Baginski and Secretary, Department of Family and Community Servic Es

[2003] AATA 486

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2003] AATA 486

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No W2002/224

GENERAL ADMINISTRATIVE  DIVISION		)
Re		MALGORZATA BAGINSKI

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Mr M Allen, Member

Date28 May 2003

PlacePerth

Decision

The decision of the Tribunal is that the decision under review is varied as follows:

·     a debt is due by Ms Baginski to the Commonwealth in respect of Austudy payments made to her in the periods 5 February 1999 to 17 October 1999 and 21 December 1999 to 5 July 2001;

·     the part of the debt for the period 5 February 1999 to 17 October 1999 should be recovered; and

·     special circumstances exist in relation to the part of the debt for the period 21 December 1999 to 5 July 2001 and recovery of that part of the debt should be waived.

….........(sgd M Allen)......................

Member

CATCHWORDS

SOCIAL SECURITY – Austudy – self-paced learning course - whether applicant a full-time student in the relevant period – Particular study period - whether a debt due to the Commonwealth – whether administrative error – whether debt attributable solely to administrative error – whether special circumstances exist – whether debt should be written off

Social Security Act 1991 ss 568, 569, 569A, 569C, 569E, 1223, 1236, 1237, 1237A, 1237AAD

Re Secretary, Department of Social Security and Hales (1998) 51 ALD 695

Re Secretary, Department of Family and Community Services and Sekhon [2003] FCA 76

Re Beadle and Director–General of Social Security (1984) 6 ALD 1

Re Boscolo and S,DSS (1999) 53 ALD 277

Re Jonauskas and S, DFCS (2001) AATA 72

REASONS FOR DECISION

28 May 2003 Mr M Allen, Member           

1.      This is an application by Ms Baginski for review of a decision made by the Social Security Appeals Tribunal (“SSAT”) on 16 June 2002.  By that decision the SSAT affirmed a decision made by a delegate of the respondent (the Secretary) on 18 July 2001 (as varied by an Authorised Review Officer, ARO) to raise and recover an overpayment of Austudy of $9,779.19 in respect of the periods 5 February 1999 to 17 October 1999 and 21 December 1999 to 17 May 2000.

2. The matter was heard on 3 February 2003 and 5 May 2003. On both occasions Ms Baginski participated by telephone and represented herself. The Secretary was represented by Mr Ellis, a Centrelink officer. Oral evidence was given by Ms Baginski and by Mr Ray Midwood, an employee of the Australian Institute of Professional Counsellors (AIPC). The Tribunal received into evidence the documents filed by the Secretary pursuant to s37 of the Administrative Appeals Tribunal Act (the T documents, T1 to T58) and additional documents adduced by Mr Midwood (who was called at the Tribunal’s request and was not regarded as a witness of either the applicant or the respondent) (M1 – M6).

Background

3.      Most of the factual material in the case is not in dispute and from the documentary and oral evidence presented to me I make the following findings.

4.      In February 1999 Ms Baginksi enrolled in a course for the Diploma of Professional Counselling by correspondence with the AIPC.  She applied to Centrelink for Austudy benefits and was paid this benefit from 5 February 1999 on the basis that she was studying full time.

5.      By various letters Ms Baginksi was notified by Centrelink of her obligation to inform Centrelink of any changes to her circumstances - specifically whether she stopped being a full time student or varied her enrolment (see T4, T6, T7, T9, and T12).  To complete the course Ms Baginski was required to complete a number of assignments and other work and to submit them to AIPC for assessment by certain dates in accordance with a schedule that was provided to her by AIPC.  The course was to be completed over 91 weeks between February 1999 and October 2000.  From an early stage in the course Ms Baginski had difficulty meeting the scheduled dates of submission for her work.  Document T43 sets out the dates (according to an amended schedule of dates – about which see below) by which a student should have completed each assignment assuming a full time workload and also the dates by which the assignments could have been submitted assuming a 75% workload.  The document also sets out the dates on which Ms Baginski actually lodged work with AIPC.  It is apparent that Ms Baginski at no time submitted work in accordance with the full time workload timetable.  In relation to the 75% workload timetable Ms Baginski’s first assignment, which was due on 5 March 1999, was submitted on 23 March 1999 but her second assignment, which was due on 30 April 1999, was not submitted until 18 October 1999.  All assignments subsequently submitted were more or less late.

