Administrative Appeals Tribunal of Australia|2008-03-20

The applicant called Deana Trenham to give evidence relevant to the interests of the respondents in opal mining claims. Ms Trenham has been employed by the Department of Primary Industry & Resources SA (PIRSA) and the Department of Minerals & Energy Resources since May 1987, and is located in Coober Pedy. She has held her current position of Opal Mining Registrar for more than five years. She has extensive knowledge of opal mining legislation and practices.
Ms Trenham gave evidence that within the Major Working Area (MWA) of the proclaimed opal fields in Coober Pedy, only one claim per person could be held, and the person holding the claim was required to work it for twenty hours per week. Outside the MWA, up to three claims could be held, and the claims did not need to be worked personally, as long as they were worked for a minimum of twenty hours per week. This was also the position with claims held in other areas, including in particular opal mining claims held at Lambina, which was not within a proclaimed field. Once a claim was pegged, the miner had an option to renew the claim for a further twelve months. Generally miners would do this if the claim was viable.
Ms Trenham recounted the claims that Mr Kambouris held from 1999 to 2004. These were as follows:

(a) a claim at Shell Patch from 15 November 1999 to 8 September 2000;

(b) a claim at Brown's Folly from 3 July 2000 until 2 October 2000;

(d) a claim at Ryan's Hill from 30 May 2002 to 29 August 2002;

(e) a second claim at Ryan's Hill from 12 September 2002 to 8 October 2002; and

(f) a claim at Larkin's Folly from 11 October 2002 to 10 January 2004.

The claim at Brown's Folly was outside the MWA, but the other claims were within the MWA. With the exception of the claim at Brown's Folly and the two claims at Ryan's Hill the above claims were extended beyond their initial three months' term.

Ms Trenham recounted the claims that Mrs Kambouris held from 1999 to 2004. These were as follows:

(a) a claim at Brown's Folly from 3 July 2000 to 2 October 2000;

(b) a second claim at Brown's Folly from 3 October 2000 to 2 January 2001;

(d) a claim at Zorba from 31 October 2001 to 30 January 2002;

(e) a claim at Ryan's Hill from 31 May 2002 to 30 August 2002;

(f) a second claim at Ryan's Hill from 12 September 2002 to 20 May 2003; and

(g) a claim at Greek Gully from 20 May 2003 to (according to the attachment to exhibit A29) 19 May 2003.

With the exception of the two claims at Brown's Folly, and the claim at Lambina, all of the above claims were inside the MWA.

Ms Trenham gave evidence as to the steps taken by PIRSA to police and enforce compliance with the labour requirements of opal mining claims. She said that a miner would be "lucky" to get away with not working a claim for any more than a month without it coming to somebody's attention (transcript 6 August 2007, page 37, lines 36 - 37). In cross-examination she acknowledged that prior to an increase in the number of compliance officers in about 2001, an unworked claim was less likely to be detected, and a period of non-compliance could occur for a couple of months (transcript 6 August 2007, page 54). She further acknowledged that if PIRSA officers observed that a claim was being worked, they would not necessarily investigate whether or not the work was being done personally by the registered holder of the claim.
Mr and Mrs Kambouris did not dispute Ms Trenham's evidence as to their interests in the various opal mining claims. However, it is apparent that Mrs Kambouris' medical condition is such that she was unable to personally carry out any mining work. Further, Mr Kambouris maintained that he was also unable to carry out mining work because of the injury to his arm in 1975. The applicant disputed this. It relied on certain information in a medical report dated 15 August 1977 to Mr Kambouris' general practitioner, Dr M G Cacas, from a general surgeon (see exhibit A1, T13, page 212).
The respondents called Dr Cacas. He gave evidence of subsequent consultations in 2001 when Mr Kambouris was complaining of right shoulder pain, which the doctor diagnosed as right shoulder capsulitis consistent with over-use of the right shoulder in consequence of not using his left arm. Dr Cacas also assessed Mr Kambouris' capacity for work, at the request of Centrelink, in February 2002.
There is no medical evidence before me as to the condition of Mr Kambouris' left arm or right shoulder during the period from 1997, when he commenced to receive Newstart allowance, and 29 August 2001, when he consulted Dr Cacas in connection with his right shoulder pain. I am not satisfied that Mr Kambouris was unable to work as an opal miner during the period in which he received Newstart allowance, but I find that he had restrictions on undertaking heavy work, and that his left arm injury prevented him from operating most forms of mining machinery, and he only had some limited capacity to work as an opal miner.
Mr Kambouris gave evidence that his interest in the mining claims was pursuant to a joint venture agreement with two other persons, namely the witness Andreas Skarmoutsos and the witness Dimitrios Nikolau. Mr Kambouris said that his two co-joint venturers provided the mining equipment and labour required, and his role was to provide the diesel fuel used by the machinery. The witness Peter Simitos confirms that Mr Kambouris purchased diesel fuel from his Mobil service station at Coober Pedy. According to exhibit A3, invoices were issued to Mr Kambouris for purchases of diesel fuel totally approximately $53,000.00 over the period from 5 June 2002 to 23 July 2003. Mr Kambouris subsequently received a rebate of $9,879.04 pursuant to the Diesel Rebate Scheme (see exhibit A1, T43, page 441). He used this amount to reduce his indebtedness to the Mobil service station, (transcript, 9 August 2007, page 268), but still owes Mr Simitos approximately $23,000.00 (transcript 6 August 2007, page 81).
The evidence of Mr Kambouris' interest in the opal mining claims with the attendant requirement that they be worked for a minimum of twenty hours per week, and evidence that any breaches of this requirement were not detected, must be assessed in the light of the further evidence to which I have referred above, and does not constitute proof that Mr or Mrs Kambouris were personally working the claims. I find that they were only involved in the opal mining joint ventures to the limited extent described by Mr Kambouris, and that Mr Kambouris' involvement did not mean that he had ceased to be unemployed for the purposes of s 593(1) of the SS Act.

