Worsley and Ors; Secretary, Department of Families, Housing, Community Services and Indigenous Affairs and Ors and - [2008] AATA 204

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 204

ADMINISTRATIVE APPEALS TRIBUNAL Nº 2007/2227, 2007/2230, 2007/2380

GENERAL ADMINISTRATIVE DIVISION

Re:SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS; AND
SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS
Applicants

And:MICHAEL DAVID WORSLEY
Respondent
AND
Re:MICHAEL DAVID WORSLEY

Applicant
And:SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS; AND
SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

Respondents

DECISION

Tribunal: G.D. Friedman, Senior Member

Date: 14 March 2008

Place: Melbourne

Decision:The Tribunal sets aside the decision under review and substitutes a decision that from 29 October 2003 to 10 September 2006 Mr Worsley was a member of a couple and that income received by Ms M. Ocfemia during that period from Alexander Grey Pty Ltd, Coles Myer Ltd and Select Australasia Pty Ltd should be treated as employment income as wages, so that Mr Worsley has a recoverable debt of $6701.15.

(sgd) G.D. Friedman
Senior Member

SOCIAL SECURITY – overpayment of newstart allowance and age pension – member of a couple – whether a marriage-like relationship – earnings by former partner – whether employment income or business income

Social Security Act 1991 ss 4(2), 4(3), 4(3A), 8

Lambe v Director‑General of Social Services (1981) 57 FLR 262

Pelka v Secretary, Department of Family and Community Services (2006) 151 FCR 546

Lynam v Director-General of Social Security (1983) 1 AAR 197

Staunton-Smith v Secretary, Department of Social Security (1991) 32 FCR 164

Stevens v Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16

REASONS FOR DECISION

14 March 2008 G.D. Friedman, Senior Member

Michael Worsley has led a nomadic lifestyle. He describes himself as a trouble-shooting management consultant who has worked all over the world and in various parts of Australia for 40 years and has qualifications in science, accounting and business administration. In 2006 Centrelink determined that Mr Worsley had been overpaid newstart allowance and age pension in three amounts totalling $6701.15 arising from income received by his former partner, Ms M. Ocfemia, during the period 2003 to 2006. Mr Worsley disputes the debt and the finding that he was a member of a couple.

ISSUES

The issues before the Tribunal are whether Mr Worsley and Ms Ocfemia were in a marriage-like relationship during the relevant period, and, if so, whether Ms Ocfemia’s income received from Alexander Grey Pty Ltd, Coles Myer Pty Ltd and Select Australasia Pty Ltd during that period was business income or employment income.

WAS MR WORSLEY A MEMBER OF A COUPLE?