6.      By letter dated 15 November 1999 (T8) Centrelink wrote to Ms Baginski advising that her Austudy had been cancelled from 13 November 1999 because her study did not qualify as being full time.  Neither the T documents nor (according to Mr Ellis) Centrelink’s file provide any information as to the circumstances in which that letter was written and Mr Ellis was not able to cast any light on it.  Document T9 is a letter dated 3 December 1999 from Centrelink to Ms Baginski advising that her Austudy was to be resumed and paid from 13 November 1999.  How these letters may have come to be written is considered later in these reasons.

7.      On 10 May 2000 Centrelink wrote to Ms Baginski advising it had received information from AIPC that indicated that she had been studying part time since 5 February 1999 (T10).  Document T11 records a telephone conversation between Ms Baginski and a Centrelink officer on 18 May 2000 in which Ms Baginksi advised that she was behind in her work but that she had obtained a letter from AIPC in November 1999 to say that she was granted an extension of time to complete her course until the end of November 2000.   Ms Baginksi was advised in that telephone conversation that she had not been a full time student for her study in 1999 and that an overpayment would be raised for the period February to November 1999.  Notwithstanding that advice Centrelink continued to pay Ms Baginski her Austudy benefits thereafter and no overpayment debt was raised at that time.

8.      No doubt because of the contact from Centrelink Ms Baginski contacted AIPC.  Document M5 records a telephone conversation on 20 May 2000 between Ms Baginski and Mr Midwood in which Ms Baginski asked for a revised schedule of dates for submission of her work.  On the same day Mr Midwood issued document M4 to Ms Baginski.  That document sets out a new schedule of dates for submission of work, the last date being in November 2001.  It is not clear whether AIPC or Ms Baginski sent that document to Centrelink at that time.

9.      In May 2001 Centrelink again reviewed Ms Baginski’s Austudy entitlement and received information from AIPC that the rate of submission of her assignments had not been in accordance with the schedule of submissions for full time or 75% full time students since February 1999, except for the period from 18 October to 20 December 1999 (T19).  Again Centrelink sought advice from Ms Baginski (T18 dated 9 May 2001) and from AIPC.  Document T19 also records telephone advice received by Centrelink from Ms Baginski on 28 May 2001 that “…she did have a problem with her studies in ’99 [and] is going back to [AIPC] to get it sorted out.”

10.     AIPC provided Ms Baginski with a letter dated 29 May 2001 confirming that she was enrolled full time in the course and that if she followed the recommended study schedule the course completion date would be 1 November 2001.  AIPC provided a copy of that letter to Centrelink on the same day (T20).

11.     Centrelink sought further information from AIPC about Ms Baginski’s workload (including dates of submission of assignments) on 31 May 2001 (T22).  T23 and T26 record oral advice being received about that on 1 June 2001 and 6 July 2001 respectively from AIPC.  Document T26 records advice from Mr Midwood to the effect that Ms Baginski had never met a full time workload and on that basis Centrelink suspended Austudy on and from that date.  In July 2001 a decision-maker determined that a debt of $10,414.04 would be raised for the period 11 May 2000 to 5 July 2001. 

