FEDERAL COURT OF AUSTRALIA Elbehidi v Secretary, Department of Employment [2015] FCA 1229 Citation: Elbehidi v Secretary, Department of Employment [2015] FCA 1229 Appeal from: Elbehidi v Secretary, Department of Employment [2015] AATA 228 Parties: HELAL ELBEHIDI v SECRETARY, DEPARTMENT OF EMPLOYMENT File number: SAD 88 of 2015 Judge: WHITE J Date of judgment: 13 November 2015 Catchwords: SOCIAL SECURITY — appeal from Administrative Appeals Tribunal — pensions, benefits and allowances — Application for Newstart Allowance — applicant operating business that is not making a profit — whether applicant was "unemployed" — discretion available to treat applicant as being unemployed for Newstart Allowance — discretion not exercised — decision under review affirmed. Legislation: Administrative Appeals Tribunal Act 1975 (Cth) s 44 Social Security Act 1991 (Cth) ss 7, 593, 595, 601(1A) Cases cited: De Gregorio v Secretary, Department of Employment and Workplace Relations [2007] AATA 1447 Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577 Haritos v Commissioner of Taxation [2015] FCAFC 92 Louis v Department of Education, Employment and Workplace Relations [2011] AATA 30 McAuliffe v Secretary, Department of Social Security [1991] FCA 268; (1991) 23 ALD 284 Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24 Re Drake v Minister for Immigration and Ethnic Affairs (No 2) [1979] AATA 179; (1979) 2 ALD 634 Secretary, Department of Employment and Workplace Relations v Joss [2006] FCA 884; (2006) 152 FCR 541 Date of hearing: 11 September 2015 Place: Adelaide Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 52 Counsel for the Applicant: The Applicant appeared in person Counsel for the Respondent: Mr A Schatz Solicitor for the Respondent: Australian Government Solicitor IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION SAD 88 of 2015 ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL BETWEEN: HELAL ELBEHIDI Applicant AND: SECRETARY, DEPARTMENT OF EMPLOYMENT Respondent JUDGE: WHITE J DATE OF ORDER: 13 NovemBER 2015 WHERE MADE: ADELAIDE THE COURT ORDERS THAT: 1. The appeal be dismissed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION SAD 88 of 2015 ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL BETWEEN: HELAL ELBEHIDI Applicant AND: SECRETARY, DEPARTMENT OF EMPLOYMENT Respondent JUDGE: WHITE J DATE: 13 NovemBER 2015 PLACE: ADELAIDE REASONS FOR JUDGMENT 1 On 17 April 2015, the Administrative Appeals Tribunal (the Tribunal) affirmed the decision of the Social Security Appeals Tribunal (the SSAT) that the applicant was not entitled to Newstart Allowance in the period from 9 August 2013 to 17 February 2015: Elbehidi v Secretary, Department of Employment [2015] AATA 228. 2 The applicant, who is unrepresented, now appeals to this Court pursuant to s 44 of the Administrative Appeals Tribunal Act 1975 (Cth). That section permits an appeal from the Tribunal on a question of law only. 3 The Amended Notice of Appeal identifies three questions of law. The grounds giving rise to those questions were enlarged in the applicant's Outline of Submissions which he had prepared with some legal assistance. 4 Although counsel for the respondent referred to the decision of the Full Court in Haritos v Commissioner of Taxation [2015] FCAFC 92, he did not submit that the Court should not consider all the matters raised. Nor did he press an Objection to the Competency of the appeal which the respondent had filed in relation to the notice of appeal in its original format. The entitlement to Newstart Allowance 5 The entitlement of an applicant to the Newstart Allowance is governed by ss 593 and 595 of the Social Security Act 1991 (Cth) (the SS Act). Section 593(1) provides (relevantly): (1) Subject to sections 596, 596A, 597 and 598, a person is qualified for a newstart allowance in respect of a period if: (a) the person satisfies the Secretary that: (i) throughout the period the person is unemployed; or (ii) the person is a CDEP Scheme participant in respect of the period; and (b) in the case of a person to whom subparagraph (a)(i) applies—throughout the period, or for each period within the period, the person: (i) satisfies the activity test; or (ii) is not required to satisfy the activity test; and ... 6 The term "unemployed" in s 593(1)(a) is not defined in the SS Act. It has been held to have the meaning of "not engaged in work of a remunerative or potentially remunerative nature", whether in the service of another or in self-employment: Secretary, Department of Employment and Workplace Relations v Joss [2006] FCA 884; (2006) 152 FCR 541 at [13]-[24]. This meaning encompasses the circumstances of a person engaged in activities directed towards the production of income, even if those activities do not bear fruit. The question of whether a person is unemployed in the relevant is a question of fact and degree: McAuliffe v Secretary, Department of Social Security [1991] FCA 268; (1991) 23 ALD 284 at 291-292. 