Section 4(2) and (3) of the Social Security Act 1991 provides:
4(2)Subject to subsection (3), a person is a member of a couple for the purposes of this Act if:
(b)all of the following conditions are met:
(iii)the relationship between the person and the partner is, in the Secretary’s opinion (formed as mentioned in subsection (3) and (3A)), a marriage-like relationship;
…
4(3)In forming an opinion about the relationship between 2 people for the purposes of paragraph (2)(a) or subparagraph (2)(b)(iii), the Secretary is to have regard to all the circumstances of the relationship including, in particular, the following matters:
(a)the financial aspects of the relationship, including:
(i)any joint ownership of real estate or other major assets and any joint liabilities; and
(ii)any significant pooling of financial resources especially in relation to major financial commitments; and
(iii)any legal obligations owed by one person in respect of the other person; and
(iv)the basis of any sharing of day-to-day household expenses;
(b)the nature of the household, including:
(i)any joint responsibility for providing care or support of children; and
(ii)the living arrangements of the people; and
(iii)the basis on which responsibility for housework is distributed;
(c)the social aspects of the relationship, including:
(i)whether the people hold themselves out as married to each other; and
(ii)the assessment of friends and regular associates of the people about the nature of their relationship; and
(iii)the basis on which the people make plans for, or engage in, joint social activities;
(d)any sexual relationship between the people;
(e)the nature of the people’s commitment to each other, including:
(i)the length of the relationship; and
(ii)the nature of any companionship and emotional support that the people provide to each other; and
(iii)whether the people consider that the relationship is likely to continue indefinitely; and
(iv)whether the people see their relationship as a marriage-like relationship.
4(3A)The Secretary must not form the opinion that the relationship between a person and his or her partner is a marriage-like relationship if the person is living separately and apart from the partner on a permanent or indefinite basis.
O’Loughlin J said in Staunton‑Smith v Secretary, Department of Social Security (1991) 32 FCR 164 at 170:
It is not suggested that this list is exhaustive nor will each of these subjects fall to be considered in every case. It must also be emphasised that a particular answer to a single subject will rarely, if ever, supply a final solution. The responsibility of the fact-finding Tribunal is to have regard to all the material facts of each case, treating the matters listed above only as indicators. The Tribunal will make its determination whether a particular man and woman are or are not living separately and apart only after assessing the totality of the evidence and other material that is before it.
French J in Pelka v Secretary, Department of Family and Community Services (2006) 151 FCR 546 had reason to deal with ss 4(2) and 4(3) of the Act in the context of an application for a carer payment. He referred to the decision in Staunton‑Smith and also to the decision of Fitzgerald J in Lynam v Director‑General of Social Security (1983) 1 AAR 197 and stated that in determining whether a marriage‑like relationship exists under the Act, the nature of the exercise is much the same as that required under the statutory formula used in Lynam, Staunton‑Smith and in Lambe v Director‑General of Social Services (1981) 57 FLR 262. In Lynam, Fitzgerald J said, at 200:
Each element of a relationship draws its colour and its significance from the other elements, some of which may point in one direction and some in the other. What must be looked at is the composite picture. Any attempt to isolate individual factors and to attribute to them relative degrees of materiality or importance involves a denial of common experience and will almost inevitably be productive of error. The endless scope for differences in human attitudes and activities means that there will be an almost infinite variety of combinations of circumstances which may fall for consideration. In any particular case, it will be a question of fact and degree, a jury question, whether a relationship between two unrelated persons of the opposite sex meets the statutory test.
French J also cited the following statement made by O’Loughlin J in Staunton‑Smith, at 173:
. . . it is not sufficient to merely note that a couple are sharing accommodation, nor is it sufficient to note that one is financially dependent on the other; it is necessary to delve deeper to find the reasons for those arrangements. Those reasons will be better indicators in determining the correct nature of their relationship.
Mr Worsley told the Tribunal that he was not in a marriage-like relationship during the relevant period. He said that he migrated to Australia from the United Kingdom in 1967 and has always enjoyed travelling to different places. He has worked as a business consultant, stockbroker and tax agent for private and government organisations and recently commenced studying for a doctorate in business administration. He said that he has had a number of relationships and has been married once.
