AYZIN ERMIS and SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

[2009] AATA 956

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 956

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No  2009/3389

GENERAL ADMINISTRATIVE DIVISION		)
Re		AYZIN ERMIS

Applicant

And SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal  Senior Member A K Britton

Date 15 December 2009

Place Sydney

Decision  The decision under review is affirmed

................... [SGD]....................

Senior Member

CATCHWORDS

SOCIAL SECURITY – Austudy – applicant continued to receive payment after ceasing to undertake a course of studies – whether repayment should be waived due to administrative error of Centrelink – whether repayment would cause applicant sever financial hardship – whether special circumstances justifying waiver of debt existed – decision of Secretary affirmed

LEGISLATION

Social Security Act 1991 (Cth) – ss 568, 569, 569A, 1236, 1237A, 1237AAD

REASONS FOR DECISION

1.          Mrs Ayzin Ermis seeks review of a decision made by the Social Security Appeals Tribunal to raise and recover from her a debt totalling $3790. The debt relates to Austudy payments made throughout a period Mrs Ermis had not been enrolled as a full-time student, 11 February 2008 to 25 June 2008.  

2. A person is entitled to Austudy payments if, among other things, they satisfy the ‘activity test’: s 568 of the Social Security Act 1991 (Cth) (the Act). The ‘activity test’ will generally be satisfied if the person is undertaking qualifying study, for current purposes, full-time study in an approved course ss 569 & 569A of the Act.

3.          It is not in issue that Mrs Ermis did not satisfy the ‘activity test’ throughout the first half of 2008 as she was not undertaking qualifying study. She claims however that she notified Centrelink of her circumstances and accordingly any overpayment is attributable to Centrelink error and must be waived. In the alternative she contends that the power to waive the debt on the ground of special circumstances should be exercised.

4.          The respondent Secretary disputes Mrs Ermis’s claim that the overpayment was attributable to Centrelink error and argues that the circumstances of the case do not warrant the exercise of the power to waive the debt.  

5.          Mrs Ermis was represented in these proceedings by her husband who also gave evidence about his dealings with Centrelink in relation to his wife’s Austudy payments.

Background

6.          It is necessary to sketch in some background facts.

7.          Mrs Ermis commenced a two year full-time course, Diploma in Library and Information Services, at Sydney TAFE in 2006.

8.          On 6 November 2007, Centrelink wrote to Mrs Ermis noting that her course was about to end and requesting that she provide details within 28 days of her future study plans. By 4 December 2007, no information having been received from Mrs Ermis, Centrelink cancelled her Austudy payments. Payments were reinstated three days later after Mr Ermis contacted Centrelink and advised that his wife would be continuing with her studies the following year. The details of that conversation are in dispute.  

9.          On the same day Centrelink wrote to Mrs Ermis and advised:

Your Austudy is based on you studying full time at Ultimo College of TAFE — Sydney Institute, tertiary Group C Course with the course ending on the 1 December 2008. If your study load changes or if you cease to study you should let us know within 14 days. You can earn up to $236 a fortnight before your income affects your payments because you are now studying or training full-time.  

10.        On 5 February 2008 Mrs Ermis received a letter in similar terms.

11.        In early July 2008 a review conducted by Centrelink revealed that Mrs Ermis was not enrolled in a TAFE course. Centrelink wrote to Mrs Ermis requesting confirmation of her enrolment. Mr Ermis contacted Centrelink and confirmed that his wife had not been enrolled in any course throughout the first semester as apparently there had been insufficient student numbers for the course to proceed. He advised that she would be enrolling in the next available course.

12.        On 7 July 2008 Centrelink wrote to Mrs Ermis and advised that she had not been entitled to Austudy payments throughout the period, 11 February to 25 June 2008. Centrelink further advised that the $3790.51 paid to her throughout that period, constituted an overpayment which would be recovered.   

13.        On review by an authorised review officer the decision was affirmed.  As noted on review the SSAT also affirmed the decision.

Paid in error

14. The Secretary (or other decision-maker) 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: s 1237A of the Act.

15.        Mr Ermis contends that all or part of the debt was attributable to the following errors:

(i) Centrelink’s alleged advice that his wife had six months to complete her studies.

(ii) The continuation of Austudy payments after Centrelink was notified that his wife had commenced employment.   

16.        In respect of each purported error it is necessary to decide:

(i) Does the conduct found proven constitute an administrative error on the part of the Commonwealth?

(ii) If yes, is all or some of the debt, attributable solely to that administrative error?

(iii) Finally, if so, did Mrs Ermis receive those payments in good faith?