7 In this case, the applicant relied upon the extended meaning of "being unemployed" for which s 595 of the SS Act provides: 595 Persons may be treated as unemployed (1) The Secretary may treat a person as being unemployed throughout a period if: (a) during the period, the person undertakes: (i) paid work that, in the Secretary's opinion, is suitable for the person to undertake; or (ii) any other activity; as a result of which he or she would, but for this subsection, not be taken to be unemployed; and (b) the Secretary is of the opinion that, taking into account: (i) the nature of the work or other activity; and (ii) the duration of the work or other activity; and (iii) any remuneration received for the work or other activity; and (iv) any other matters relating to the work or other activity, or to the person's circumstances, that the Secretary considers relevant; the activity should be disregarded. ... (2) A person complying with a Newstart Employment Pathway Plan, or with a requirement under subsection 601(1A), may be treated by the Secretary as being unemployed. (3) In deciding whether to treat a person as being unemployed, the Secretary is to take into account: (a) the nature of the activity undertaken by the person so as to comply with a requirement under subsection 601(1A) (activity test) or a requirement in a Newstart Employment Pathway Plan; and (b) the duration of the activity; and (c) any other matters relating to the activity that the Secretary considers relevant. 8 As can be seen, s 595(1) authorises the Secretary in some circumstances to treat a person as unemployed even if the person has during the period in question engaged in remunerative work or activity. 9 It was the extended meaning of being unemployed for which s 595 provides on which the applicant relied in the present case. The applicant's circumstances 10 The factual circumstances giving rise to the applicant's claim were not in dispute. In the period for which the applicant sought the Newstart Allowance, he operated in his own right a pizza shop styled "Pharaoh's Gourmet Pizza". He commenced doing so on 2 January 2012. The applicant used premises which he had leased for the purpose, executing a three year lease. The shop was open for business from 5 pm to 8.30 pm on Tuesdays, Wednesdays and Thursday and from 5 pm to 9.30-10.30 pm on Fridays, Saturdays and Sundays. In effect, the shop was open for business between 24 and 27 hours each week. 11 The food menu in the shop comprised pizzas, pasta, garlic bread and drinks. The applicant was responsible for opening and closing the shop and he prepared the pizzas and other food he sold in it. In addition, he performed work outside the opening hours such as acquiring the food, drinks and ingredients for food sold in the shop. Further still, the applicant performed the cleaning of the premises and the equipment which he used. For a short time, he was assisted in some aspects of this work by his former wife. 12 Customers could place orders for food in person or by the internet or by telephone. 13 Despite the applicant's endeavours and his attempts at marketing the business, it was unsuccessful. The expenses he incurred in the business exceeded the income he derived from it. The applicant said that he had not derived any net income in the tax years ending on 30 June 2013 and 30 June 2014. 14 Before commencing Pharaoh's Gourmet Pizza, the applicant had been unemployed and had been in receipt of the Newstart Allowance since 3 September 2010. In fact, he continued to receive the Newstart Allowance until 18 September 2012. 15 For a period of about seven weeks commencing in August 2012, the applicant had also had casual work at a bakery. He would start at 5 or 5.30 am and continue working until the tasks for the day had been completed. Sometimes that was at 9 am, sometimes at 11 am and sometimes at 12 noon. The applicant would then go to Pharaoh's Gourmet Pizza shop and commence his activities there. 16 The applicant gave up operating Pharaoh's Gourmet Pizza in February 2015 because it was unprofitable. He then commenced receiving the Newstart Allowance again and entered into a Newstart Employment Pathway Plan (NEPP) on 26 February 2015. The Tribunal decision 17 The Senior Member in the Tribunal considered that the applicant was not unemployed in the sense contemplated by s 593. He said: [16] As the term "unemployed" is not defined in the Act it must have its ordinary meaning under the law. The applicant operates a pizza takeaway business, "Pharaoh's Gourmet Pizza". He is a sole trader or is self-employed and he works in the business six days each week. In my view, he is not "out of work" or "without work or employment". Clearly he has work and, on the ordinary meaning of "unemployed", he is not unemployed. ... [18] When referred to his etax individual tax returns for 2013 and 2014, Mr Elbehidi argued that the returns did not show that he derived income in those years and that he was therefore unemployed. I do not accept this argument. It is clear from the returns that he was employed (or self-employed) in a pizza shop business at 2/92-94 Saint Bernards Road, Magill as a sole trader. He derived an income from the shop business, but he also incurred losses arising from incurring expenses in conducting the business. In these circumstances, he was not "unemployed" throughout the relevant period which, as it has transpired, was the period before he commenced receiving newstart allowance on 18 February 2015, that is, from 9 August 2013 to 17 February 2015. 