Effect of Mr Kambouris' income on respondents' entitlement to pension

In view of my finding that Mr Kambouris had ceased to be unemployed by 1 July 2001, he was not entitled to Newstart allowance after that date, and the level of his income after that is not relevant in his case. However, it remains necessary to consider whether his income was such as to disqualify him from receiving Newstart allowance prior to that date.
I have referred above to the interests of Mr and Mrs Kambouris in opal mining claims. Mr Kambouris said that whilst some small pieces of opal were discovered, there was never any economic find of opal from the mining claims. He said that the small amount that was found was used by Mr Skarmoutsos for repairs to his machinery. Mr Skarmoutsos, and the other participant in the joint venture, namely the witness Mr Nikolou, also confirmed that the joint venture was unsuccessful.
I find that the interests of Mr and Mrs Kambouris in their mining claims did not at any time prior to 1 July 2001 result in their receiving income at a level that would prevent them from receiving Newstart allowance or reduce their entitlement to that pension.
The level of Mr Kambouris' income is also relevant to the entitlement of Mrs Kambouris first to Newstart allowance, and then from 8 April 2002 to DSP. Having regard to my above findings, I now turn to the issue of whether Mr Kambouris' income between 1 July 2001 and 22 January 2004 was such as to preclude Mrs Kambouris from entitlement to DSP, or alternatively, to reduce any such entitlement.
As mentioned above, the rate of Newstart allowance is provided for in Part 3.6 of the SS Act. Section 1068-G1 provides for the method of working out the effect of a person's ordinary income, and of the ordinary income of a partner of the person, on the person's maximum payment rate. The first step in the method statement is to work out the person's ordinary income on a fortnightly basis. Provision is made in s 1068-G2 for the deemed ordinary income of members of couples where the person's partner is receiving a social security pension.
Provision is made for the rate of DSP in Part 3.2 of the SS Act. Section 1064-E1 provides for the method of working out the effect of a person's ordinary income on the person's maximum payment rate. The first step of the method statement is to work out the amount of the person's ordinary income "on a yearly basis". Provision is made in s 1064-E2 for determining the ordinary income of members of couples.
The word "income" is defined relevantly in s 8(1) to mean:

(a) an income amount earned, derived or received by the person for the person's own use or benefit; ... ."

The expression "earned, derived or received" used in this definition is defined in s 8(2) in broad terms.

By virtue of s 1064-E1 it is necessary to determine the amount of Mr Kambouris' income "on a yearly basis" between 8 April 2002 and 22 January 2004.
In Harris v Director-General of Social Security [1985] HCA 1; (1985) 7 ALD 277 the High Court of Australia considered the meaning of the expression "annual rate of ... income" in s 28(2) of the Social Services Act 1947 (Cth) (the "1947 Act"), which preceded the SS Act. The majority of the High Court discussed how the section should be applied where a pensioner received irregular or intermittent amounts of income from different sources. Their Honours said, at 282:

"If a pensioner is in casual employment earning different amounts each week, as Mrs Harris was, it may be appropriate - it is a question of fact - to determine the annual rate of income attributable to casual employment by striking an average of earnings over a period ... the circumstances of the case must determine what is a fair method of ascertaining the current rate of income at a particular time."