(i) Centrelink’s advice  

17.        Mr Ermis claims that in December 2007 an officer of Centrelink approved his wife’s request for a six month extension to complete her course and advised him that his wife was required to provide an update of her circumstances in six months. As I understand it, the purported error was both the alleged approval and the failure to advise that it would be necessary to update Austudy if there was a change of circumstances within six months.

18.        Mr Ermis testified that on 7 December 2007 he spoke at length to Centrelink officer, ‘Kellie’ and explained that TAFE had refused to issue his wife’s results for the academic year 2007 on the ground that the enrolment fee for an unrelated course had not been paid.  He claims that he told ‘Kellie’ that until this was sorted out his wife did not know whether she would need to repeat her final year in the Diploma or be able to commence the Advanced diploma.  On his account, ‘Kellie’ told him that his wife had ‘another six months to finalise her studies’.

19.        In these proceedings Mr Ermis gave conflicting evidence about when he first became aware that TAFE had refused to release the details of his wife’s results. He initially claimed it was late in December and later revised that claim to early December 2007, before his conversation with ‘Kellie’. 

20.        A file note recorded by ‘Kellie’ is inconsistent with Mr Ermis’s account:  

…

Customer has confirmed they will be continuing to study in a new course in the next available semester…

…Screens both updated to show the new study details

AUS study payments have also been referred.

…

21.        A letter sent to Mrs Ermis the day after that conversation is consistent with that record (see par [9] of these Reasons).  It stated that Mrs Ermis’s payments were based on her studying full-time at the Ultimo College of TAFE and that she must notify TAFE if, among other things, she were to cease studying.

22.        I have some difficulties accepting Mr Ermis’s account of that conversation for these reasons. First it is internally inconsistent. If, as claimed, he told ‘Kellie’ that his wife did not know at that stage which course she would be enrolling in the following year because of TAFE’s refusal to release her results, it is not immediately apparent why the issue of a six month extension would have been arisen. On his account the only issue at that time was which course his wife would be undertaking, not whether she would be undertaking further studies. Second, Mr Ermis gave contradictory evidence about when he first became aware that TAFE would be withholding his wife’s results. Third, his account is inconsistent with the contemporaneous record made by ‘Kellie’ and the letter sent the following day notifying Mrs Ermis of the basis on which Austudy payments had been restored. Fourth, there are no contemporaneous records to support Mr Ermis’s account. Fifth, while errors will invariably be made by Centrelink staff it is inherently implausible, in my view, that advice would be given to the effect that Austudy payments would continue to be made throughout a period a person was not enrolled as a student.

23.        But even if Mr Ermis’s account of that conversation was accepted, in my view the second limb of s 1237A(1) that is, that the subject payment were received in ‘good faith’, has not been met.

24.        In Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 50 ALD 186, Finn J said of an equivalent provision:

For my own part, I consider the burden of the formula in the s 289 setting to be obvious enough. Its concern is with the state of mind of a person concerning his or her receipt of the payment: if that person knows or has reason to know that he or she is not entitled to a payment received - i.e. is not entitled to use the money received as his or her own – that person does not receive the payment in good faith. Absent such knowledge or reason to know, the receipt would be in good faith.

25.        Nor does a person act in good faith if they fail to make enquiries about an overpayment where doubt about their entitlement exists: per Cooper J in Jazazievska v Secretary, Department of Family and Community Services [2000] FCA 1484.

26.        Centrelink’s letter of 7 December 2007 put Mrs Ermis on notice that she was required to notify Centrelink if her studies ceased or her study plans changed.  That advice was repeated in subsequent correspondence. That correspondence at the very least ought to have raised doubt as to the accuracy of information her husband claimed had been provided by Kelly. No explanation has been provided that might explain why Mrs Ermis ignored that written advice.

27.        There are no factors, such as language difficulties, illiteracy or disability which might explain why Mrs Ermis ignored Centrelink’s written advice.

28.        I am not persuaded that the payments made throughout the subject period were attributable to an administrative error by the Commonwealth or received in good faith.

(ii) Notification of change of circumstances  

29. Mr Ermis contends that Centrelink was notified on three occasions that his wife had ceased studying and any payment made after that period was due to Centrelink’s failure to act on that advice. This, he contends constitutes an administrative error within the meaning of s 1237A of the Act.

30.        Mr Ermis argues that Centrelink was notified of his wife’s changed circumstances on:

(i)        26 April 2008, when she submitted an ATO Tax file number to her employer; and

(ii)       1 May 2008, when he notified the Burwood Centrelink office in person, that his wife had commenced employment; and

(iii)      14 May 2008, when he lodged an application for parenting payment in which he disclosed that his wife had commenced employment. 

