Aldridge and Department of Education, Training and Youth Affairs

[2000] AATA 682

DECISION AND REASONS FOR DECISION [2000] AATA 682

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No T1999/160

GENERAL ADMINISTRATIVE  DIVISION       )          
           Re      GREGORY IAN ALDRIDGE        
  Applicant
           And    SECRETARY, DEPARTMENT OF EDUCATION, TRAINING AND YOUTH AFFAIRS            
  Respondent

DECISION

Tribunal       Ms A F Cunningham (Part-time Member)          

Date9 August 2000

PlaceHobart

Decision      1. THAT the decision under review to raise a debt in the sum of $5,542.91 is affirmed. 2. THAT the balance of the debt which remains outstanding in the sum of $3,481.00 is waived pursuant to the provisions of s.43F of the Student Assistance Act 1973.              

..............................................
  Part-Time Member
CATCHWORDS
AUSTUDY – overpayment – actual means test - after tax income of the notional parent - parents expenditure overseas - high cost of living – waiver of debt. 
Student Assistance Act 1973 – s.43F
Re Heuzenroeder and Secretary, Department of Education, Training and Youth Affairs [1999] AATA 914
Re Beadle and Director-General of Social Security (1984) 6 ALD 1

REASONS FOR DECISION

9 August 2000        Ms A F Cunningham (Part-time Member)   

1. The applicant has sought the review of a decision made by a Centrelink officer on 2 June 1998 to raise an overpayment in the sum of $5,542.91 against the applicant's 1997 Austudy entitlement.   The decision was affirmed by a Centrelink review officer on 23 June 1999 and subsequently by the Social Security Appeals Tribunal (SSAT) on 9 September 1999.

2. The applicant represented himself at the hearing and the respondent Department was represented by Mr. John Shears.

3. The "T" documents were lodged pursuant to s.37 of the Administrative Appeals Tribunal Act 1975.   The parties also tendered various other documentation including a newspaper clipping from the Age, a pamphlet entitled "The Actual Means Test", a departmental manual Guide as well as written submissions.

4. The Tribunal is being asked to review the decision to raise an overpayment in the sum of $5,542.91 on the basis that the actual means of the applicant's family exceeded the benchmark maximum during the year 1997.   

5. The relevant legislation is that found in the Austudy Regulations made pursuant to the Student and Youth Assistance Act 1973 ("the Act").   These regulations which introduced the actual means test, were originally enacted in 1995 and subsequently extended in 1996.    As stated by Deputy President Burns in Re Heuzenroeder and Secretary, Department of Education, Training and Youth Affairs [1999] AATA 914, at paragraph 5:

   "The actual means test was introduced to supplement the existing income tests and assets tests as a means of targeting assistance to students most in need.    It was introduced in response to a concern that students of families who were able to minimise their taxable income through financial arrangements were passing the income test and qualifying for Austudy even though they may have been in no more need of assistance than another person from a wage or salary earning family who did not qualify for assistance."

1. The parties submitted a statement of agreed facts wherein the expenditure of the applicant's parents during the relevant period for the purpose of the actual means test was agreed to be $51,592.    It was further agreed that the amount of the Austudy overpayment was $5,542.91 being the entire amount paid to the applicant in 1997.

2. The amount of the benchmark under the actual means test applicable to the applicant's circumstances in 1997 was agreed at $36,714.    The Tribunal was informed that this amount is calculated by the respondent Department at the time the application is assessed, although it can be varied as additional information is received.

3. The Tribunal was advised that whilst the applicant does not need to calculate the actual means benchmark, the method of calculation can be followed by using the step by step instructions at appendix C of the Department's publication "The Actual Means Test – Austudy 1997".    The factors considered by the Department in calculating the benchmark include the income level of the parents adjusted for  dependent children and taking into account their number and age;  the type of Austudy for which the student is applying; income tax payable as well as the Medicare levy; and allowance for family payment; if appropriate.

4. For the applicant to qualify for the Austudy benefit (which was the dependent at home rate at the commencement of 1997, but changed to the dependent away from home rate when his parents moved to Hong Kong to live later in 1997) he must satisfy the provisions of the Austudy regulations and in particular regulations 12K, 12L, 12M and 12N. The provisions of 12K state that the student is not entitled to receive a living allowance for a period of eligibility in the year of study unless "the actual means of the designated parent are less than the after tax income of the notional parent". The applicant's parents can be defined as "designated parents" under the provisions of regulation 12L as they, in accordance with the provisions of sub-section (c), derive "income from a source outside Australia and its external territories (other than income described in sub-paragraph (d)(ii);)".
   Regulation 12N, subsection (1) states:

   "For the purposes of subregulation 12K(1), the actual means of a designated parent for the period of eligibility are taken to be the amount that equates to total expenditure and savings made in that period by the parent and each member of his or her family."