Mr Worsley explained that he had advertised for companionship and met Ms Ocfemia, a Filipino citizen, in 1990 when she came to Australia to visit her sister. Mr Worsley said Ms Ocfemia wished to remain permanently in Australia and that he agreed to sponsor her application for migration. She had a degree in fisheries and he helped her to obtain a graduate diploma in accounting and he set up a business for her to operate from home. He also wanted more children. He agreed that from 1990 they were in a marriage-like relationship, and lived at first in Longreach, Queensland where their son David was born in 1991. Their daughter Margaret was born in Sydney in 1992 and a third child, Carlos, was born in Gosford, New South Wales in 1996 but lived only a few hours. Mr Worsley stated that the death of Carlos had a pronounced effect on Ms Ocfemia and the relationship deteriorated. She joined the Hare Krishna and spent time with that organisation, leaving him to care for the children. He said that he and Ms Ocfemia established a trust for the children and bought a house in Kingston, Tasmania where they lived for about two years.
According to Mr Worsley, Ms Ocfemia became frustrated with his constant absences due to his work and in 1999 she moved to Sydney. He said that the relationship effectively ended at that time. After several changes of residence he moved to Werribee, near Melbourne in 2003 in a house purchased by the trust, and Ms Ocfemia and the children still live there. He said that he used the house as his base until March 2007, and then moved to a nearby suburb where he rents a house. His files were located in the Werribee house, and he found this convenient for his lifestyle of travelling intermittently to other places for work. Mr Worsley told the Tribunal that he has an arrangement with Ms Ocfemia that when one of them is absent the other looks after the children, who are now able to take more responsibility for themselves. He said he communicates regularly with the children and visits whenever they need assistance.
Mr Worsley said that Ms Ocfemia pays $230 rent per week to the trust and he pays $50. They have one joint account which was opened in 1990 and which only he uses. It has a small balance and he transfers funds to Ms Ocfemia on occasions such as the payment of dividends for shares held jointly. He said that they own no other assets together and act as trustees for the Werribee property, which is the only asset of the trust. Mr Worsley stated that whoever has care of the children at any time usually pays the bills. He said that he does not support Ms Ocfemia financially as she operates her bookkeeping business from home.
In respect of their relationship Mr Worsley said that the children now understand that their parents are separated, However, when they were younger they would often ask him and Ms Ocfemia to go out together as a family. He said that since 1999 he and Ms Ocfemia have had no social life together and there is no sexual relationship, even though at times they have shared a bed at the Werribee house. He said that Ms Ocfemia does not perform any household tasks for him and he has informed the children’s schools of the separation. They do not represent themselves to others as a couple. Mr Worsley stated that his commitment to Ms Ocfemia is only as the mother of his children. His contact with her is limited to discussion several times each week about arrangements for the care of the children, and when he visits the house to see the children. He has a key to the house.
Under cross-examination Mr Worsley agreed that he usually prepared Ms Ocfemia’s tax returns but that she had prepared the return for 2004/2005 in which she listed him under the heading Your spouse’s name. He also agreed that in other tax returns and Centrelink documents he and Ms Ocfemia listed each other as spouse or de facto spouse or partner. He said that he had been acting on Centrelink’s advice by completing the forms in that manner as Centrelink would not accept separation under the one roof. Mr Worsley explained that various Centrelink officers told him to include spouse details if he was living in the same house as Ms Ocfemia on the day the form was completed, as this was the most convenient way for Centrelink to manage his unorthodox living and business arrangements. He agreed that he knew at all times that the information he provided was false, and also agreed that he was aware of his obligations as a registered tax agent to ensure that the information he provided was correct. He said that he did not take the forms seriously.
Mr Worsley told the Tribunal that the consequence of representing himself and Ms Ocfemia to Centrelink and the Australia Taxation Office as spouses was that he received parenting payment at the partnered rate rather than the single rate. He agreed that he and Ms Ocfemia travelled to the Tribunal hearing together on the first day, but denied that they had discussed the proceedings at any time. With one exception he was unable to provide corroborating evidence from friends, relatives, neighbours or business associates about the nature of his relationship with Ms Ocfemia. He said that he has been estranged from his six adult children and ten grandchildren for at least one year. He stated that he would be prepared to take Ms Ocfemia to hospital if she became ill, and agreed that her name is included in the family’s ambulance subscription.
Ms Ocfemia told the Tribunal that she and Mr Worsley began to drift apart in about 1998 and separated in 1999. She said that she and Mr Worsley do not go out together without the children, and that he visits the children regularly at the house. She said that she has informed her family in Australia and the Philippines that she and Mr Worsley are separated. She has her own income from her bookkeeping business. Ms Ocfemia stated that Mr Worsley has unfettered access to the house because he is a trustee and needs to have regular contact with the children. She said that Mr Worsley was living and working interstate for most of the period from 2003 to 2006, and that when he was not away he lived with her and the children at the Werribee home. She said that she did the household tasks such as cooking and cleaning but did not cook specifically for him, although she said that they ate as a family when the parents and children were present. She also did the washing and sometimes washed Mr Worsley’s clothes when he was living with her and the children.