12.     Thereafter followed numerous exchanges between Centrelink and Ms Baginski and various advocates on her behalf.  In March 2002 that decision was reviewed and further information from AIPC taken into account (T50).  On the basis of that further information it was determined that the debt was $20,368.68 for the periods 5 February 1999 to 17 October 1999 and 21 December 1999 to 5 July 2001.  In April 2002 an ARO varied that decision by agreeing that the overpayment had occurred but deciding that the amount of the overpayment should be reduced to $9,779.19 by waiving recovery of all overpayments made after 18 May 2000.  The decision to waive overpayments made after that date was based upon acceptance that payments made after that date were primarily caused by a Centrelink error and that Ms Baginski believed them to be correct; alternatively, special circumstances existed to justify waiving after that date because AIPC had advised Ms Baginski that she was full time and that her circumstance could therefore be regarded as extraordinary and unusual.

13. Ms Baginski applied to have that decision reviewed by the SSAT and in June 2002 the SSAT affirmed the decision as varied by the ARO. The SSAT concluded that in the periods 5 February to 17 October 1999 and 21 December 1999 to 17 May 2000 Ms Baginski did not undertake at least three quarters of the normal full time workload and that she was not therefore a full time student and hence not qualified to receive the Austudy that had been paid to her. In those circumstances the SSAT considered that s1223(1) of the Social Security Act1991 (“the Act”) operated to create a debt of $9,779.19. The SSAT stated that it considered the provisions in the Act under which debts can be waived or deferred. Although the SSAT decision does not identify what considerations were examined, the SSAT concluded that it was unable to conclude that any of those provisions could be applied to Ms Baginski.

Consideration

14. Section 568 of the Act provides that a person is qualified for an Austudy payment if, throughout the relevant period, the person satisfies the activity test. Section 569(1) provides that a person satisfies the activity test if, throughout the relevant period, the person is undertaking qualifying study. Section 569A provides that a person undertakes qualifying study if the person is enrolled in a course of education at an educational institution; the course is an approved course of education or study; the person is a full time student; and the person satisfies the progress rules. It is not in dispute that Ms Baginski’s course was an approved course of education or study.

15. The issue to be determined in this case is whether Ms Baginski was a full time student in respect of the course she was undertaking. So far as is relevant to this case s569C of the Act provides that a person is a full time student in respect of a course if the person is enrolled in the course for a particular study period (such as, for example, a semester) and the person is undertaking at least three quarters of the normal amount of full time study in respect of the course. Section 569E of the Act deals with normal amounts of full time study.

16.     It is not in dispute that in this case the “particular study period” for which Ms Baginski was enrolled was, initially, the 91 weeks of the course in accordance with the original enrolment but was, as Mr Ellis conceded, subsequently the extended period.  Likewise, it was not in dispute that, for the purposes of determining what constitutes normal full-time study and whether a student is undertaking at least 75% of the full-time load in a self-paced course of the type in question in this case, regard should be had to the schedule of submission dates determined by the institution in question (ie AIPC).  It is for that reason that documents such as T43 prepared by AIPC set out submission dates on both a “fulltime workload” and “75% workload” basis.  These dates reflect what the institution regards as the time required to complete the various components on a full-time or 75% load basis and that Centrelink accepts that assessment.  Mr Midwood’s evidence (which I accept) that when (in July 2000) he agreed to extend the time for completion of submissions from October 2000 (for a full-time load) or May 2001 (for a 75% load) to November 2001 that was the maximum extension he could grant consistent with AIPC’s arrangements with Centrelink and AIPC’s assessment of the time reasonably required to complete the course on a full time or 75% workload basis.

17. On the evidence I find that at no time between February 1999 and July 2001 did Ms Baginski submit assignments in accordance with the original or revised full-time or 75% workload schedule. However, I accept the evidence of Mr Midwood (and it was not contested by the Secretary) that between 18 October 1999 and 21 December 1999 – in which period Ms Baginski submitted three modules of work for assessment – Ms Baginski was working at a rate equivalent to a full-time rate. Accordingly, with the exception of that two month period, I find that Ms Baginski was not undertaking at least three-quarters of the normal amount of full-time study as required by s569C and s569E – and was not, therefore, a full-time student in that period. She was not, therefore, undertaking qualifying study (s569A) and not satisfying the activity test (s569(1)). It follows that she was not qualified to receive Austudy during the periods 5 February 1999 to 17 October 1999 and 21 December 1999 to 5 July 2001.

