Abouelola and Secretary, Department of Education, Training and Youth Affairs [1999] AATA 26 (20 January 1999)

Last Updated: 4 February 2009

Administrative
Appeals
Tribunal

DECISION AND REASONS FOR DECISION [1999] AATA 26

ADMINISTRATIVE APPEALS TRIBUNAL )
) No N98/465
GENERAL ADMINISTRATIVE DIVISION )

Re AHMED ABOUELOLA
Applicant

And SECRETARY, DEPARTMENT OF EDUCATION, TRAINING AND YOUTH AFFAIRS
Respondent

DECISION

Tribunal R P Handley, Senior Member

Date 20 January 1999

Place Sydney

Decision In accordance with s 43 of the Administrative Appeals Tribunal Act 1975, the Tribunal:

1. Sets aside the decision of the Social Security Appeals Tribunal dated 1 April 1998.
2. In substitution decides:
   • (a) The overpayment of AUSTUDY received by the Applicant between 2 July and 16 July 1997 was $6,674.56;
   • (b) An amount of $942.12 of the debt arising from the overpayment is waived under s 289(1) of the Student Assistance Act 1973; and
   • (c) In addition, the Applicant was underpaid $937.28 of his AUSTUDY allowance for the period 30 July 1997 to 22 October 1997.
     

(Sgd) R P Handley
..............................................
SENIOR MEMBER

CATCHWORDS

EDUCATION - student assistance - AUSTUDY - overpayment - recovery - waiver - administrative error - notification of part of debt within 6 weeks - remainder of debt not notified - - whether “advance” payment or overpayment - part of debt waived - additional underpayment also found

Student Assistance Act 1973, ss 289(1), 289(1A), 290C

Beadle v Director-General of Social Security [1984] AATA 176; (1985) 7 ALD 670

Re Beadle and Director-General of Social Security 91984) 6 ALD 1

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

Secretary, Department of Social Security v Hales (1998) 153 ALR 259

REASONS FOR DECISION

20 January 1999 R P Handley, Senior Member

1. This is an application by Ahmed Abouelola (“the Applicant”) for a review of a decision of the Social Security Appeals Tribunal (“the SSAT”) dated 1 April 1998 affirming a decision of a delegate of the Secretary of the Department of Employment, Education, Training and Youth Affairs, now the Department of Education, Training and Youth Affairs, (“the Respondent”), and a review officer, to raise and recover an overpayment of AUSTUDY of $5,737.28.
2. At the hearing, the Applicant was self-represented and the Respondent was represented by Hervee Dejean of the Australian Government Solicitor’s office. The Tribunal had before it the documents provided pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (“the T Documents”).

BACKGROUND

3. On 28 January 1997, the Applicant lodged a claim for AUSTUDY for first semester 1997 to undertake Course 3601, Certificate in Information Technology, at the Dapto Campus of the Illawarra Institute of Technology (T3). On 3 February 1997, the Applicant also lodged a claim for Dependent Spouse Allowance (“DSA”) in respect of his wife, Hala Abouelola (T5). Both claims were granted (T4 and T7 respectively). On 7 February 1997, the Applicant was notified that he had been granted an Education Supplement loan by the Commonwealth Bank (T10).
4. In June 1997, the Applicant applied for AUSTUDY for second semester 1997 to undertake Course 6660, Certificate in Tour Directing and Guiding, also at the Dapto Campus of the Illawarra Institute of Technology (T12). On 7 July 1997, the Applicant also lodged a claim for DSA for second semester (T15). In the course of processing the Applicant’s claims, a computer error occurred resulting in an overpayment, calculated by the Respondent to be $5737.28, being a backpayment of DSA to February 1997. Part of the overpayment - $2,517.93 - was immediately recovered and a further sum has since been recovered by withholdings from the Applicant’s AUSTUDY payments during the remainder of 1997 and 1998. The Applicant is currently undertaking a Diploma in Hospitality Management at the Wollongong Campus of the Illawarra Institute of Technology.
5. The Respondent notified the Applicant of the raising and recovery of an overpayment by letter dated 11 July 1997 (T16), a few days before the actual overpayment occurred. On 20 October 1997, the Applicant sought a review of the decision (T21). This was conducted by a review officer (T23) who, on 11 November 1997, affirmed the decision. On 1 April 1998, the decision was also affirmed by the SSAT (T2). On 27 April 1998, the Applicant lodged an application for a review by the Tribunal.