In a helpful decision in Re Secretary, Department of Family and Community Services and Rolley [1999] AATA 968 Deputy President Forgie reviewed a number of authorities and said (at [42]) that the current SS Act "did not intend to effect any changes in the Ordinary Income Test as it had operated under the 1947 Act", and therefore the High Court decision in Harris should be followed. The Full Federal Court dismissed an appeal from the Deputy President's decision, and also adopted the interpretation of the judgment of the majority of the Court in Harris. The Court went on to discuss various situations where income might be derived from different sources, and to explain the method of determining a yearly rate of income in those situations.
The present case differs from Rolley because in that case the pensioner received income from casual employment over a closed period of time. Mr Kambouris was self-employed during the relevant period, and no doubt his income fluctuated according to the sales that he made and the resulting profitability of those sales. I therefore consider that the correct approach in the present matter in order to determine Mr Kambouris' income "on a yearly basis" at any particular point in time is to strike an average of his earnings over an appropriate period.
There are some references in the authorities to the proposition that the yearly rate of income should be calculated by projecting anticipated future income on the assumption that the relevant source(s) of income continue to provide income at the same rate in the future. This would no doubt be appropriate at the time when an administrator is considering whether an applicant for a pension is qualified under the relevant income test. In other cases, such as the present, the question will be whether there has been an overpayment of pension in respect of a past period, and this should be determined by reference to the rate of income over that period. In either case, the decision-maker should consider all of the information available at the time of making a decision. When matters come to be determined in this tribunal, the tribunal often has the benefit of information that has arisen since the date of the original determination, and it is of course appropriate for the tribunal to use the benefit of hindsight and to take into account all of the information available to it up to the time when it makes its decision (see Commonwealth of Australia v Ford (1986) 9 ALD 433 at 437).

