Bird, G. v Secretary of the Department of Employment, Education & Training

[1994] FCA 501

GEOFFREY BIRD v. DEREK VOLKER, SECRETARY OF THE DEPARTMENT OF EMPLOYMENT,
EDUCATION AND TRAINING and JOHN ELLIOTT, PUBLIC SERVANT, DEPARTMENT OF
EMPLOYMENT, EDUCATION AND TRAINING
No. NG338 of 1994
FED No. 501/94
Number of pages - 8
Social Security

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
DAVIES J

CATCHWORDS

Social Security - Student Assistance benefits - AUSTUDY grant and financial supplement thereto - time and manner of payment of financial supplement and its correlation with AUSTUDY grant - discretion to make advances - whether refusal to make an advance was unreasonable.

Student Assistance Act 1973 (Cth) - ss.11, 12K(2)
AUSTUDY/ABSTUDY Supplement Regulations, regs.12A, 12B

HEARING

SYDNEY, 17 June 1994
#DATE 25:7:1994

Counsel for the Applicant: Litigant in person.

Counsel for the Respondent: G. Elliott

Solicitor for the Respondent: Australian Government Solicitor

ORDER

The Court Orders that:
1. The application be dismissed.
2. The applicant pay the respondents' costs of the proceedings.
3. The applicant pay the costs of the Commonwealth Bank.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

DAVIES J This application concerns the timing of the payments made to the applicant, Mr Geoffrey Bird, under his entitlements under the AUSTUDY Scheme, for which Part 2 of the Student Assistance Act 1973 (Cth) ("the Act") and the AUSTUDY Regulations provide, and to the financial supplement, for which Part 4A of the Act and the AUSTUDY/ABSTUDY Supplement Regulations provide. Payments of the AUSTUDY grant and of the financial supplement are being made to Mr Bird fortnightly. However, he has sought a lump sum payment.

1. Mr Bird seeks orders of review with respect to assessments of his entitlement, insofar as the assessments show entitlement to fortnightly payments, and with respect to a decision, notified on 19 April 1994, rejecting his request for a lump sum payment. Mr Bird also seeks a mandatory order requiring the payment to him of the lump sum which he seeks.

2. Needless to say, no mandatory order could be made unless Mr Bird could point to an obligation that the sum be paid to him as he seeks. Mr Bird has submitted that, even if there is no obligation to make the lump sum payment to him, merely a discretion to do so, nevertheless no reasonable decision-maker could decide otherwise than to make the grant. This submission, even if it were accepted, would not permit the Court to order the payment of money, the payment being discretionary.

3. Mr Bird applied for the grant of AUSTUDY and also for the maximum available amount of financial supplement, $6,000, in respect of the 1994 year. He is not yet enrolled for the full year and that matter has been the subject of other proceedings, NG 184/94.

4. Mr Bird was notified that, in the first fortnightly period in 1994, he would receive an AUSTUDY grant of $89.17, supplement of $115.07, total $204.24, that in the following 24 fortnightly periods he would receive AUSTUDY grant of $178.33, a supplement of $230.14, total $408.47 and that in the final period he would receive an AUSTUDY grant of $101.94, supplement of $131.43, total $233.37. The total of the sums was $4,649.36 for the AUSTUDY grant and $6,000 for the supplement, which total was his anticipated entitlement for the 1994 year.

5. On 5 April 1994, Mr Bird wrote to the Manager, Student Assistance, DEET:-
   

"I am writing to request that the timing of my Austudy grant payments and Austudy supplement payments be altered to suit my financial circumstances.

Let me illustrate what I mean by considering the case of a hypothetical student who doesn't have a vacation job. At present you might pay such a student $408 per fortnight. But at the beginning of the year, the student would have to spend about $1500 for enrolment fees, textbooks and rental bond. Because of the timing of the Austudy payments, the student would live in dire poverty for the first few months of the year while paying for these one-off expenses. It would make more sense for DEET to pay the student $1500 in the first week of February, and then pay the student $360 a fortnight for the rest of the year.

On my reading of the Student Assistance Act and Regulations, if a student applied to be paid $1500 up-front and $360 in fortnightly payments, you would be legally obliged to agree to this. Accordingly I request to be paid by up-front payments and with correspondingly reduced fortnightly payments.