31.        Submitting a tax file form could not in my view reasonably be construed as providing notice to Centrelink. While both Commonwealth agencies, the Australian Tax Office and Centrelink are nonetheless separate entities. But in any event, none of the three notifications relied upon could, in my view, be said to constitute notice that Mrs Ermis was not enrolled in a course of study at TAFE. It goes without saying that studying and employment are not mutually exclusive activities.

32.        But even if I have taken an overly narrow view of what constitutes proper notice of a change in circumstances in relation to studies, I am not satisfied that the payments were received in good faith. Payments continued until early July 2008 when Centrelink discovered that Mrs Ermis was not enrolled in TAFE. After notifying Centrelink that she had commenced employment Mrs Ermis continued to receive payments despite receiving three notices which clearly stated that she must advise if her study circumstances were to change.

Summary   

33. I am not satisfied that, in respect of either purported error, the elements of s 1237A have been satisfied. Accordingly the debt cannot be waived under this provision.

Should the debt be waived on the grounds of ‘special circumstances’?

34.        Mr Ermis contends that TAFE’s refusal to issue his wife’s results for her final diploma year constitutes ‘special circumstances’ and on that basis, the power to waive the debt should be exercised.  

35. Section 1237AAD of the Act provides that the Secretary, or other decision‑maker may waive the right to recover all or part of a debt if satisfied that there are special circumstances (other than financial hardship alone) that make it desirable to waive. The phrase ‘special circumstances’ is not defined in the Act. It requires that there be ‘something that distinguishes [Mrs Ermis’s] case from others to take it out of the usual or ordinary case’: Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25; Dranichnikov v Centrelink (2003) 53 ATR 270.

36.        There is limited material before me about TAFE’s alleged failure to release Mrs Ermis’s results for the 2007 academic year. Mr Ermis was unable to tell me when the results were eventually released. 

37.        Even if accepted that TAFE had acted unreasonably and Mrs Ermis’s results were not released until after the commencement of the 2008 academic year, this did not prevent Mrs Ermis from notifying Centrelink that she had not enrolled in the first semester. At its highest TAFE’s action caused Mrs Ermis to be uncertain for a short period about what course of study she would be able to undertake in the first half of 2008. While TAFE’s action might have effectively prevented Mrs Ermis from enrolling in a course in the first semester it did not prevent her from complying with her obligation to keep Centrelink abreast of her study plans.

38.        For these reasons I am not satisfied that ‘special circumstances’ have been demonstrated.

can the debt be waived because of ‘financial hardship’?

39. The Act gives the Tribunal the power to waive or write off a debt where either the debtor is incapable of repaying it (s 1236(1A)(b) of the Act), or where special circumstances (other than financial hardship alone) exist: s 1237AAD(b). Under s 1236(1C). a person is taken to be unable to pay a debt if recovery would result in “severe financial hardship”, meaning something more than mere financial difficulties: see Re Stubbs and Secretary, Department of Families and Community Services [2003] AATA 729.

40.        Mrs Ermis is currently in part time employment.  Her current position – which she has held since May 2008 – is not permanent, and her hours of work vary. From the material before me her salary seems to be in the range of $1700 to $2400 per month. For the six weeks to 26 November 2009 she earned just under $4000. Mr Ermis receives a carer payment and an allowance of about $1600 per month together with family tax benefit. 

41.        The Ermis’s have two dependent children: both are students, and one is an adult. They have a mortgage of about $1300 per month. They have the usual expenses and no other debts.

42. I accept that the payment of the debt will be difficult for the Ermis family — $3790 is not an insignificant sum. Mrs Ermis is not, however, incapable of repaying it and nor is this asserted. Accordingly s 1236(1A)(b) has no application.

43. Nor am I satisfied that the discretionary power under s 1237AAD should be exercised. I note that “special circumstances” cannot arise on the basis of a person’s financial hardship alone. I have not accepted that anything else raised on behalf of Mrs Ermis shows that special circumstances exist. Therefore, even if “financial hardship” were to arise in this matter, the debt cannot be waived using s 1237AAD.

Summary

44.        I am satisfied that there is no basis upon which the debt should be waived or written off and therefore affirm the decision under review.

I certify that the   preceding paragraphs are a true copy of the reasons for the decision herein of  

Signed:         ..................................[SGD]............................................
  Associate to Senior Member Britton

Date/s of Hearing  7 December 2009
Date of Decision   15 December 2009

The applicant was represented by her husband, Mr Volkan Ermis
Solicitor for the Respondent     Centrelink Legal Services