Income of Mr Kambouris from 1 July 2003 to 22 January 2004

In the present matter, having regard to the focus of the presentation of the accounting evidence, I will first consider Mr Kambouris' income on a yearly basis as at 22 January 2004, when Mrs Kambouris ceased to receive DSP. I consider that this should be done by striking an average of Mr Kambouris' income over the period from 1 July 2003 to 22 January 2004. This period is a little over half a year. The commencement of the period corresponds with the commencement of the financial year, and Mr Kambouris' accountant, Ms Cook, prepared his accounts on a financial year basis.
Ms Cook gave evidence that she has acted for Mr Kambouris since about December 2003 and that she prepared the first accounts of his business, which were the accounts for the financial year ended 30 June 2003. She also prepared the accounts for subsequent years, including in particular the accounts for the financial year ended 30 June 2004.
The applicant engaged another accountant, namely the witness Trevor Clark, initially to advise on the accounts of the business for the year ended 30 June 2004. He arrived at a net profit for that year that was substantially greater than the net profit arrived at by Ms Cook. In those circumstances I directed that the two accountants should meet and then prepare a joint report in respect of the financial year ended 30 June 2003 and the period 1 July 2003 to 22 January 2004, with a view to their giving concurrent evidence. However, in the event, they did not give their evidence concurrently.
By the time of the hearing, the accountants had prepared various reports which are included in exhibit A51. They later also prepared a joint report dated 4 December 2007 (exhibit A52). This joint report sets out the areas of agreement between them, as well as the areas of disagreement.
Ms Cook explained that the accounts she had originally prepared for Mr and Mrs Kambouris were based on information provided to her by them. This included information provided by Mrs Kambouris in order to prepare quarterly business activity statements for the business. However, when Ms Cook and Mr Clark examined the period from 1 July 2003 to 22 January 2004 in order to prepare their joint report, they each prepared income and expenditure statements for that period using source materials, comprising bank statements, cheque butts and deposit records. When Mr Clark prepared his accounts for the year ended 30 June 2003, he also used the source material approach, although he said that in the early stages of trading Mr Kambouris rarely used the Westpac Bank account for his business.
The joint report for the period 1 July 2003 to 22 January 2004 shows that the gross profit from trading arrived at by Ms Cook was in round figures about $30,000.00 less than the gross trading profit arrived at by Mr Clark. It was agreed that this difference was the result of their differing treatment of two cheques dated 19 December 2003 for $15,000.00 each (plus GST) made out to Mr Scott's company, S W Scott Enterprises Pty Ltd. When the joint report was prepared, Ms Cook treated these cheques as payment for stock, so that her figure for purchases was in round figures $30,000.00 more than the purchases determined by Mr Clark. Whilst Ms Cook treated the two cheques in this way, Mr Clark understood that the cheques should not be taken into account as they had not been presented by 22 January 2004. In fact, the cheques were presented on 12 February 2004 and 10 March 2004, as appears from the Westpac Bank statements, exhibit A11. Quite apart from this, Mr Clark said that if the cheques were for consignment stock, neither the value of the opal on consignment nor the cheques should be taken into account at all, and the only accounting relevance of the transaction would be to take into account as income any commission earned for selling the consignment stock.
In his evidence Mr Clark adhered to the opinion he expressed in the joint report. Ms Cook said that she had had further discussions with Mrs Kambouris the night before giving evidence. Ms Cook said that she was then informed that certain sales of opal effected by Mr Kambouris for Mr Scott, which she had understood to be consignment sales, were not reflected at all in Mr Kambouris' bank account. This was because in the case of those sales, once Mr Kambouris found a purchaser, he would arrange for Mr Scott to invoice that purchaser direct, and the purchaser would then pay Mr Scott the invoiced amount.
Ms Cook acknowledged, however, that the two cheques totalling $30,000.00 were not banked until after 22 January 2004, and further agreed that if the two cheques related to sales which took place after that date, then the two cheques should not be brought into account if Mr Kambouris had taken delivery of the opal on the day the cheques were written out, namely 19 December 2003. However, Ms Cook said that she considered, apparently as a result of her discussion with Mrs Kambouris, that Mr Kambouris had received the opal some time before 19 December 2003 and that he may have sold some of the opal before that, but it was not clear what parts of the parcel had been sold, or when it had been sold.
At my request, Mr and Mrs Kambouris were recalled to provide further evidence in relation to the two cheques. Mr Kambouris confirmed that the cheques related to a parcel of opal that he had received on consignment from Mr Scott some time before the date when the cheques were written out. He said that he could not remember the particular parcel in question or details of the transaction, but could say confidently what would have happened as a result of the usual course of his dealings with Mr Scott. He said that before the date when the cheques were written out, he would have had the parcel of opal on consignment possibly for some time and would have sold some of the parcel (by mixing it with other opal), but not all of it; and as a result, on 19 December 2003 Mr Scott agreed to sell the parcel to him for a reduced price of $30,000.00 in order to dispose of the opal. Mr Kambouris explained that he had agreed that Mr Scott would not present the cheques until Mr Kambouris advised him that there were funds in his account to meet the cheques. Mr Kambouris also explained that two cheques for $15,000.00 each were issued, instead of one cheque for $30,000.00, since it was easier for him to have his account in funds to the extent of two smaller amounts of $15,000.00, rather than for the full amount of $30,000.00.
Whilst Mr Kambouris was unable to recall how much of the parcel in question had been sold before the date when the cheques were written out, he agreed in cross-examination that it was likely that he had held the parcel for some time, and that not much of the parcel had been sold by the time the cheques were written out.
Mrs Kambouris gave further evidence as to her understanding of the transactions involving the two cheques. This was consistent with Mr Kambouris's explanation, although she said that she was not present at conversations between her husband and Mr Scott, and was unaware of the value of the parcel of opal or what part of it might have been sold.
The cashbook kept by Mrs Kambouris and the Westpac Bank statements indicated that the sales of opal between 19 December 2003 and 22 January 2004 amounted to only to $2,700.00 (see exhibit A53 and transcript, 4 December 2007, page 28, line 32), but that there were significant sales in February and March 2004. Having regard to this material and to Mr Kambouris's concession in cross-examination, I find that it would be reasonable to treat the major portion of the parcel in question as unsold as at 22 January 2004, but to treat part of the parcel as having been sold earlier.
As at 22 January 2004 Mr Kambouris had not paid for the portion of the parcel sold earlier. The evidence before me does not enable me to quantify the proportion of the parcel of opal that had been sold before 22 January 2004. In these circumstances, I think it appropriate to do the best I can on the evidence before me, and to use a "broad axe" approach in order to quantify the value of the stock sold prior to 22 January 2004, and to add the resulting figure to the cost of purchases made prior to that date. Proceeding in this way would, I think, be consistent with the approach of courts in quantifying damages in cases where there are difficulties in quantifying losses from the limited evidence before the court: see for example Northern Territory of Australia v Mengel [1994] NTSC 37; (1994) 95 NTR 8, at paragraph 272; Watson, Laidlaw & Co Ltd v Pott, Cassels and Williamson (1914) 31 RPC 104, at 118 per Lord Show; and Callaghan v William C Lynch Pty Ltd (1961) 79 WN (NSW) 830, at 834. I think it appropriate to add a sum of say $7,500.00 (being 25% of the agreed price of $30,000.00 for the parcel of opal in question) to the amount of opal purchases for the period up to 22 January 2004.
There are certain other differences in the figures referred to in the accountants' joint report. In arriving at his figure for sales, Mr Clark deducted GST, but Ms Cook pointed out that no GST was payable on overseas sales, and I accept that the amount of GST, $2,657.00, should be deducted. There was a further difference in that Ms Cook had treated a bank deposit of $4,000.00 on 7 October 2003 as a redeposit and not a sale, but I prefer the evidence of Mr Clark who considered, based on his analysis of the cashbook, that this amount constituted sales.
Having regard to Mr Kambouris' evidence, but using a broad axe approach as mentioned above, I consider that the trading profit should be calculated as follows.