18. Section 1223(1) of the Act provides that an amount paid to a person that the person was not qualified to receive is a debt due to the Commonwealth and is legally recoverable. It follows that the amounts paid to Ms Baginiski in respect of the periods 5 February 1999 to 17 October 1999 and 21 December 1999 to 5 July 2001 (namely the amount of $20,368.68) constitute a debt due by Ms Baginski to the Commonwealth.

19.     However, as I have noted at paragraph 12 above, in April 2002 the ARO decided to waive the recovery of all payments made after 18 May 2000. Ms Baginski sought to have reviewed by the SSAT only the ARO’s decision that the amounts due in respect of the periods 5 February 1999 to 17 October 1999 and 21 December 1999 to 18 May 2000 and the SSAT only purported to review that aspect of the ARO’s decision.

20.     Again, it was only that aspect of the ARO’s decision as affirmed by the SSAT that Ms Baginski sought to have reviewed in this Tribunal.  Mr Ellis for the Secretary did not contend that the SSAT should have independently reviewed the ARO’s decision to waive the debt that accrued after 18 May 2000, nor did he contend that I should review that decision.  The Secretary’s position was only that the SSAT’s decision in respect of the debt due prior to 18 May 2000 should be affirmed.

21.     However, I consider my obligation to be to review the original decision as varied by the ARO and which was, in turn, affirmed by the SSAT.  That requires me to consider what was the correct or preferable decision in relation to Ms Baginski at the time of the original decision.  That means that I must turn to consider whether all or part of the debt that I have found to exist (ie the amount of $20,368.68) should be recovered.

Should the debt be recovered?

22.      French J observed in Re Secretary, Department of Social Security and Hales (1998) 51 ALD 695 at 695,696 as follows:

“From time to time in the administration of social security benefits overpayments occur. Sometimes these are the result of innocent non-compliance with the requirements of the law which can be affected by the stress associated with the circumstances that led to the receipt of benefits in the first place. The taxpayer is entitled to expect that in the ordinary course money paid to people which they are not entitled to receive will be recovered, albeit in a way appropriate to the circumstances which led to the overpayment and the circumstances of the persons concerned. However, the confining of a recovery regime by rigid rules, particularly in this area of the law, is likely to be productive of unfair or harsh outcomes in some of the great variety of fact situations that can arises. There are provisions in the Act which recognise that reality. They relate to the writing off and the waiver of debts otherwise due to the Commonwealth.”

23. Section 1237(1) of the Act grants to the Secretary, and hence to this Tribunal by virtue of s43(1) of the AAT Act, the ability to waive the Commonwealth’s right to recover the whole or part of a debt due from a debtor only in the circumstances described in a number of specified sections of the Act. Two waiver sections are relevant in the current proceeding, namely s1237A and s1237AAD.

24. First, s1237A(1) of the Act provides that (subject to the proviso in s1237A(1A), which is not relevant in the present case) 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.”

25.      Two questions must be answered in the affirmative for the obligation to waive to arise; first, whether the debt was attributable solely to administrative error by the Commonwealth and, second, whether the payment(s) were received by the recipient in good faith.  As regards the first of these two factors, Beaumont J in Re Secretary, Department of Family and Community Services and Sekhon [2003] FCA 76 recently emphasised that the significance of the word “solely” must not be overlooked. It is not enough that, in the absence of administrative error, the debt would not have arisen. Administrative error must be the sole cause, not merely one of multiple causes.

26. Secondly, in certain circumstances a debt may be waived in the exercise of a discretion to do so. Section 1237AAD of the Act is as follows:

1237AAD.  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 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.

Note:    Section 1236 allows the Secretary to write off a debt on behalf of the Commonwealth.