18 The Senior Member also considered that the applicant did not come within the extended meaning of being unemployed for which s 595 provides. He referred to De Gregorio v Secretary, Department of Employment and Workplace Relations [2007] AATA 1447 in which Hack DP said: [10] It is finally necessary to refer to s 595(1) and the discretion in that section to treat a person as being unemployed, notwithstanding that the person undertakes paid work. I doubt whether this sub-section has any application to a person in the position of Ms De Gregorio. The language of the statute (and the policy manual) suggests that it has application to occasional and incidental periods of paid work rather than the type of sustained and full-time employment engaged in by Ms De Gregorio in her own business. Even if the sub-section were to have application I would not regard this matter as one where the exercise of the discretion was warranted. 19 The Senior Member then concluded: [20] In considering the application of s 595 of the Act, I note that Mr Elbehidi commenced to be self-employed on 27 February 2011 on a basis that could not be described as "occasional" or "incidental" and where he attended to the shop business of "Pharaoh's Gourmet Pizza" for more than 30 hours per week. In these circumstances, I would not regard this matter as one where the exercise of the discretion is warranted. 20 The reference to 27 February 2011 in this paragraph is plainly an error. The correct date is 2 January 2012. Nothing turns on this mistake by the Tribunal. The application of s 595 21 The applicant's first ground of appeal was that the Senior Member had, in two respects, applied s 595 of the SS Act incorrectly. 22 First, the applicant contended that the Senior Member had failed to consider and take into account the nature of his activities in the pizza shop, as required by s 595(3)(a). Secondly, the applicant contended that the Senior Member had failed to consider the lack of income generated by his activities in the pizza shop. He contended that this was also a relevant matter under s 595(3)(a). 23 In my opinion, the applicant's reliance upon s 595(3)(a) is misplaced. That provision requires the Secretary to have regard to activities in which a person engages in compliance with a requirement imposed under s 601(1A) of the SS Act, or in a NEPP. Section 601(1A) provides for one means by which a person may satisfy the "activity test" to which s 593(1)(b) refers. (1A) A person also satisfies the activity test in respect of a period if: (a) the Secretary is of the opinion that, throughout the period, the person should undertake particular paid work, other than paid work that is unsuitable to be done by the person; and (b) the Secretary notifies the person that the person is required to act in accordance with that opinion; and (c) the person complies, throughout the period, with the Secretary's requirement. As can be seen, subs (1A) has the effect that a person will satisfy the activity test if the person complies with a requirement imposed by the Secretary that the person engage in particular paid work. 24 There is no suggestion that the Secretary had given the applicant any notification under s 601(1A) or that he was performing his activities in Pharaoh's Gourmet Pizza pursuant to a notification from the Secretary. Further, the applicant did not enter into a NEPP until 26 February 2015. He was not complying with an NEPP during the period to which the disputed entitlement for the Newstart Allowance related. Accordingly, the Senior Member did not err by failing to take into account a matter required by s 595(3)(a). 25 However, the respondent accepted that s 595(1)(b) and (c) did require the Tribunal to consider the nature, duration, remuneration and any other relevant matters relating to the applicant's work in the pizza shop. 26 The respondent submitted that the Tribunal had had regard to these matters. That submission should be accepted as the Senior Member referred to, and made findings about, the applicant's operation of the pizza shop (in [7]-[14]). Much of the summary given earlier in these reasons is derived from these passages in the Tribunal's reasons. 