APPLICABLE LEGISLATION

6. Although the Applicant does not dispute that he received an overpayment of AUSTUDY, he disputes the amount of the overpayment. He also contends that the resulting debt should not be recovered.
7. The relevant provisions of the Student Assistance Act 1973 (“the Act”) (in accordance with the transitional provisions contained in subitem 133(3) of the Social Security Legislation Amendment (Youth Allowance Consequential and Related Measures) Act 1998) are as follows:

289 (1) Subject to subsection (1A), 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.
289 (1A) Subsection (1) only applies if:
(a) the debt is not raised within a period of 6 weeks from the first payment that caused the debt; or
(b) if the debt arose because a person has complied with a notification obligation, the debt is not raised within a period of 6 weeks from the end of the notification period;
...
290C 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:

• (i) making a false statement or false representation; or
• (ii) failing or omitting to comply with a provision of this 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.

8. AUSTUDY Regulation 12C enables the Respondent to make a new determination if it receives information indicating that a previous determination of a student’s entitlement to AUSTUDY was incorrect. If, as a result, a student has received more than their proper AUSTUDY entitlement, Regulation 12E provides that the difference is a student assistance overpayment.

THE APPLICANT’S CASE

9. The Applicant said he could not understand how the Respondent had calculated the overpayment. The figures set out in Attachment A of the Respondent’s Statement of Facts and Contentions did not correspond with the figures shown in Vanessa Sturman’s calculations at A103 and 104 in the T Documents. The Applicant also noted that the figures for particular fortnights in the second semester of 1997 could not be explained by reference to the figures for the first semester.
10. The Applicant expressed his frustration at the Respondent’s failure to provide him with an intelligible explanation for their calculations. When he was first notified that his AUSTUDY payments in the second semester of 1997 would only be $487.35 per fortnight, he queried this with the Respondent because this would not be enough for the support of his family. He spoke to a departmental officer at the Wollongong Student Services Centre who was unable to provide him with an explanation. He asked to speak to the Manager but was referred to Vanessa Sturman, an authorised review officer. She recommended that a proportion of the debt should be waived, but this recommendation was rejected by a senior departmental officer.
11. The Applicant noted that Ms Sturman’s calculations and the waiver recommendation and rejection (T28 to T31) were not made available to the SSAT, and the Applicant was not aware of these until he received a copy of the T Documents for the purpose of the Tribunal proceedings.
12. The Applicant said his dealings with the Respondent over this matter had caused him and his wife significant annoyance, upset and stress. Although he had done nothing wrong, his treatment by departmental officers led him to think he was being discriminated against. He considered their treatment of him should have been more lenient when the overpayment had not been his fault. In late October 1997, the Respondent had sought to increase withholdings from his allowance to $174.48 per fortnight. When the Applicant protested, this was reduced to $100 per fortnight, but the Applicant said this was still a large sum to withhold from his allowance.
13. The Applicant acknowledged he had received a lump sum payment of allowance in July 1997. He did not spend this sum all at once - he used it to pay bills and kept a part in hand to top up his fortnightly payments which had been reduced to $487.35. Since July 1998, the Applicant and his wife have received separate allowances. The Respondent now only makes a withholding of $57 per fortnight from the Applicant’s allowance.
14. The Applicant said he had worked for BHP for 22 years. He hopes the Workers’ Compensation claim in respect of his left arm will soon be settled. The Applicant owns his house. He has the usual expenses associated with maintaining a family, a house and car. The Applicant and his wife have two children: Nashua aged 10 and Mohamed, aged 20 months. His wife is not currently working.
15. The Applicant completed a Certificate in Tour Directing and Guiding at the Dapto campus of the Illawarra Institute of Technology in late October 1997. At the beginning of 1998 he enrolled in a two year, full-time program at the Wollongong campus for a Diploma in Hospitality Management.