Bearing in mind that I'm entitled to $7867.78 for the rest of the year, I request the following:

1. An up-front payment of $1000 for clothing, textbooks, etc.

2. An up-front payment of up to $4000 for medical expenses not covered by Medicare. (At present I don't know exactly how much the medical expenses will come to. It will cost several hundred dollars just to find this out. The cost will probably be about $2000, but I'm asking for up to $4000 just to be on the safe side.

At present I am not enrolled in a course for the whole of the year. But that is because DEET has not paid my Open Learning registration fees as required by the contract. When you have done this, I will then be enrolled for an all-year course and so will continue to be entitled to receive Austudy all year.

If you advanced me $5000 up-front, I would only be entitled to receive $140 a fortnight for the rest of the year. You may well ask, how would I live on $140 a fortnight? The point is, the medical condition has made me virtually unemployable, except in sectors of the economy that have been affected by the recession. Once I have the operation, I will be able to get a part-time job, notwithstanding the recession, so my income will be a lot more than $140 a fortnight.

I will be writing to the Office of the Australian Government Solicitor with a proposed out-of-court settlement, since you have indicated a willingness to settle the matter. This makes more sense than incurring $50,000 in legal costs, over $5000 that you have to pay me sooner or later anyway. The details of the settlement can be changed to accommodate any problems you have (but not the aspect of the up-front payments, unless of course you would like to lend this under some other programme).

If we cannot agree on a settlement, I will seek to amend the Court proceedings to secure the up-front payments by legal action.

Last Thursday you indicated that there might be a problem with DEET's accounting system in paying advances. What I suggest you do is treat the up-front payments as 'grant debt'. Your accounting system makes provision for automatic deductions of a grant debt from the Austudy grant. So, all you have to do is set the deductions of grant debt at a sufficiently high level to recover the up-front payments."

1. Earlier, Mr Bird's entitlements had been cancelled due to a misunderstanding of his position when he transferred from the University of New South Wales to the Open Learning Scheme. Part of the relief sought in proceedings NG 184/94 was restoration of his entitlements. The entitlement was restored by notice given on 6 April 1994 and Mr Bird was then advised of the fortnightly payments he would receive during the first half of 1994.

2. Mr Bird's letter of 5 April 1994, which was received on 7 April, was treated as a request for reconsideration of the decision of 6 April. Mr Bird has contended that he did not request review; but this point seems to carry no weight. His letter was considered and the decision was taken by a Mr John Elliott, the second respondent. It is that decision which is the subject of these proceedings.

3. The reasons stated by the decision-maker for his decision were as follows:-
   

"REASONS FOR THE DECISION: Section 11 of the Student Assistance Act 1973 (the Act) sets out that 'An authorised person may authorise the payment of an advance on account of any benefit that is expected to become payable under student assistance'. This provision is in place because AUSTUDY payments are necessarily advances based on a student's estimated personal income.

Paragraph 56(e) of the Act allows in part that the regulations may provide for the time and manner of payment. This allows the Regulations to limit the extent of the advance payable to the student.

Regulation 12A sets out that payments are fortnightly, and regulation 12 B sets out a formula for determining a student's entitlement based on the number of days in the fortnight for which the student is entitled to get AUSTUDY. Taken together these mean that it is not possible to make an advance of an entitlement as you have requested."

1. The AUSTUDY grant is provided as a living allowance and, in general is payable fortnightly. Thus, the AUSTUDY regulations provide, inter alia:-
   

"12A. AUSTUDY is paid fortnightly.

12B. ...(2) Subject to subregulation (3), the amount of living allowance that a student is entitled to receive in a payment is the amount determined by the following formula: days entitled x entitlement for the year number of days of eligibility where:

'days entitled' means the number of days in the previous fortnight that are days for which the student is entitled to get AUSTUDY; and

'entitlement for the year' means the amount of living allowance that, on the basis of information available to the Department at the time the payment is made, is the total amount that the student is expected to be entitled to be paid in the calendar year in which the payment is made; and 'number of days of eligibility' means:

(a) the number of days in the year; or

(b) if the student is expected to be eligible for living allowance for a period of less than a year - the number of days in the lesser period."