27 The Senior Member referred expressly to the applicant's taxation returns for the financial years ending on 30 June 2013 and 30 June 2014 and noted the applicant's submission that, because he had traded at a loss, it could not be said that he had derived income in either of those years. He did not regard that as a conclusive consideration. The Senior Member noted, when considering whether the applicant was unemployed in the ordinary sense, that a person may be employed even though his or her activities do not produce an income or profit. This was a correct approach and in accordance with the authorities. 28 It is true that the Senior Member did not refer again expressly to the question of remuneration when considering whether the extended meaning of being unemployed contained in s 595 should be applied in the applicant's case. Instead, he considered that the applicant did not come within s 595 because he was in self-employment and on a basis which was not "occasional" or "incidental" as it involved his attendance at the shop for more than 30 hours per week. 29 I do not think it can be concluded that the Senior Member overlooked, when considering the application of s 595, that the applicant did not receive remuneration. It was the absence of net income from the shop which formed the very basis of the applicant's claim. It should not readily be supposed that the Senior Member overlooked that. Further, having referred expressly to the applicant's submission based on the absence of a net income in relation to s 593, it is not readily to be supposed that the Senior Member overlooked the same submission in relation to the applicant's reliance on s 595. 30 In my opinion therefore, neither aspect of the first ground of appeal is made out. The Guide to Social Security Law 31 The applicant's second ground of appeal was that the Tribunal had failed to take into account the Guide to Society Security Law (the Guide) published by the Department of Social Security. The Guide had been provided by the Secretary pursuant to s 7 of the SS Act to guide his or her delegates in making decisions under the Act. 32 The applicant contended that the Tribunal had been required "in accordance with s 595(1A) of the [SS Act]" to take account of the Guide and asserted that the Tribunal's failure to take account of the Guide had led it to determine, wrongly, that he was not unemployed. 33 The applicant's Outline of Submissions identified particular portions of Pt 1.1.U.30 in the Guide as the matters to which the Tribunal should have had regard. These portions were in the nature of an overview of the operation of s 595 of the SS Act and an explanation of the discretion for which it provided: Section 595 gives the Secretary the discretion to treat a person as unemployed [when] the person would not be regarded as unemployed in the general sense. Use of the discretion supports the objective of increasing or maintaining a person's engagement in the labour market. The most common use of the discretion is to enable a person who undertakes paid work to continue to be regarded as unemployed. A person on NSA is generally required to look for and undertake suitable work. The NSA income test is intended to support this by ensuring that people benefit financially by taking up paid work. This objective would be undermined if a person in paid employment could not be regarded as unemployed, since the person would not qualify for NSA even if they had an entitlement to part-rate NSA under the income test. The discretion to treat an employed person as unemployed for NSA purposes should therefore be exercised in such a way as to further the objective of increased work force participation, rather than providing a disincentive for people to increase their hours of work. Although employment is actively encouraged for NSA recipients, the section 595 discretion is not always exercised to disregard employment. For example, a person who is working less than the number of hours required to satisfy their mutual obligation requirements, and who is not willing to look for or undertake alternative work, and not be considered unemployed. As a general rule, however, where the person has employment and also satisfies mutual obligation requirements, the employment will be disregarded. Section 595 is also used to continue to treat as unemployed a person who is undertaking an activity the Secretary considers appropriate to disregard. (Emphasis added) The applicant emphasised the italicised portions. 34 As to the requirement for the Tribunal to have regard to the Guide, the applicant relied on Louis v Department of Education, Employment and Workplace Relations [2011] AATA 30 in which Senior Member Isenberg said: [10] The Secretary has promulgated a policy document, the Guide to Society Security Law (the Guide), to assist decision makers in the administration of the Act. In exercising a discretion such as s 595, the Tribunal should take into account executive policies relevant to the matter unless there are cogent reasons for not doing so in a particular case. Isenberg SM cited the decision of Brennan J in Re Drake v Minister for Immigration and Ethnic Affairs (No 2) [1979] AATA 179; (1979) 2 ALD 634 as the authority for this proposition. 