Tierney and Department of Family and Community Services [2002] AATA 25 (17 January 2002)

Last Updated: 17 January 2002

DECISION AND REASONS FOR DECISION [2002] AATA 25

ADMINISTRATIVE APPEALS TRIBUNAL )

) No Q2001/560

GENERAL ADMINISTRATIVE DIVISION )

Re MICHAEL TIERNEY

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Ms J Cowdroy, Member

Date 17 January 2002

Place Brisbane

Decision The Tribunal affirms the decision under review.

..............................................

J Cowdroy

Member

CATCHWORDS

SOCIAL SECURITY - Austudy - overpayment

Social Security Act 1991 ss 568, 569, 569A, 1236, 1237A, 1237AAD

Callaghan and Secretary, Department of Social Security (AAT 11404, 18 November 1996)

Beadle v Director-General of Social Security (1985) 7 ALD 670

Secretary, Department of Social Security v Hales [1998] 219 FCA

REASONS FOR DECISION

17 January 2001 Ms J Cowdroy, Member

BACKGROUND TO THE APPLICATION

1. By decision dated 23 May 2001, the Social Security Appeals Tribunal affirmed a decision made by Centrelink on 2 January 2001 to raise and recover $2283.34, being an overpayment of Austudy.

2. The Tribunal heard the matter on 23 November 2001. The applicant appeared in person and gave evidence. Miss J Dwyer represented the respondent.

APPLICANT'S EVIDENCE & SUBMISSIONS

3. The applicant was in receipt of Austudy for studies towards a Bachelor of Architecture. He was undertaking three subjects, each with a value of 10 credit points, which was three quarters of a full study load. On 3 April 2000 he cancelled his enrolment in one subject.

4. Prior to the cancellation he had contacted the call centre at Centrelink to ascertain what documentation he needed to apply for Austudy at the concessional rate. He understood that he would still be entitled to Austudy payment if he were undertaking 66 per cent of the usual study load. He was not sure whether the concessional rate of study was calculated on the workload for each semester or over the entire year.

5. He had been informed by Centrelink that he needed to supply a letter from the Dean of the Faculty stating that his study programme had changed. He supplied this to the South Brisbane office of Centrelink, along with a handwritten note written on an envelope advising that he had changed his enrolment to two subjects.

6. A male officer at Centrelink accepted the documents and told him the matter would be attended to. After six months, he had not heard from Centrelink, consequently he was of the understanding that he continued to be eligible for Austudy.

7. He stated that, in retrospect, that had he been aware he was no longer qualified for Austudy, he would have applied for unemployment benefits or he would have enrolled in a third subject in order to maintain his eligibility. This would have only been possible if Centrelink had notified him reasonably quickly that he was no longer eligible for Austudy.

8. He acknowledged that he did not contact Centrelink to inquire about the status of his application for concessional study and in retrospect, was probably naive.

9. The applicant referred the Tribunal to various principles of statutory interpretation, including those of Dicey in 1885. He submitted that such principles had a part to play in the matter before the Tribunal, in that they were to be utilised in interpreting "inflexible rules". He referred to Section 15AB of the Acts Interpretation Act 1901, which permits the use of extrinsic material in determining the meaning of a provision where the ordinary meaning of the words would lead to a manifestly absurd or unreasonable outcome.

10. The applicant acknowledged that errors had been made on the part of both parties, and therefore he conceded that the overpayment had not been made solely on the basis of administrative error. He had repaid approximately $1100 of the debt by fortnightly instalments of $20 . He is in receipt of $260 per fortnight and receives interest of approximately $90 per fortnight from interest on investments that are valued at about $80,000 and comprise mutual funds, equities and mortgages. He thought he might be compelled to take out a supplementary loan in order to enable him to complete his studies, which will take a further two years.

RESPONDENT'S SUBMISSIONS

12. The respondent referred the Tribunal to a Centrelink record of contact which appears at T5-22. A conversation is recorded with the applicant on 29 March 2000 in which he advised that he would be studying 66 per cent of the course load for the remainder of the semester. The respondent acknowledged that the applicant had provided written confirmation as to the change in enrolment from the University (T10-33). It was pointed out that the notification states that the applicant's status is that of a part time student.

13. It was accepted that the applicant contacted the South Brisbane office of Centrelink on 4 April 2000. However, there is no record of the handwritten note about which he gave evidence, however it was not disputed that this occurred. The fact that there is no record is explicable on the basis it was written on an envelope. In any event, the applicant was not sure whether he specifically set out the name of the subject from which he had withdrawn.