figure used by both accountants) 86,800.00 67,125.00

This gross trading profit should then be reduced by expenses. If Ms Cook's figure for expenses is used, namely $35,949.00, the net profit for the above period would be $24,997.00, which would equate to a yearly rate of income of $42,240.30.
I am mindful that the above figure substantially exceeds the original net profit of $13,848.00 shown in Ms Cook's original accounts for the whole of the financial year in question, namely the year ended 30 June 2004 (see exhibit A51, Tab 1, letter dated 20 June 2007 from Clark & Associates, Schedule 1). However, the following aspects of the original full year's accounts, compared with the figures used by Ms Cook when the joint report was prepared, suggest that the original accounts were deficient.

(a) Ms Cook's sales to 22 January 2004 were $124,071.00 and only $129,393.00, or a little over $5,000.00 more, for the full year.

(b) Ms Cook's expenses for the period to 22 January 2004 were $35,949.00, compared with $21,714.00 for the full year, being a substantially lower figure than for the part year.

I am also mindful that the accountants did not prepare a joint report for the full year, and were not asked to do so, because Mrs Kambouris did not receive a pension after 22 January 2004. There is some reference in the accountants' earlier reports to the full year accounts initially prepared by Mr Clark, but the differences were not explored in evidence, and I consider that the period relevant to the determination of the proceedings is the period prior to 22 January 2004, when Mrs Kambouris ceased to receive DSP.
The business comprised the sale of opal via the internet, and also personal sales which according to Mr Kambouris's evidence were frequently cash transactions. Mrs Kambouris kept records of the internet sales and payments received from e-bay, and I was satisfied with her evidence as to those sales. However, she was not otherwise involved in the sales or trading activities of the business. It follows from the evidence of Mr Kambouris that the Westpac Bank account was used for the deposit and withdrawal of the cash involved in selling and buying opal. For this reason, I find that accounts prepared using the source materials are likely to be more accurate than the original accounts prepared by Ms Cook, and I do not accept that those original accounts for the year ended 30 June 2004 accurately reflect the trading position of the business in that year. I think it likely that the original accounts did not correctly reflect the cash transactions conducted by the business, and that would explain the disparity between the joint accounts and Ms Cook's original accounts.
The yearly rate of income which I have arrived at in paragraph 90 above makes no allowance for any profit or loss derived from cash sales which Mr Kambouris also made during the above period. There is no evidence before me of the volume of such sales, or any profit (or loss) resulting from such sales. It is not possible, on the state of the evidence before me, to quantify the profit from the cash transactions during the period from 1 July 2003 to 22 January 2004.
However, on my above findings as to when Mr Kambouris had ceased to be unemployed, I think it reasonable to conclude that by 1 July 2003 Mr Kambouris had become well aware of the market for opal and the prices for which opal could be sold. He had access to funds which could be used for the purpose of buying opal, and it is likely that he had established or re-established contacts amongst miners at Coober Pedy and other potential buyers and sellers of opal. Clearly his purpose in conducting the cash sales involved in his business was to trade at a profit. The difference between the level of income referred to in paragraph 90 and the yearly rate of income at which Mrs Kambouris ceased to be entitled to DSP was less than $9,000.00 per year (see exhibit A57(b)). I am satisfied that Mr Kambouris' income from his cash transactions would at least have exceeded this figure. I accordingly conclude that the level of Mr Kambouris' income during the period from 1 July 2003 to 22 January 2004 was such as to preclude Mrs Kambouris from entitlement to receive DSP.