Ms Ocfemia stated that she and Mr Worsley shared a bedroom during the relevant period but there was no sexual relationship at that time. She agreed that in 2003 she applied for newstart allowance and declared him to be her partner. In February 2007 he finally moved out of the house. He lives nearby and does not stay overnight. He pays the bills and they discuss issues such as mortgage repayments and council rates.
Under cross-examination Ms Ocfemia agreed that in her tax returns for 2001/2002 and 2003/2004 she listed Mr Worsley as her spouse. She was unable to provide a reason, and explained that Mr Worsley prepared the returns and she signed them. She confirmed that the joint account was still open and that she has not used it for 12 years. She stated that she and Mr Worsley have no joint assets other than the trust property, and no joint loans. Her Medicare card contains her name and the children’s names. She agreed that in the document she signed with Coles Myer Ltd for employment in 2003 she had stated that if she dies any benefits are to be paid to her children and Mr Worsley.She also listed Mr Worsley as her emergency contact. Ms Ocfemia explained that she refers to Mr Worsley as her husband out of habit.
In an undated statement (Exhibit A1) Mr P. Weidemann said that he has known Mr Worsley since 1989 and has remained a friend. He stated that Mr Worsley and Ms Ocfemia have maintained a civil relationship for the sake of the children, but have lived separate lives for many years. In oral evidence Mr Weidemann conceded that he has not visited Mr Worsley or Ms Ocfemia in Melbourne and said that Mr Worsley provided him with some of the information contained in his statement.
Mr J. Sherlock, a complex assessment officer with Centrelink, told the Tribunal that he has not dealt personally with Mr Worsley. However he said that Centrelink officers are familiar with the concept of separation under the one roof. He explained that complex assessment officers across Australia are required to adhere to strict rules that include accurate recording of contact with Centrelink clients. Mr Sherlock stated that officers are not permitted to enter into agreements that are contrary to social security legislation, and that adequate procedures are in place for dealing with Mr Worsley’s situation involving multiple bank accounts and frequent changes in work and living arrangements.
In respect of the financial aspects of the relationship the Tribunal accepts that there is one joint bank account to which Mr Worsley contributes and which is used mainly for the payment of expenses for the children. The financial affairs of Mr Worsley and Ms Ocfemia are linked through the Carlos Family Trust, which owns the house in which Ms Ocfemia and the children live. Mr Worsley and Ms Ocfemia are the trustees and contribute to the mortgage by way of rent, and outgoings appear to be paid by both parents who have accepted joint responsibility for the children’s financial needs. The Tribunal accepts the evidence from Ms Ocfemia that during the relevant period she sometimes purchased items for Mr Worsley with her own money, and that household expenses were shared, with each parent purchasing food and household items as required. These arrangements demonstrate that the financial affairs of Mr Worsley and Ms Ocfemia were closely linked during the relevant period.
In respect of the nature of the household, the Tribunal accepts that during the relevant period Mr Worsley spent a considerable time away from the family home because of his work commitments. However his address was the same as for Ms Ocfemia and there was no dispute that he returned to the family home where Ms Ocfemia and the children lived each time he was not engaged in such assignments. Mr Worsley considered this to be his residence. The evidence is clear that both parents accepted joint responsibility for providing care and support of the children. The basis on which responsibility for housework was distributed appears to have been the needs of the household and the availability of one or both parents. The Tribunal accepts Ms Ocfemia’s evidence that she performed household tasks such as cooking, cleaning and washing of clothes for herself and the children and sometimes for Mr Worsley. These arrangements demonstrate that Mr Worsley and Ms Ocfemia continued to share responsibility for the various aspects of the household and care of the children during the relevant period.
In respect of the social aspects of the relationship the Tribunal takes into account that Mr Worsley and Ms Ocfemia stated that during the relevant period they did not socialise together as a couple, although Ms Ocfemia said that they went out as a family for special events such as birthdays. However in their dealings with Centrelink since 1999 they have consistently held themselves out as a couple, and have included each other as partner or spouse in applications and in correspondence. Until 2006 they listed each other as spouse for tax purposes. The Tribunal notes that in an employment document in 2004 Ms Ocfemia listed Mr Worsley as her husband and the emergency contact as next of kin, as well as a beneficiary in the event of her death. She told the Tribunal that she would visit him in hospital if he became ill and was sure that he would visit her. January 2005 seems to be the first time that Mr Worsley told Centrelink that he did not consider himself to be a marriage-like relationship.