The position is a more complicated with respect to the financial supplement, for the time and manner of payment are not prescribed by the Act or the regulations.

1. There are a number of indications in the Act that the payment of the financial supplement is to be made in tandem with the payment of the AUSTUDY grant. The first is the use of the noun "supplement". The Macquarie Dictionary defines the word as "1. something added to complete a thing, supply a deficiency, or reinforce or extend a whole." The implication which arises from the use of this term is that the provisions for financial supplement add to and extend the benefits conferred under the AUSTUDY Scheme for which Part 2 of the Act provides.

2. This implication is reinforced by s.12H of the Act which provides:-
   

"12H. (1) The payment of financial supplement to a person will, as mentioned in subsection 12A(2), reduce the person's entitlement to certain other benefits under the AUSTUDY scheme or the ABSTUDY scheme in accordance with subsection (2).

(2) If:

(a) apart from this section a person would be entitled to a prescribed benefit under the AUSTUDY scheme or the ABSTUDY scheme in respect of a year or a part of a year; and

(b) an application by the person to a participating corporation for financial supplement in respect of that year or that part of that year is accepted by the corporation in accordance with section 12K; the benefit referred to in paragraph (a) is reduced by an amount equal to one-half of the amount of the financial supplement paid to the person."

It follows that, if a student elects to take a fortnightly supplement of $100, the student's entitlement to the AUSTUDY benefit will be reduced by $50 per fortnight. The use of the word "paid", rather than the word "payable" in s.12H(2) suggests that the fortnightly payments of the AUSTUDY grant and of the financial supplement are to be adjusted in accordance with the amount of each fortnightly payment of the financial supplement.

1. Other provisions point in the same direction. Thus, s.12P commences with the words "This Division provides for payments in respect of financial supplement to stop ... " (emphasis added). Section 12Q(1) provides that a student may give written notice "that he or she does not require any further payments ..." (emphasis added).

2. Some provisions of the Act and of the Regulations may point the other way. Thus, reg. 8 of the AUSTUDY/ABSTUDY regulations specifies $500 as the minimum amount of financial supplement and reg.9 specifies $4,000 as the maximum amount of financial supplement that a student is eligible to obtain. Section 12F provides:-
   

"12F(1) An authorised person must:

(a) decide whether a person ('the student') who seeks to obtain financial supplement in respect of a year or a part of a year is an eligible student in respect of that year or that part of that year; and

(b) give to the student written notice of the decision stating whether the student is an eligible student in respect of that year or that part of that year and, if so, stating:

(i) the minimum and maximum amounts, as determined under the regulations, of the financial supplement that the student is eligible to obtain; and

(ii) such other information as is required by the regulations to be included in such a notice."

Section 12G provides that a student who receives a notice under s.12(F) may choose to apply for the whole or part of the financial supplement by lodging a form of application together with the notice at any office of a participating corporation. These provisions are equally consistent with the payment of lump sums as requested by the students as with the payment of regularly fortnightly instalments.

1. However, s.12K provides:-
   

"12K (1) If a person ('the student') who is entitled to do so applies to a participating corporation in accordance with section 12G for the payment of financial supplement in respect of a year or a part of a year, the corporation must, as soon as practicable, accept the application by written notice to the student.

(2) The acceptance of the application forms a binding contract in respect of that year or that part of that year between the corporation and the student for the making of a loan by the corporation to the student in accordance with this Division of such amount of financial supplement as the student from time to time requests but not exceeding the maximum amount of financial supplement that the student is from time to time eligible to obtain and for the making, if the student so wishes, of repayments during the contract period in accordance with Division 5 in respect of the amount outstanding from time to time under the contract."

My reading of the words "from time to time eligible to obtain" is that they refer to the facts as they exist up to a particular point of time, not to possible entitlement throughout the whole year.

1. Although the issue is debatable, it seems to me that Part 4A which provides for the financial supplement, should be read as supplementary to, and correlated with, the AUSTUDY Scheme. It seems to me therefore that the legislation has in mind that payments will be made in tandem with the payments of the AUSTUDY grant.