Income of Mr Kambouris from 1 July 2001 to 30 June 2003

No accounts were tendered for the year ended 30 June 2002. That was before Mr Kambouris engaged Ms Cook to prepare his accounts. On Mr Kambouris' evidence, he did not recommence business as an opal dealer until June of 2002, being after the loan of $50,000.00 from Mr Scott. However, I have found above that Mr Kambouris had ceased to be unemployed and commenced his business as from 1 July 2001.
Ms Cook produced accounts for the business for the financial year ended 30 June 2003. They showed a profit of $7,593.00, derived from sales of $78,600.00 (see exhibit A51, Tab 8, Schedule 2). Ms Cook said she prepared the accounts from instructions probably provided by Mrs Kambouris, and that the figure for sales included cash sales of which there were no separate bank account or other records. She said that the total figure for sales would have included any money received by Mr Kambouris for selling opal on consignment.
Mr Clark produced a profit and loss statement for the year ended 30 June 2003 based on available business records. This showed sales of only $8,636.00 and a net profit of only $2,192.00. Mr Clark was unable to include any allowance for cash sales, and prepared his accounts without any discussion with Mr or Mrs Kambouris.
Counsel for the applicant, Ms Bean, pointed out that the gross sales figure used by Ms Cook for the following year (i.e. financial year ended 30 June 2004) was demonstrably too low, having regard to the figures later derived by both Ms Cook and Mr Clark from the records of the business, which themselves did not include cash sales. Counsel submitted that I should therefore infer that the gross sales for the financial year ended 30 June 2003 were likely to have been of the order of about double the figure of $78,600.00. Counsel further submitted that Mr Clark had derived a percentage rate of profit from the accounts that he had arrived at by reference to the records of the business, and that I should apply this same percentage rate of profit to an estimate of the gross sales for the year in question.
I do not think that it would be appropriate to infer that the rate of profit deduced by Mr Clark would have applied during the year ended 30 June 2003. That rate of profit took into account a significant level of on-line sales which did not occur in the preceding year. Further, whilst I have decided that Mr Kambouris had ceased to be unemployed from 1 July 2001, I accept that he had to go through a period of learning the state of the market and the prevailing level of prices. It is further likely, and I find, that the volume of his sales would have gradually increased, but would have also been adversely affected by such things as the September 11 terrorists' attacks in the United States of America and the SARS outbreak. According to Mrs Kambouris' witness statement (exhibit R6) the opal industry declined as a result of the SARS outbreak for over six months from January 2003, as Chinese buyers did not come back to Australia during that period.
I have already found above that Mr and Mrs Kambouris' interests in mining claims did not produce income of a level that would disentitle them to Newstart allowance.
The applicant conducted extensive investigations into the financial affairs of Mr and Mrs Kambouris. In addition to copies of bank statements and other records relating to Mr Kambouris' business, copies of statements showing bankcard transactions, the operation of personal bank or building society accounts, and GIRO deposits were tendered. Mr and Mrs Kambouris were cross-examined at length about various entries in those records. However, the records did not suggest that during the period to 30 June 2003 their income must have exceeded the level that would have resulted in a reduction in their entitlement to Newstart allowance or DSP.
One potential indicator of the level of income prior to 30 June 2003 is to examine whether Mr Kambouris made repayments of any loans in the period prior to that date. According to Mr Scott, Mr Kambouris paid interest of $2,055.00 on 6 August 2002 in respect to the period from 15 April to 30 June 2002. The next payment was not until 28 August 2003, when Mr Kambouris paid $10,000.00, being interest from 1 July 2002 to 30 June 2003. He then made no further payments to Mr Scott until 20 July 2004, when he paid a further $30,000.00, being partly for interest and a part repayment.
Mr Kambouris also referred to a further loan of $100,000.00 that he obtained from a Mr Li for the purpose of his chrysoprase mining venture in the 1990's. He said that after this venture collapsed he could have petitioned for his bankruptcy, but did not want to do this, as he wanted to repay his debts. He gave evidence that he commenced repaying the loan from Mr Li in August 2005, at the rate of $833.00 per month, and he did not have the funds to commence repayments before then (see exhibit R2, paragraph 27). In her evidence, Mrs Kambouris seemed unclear as to when the repayments of $833.00 per month commenced, although she was clear that the payments were being made through a bank account on the first of each month. Mr Kambouris' evidence is supported by the copy bank statements for the period from 21 May 2004 to 22 January 2008 (exhibit R10). This shows periodical payment debits on the first day of each month, commencing on 1 August 2005. There is accordingly no evidence of loan repayments that would indicate that Mr Kambouris had a significant level of income in the year ended 30 June 2003.