1. The after tax income of the notional parent referred to in regulation 12K (previously referred to as the benchmark) is calculated in accordance with the formula set out in regulation 12M.

2. There was no dispute as to the applicability of the above regulations. The amount of the total expenditure and savings of the applicant's parents for the purposes of determining their actual means was agreed at $51,592 having been calculated in accordance with the forms lodged with the respondent Department.

3. The issue for the applicant was that the calculation of the actual expenditure of the applicant's parents had no regard to the greater cost of living in Hong Kong as opposed to Australia.    The applicant submitted evidence to this effect to the Tribunal which was not disputed by the respondent.   The applicant argued that the cost of living differential between Australia and Hong Kong amounted to some 21% and contended that an allowance in relation to his parents expenditure should be made accordingly.   He claimed that housing and schooling costs amount to some 63.25% of total expenditure.   The applicant contended that he was being punished through no fault of his own when he was unaware of his parents expenditure in Hong Kong until the end of the year.    He pointed out that he received no financial information from his parents until he sent them relevant renewal forms.

4. The applicant contended that if adjustments were made to the expenditure figure of $51,592 for the difference in the cost of living between Australia and Hong Kong as well as provision for the "economic crash in Asia", this would justify an adjustment of 40% to his parents expenditure.

5. It was the respondent's contention however, that there is no opportunity afforded in the relevant legislation for the exercise of discretion in the calculation of the actual means test.   Mr. Shears submitted that the regulations should be given their plain and ordinary meaning and that no distinction can be made between expenditure in Australia and overseas.

6. This Tribunal agrees with the submissions of Mr. Shears and whilst it appreciates the applicant's position and has some sympathy for his circumstances, this Tribunal must apply the facts to the applicable legislation.   It being accepted that the actual means of the applicant's parents during the relevant period was $51,592.00 and as this sum exceeds the benchmark maximum calculated in accordance with the formula prescribed in reg.12M, the Tribunal determines that the provisions of reg.12K dictate that the applicant was not entitled to receive the living allowance for the relevant period.  An overpayment of $5,542.91 being the amount of Austudy paid to the applicant in 1997 is accordingly raised as a debt owed to the Commonweath.

7. The contents of the applicant's letter of appeal to this Tribunal indicate that he believed that the SSAT was the wrong forum for his complaint and he was hopeful that this Tribunal would be able to take his issues into account in its decision.   This Tribunal  like the Social Security Appeals Tribunal is only able to consider the issues in accordance with the provisions of the relevant legislation.  No further powers are conferred on this Tribunal other than those provided for in the legislation.   

8. At the conclusion of the evidence, the parties were requested to forward written submissions as to whether or not the applicant's circumstances justified a waiver of the debt in the event that the Tribunal determined that an overpayment had been raised.

9. The relevant legislative provision is contained in s.43F of the Act which states:

   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; 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."

1. It is noted that this provision is in identical terms to s.1237AAD of the Social Security Act 1991.

2. It was submitted on behalf of the respondent that there is no suggestion that sub-paragraph (a)  applies as the respondent does not contend that the applicant made any false statements or omissions.

3. In their written submissions, both parties referred to the definition of "special circumstances" adopted by Toohey J in Re Beadle and Director-General of Social Security 1984 (6 ALD 1), where he was considering the equivalent term under the Social Security legislation. In that decision Toohey J stated at p.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 qualify of unusualness that permits them to be described as special."

4. Mr. Shears then referred the Tribunal to a number of cases where the term "special circumstances" had been considered as listed in Annotations to the Social Security Act 1991 by Peter Sutherland at p.665.   Several of those cases involved issues of ill health, various failures by the Department's administrative systems, and cases of misleading advice given by departmental officers.