27.      What should be regarded as special circumstances is an issue that confronts this Tribunal regularly.  Reference is frequently made, with approval, to the decision of the Tribunal in Re Beadle and Director–General of Social Security (1984) 6 ALD 1 at 3, that one should look for circumstances that are unusual, uncommon or exceptional. They need not be unique, but they must have a particular quality of unusualness that permits them to be described as special. In Re Boscolo and S,DSS (1999) 53 ALD 277 at 281, 282 French J described the core of the requirement as being that there be something unusual or different to take the matter out of the ordinary course, but without requiring that the case be extremely unusual, uncommon or exceptional.

28.      Ms Baginski contended that at all times she had attempted to do the right thing and to pursue her studies diligently, although she had experienced delays in completing work because of ill health; at all times she had keep AIPC informed and understood that AIPC at all times considered her to be a full-time student - and that AIPC had kept Centrelink informed of her position.  Overall, she believed that so long as AIPC was happy with her progress (and as far as she knew that was always so) then she would be satisfying all of the requirements of Centrelink in relation to her eligibility for Austudy.  She was aware of her obligations to notify of changes of enrolment but at no time did she believe that she had to notify anything to Centrelink because, so far as she was concerned, the nature of her enrolment had not changed and AIPC was keeping Centrelink informed.

Mandatory waiver under s1237A

29.      In my opinion no question of administrative error can arise until, at the earliest, 3 December 1999 when Centrelink wrote to Ms Baginski to advise that her benefit, which had been cancelled from 13 November 1999, was to be restored with effect from 13 November. There is no reason to consider that between February 1999 and the date of that letter Centrelink had committed any administrative error.   There is no suggestion that the original decision to grant the benefit to Ms Baginski was incorrect and Ms Baginski confirmed her understanding that she was required to notify Centrelink if she ceased to be a full-time student or changed her enrolment.  I have found that at no time prior to 17 October 1999 was Ms Baginski a full-time student.  No notification of that was given to Centrelink.  In my opinion s1237A has no application to any part of the debt that accrued prior to 3 December 1999.

30.      As to whether or not Centrelink erred by reinstating the benefit on 3 December 1999, I have already observed that there is no direct evidence available as to why Centrelink took the action that it did to cancel the benefit or to reinstate it.  Presumably it had become aware of some information (which could only have been from AIPC) that Ms Baginski was not studying full-time.  Whether the decision to reinstate the benefit was itself an error depends on what information was available to Centrelink about Ms Baginski’s ongoing entitlement.  Mr Midwood was able to produce document M1 – which is a letter dated 29 November 1999 from AIPC to Ms Baginski but marked “to whom it may concern.”  The letter ‘certifies“ that Ms Baginski “is currently enrolled” in the course and that “…it is anticipated that if [she] follows the recommended study schedule provided by [AIPC] she will complete her studies …on 23 October 2000.”  It contains no statement or information to the effect that Ms Baginski was not in fact following the recommended study schedule.

31.      There is no direct evidence that Centrelink ever received a copy of that letter although Ms Baginski gave evidence that on the several occasions that she obtained letters from AIPC about her enrolment she did pass them on to Centrelink.  It is apparent that Centrelink did receive some information that apparently justified the reinstatement of the benefit.  On balance I find that Centrelink did receive a copy of M1.  On that basis I do not consider that it can be said that the decision to reinstate the benefit was an administrative error.  If it could be said to be so then I consider that the error was not the sole cause of the debt arising after 3 December 1999 – because the information provided by M1 was not a complete picture of Ms Baginski’s course workload situation.  I have found that Ms Baginski was not a full time student at that time and the information available to Centrelink at that time did not make that clear.  It follows, in my opinion, that the debt which arose in the period after 3 December 1999 until 18 May 2000 was not solely due to administrative error by Centrelink.  I do not need, therefore, to consider whether Ms Baginski received the payments made in that period in good faith.  I conclude that a waiver of the debt under s1237A(1) is not possible in relation to the debt that arose in that period.       