14. The applicant had advised Centrelink that he was undertaking 66 per cent of the usual course workload, and Centrelink had accepted that advice. Further, Centrelink had determined that Austudy would remain payable to the applicant (T5-22), notwithstanding that the decision was not communicated to the applicant.

15. From 4 April 2000, and until the cessation of the first semester, the applicant was enrolled in two subjects with a total value of 20 credit points, which is insufficient to qualify him for Austudy.

16. Although Centrelink had contributed to the error that caused Austudy to be continued to be paid, the applicant had also contributed to the error by not specifically advising that he was undertaking 50 per cent of the usual work load in semester one. Therefore, the overpayment was not caused by administrative error, consequently Section 1237A of the Social Security Act 1991 (the Act) cannot apply to waive recovery of the debt.

17. In respect to the discretion to waive contained in Section 1237AAD of the Act, it was contended that the applicant did not knowingly provide false information which led to the overpayment, however his behaviour could be categorised as reckless. In respect to his personal circumstances, it was contended that they did not fall within the meaning of "special circumstances".

THE LEGISLATION AND ITS APPLICATION

18. Section 568 of the Act sets out the basic qualifications for the payment of Austudy. It states as follows:

"568 Qualification for austudy payment - general rule

Subject to this Subdivision, a person is qualified for an austudy payment in respect of a period if, throughout the period:

(a) the person satisfies the activity test (see Subdivision B); and

(b) the person is of austudy age (see Subdivision C); and

(c) the person satisfies the residency requirements that apply to the person under Subdivision D."

19. It is not in dispute that the applicant meets (b) & (c) in that he is of Austudy age and he satisfies the residency requirements. In respect to (a), the means of satisfying the activity test is set out in Section 569 which states, in effect, that the activity test is satisfied if a person is, throughout the relevant period, undertaking qualifying study. The term "undertaking qualifying study" is defined in section 569A of the Act as follows:

"(a) the person:

(i) is enrolled in a course of education at an educational institution; or

(ii) was enrolled in the course and satisfies the Secretary that he or she intends, and has (since no longer being enrolled) always intended, to re-enrol in the course when re-enrolments in the course are next accepted; or

(iii) was enrolled in the course and satisfies the Secretary that he or she intends, and has (since no longer being enrolled) always intended, to enrol in another course of education (at the same or a different educational institution) when enrolments in the other course are next accepted; and

(b) the course in which the person is enrolled, or intends to enrol, is an approved course of education or study (see section 569B); and

(c) the person is a full-time student or a concessional study-load student in respect of that course (see sections 569C and 569D); and

(d) the person satisfies the progress rules (see sections 569G and 569H).

20. It is not in dispute that the applicant was enrolled in an approved course of education at an educational institution or that he made satisfactory progress, thus satisfying (a) (i), (b) and (d) and the Tribunal finds accordingly. It is also not disputed that the applicant was neither a full time student or a concessional study load student. In the applicant's case this requires him to undertake at least two thirds but less than three-quarters of the normal amount of full time study in respect of the course for the period.

21. Clearly, he did not fulfil this requirement during the relevant period. Section 1223 of the Act states, in part, that if an amount has been paid to a person by way of social security payment on or after 1 October 1997 and (a) the recipient was not qualified for the social security payment when it was granted; or (b) the amount was not payable to the recipient; the amount so paid is a debt due to the Commonwealth. Applying that provision to the evidence before it, the Tribunal finds that there is a debt in the sum of $2283.34 for the period 4 April 2000 to 9 July 2000.

22. The Tribunal is then required to consider the write off and waiver provisions which are contained in sections 1236, 1237A(1) and 1237AAD of the Act. Write-off of a debt may occur in certain limited circumstances, which are set out as follows:

"1236(1A) The Secretary may decide to write off a debt under subsection (1) if, and only if:

(a) the debt is irrecoverable at law; or

(b) the debtor has no capacity to repay the debt; or

(c) the debtor's whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or

(d) the debtor is not receiving a social security payment under this Act and it is not cost effective for the Commonwealth to take action to recover the debt."

23. The Tribunal determines that none of the above criteria are met. It then must be considered whether waiver of the debt was appropriate. Section 1237A of the Act directs waiver must occur where the debt is attributable solely to an administrative error made by the Commonwealth and the debtor received the payments in good faith.