Although Mr Worsley told the Tribunal that he had notified the children’s schools of the separation, he was not clear on the approximate dates and there was no supporting evidence from friends, neighbours or relatives that he and Ms Ocfemia no longer held themselves out as members of a couple. Mr Weidemann’s evidence carries little weight as he has not seen Mr Worsley or Ms Ocfemia in Melbourne and his statement appears to have been based on information provided by Mr Worsley. On Ms Ocfemia’s evidence there is some doubt that the children have been told of the separation at all.
In respect of any sexual relationship the Tribunal accepts that although Mr Worsley and Ms Ocfemia shared a bed on occasions during the relevant period, there was no sexual relationship.
In respect of the nature of the commitment to each other the Tribunal takes into account that there has been conflict between Mr Worsley and Ms Ocfemia which has been exacerbated by Mr Worsley’s work arrangements. However Mr Worsley lived with Ms Ocfemia and the children and had done so for a considerable period; he and Ms Ocfemia occupied the same bed on numerous occasions; they consulted each other regularly regarding the children; Ms Ocfemia regarded Mr Worsley as her next of kin on employment documents; Mr Worsley provided work for her and advised her on tax and other matters; and they maintained a joint bank account. All these indicate a continuing commitment to each other during the relevant period.
Taking all factors into account the Tribunal finds that during the relevant period Mr Worsley and Ms Ocfemia maintained a close relationship. Although there was no sexual relationship between them they lived in the same house when Mr Worsley was not working interstate, jointly cared for the children and performed duties as trustees of the Carlos Memorial Trust by contributing to the mortgage and providing funds for household expenses. Mr Worsley obtained employment for Ms Ocfemia and assisted her, and each held the other out as spouse or partner in various documents. The Tribunal does not accept Mr Worsley’s explanation for providing false information to Centrelink and the Australia Taxation Office on a regular basis. His evidence was inconsistent, evasive, and at times fanciful. Although he described himself as eccentric, he is a highly educated and articulate individual with qualifications in accountancy, and he had no valid reason or justification to provide false answers questions on official forms. The Tribunal does not accept that a succession of Centrelink officers persuaded him to sign documents he knew to be false, or that Centrelink regularly gave him advice it knew to be incorrect and contrary to law.
Mr Worsley and Ms Ocfemia appear to have maintained an emotional attachment. They attended social functions together with the children. Ms Ocfemia performed household tasks such as cooking, cleaning and washing for Mr Worsley. On balance the Tribunal finds that Mr Worsley and Ms Ocfemia were members of a couple during the relevant period.