35 In Re Drake (No 2), Brennan J considered the extent to which the Tribunal should have regard to a declared general policy of a Minister when exercising its jurisdiction under the Administrative Appeals Tribunal Act to review that decision. Brennan J concluded at 645: When the Tribunal is reviewing the exercise of a discretionary power reposed in a Minister, and the Minister has a adopted a general policy to guide him in the exercise of the power, the Tribunal will ordinarily apply that policy in reviewing the decision, unless the policy is unlawful or unless its application tends to produce an unjust decision in the circumstances of the particular case. Where the policy would ordinarily be applied, an argument against the policy itself or against its application in the particular case will be considered, but cogent reasons will have to be shown against its application, especially if the policy is shown to have been exposed to parliamentary scrutiny. 36 In an earlier decision involving the same applicant, Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577, Bowen CJ and Deane J made the following observations at 590 concerning the account which the Tribunal may take of a relevant government policy: In a matter such as the present where it was permissible for the decision-maker to take relevant government policy into account in making his decision, but where the Tribunal is not under a statutory duty to regard itself as being bound by that policy, the Tribunal is entitled to treat such government policy as a relevant factor in the determination of an application for review of that decision. It would be contrary to common sense to preclude the Tribunal, in its review of a decision, from paying any regard to what was a relevant and proper factor in the making of the decision itself. If the original decision-maker has properly paid regard to some general government policy in reaching his decision, the existence of that policy will plainly be a relevant factor for the Tribunal to take into account in reviewing the decision. On the other hand, the Tribunal is not, in the absence of specific statutory provision, entitled to applicate its function of determining whether the decision made was, on the material before the Tribunal, the correct or preferable one in favour of a function of merely determining whether the decision made conforms with whatever the relevant general government policy might be. 37 The submissions of both parties were made on the implicit assumption that these statements of principle applied in respect of the Guide. 38 However, the conclusion that the Tribunal will ordinarily have regard to a policy applied by the original decision-maker is not the same as a conclusion that the Tribunal is bound to have regard to that policy so that a failure to do so will amount to an error of law in the sense discussed in Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24 at 39. The applicant did not point to any feature of the SS Act indicating that a decision-maker is bound to consider the Guide, and none has been identified. 39 I observe that in their respective decisions concerning the applicant's claim, both the Authorised Review Officer and the SSAT did refer to the Guide. 40 Subject to one qualification, the applicant is correct in his submission that the Tribunal's reasons do not contain any express reference to the Guide. That may be some indication that the Tribunal did not have regard to the Guide, but it is not conclusive. 41 The more significant consideration is whether the omission of the Tribunal to mention the Guide is suggestive of a failure by it to appreciate that s 595 permitted the exercise of a discretionary judgment or failure by it to recognise principal matters bearing upon the formation of that discretionary judgment. 42 It cannot be concluded that the Tribunal failed to recognise that s 595 bestowed a discretion. It referred expressly, in [5] and [19] of its reasons, to the discretion conferred by s 595. 43 It is apparent that the Tribunal regarded the exercise of the discretion as being informed by the statement of Hack DP in De Gregorio quoted earlier in these reasons. In that passage, Hack DP drew implications as to the scope and purpose of the discretion from the language of the SS Act itself and from "the policy manual". On my understanding, the "policy manual" to which Hack DP referred is the Guide. It is evident that Hack DP considered that, ordinarily, the s 595 discretion could not be exercised appropriately in relation to a person engaged in their own business in a sustained way. The Senior Member in the present case adopted the same approach. However, the specific mention of one particular matter in the circumstances of this case is not an indication that other matters which may also have been relevant were not considered. This Court should not readily reason that, simply because a matter is not mentioned, it was not considered. 