32.      As regards the debt that arose after 18 May 2000, I note that the ARO took into account the following matters relevant to s1237A when arriving at the conclusion that the debt that accrued after that date should be waived:

·     Although Ms Baginski was advised in May 2000 that there would be a debt raised for the period from February to November 1999 (which was not then raised) payment was continued, apparently on the advice that she had been granted an extension until November 2000.

·     In May 2000 payment by Centrelink should not have continued without further evidence that Ms Baginski was again studying full-time.  Ms Baginski probably did believe that her position was satisfactory as a full-time student as no further contact was made by Centrelink.

·     The study schedule dated 20 July 2000 indicates that the course would continue until 1 November 2001 – and this would have also led Ms Baginksi to believe that she was a full-time student.

·     In October 2000 Centrelink’s records were updated and some sort of proof of enrolment provided – although it is not known what the proof may have been.

·     The payments after 18 May 2000 were due initially to administrative error and that the payments were received in good faith.  From 5 October 2000 the payments could have been made due to administrative error or, if not, there were special circumstances to waive recovery.  The special circumstances were that AIPC had informed Ms Baginski that she was studying full-time.

33.      I agree with the ARO’s assessment that Centrelink should not have continued the payments in May 2000 without much more specific information about Ms Baginski’s enrolment arrangements and compliance with the schedule of submissions for work, and to that extent there was, in my opinion, administrative error.  Once again, though, I do not consider that it can be said that this error was the only cause of the debt that arose.  At the very least another cause was that Ms Baginski was not studying on a full-time basis and that, in the end, is the fundamental reason why the debt eventually came into existence.  To that extent, in the sense referred to by Beaumont J in Re Sekhon (supra), it cannot be said that the administrative error was the sole cause of the debt after May 2000.  In my opinion none of the debt in respect of the period from February 1999 to May 2001 can be waived under s1237A(1).

Discretionary waiver under s1237AAD

34. The Secretary has not contended that the requirements of s1237AAD(a) are not satisfied in relation to the whole period of the debt and I am satisfied on the evidence before me that all the information provided (or not provided) to Centrelink by Ms Baginski or AIPC was not the result of any actual knowledge and deliberate choice to fail to comply with a notification obligation – and, hence, was not a knowing failure: see Re Jonauskas and S, DFCS (2001) AATA 72 at paras 68 – 73 (Deputy President Forgie).

35. Section 1237AAD(a) being satisfied, I must then turn to s1237AAD(b) and consider whether there are special circumstances (other than financial hardship alone) in the case that would make it desirable to waive the debt. I have already noted:

·Ms Baginski’s uncontradicted evidence (which I accept) that at all times she had believed that her status with AIPC was as a full-time student and that she was, accordingly, a full-time student for Centrelink’s purposes also.

·The SSAT recorded that it had looked at whether there were any special circumstances but considered that none arose. 

·The ARO’s  conclusions regarding the special circumstances after 18 May 2000, namely the fact that AIPC had informed Ms Baginski that she was a full-time student was enough to make her circumstances “extraordinary and unusual” (T55 p163).

36.      In my opinion the ARO’s reasoning is also applicable to the period after November 1999 but not before then.  Prior to that time Ms Baginski was in the same position as any other Austudy beneficiary.  She knew that she was required to be a full-time student and that she had to notify Centrelink of any change to that status.  She also knew that she was not meeting the AIPC submission schedule and the obligation was on her from an early stage to clarify her Austudy entitlement position.  She did not do so until November 1999 in response to the cancellation of the benefit.  At that point I accept that the response she received from AIPC and passed on to Centrelink, and the reinstatement of the benefit,  was sufficient for her to reasonably believe that she continued to be considered a full-time student by both AIPC and Centrelink.  That belief can only have been reinforced by the events of May 2000 and the continuation of her benefits after that time.

37.      I therefore conclude that special circumstances exist in relation to the debt in the period after 21 December 1999 (remembering that Ms Baginski has been accepted as being a full-time student from 18 October 1999 until that date) but not before then by virtue of the misconception by Ms Baginski about her status.