WAS MS OCFEMIA’S INCOME BUSINESS OR EMPLOYMENT INCOME?

In determining a person’s rate of newstart allowance and age pension the ordinary income of the person and the person’s partner must be taken into account. The term ordinary income is defined widely in s 8 of the Act and includes both business and employment income.
Mr Worsley submitted that that Ms Ocfemia’s ordinary income earned during the relevant period was entirely business income earned as a contractor, for which legitimate business expenses and losses could be offset. Mr Worsley said that as Ms Ocfemia’s business expenses were more than her business income, her ordinary income was nil. Therefore, Ms Ocfemia’s business income does not affect his rate of newstart allowance and age pension and there is no overpayment or debt.
Mr de Uray, a Centrelink advocate, submitted that Ms Ocfemia was not working as a contractor for three companies during the relevant period but was an employee of the companies and received employment income. Therefore, these earnings should be taken into account when assessing Mr Worsley’s rate of newstart allowance and age pension.
Mr Worsley said that Ms Ocfemia operated a bookkeeping business and referred to Ms Ocfemia’s tax return for 2004/2005, which he said she prepared and lodged. He did not check the contents, but acknowledged that he signed the return as tax agent and that he had verified that the contents were true and correct. Mr Worsley drew attention to the heading Salary and Wages (T26, page 204) where there are entries for Alexander Grey Pty Ltd, Coles Myer Ltd and Select Australasia Pty Ltd in the amount of $10,409 for gross wages, in addition to entries for business income for ML Ocfemia and Chess Wiz. He agreed that in July 2007 he lodged an amended return for Ms Ocfemia in which he transferred the gross wages figure to business income. He said that he realised that the original return was incorrect.
Mr Worsley said that although Alexander Grey Pty Ltd described Ms Ocfemia as a casual employee, it acknowledged that she had provided an Australian Business Number (ABN) to the company. He stated that Ms Ocfemia handled a range of assignments when the company’s temporary staff were absent, and was described as an employee rather than a contractor only because of administrative convenience and the fact that Ms Ocfemia did not like the paperwork involved in operating as a contractor. Mr Worsley said that Ms Ocfemia was covered under his group professional indemnity insurance policy, and he produced a Certificate of Currency for the period 30 June 2006 to 30 June 2007 in respect of his accounting business, which included Myrla Lerum Ocfemia trading as ML Ocfemia, Accounts Right, Chess Wiz.
Mr Worsley agreed that Coles Myer Ltd described Ms Ocfemia as a casual employee from 6 December 2004 to 19 January 2005 and Select Australasia Pty Ltd described her as a seasonal employee from 28 March 2005 working 25 hours per week but variable.
Ms Ocfemia told the Tribunal that she started her bookkeeping business in 1991 with help from Mr Worsley, and that she operates from home. She said that Mr Worsley prepared the tax return for 2004/2005.
Under cross-examination Ms Ocfemia agreed that 14 February 2004 she signed a document: Alexander Grey Pty Ltd – Temporary Employment Agreement which outlined the terms and conditions of her employment, and received weekly payslips from the company (T68 pages 413-415). She also agreed that she worked specified hours and was subject to the company’s control. Ms Ocfemia agreed that in relation to Coles Myer Ltd, in a Centrelink Employment Declaration (T60 pages 360-362) the payroll officer stated that she was employed on a casual basis. She received one payslip. In relation to Select Australasia she agreed that in a Centrelink Employment Declaration (T52 pages 355-358) the payroll officer stated that she was employed on a seasonal basis for 25 hours per week which varied at the company’s discretion, with tax deducted by the company.
In assessing whether an individual is operating as an independent contractor or employee the totality of the relationship between the parties must be considered. A number of factors have been identified as relevant including the degree of control over the person engaged, mode of remuneration, flexibility of conditions and insurance arrangements (Stevens v Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16).
The Tribunal accepts that Ms Ocfemia operated a business during the relevant period and that amended tax returns were lodged with her earnings from the three companies entered under business income. The Tribunal also accepts that Ms Ocfemia may have carried her own professional indemnity insurance during the relevant period, however was covered by Alexander Grey’s insurance both professionally and generally when working there.
The Tribunal finds that when Ms Ocfemia worked for Alexander Grey and Coles Myer she signed contracts of employment and had little flexibility with her terms and conditions. She was paid a loading for annual and sick leave and was regarded as an employee. At Alexander Grey she worked specified hours. For all three companies, Ms Ocfemia’s payslips show that tax and superannuation payments were deducted from her gross wage. On balance the Tribunal finds that the work performed by Ms Ocfemia for the three companies was as an employee rather than as a contractor, so her earnings were wages and the expenses and losses cannot be deducted. As she was the partner of Mr Worsley during the relevant period these wages must be taken into account when determining the appropriate level of newstart allowance and age pension received by Mr Worsley.

DECISION

The Tribunal sets aside the decision under review and substitutes a decision that from 29 October 2003 to 10 September 2006 Mr Worsley was a member of a couple and that income received by Ms M. Ocfemia during that period from Alexander Grey Pty Ltd, Coles Myer Ltd and Select Australasia Pty Ltd should be treated as employment income as wages, so that Mr Worsley has a recoverable debt of $6701.15.

I certify that the thirty-eight [38] preceding paragraphs are a true copy of the reasons for the decision of:

G.D. Friedman, Senior Member

(sgd) Mara Putnis
Associate

Dates of hearing:  31 October 2007, 17 January 2008, 6 March 2008
Date of decision:  14 March 2008
Advocate for Centrelink:              Mr T. de Uray
Advocate for Mr Worsley:           Self-represented