44 The range of matters to which the Secretary may have regard, by virtue of s 595(1)(b), is diverse. That being so, it is probable that decision-makers will mention those matters which they regard as pertinent in the particular circumstances of an applicant's case, and not every possible matter. That appears to be this case. I note again that the Tribunal was not bound to consider the passages in the Guide to which the applicant referred. This ground of appeal fails. Complete reliance on De Gregorio? 45 The applicants third ground of appeal was that the Senior Member had erred in placing "complete reliance" on the decision of Hack DP in De Gregorio, instead, as the applicant contended, on the Guide. 46 The applicant referred to a passage in the reasons of Senior Member Isenberg in Louis containing, he submitted, a list of the matters which the Tribunal should have addressed. The list was, in effect, a summary of the matters mentioned in s 595(1) together with references to "the sufficient work test" and "the activity test". As I understand it, the "sufficient work test" is that contemplated by s 595(3)(a). For the reasons given earlier, that provision had no application in the present case. Nor did the Tribunal have to have regard to the "activity test" to which s 593(1)(b) refers. That was a cumulative requirement to be satisfied in the event that the applicant was found to be "unemployed". 47 It is true that the Tribunal was influenced by the approach of Hack DP in De Gregorio, but a fair reading of the Tribunal's reasons indicates that it did not place "complete reliance" on that decision. Instead, the Tribunal exercised the discretionary judgment contemplated by s 595 having regard to the applicant's circumstances as well as the considerations mentioned in De Gregorio. The Tribunal concluded that it was the nature and extent of his involvement in, and commitment to, the pizza shop which meant that the discretion should not be exercised in his favour. Other matters 48 The applicant's submissions placed considerable reliance on the decision in Louis and seemed to suggest that the circumstance of the applicant in that case could not be distinguished from his own. The circumstances in Louis have some similarities with those of the applicant. Ms Louis sought the payment of Newstart Allowance in respect of a period during which she had conducted a sandwich shop business. That business too had not been profitable and Ms Louis made a loss. However, the circumstances in Louis differ in at least one significant respect from those of the applicant. That is that Ms Louis was, at relevant times, complying with applicable activity agreements and employment pathway plans into which she had entered with the Secretary. Ms Louis was accordingly a person to whom s 595(2) of the SS Act applied. In that circumstance, there was no irrationality in the Tribunal reaching a different conclusion in the applicant's case from that which the Tribunal had reached in the case of Ms Louis. 49 Next, the applicant submitted that the Tribunal had erred in law by failing to have regard to the hardship which the cessation of the Newstart Allowance had caused him. The difficulty for the applicant with this submission is that the hardship which being deprived of the Newstart Allowance would cause him was not a matter which the Tribunal was bound in the Peko-Wallsend sense to consider. Further, and in any event, it is difficult to see how the circumstance that the applicant suffered hardship by being deprived of an allowance to which he was found not to be entitled could constitute an error of law. 50 Next, the applicant likened his circumstances to those of persons doing voluntary work or work experience. He submitted that the Tribunal had erred by failing to have regard to this consideration. It may be doubted whether, as a matter of fact, this characterisation of the applicant's activities in Pharaoh's Gourmet Pizza is accurate but, for present purposes, any failure by the Tribunal to adopt the characterisation cannot be regarded as an error of law. 51 Next, the applicant attached significance to the fact that he had been granted Newstart Allowance again with effect from 18 February 2015 even though he had not been able to dispose of Pharaoh's Gourmet Pizza until May 2015. This submission overlooked that the applicant had agreed to commence on a NEPP on 18 February 2015, with effect from 26 February 2015. Conclusion 52 For these reasons, I consider that the applicant has not made good any of his grounds of appeal. The appeal should be dismissed. I certify that the preceding fifty-two (52) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice White. Associate: Dated: 13 November 2015