THE RESPONDENT’S CASE

16. Ms Dejean explained that the overpayment calculations were most easily understood by looking at the total payment for the period in question, rather than by attempting to reconcile the payments on a fortnight by fortnight basis. She noted that between 12 February 1997 and 22 October 1997 the Applicant had actually received payments totalling $15,524.00. This figure took into account the overpayments totalling $5,737.28 made as a result of computer error in July 1997, less $2,517.93 recovered from the overpayment on 16 July 1997, and withholdings imposed from 30 July 1997 to 22 October 1997, giving a total of $3,219.56 having been recovered. The overpayment outstanding at 22 October 1997 was, therefore, $5,737.28 less the $3,219.56 recovered, resulting in a balance of $2,517.72.
17. Ms Dejean said the Applicant’s actual entitlements for this period were set out in Attachment B to the Respondent’s Statement of Facts and Contentions. She said the increase in the AUSTUDY supplement actually paid to the Applicant from 16 July 1997 (see Attachment A) was explained by the failure to make a full supplement payment on 2 July 1997. The decrease in the Applicant’s AUSTUDY grant was explained by the Respondent’s imposing a withholding, together with the Respondent’s having made the Applicant an advance payment of AUSTUDY in July 1997, apart from the overpayments. This advance payment had the effect of reducing the Applicant’s AUSTUDY grant by a proportional amount of the advance over the fortnights 16 July 1997 to 8 October 1997.
18. The Tribunal asked the Applicant whether he had been notified or aware of an advance payment being made in July 1997. He replied that he had no knowledge of any advance payment being made.
19. Ms Dejean submitted that the overpayment calculations were correct. She was not aware that the Applicant was still subject to withholdings from his AUSTUDY allowance. Her instructions were that withholdings had been stopped in April 1998 pending the outcome of the Tribunal proceedings. At that time, the outstanding debt was $1,081.61.
20. Ms Dejean submitted that waiver under s 289(1) was not available in the Applicant’s case, pursuant to s 289(1A), since the Respondent had notified the Applicant of the overpayment by letter dated 11 July 1997, before the overpayment on 16 July 1997 occurred.
21. With regard to waiver on the ground of special circumstances, Ms Dejean submitted the Applicant’s financial situation could not be said to be unusual or extraordinary. She noted the Respondent had on two occasions agreed to reduce the withholdings from the Applicant’s AUSTUDY allowance, in October 1997 from $174.49 to $100 per fortnight, and, in July 1998 to $57 per fortnight. Similarly, while she acknowledged the stress caused to the Applicant as a result of the Respondent’s computer error, she said stress in such a situation was not unusual or extraordinary and could not be said to constitute special circumstances.