2. That is not to say that payment otherwise than by fortnightly instalments could not be authorised. Section 11(1) of the Act provides:-
   

"11.(1) An authorised person may authorise the payment of an advance on account of any benefit that is expected to become payable under student assistance."

Section 3(1) of the Act defines "student assistance" as "assistance under this Act by way of a benefit under the AUSTUDY scheme." Thus, s.11(1) does not apply directly to the financial supplement. But as payments of the AUSTUDY grant and payments of the financial supplement are to be made in tandem, it seems that, if there is an advance made in respect of the AUSTUDY grant, there may, and should also be a corresponding advance of the financial supplement.

1. The decision-maker and also counsel for the respondents expressed the view that AUSTUDY payments are necessarily advances based on a student's estimated income and therefore paid only under s.11(1) of the Act and that such payments in advance must be made fortnightly in accordance with reg. 12A.

2. As presently advised, I do not accept this submission. It appears to me that fortnightly payments are to be made to eligible students as specified by s.7 of the Act and by the regulations. Section 11(1) of the Act confers a separate and distinct power to make an advance which, if exercised, will override the manner of payment otherwise specified. Advances of the AUSTUDY grant may be offset against later payments or recovered under Part 6 of the Act. Advances of the financial supplement may presumably also be offset against future payments, but in any case they would be recoverable in accordance with the provisions for repayment set out in Part 4A of the Act.

3. It follows that the reasons of the decision-maker were in error in two respects. First, the decision-maker misunderstood the effect of s.11(1) of the Act and took the view that all payments must be made in accordance with regs. 12A and 12B. Secondly, the decision-maker did not separately consider the payment of the financial supplement but treated the whole matter as governed by regs. 12A and 12B.

4. However, I am of the view that Mr Bird's letter of 5 April 1994 was misconceived and that the decision-maker was correct in rejecting the application therein made. In his letter of 5 April 1994, Mr Bird did not seek the exercise of the s.11(1) power but put the matter on the footing that, if a student applied to be paid a lump sum, the authorities dealing with students' assistance "would be legally obliged to agree to this". In this circumstance, it seems to me that the reasons for decision substantially dealt with the matters raised in Mr Bird's letter of 5 April. I agree with the decision-maker's approach that the Act contemplates that payments of the AUSTUDY grant and payments of the financial supplement will run in tandem and that a student has no right to demand payment in a lump sum at any time throughout the year.

5. Mr Bird's case is not advanced by looking at the matter from the point of view of contract. He lodged a form of application for the financial supplement with the Commonwealth Bank and it may be assumed that the form was accepted by the Commonwealth Bank. Thus, in accordance with s.12K(2), there was a binding contract between the Commonwealth Bank and Mr Bird. The precise form is not in evidence but there has been tendered a booklet which contains a pro forma form of application. That form provides for a request to the Bank "to lend me the amount of ........ . under the terms and conditions contained in the Student Assistance Act 1973 ('the Act')". The form at a later stage states "Payments will commence within 4 weeks of lodging this form." Other aspects of the booklet show that it was proposed that payments be made by fortnightly instalments. Thus, page 6 contains the sentence "The Supplement is paid in fortnightly instalments into an account you specify." And following the form of application is "A message from the Commonwealth to Tertiary Students", which contains the information, "You can have your fortnightly payments automatically deposited into a Streamline Account". One could not conclude from the evidence before the Court that the Bank undertook to pay the supplement requested in a lump sum or sums as the student sought. Moreover, s.12K(2) set out the essential character of the contract.

1. I shall therefore dismiss Mr Bird's application.

2. Mr Bird should pay the respondents' costs of the proceedings and also the costs of the Commonwealth Bank, on which Mr Bird served a subpoena to produce and a notice to produce the agreement entered into between it and the Commonwealth under s.12D of the Act and other documents. The Commonwealth Bank was represented by counsel to oppose production on various grounds. In the end, it was not necessary to debate the issue as no party wished to rely upon the documents. However, unnecessary costs were incurred. Mr Bird has submitted that the issue would have been avoided had the respondent admitted facts 2 and 3 set out in a notice to admit dated 11 May 1994. However, I would not have expected the respondents to admit the facts in the terms in which they were stated. As Mr Bird did not seek to rely upon the documents, he should not have served the notice to produce and the subpoena.