38.      I have also considered whether there are any other circumstances in relation to the period prior to December 1999 that can be considered special.  Ms Baginski has not identified any other special factors other than that she was unwell for some of this period and that this had an affect on her ability to study in accordance with the approved schedule at the time.  Whether this would constitute a special circumstance must be doubtful, but in any event I accept the evidence that throughout the relevant period Ms Baginski was able to hold one and at times two part-time jobs.  Overall I do not consider that any special circumstances exist in relation to the debt that arose prior to December 1999.

39.      Having concluded that special circumstances exist in relation to the debt due for the period after 21 December 1999 but not before that date I must consider whether the requirements of s1237 AAD(c) are satisfied - namely that it is more appropriate to waive the debt (ie not recover the debt at all) than to write it off (ie defer its recovery for a period of time).  In my opinion, and for the reasons set out below, in the circumstances of the case it is not appropriate to write off any of the debt.  Accordingly, it must be more appropriate to waive the debt for the period after 21 December 1999 than to write it off: Re Hales (supra) at p704.

Discretionary write off under ss1236

40. It remains only for me to consider whether any of the debt that that I have found to exist should be written off (ie its collection delayed) under Section 1236 of the Act – which permits a debt to written off for a stated period or otherwise, but only in the circumstances referred to in the section. At the relevant time the section was as follows:

1236(1)         Subject to subsection (1A), the Secretary may, on behalf of the Commonwealth, decide to write off a debt, for a stated period or otherwise.

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.

1236(1B) For the purposes of paragraph (1A)(a), a debt is taken to be irrecoverable at law if, and only if:

(a)the debt cannot be recovered by means of deductions, or legal proceedings, or garnishee notice, because the relevant 6 year period mentioned in section 1231, 1232 or 1233 has elapsed; or

(b) there is no proof of the debt capable of sustaining legal proceedings for its recovery; or

(c)the debtor is discharged from bankruptcy and the debt was incurred before the debtor became bankrupt and was not incurred by fraud; or

(d) the debtor has died leaving no estate or insufficient funds in the debtor's estate to repay the debt.

1236(1C)      For the purposes of paragraph (1A)(b), if a debt is recoverable by means of deductions from a person’s social security payment, the person is taken to have a capacity to repay the debt unless recovery by those means would cause the person severe financial hardship.

1236(2)         A decision made under subsection (1) takes effect:

(a) if no day is specified in the decision—on the day on which the decision is made; or

(b)if a day is specified in the decision—on the day so specified (whether that day is before, after or on the day on which the decision is made).

1236(3)         Nothing in this section prevents anything being done at any time to recover a debt that has been written off under this section.

41. On the evidence, I am satisfied that none of the four circumstances in s1236(1A) that would permit a write-off exist. Ms Baginski is in paid (albeit part-time) employment and lives on a de facto basis with a person who is in full-time, secure employment. She is not in receipt of any social security benefit at the moment but makes fortnightly payments to Centrelink in reduction of the debt when she is in employment under an arrangement with Centrelink. There is no reason why that arrangement should not continue. The relevant debt should not, therefore, be written off.

Decision

42.      For the reasons set out above my decision is that I vary the decision under review by deciding that:

·     a debt is due by Ms Baginski to the Commonwealth in respect of Austudy payments made to her in the periods 5 February 1999 to 17 October 1999 and 21 December 1999 to 5 July 2001;

·     the part of the debt for the period 5 February 1999 to 17 October 1999 should be recovered; and

·     special circumstances exist in relation to the part of the debt for the period 21 December 1999 to 5 July 2001 and recovery of that part of the debt should be waived.

I certify that the 42 preceding paragraphs are a true copy of the reasons for the decision herein of Mr M Allen, Member

Signed:         …..……(sgd V Wong)......................................
  Associate

Date/s of Hearing  3 April, 5 May 2003
Date of Decision  28 May 2003
Counsel for the Applicant         In person
Counsel for the Respondent     Mr S Ellis, Service Recovery Team, Centrelink