Section 1237A(1) of the SS Act provides in effect that the Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt.
It was common ground that Mrs Kambouris was advised by a Centrelink officer in June 2002 to stay on benefits until Mr and Mrs Kambouris' business faired. The respondents contended that this constituted an administrative error, and that the debt should be waived pursuant to s 1237A(1).
During the period when they were on benefits, Centrelink periodically sent notices to Mr and Mrs Kambouris advising them of their obligation to notify Centrelink if either of them started any paid work or any form of business or self-employment or if their income changed from the rate last notified to Centrelink (see the various letters from Centrelink reproduced in exhibit A1, at T6 and T7). On my above findings, the income of Mr Kambouris increased during the period from 1 July 2003 to 22 January 2004 to a level such that Mrs Kambouris ceased to be entitled to DSP. Mrs Kambouris did not notify Centrelink of this. I therefore find that even if I accepted the contention that the Centrelink officer's advice constituted an administrative error (and on the facts before me I doubt that this was so), the overpayments to Mrs Kambouris did not result solely from any such error. In any event, I further find that it was not reasonable for Mrs Kambouris to continue to rely on the advice provided by the Centrelink officer without checking her position again before 1 July 2003, and so once again the overpayment did not result solely from an administrative error.
Section 1237AAD of the SS Act gives the Secretary a discretion (which this tribunal standing in the shoes of the Secretary may also exercise) to waive a debt in special circumstances. It provides as follows:

"The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:

(a) the debt did not result wholly or partly from the debtor or another person knowingly:

making a false statement or a false representation; or

failing or omitting to comply with a provision of this Act or the 1947 Act; and_(b) there are special circumstances (other than financial hardship alone) that make it desirable to waive; and__(c) it is more appropriate to waive than to write off the debt or part of the debt."_

The concept of what constitutes "special circumstances" has been discussed in many cases in the Federal Court and in this tribunal. In Re Beadle and Director-General of Social Security (1984) 6 ALD 1 the tribunal was dealing with an application under a different section of the Act which also, however, involved a consideration of whether special circumstances existed. Toohey J said (at page 3):

"An expression such as 'special circumstances' is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special."

In the same case on appeal ((1985) [1984] AATA 176; 7 ALD 670 at 674), the Full Federal Court reiterated the need to avoid limiting the scope of what might constitute special circumstances when it explained:

"We do not think it is possible to lay down precise limits or precise rules. The matter is one for the Director-General bearing in mind the purpose for which the power is given. The phrase 'special circumstances', although lacking precision, is sufficiently understood in our view not to require judicial gloss."

The Full Court also said, at page 675, that they did not consider that any error of law had been made by the tribunal, but continued:

"While we would place less emphasis on one dictionary definition of "special", we are in broad agreement with the approach of the Tribunal and are in agreement with its conclusion."

In a later case, Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541, at page 545, Kiefel J, after referring to the Federal Court's decision in Beadle, observed that special circumstances:

"... would require something to distinguish Mr Groth's case from others, to take it out of the usual or ordinary case ... It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary."

The flexibility of the concept of special circumstances was also referred to in Riddell v Secretary, Department of Social Security [1993] FCA 261; (1993) 42 FCR 443, where the Full Court of the Federal Court said, at page 450:

"Each particular case must be considered on its merits. It is the essential nature of the provision to create a broad discretion to meet the great variety of circumstances which must occur, raising considerations of individual hardship, need, fairness, reasonableness, and whatever else may move an administrator, keeping in mind the scope and purposes of the Act, to make a decision one way or the other."

Finally, I refer to Haidar v Secretary, Department of Social Security [1998] FCA 994; (1998) 52 ALD 255, at 263, where Hill J discussed another section in the SS Act that in effect permitted the abbreviation of a preclusion period in special circumstances. His Honour referred, at 263, to the proposition that the legislature 'was conscious of the possible harshness of a rule structured in an arbitrary way" and therefore provided the means for administrators to alleviate this harshness in an appropriate case but only where there were special circumstances.
Counsel for Mr and Mrs Kambouris contended that there were special circumstances in their case, and he referred to the following matters.

(a) Mr and Mrs Kambouris had undergone a lengthy period of financial hardship during which they had been battling their bank and lost significant property, which brought them to the verge of bankruptcy, which they were determined to avoid.

(d) Mrs Kambouris remained on benefits at the suggestion of Centrelink pending ascertaining whether or not the business would succeed.

(e) When both Mr and Mrs Kambouris went off benefits it was of their own volition.

(f) They sought guidance from Centrelink and made it quite clear to Centrelink what their position was in mid 2002 following the obtaining of various loans to set themselves up in business.

(g) There was no absence of good faith on the part of Mr or Mrs Kambouris.