24. The Tribunal finds that the applicant was confused when he informed Centrelink that he was undertaking study at the level of 66 per cent of full time study. The evidence is unclear as to whether the applicant informed Centrelink specifically that he was studying only two subjects, however nothing turns on that issue. Ultimately, the applicant was in error in informing the department that his study load was 66 per cent and, in turn, the respondent compounded that error by accepting the information at face value and not making further inquiries.

25. As is evidenced by T5-22, the respondent approved the applicant continuing to receive Austudy on the basis he was undertaking a concessional load. However, this decision was not communicated to the applicant and not unnaturally, when he continued to receive Austudy he believed that he still had entitlement to receive it. Be that as it may, it cannot be said that the debt arose solely due to administrative error on the part of the Commonwealth.

26. That leaves consideration of Section 1237AAD of the Act, which states 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:

(I) making a false statement or a false representation; or

(ii) 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"

27. It is not contended that the applicant knowingly made a false statement or false representation. Whilst it was contended by the respondent that the applicant's behaviour was reckless, the judgments discussed and followed in Callaghan and Secretary, Department of Social Security (AAT 11404, 18 November 1996) are to the effect that the word "knowingly", unless the legislation specifies to the contrary, is understood to mean actual knowledge. Applying those principles, there is no evidence in the present matter that the applicant had actual knowledge that he was making a false statement or representation or that he was failing or omitting to comply with a provision of the Act.

28. In deciding whether special circumstances exist, the Tribunal had regard to the principles outlined in Beadle v Director-General of Social Security (1985) 7 ALD 670 which described special circumstances as "extremely unusual, uncommon or exceptional". In Secretary, Department of Social Security v Hales [1998] 219 FCA, French J discussed Beadle's case and the application of Section 1237AAD in the following terms:

"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 debt. It is inappropriate to constrain that flexibility by imposing a narrow or artificial construction upon the words. It may be that there will be few cases in which the Secretary will be satisfied that there are special circumstances in the absence of financial hardship. It may be that there are few cases in which having found special circumstances to exist, the Secretary would exercise the discretion to waive in the absence of financial hardship. But to anticipate the limits of the categories of possible cases by imposing on the language of the section a fetter upon its application which is not mandated by its words, is to erode its useful purpose."

29. The evidence of the applicant was that he has been making fortnightly contributions of $20. He has expenses associated with his studies such as the need to lease a computer, which make his financial circumstances difficult. However, even if he has to resort to taking out a loan to enable him to complete his studies, it cannot be said that repayment of the debt will cause financial hardship.

30. In any event, financial hardship alone is insufficient to meet the requirements of Section 1237AAD. There are aspects of the respondent's conduct in this matter which, from the applicant's point of view, may be construed as having a harsh result, if he is compelled to repay the debt in its entirety. Those aspects of behaviour are: (i) the absence of any checks into the reliability of his claim that he was undertaking a course load of 66 per cent, (ii) no advice was given to him by Centrelink following his notification about the change of enrolment; and (iii) Centrelink advised the applicant some six months later that he was not entitled to Austudy during the relevant period.

31. If inquiries had been made by Centrelink, they would have revealed that the applicant was not qualified for Austudy and a decision to this effect could have been conveyed to him in sufficient time for him to consider whether to enrol in another subject or seek an alternative form of income support. Both those avenues were denied to him, as a consequence of the respondent's inactivity.

32. However, whilst the matters referred to above had a detrimental effect on the applicant which could have been avoided by diligence on the respondent's part, I do not consider that they give rise to "special circumstances" within the meaning of that term.

33. In so finding, I had regard to the applicant's submissions in regard to principles of statutory interpretation. However, the extrinsic materials referred to in the Commonwealth Acts Interpretation Act 1901 can be considered only to assist in the ascertainment of the meaning of a provision of an Act in certain limited circumstances, one of those circumstances being when the provision is ambiguous or obscure or the use of the ordinary meaning would lead to a result that is manifestly absurd or unreasonable. In the present context, such considerations do not arise.

34. The Tribunal affirms the decision under review.

I certify that the 34 preceding paragraphs are a true copy of the reasons for the decision herein of Ms J Cowdroy, Member

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

Associate

Date of Hearing 23 November 2001

Date of Decision 17 January 2001

For the Applicant In person

For the Respondent Miss J Dwyer