CONSIDERATION OF LAW AND FINDINGS

22. The first issue for the Tribunal is the amount of the overpayment. The Applicant did not dispute that he received an overpayment but he did dispute its calculation and amount. The Tribunal relied on Attachment A (to the Respondent’s Statement of Facts and Contentions) which appears to be an accurate tabulation of the AUSTUDY payments received by the Applicant during the period 12 February 1997 to 22 October 1997. It is clear from this Table that computer generated errors in the Applicant’s payments occurred on 2, 3 and 16 July 1997. The two paydays in this period are 2 and 16 July.
23. Between 2 July 1997 and 16 July 1997, the Applicant received AUSTUDY grant payments totalling $7,569.26 ($504.89 on 2 July, $1041.60 on 3 July and $6022.77 on 16 July). In this period, the Applicant should only have received two grant payments of $447.35 each (on 2 July and 16 July), giving a total of $894.70. He was therefore overpaid $6,674.56. On 11 July 1997, the Respondent notified the Applicant of an overpayment of $5,732.44 (T16). The difference between the actual overpayment, and that notified, is $942.12. (The Tribunal notes that some of the figures in the notification dated 11 July 1997 do not correspond with those in Attachment A.) The Respondent contends this additional amount of $942.12 was money the Applicant was entitled to, which was paid by way of an advance.
24. Between 30 July 1997 and 22 October 1997, the Applicant’s fortnightly AUSTUDY payments were reduced by a total of $937.28 to recover this “advance”, together with additional withholdings being made to recover the overpayment. The Applicant neither requested nor was notified that he had been granted an “advance” payment of $942.12. In the Tribunal’s opinion, the $942.12 paid to the Applicant in July 1997 is better characterised as an overpayment, of which the Applicant was not notified. Thus, the Applicant was underpaid $937.28 between 30 July 1997 and 22 October 1997, being the amount by which his entitlement was reduced to recover the overpayment of $942.12 of which he was never notified.
25. The second issue for the Tribunal to determine is whether the debt should be recovered, and, in particular, whether there are grounds upon which recovery of the debt should be waived. The relevant waiver provisions in the Applicant’s case are ss 289(1) and 290C of the Act. Under s 289(1), the Secretary must waive recovery of the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth, provided the debtor received the payments which gave rise to the debt in good faith. However, s 289(1A) provides that s 289(1) only applies if the debt is not raised within a period of six weeks from the first payment that caused the debt. As already mentioned, the Applicant was notified of an overpayment $5,732.44 by letter dated 11 July 1997 (T16). In fact, the overpayment was $6,674.56.
26. There is no dispute that the overpayments were solely the result of the Respondent’s administrative error. Pursuant to s 289(1A), while waiver is not available in respect of $5,732.44 of the overpayment because the Applicant was notified of this overpayment within six weeks of payment, the Applicant was never notified of the additional $942.12 overpayment which must therefore be waived under s 289(1).
27. Waiver may also be available under s 290C. Three conditions must be satisfied for this discretion to waive recovery of all or part of a debt to be exercisable. First, the Applicant (there being no other person involved in this case) must not knowingly have made a false statement or representation, or failed or omitted to comply with a provision of the Act. There is no suggestion in this case that the Applicant made a false statement or representation, or failed or omitted to comply with a provision of the Act.
28. The second requirement of s 290C is that “there are special circumstances (other than financial hardship alone) that make it desirable to waive” recovery of the debt. Although the Act provides no guidance as to the meaning of “special circumstances”, this has been the subject of statutory interpretation by the Federal Court and the Tribunal.
29. The leading case is probably Beadle v Director-General of Social Security [1984] AATA 176; (1985) 7 ALD 670, a decision of the Full Federal Court. In Beadle, the Court did not think it possible to lay down precise limits or precise rules. It would depend upon the circumstances of a particular case as to whether they constituted special circumstances. Moreover, even though the phrase “special circumstances” lacks precision, it “is sufficiently understood in our view not to require judicial gloss” (at 228).
30. The Court affirmed the decision of the Tribunal under review in that case, Re Beadle and Director-General of Social Security (1984) 6 ALD 1, in which the Tribunal, whilst acknowledging that the phrase ‘special circumstances’ is “incapable of precise or exhaustive definition”, said, nevertheless, that the circumstances “must have a particular quality of unusualness that permits them to be described as special” (at 3).
31. In Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541 at 545, Keifel 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.

32. In the Federal Court decision in Secretary, Department of Social Security v Hales (1998) 153 ALR 259, French J said of the “concept” of special circumstances in the parallel provision in the Social Security Act 1991, s 1237AAD:

The evident purpose of s 1237AAD is to enable a flexible response to the wide range of situations which could give rise to hardship or unfairness in the event of a rigid application of a requirement for recovery of a debt. It is inappropriate to constrain that flexibility by imposing a narrow or artificial construction upon the words.

33. The Tribunal accepts that the Applicant’s financial circumstances are straitened, and that the events following the Respondent’s computer generated error of July 1997 caused the Applicant budgeting problems. The Tribunal also notes that the raising and recovery of the overpayment has been a confusing, frustrating and stressful process for the Applicant when what occurred was no fault of his. However, bearing in mind the Tribunal’s decision to waive a proportion of the debt under s 289(1), above, in the Tribunal’s view the Applicant’s circumstances are not otherwise so unusual as to amount to special circumstances. It was, therefore, unnecessary for the Tribunal to consider the third requirement of s 290C, whether it is more appropriate to waive than to write off the debt or a part of the debt.
    

I certify that this and the 11 preceding pages are a true copy of the decision and reasons for decision herein of Senior Member R P Handley.

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

Associate

Date/s of Hearing 15 December 1998

Date of Decision 20 January 1999

Unrepresented Applicant Ahmed Abouelola

Solicitor for the Respondent Australian Government Solicitor