The contention in paragraph (c) above is inconsistent with my finding as to the date when Mr Kambouris ceased to be unemployed. Further, Centrelink's understanding of the position of Mr and Mrs Kambouris in June 2002 was not fully explored, and so the submission in paragraph (f) above might overstate the position. However, the other matters referred to in the preceding paragraph are consistent with the evidence before me.
I have carefully considered the matters to which counsel referred. Whilst they are matters that may properly be taken into account in considering whether special circumstances exist, they are not in my judgment unusual or uncommon in cases that arise under the SS Act and come before this tribunal. In particular, neither the financial position nor the health problems of the respondents are as difficult as is often the case. I do not think that the matters referred to by counsel, either separately or in combination, constitute special circumstances for the purposes of s 1237AAD(b). Further, I do not think that they demonstrate, or have resulted in, such hardship that it would be appropriate to exercise a discretion to waive any part of the debts arising from overpayments of pension.
Apart from the foregoing matters, Mr and Mrs Kambouris were, as I have mentioned above, notified of their obligation to inform Centrelink of a change in their circumstances, but they failed to inform Centrelink of what, on my above finding, was of their changed level of income in the period 1 July 2003 to 22 January 2004. This did not constitute a failure to comply with the SS Act for the purposes of s 1237AAD(a)(ii), but is a matter that would be relevant to the exercise of discretion under that section if I had found (contrary to my above conclusion) that special circumstances existed. As to this aspect, I repeat my remarks in Re Goldthorpe and Secretary, Department of Employment and Workplace Relations [2007] AATA 1875, where I said, at [58]:

"The failure to give requisite information to Centrelink in response to a requisition is not a breach of the SS Act, but rather, a breach of s 63 of the Social Security (Administration) Act 1999 (Cth) (Administration Act) which (among other things) in effect authorises the Secretary to notify a benefits recipient that he or she is required, within a specified time, to give specified information to the Secretary. Under s 63(4), if the person does not comply with the requirement, the payment that the person is receiving is not payable. It is curious that s 1237AAD(a)(ii) does not refer to a breach of the Administration Act, as well as the SS Act itself. Perhaps this was an inadvertent omission when the SS Act was amended. However, I consider that a breach of this aspect of the Administration Act is a matter that can be taken into account in the exercise of the discretion conferred by s 1237AAD."

The tribunal sets aside the decisions under review, and in place of those decisions, decides that:

(a) the first respondent was not entitled to receive Newstart allowance from 1 July 2001 to 7 June 2002;

(b) the second respondent was not entitled to receive Disability Support Pension from 1 July 2003 to 22 January 2004;

the tribunal remits the matter to the applicant and directs the applicant to calculate the amount of benefits received by the respondents to which they were not entitled having regard to these reasons.

Signed: .....................................................................................

Date/s of Hearing 6 and 8 to 10 August , 10, 13 and 14 September, 3, 4 and 5 December 2007 and 30 January 2008

Solicitor for the Applicant Australian Government Solicitor

Tax Assessment Act 1936

Security (Administration) Act 1999

Appeals Tribunal Act 1975

Kambouris; Secretary, Department of Education, Employment and Workplace Relations and [2008] AATA 221 (20 March 2008)

Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336

Bushell v Repatriation Commission [1992] HCA 47; (1992) 175 CLR 408

Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541

Haidar v Secretary, Department of Social Security [1998] FCA 994; (1998) 52 ALD 255

Northern Territory of Australia v Mengel [1994] NTSC 37; (1994) 95 NTR 8

Rana v University of South Australia [2007] FCAFC 188

Re Goldthorpe and Secretary, Department of Employment and Workplace Relations [2007] AATA 1875

Re Secretary, Department of Family and Community Services and Rolley [1999] AATA 968

Riddell v Secretary, Department of Social Security [1993] FCA 261; (1993) 42 FCR 443

Secretary, Department of Employment and Workplace Relations v Joss [2006] FCA 884; (2006) 152 FCR 541

In an earlier Full Federal Court case, namely McDonald v Director-General of Social Security [1984] FCA 57; (1984) 6 ALD 6, Woodward J said that he thought it was inappropriate to refer to the concept of onus of proof in proceedings in this tribunal. His Honour pointed out (at page 10) that by virtue of s 43 of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act), this tribunal, in carrying out its review, is put in the position of the person who made the relevant decision; that this tribunal must make its own decision based on the material before it, and not the material before the person who made the decision under review; and that there is no presumption that the original decision-maker's decision is correct. He went on to discuss situations where the relevant legislation was not expressed in terms that implied an onus of proof, and said (at page 11):

Kambouris; Secretary, Department of Education, Employment and Workplace Relations and [2008] AATA 221 (20 March 2008)

At a glance

Court

Decision date

Source

Judgment (66 paragraphs)

Legislation Cited (5)

Cases Cited (16)

Kambouris; Secretary, Department of Education, Employment and Workplace Relations and [2008] AATA 221 (20 March 2008)