5. Mr. Shears contended that the fact that the applicant's parents were overseas for a large part of 1997 was not a unique factor as many students in Australia he submitted,  would have one or more parents travelling overseas to earn income at any given time.   Mr. Shears suggested that the Tribunal was able to conclude from the size of the expenditure of the applicant's parents that they had "the means at their disposal to spend considerably more during the relevant period than the benchmark sum".    Mr. Shears urged the Tribunal to consider the financial  capacity of the applicant's parents and carefully scrutinise their capacity to expend such sums of money during the relevant period.   Mr. Shears submitted that "a test of capacity  is relevant because the fact remains that although the cost of living was higher in Hong Kong than in Hobart they found the capacity to finance their moving and re-establishment costs.   They elected to move and had the financial resources to do it".

6. The applicant's evidence as to the state of his parents financial capacity was  that they were on the verge of bankruptcy when they left Australia.   The applicant stated that his father was forced to take up an employment offer overseas as none was forthcoming in Australia, that he had experienced difficulties with his previous employment contract and was liable for the repayment of numerous debts.  The applicant submitted that "my father at the time of my family's relocation to Hong Kong was unemployed between (June 1996 and March 1997), and as a 57 year old had slender prospects of achieving further employment in the depressed Tasmanian economic climate.   When he received an offer of employment subject to his re-location to Hong Kong, there were no options at the time".   The applicant pointed out that at the time of his parents departure they had a sizeable mortgage and other miscellaneous debts amounting to more than $100,000 (T20).   He said that the family car was sold to pay for the removal costs.

7. The applicant contended that his circumstances when looked at in their entirety, were unusual, uncommon and exceptional.  He claimed that the fact that he remained in Australia whilst his parents moved away to take up the only offer of employment available in a new field, with new employers, in a new country, was quite different from the majority of cases where the parents reside overseas and the student comes to Australia to study.

8. The Tribunal accepts the applicant's contention that the expenditure incurred by his parents during 1997 did not of itself indicate a financial capacity to expend such sums.   It is not the case as contended by the respondent, of a family electing to move to another country and having the available financial resources to do so.   The Tribunal accepts the applicant's evidence that it was rather a case of desperation of an unemployed father facing substantial debts, and without the means or prospects of repayment.     Further, there is no evidence that the applicant's parents had the financial capacity to support their son during the relevant study period and in fact did not do so.   The applicant's evidence was that he was working at two different jobs  during the semester and took on two additional jobs during the summer holiday period in order to support himself.  

9. In considering whether or not the applicant's circumstances justify a waiver of the debt, the Tribunal also takes into account the fact that the applicant had no independent access to his parents financial records, that he could not have anticipated or assumed that his parents expenditure would exceed their income by such a sizeable amount, that he was geographically isolated from his parents by a considerable distance, that he received no financial support from his parents whatsoever during the relevant period and was endeavouring to support himself from his own resources by taking on additional employment.    The applicant stated that he had moved into rental accommodation during this period, something that he would not have undertaken had he known that a debt was being raised against him. 

10. The Tribunal is satisfied that the above circumstances looked at in their entirety, were so unusual and uncommon to justify a waiver of the debt under the provisions of s.43F.

11. The Tribunal having concluded that the circumstances justified a waiver of the debt finds that it is more appropriate to waive the debt because of the above circumstances than to write it off.   The remaining issue is whether to waive the whole or part of the debt.    The Tribunal was informed that the balance owing on the debt is the sum of $3,481, the sum of $2,060 having already been repaid by way of deductions from the applicant's youth allowance.

12. Mr. Shears contended that the applicant now has a reasonable earning capacity being a 23 year old law graduate and currently in employment.

13. Whilst the Tribunal acknowledges the efforts of the applicant to support himself during the relevant period and appreciates that it may have been financially difficult for him during the time when the repayments were being deducted from his youth allowance, it is the Tribunal's view that it is not an appropriate case where the amount already repaid by the applicant should be refunded to him.   The Tribunal takes account of the fact that the applicant is now a graduate of the University and in employment and its determination that the full amount of the debt of $5,542.91 was legitimately raised in accordance with the relevant legislation.

14. The decision of the Tribunal is that :

15. The decision under review to raise a debt in the sum of $5,542.91 is affirmed.

16. That the balance of the debt which remains outstanding in the sum of $3,481.00 is waived pursuant to the provisions of s.43F of the Student Assistance Act 1973.

I certify that the 32 preceding paragraphs are a true copy of the reasons for the decision herein of Ms A F Cunningham (Part-time Member)

Signed:         .....................................................................................
  Personal Assistant

Date/s of Hearing  6 April 2000
Date of Decision  9 August 2000
Solicitor for the Applicant         Applicant appeared for himself.
Solicitor for the Respondent    Mr J Shears (Aust. Government Solicitor)