Chadwick and Secretary, Department of Social Services (Social services second review)
[2023] AATA 3921
•28 November 2023
Chadwick and Secretary, Department of Social Services (Social services second review) [2023] AATA 3921 (28 November 2023)
Division:GENERAL DIVISION
File Number:2022/2501
Re:Mr Greg Michael Chadwick
APPLICANT
Secretary, Department of Social ServicesAnd
RESPONDENT
DECISION
Tribunal:Senior Member B. Pola
Date:28 November 2023
Place:Brisbane
Pursuant to section 43(1)(c)(i) of the Administrative Appeals Tribunal Act 1975 (Cth), the Tribunal sets aside the decision of the Social Services and Child Support Division of the Administrative Appeals Tribunal dated 24 August 2021, and in substitution determines, that the applicant was not eligible to be offered Student Financial Supplement Scheme loans in 2001, 2002 and 2003.
Further, pursuant to section 43(1)(c)(ii) of the Administrative Appeals Tribunal Act 1975 (Cth), the Tribunal remits the matter to the respondent for reconsideration and directs the respondent to recalculate the applicant’s 2003 Student Financial Supplement Scheme opening loan balance, with reference to the reasons of the Tribunal in this decision.
..............................[SGD]..............................................
Senior Member B. Pola
Catchwords
SOCIAL SECURITY - Application of Student Financial Supplement Scheme – where applicant had entered into student loans as a minor and with an intellectual impairment – where applicant was not studying on a full-time basis – whether applicant was entitled to youth allowance and the student loans – where Centrelink were aware of applicant study load and invited applicant to apply for the loans – applicant not entitled to the loans – loans separate contract not voidable under Social Security Act 1991 (Cth) – no common law relief available – decision set aside and substituted
Legislation
Administrative Appeals Tribunal Act 1975 (Cth)
Public Governance, Performance and Accountability Act 2013 (Cth)
Social Security Act 1991 (Cth)
Social Security Administration Act 1999 (Cth)
Cases
Boscolo and Secretary, Department of Education, Employment and Workplace Relations [2009] AATA 794
Collins and Department of Family and Community Services [2006] AATA 820
Commercial Bank of Australia v Amadio [1983] HCA 14; 151 CLR 447
Hailstone and Secretary, Department of Social Services [2022] AATA 1079
Petelin v Cullen [1975] HCA 24
Sukkarieh and Secretary, Department of Education, Science and Training [2006] AATA446
Secondary Materials
Australian Government, ‘Student Financial Supplement Scheme (SFSS)’, Social Security Guide (Government web page, last reviewed 6 November 2023, < Government Department of Finance, ‘Application for a Waiver of Debt owed to the Government’, <REASONS FOR DECISION
Senior Member B. Pola
28 November 2023
BACKGROUND
The applicant, Mr Greg Michael Chadwick had been a participant in a former scheme known as the Student Financial Supplement Scheme (herein referred to as the “SFSS”), which was established in 1993[1], and was abolished with effect from 1 January 2004[2].
[1] Refer to Student Assistance Amendment Bill 1992. The Bill was introduced into the House of Representatives on 7[2] 1.2.7.40 Student Financial Supplement Scheme (SFSS) - description | Social Security Guide (dss.gov.au).
The SFSS allowed eligible tertiary students to increase the amount of assistance they were receiving to supplement their studies in the form of a loan. The SFSS scheme allowed eligible tertiary students to exchange part or all of their entitlements they had been receiving, for instance, Youth Allowance, Austudy, or the Pensioner Education Supplement, for an amount up to twice that of their entitlement, paid to them on a fortnightly basis. The description of the SFSS is prescribed in Chapter 2B, subsections 1061ZX(1) to (6) of the Social Security Act 1991 (Cth) (herein referred to as the “Act”).
In the present matter, the applicant had entered into three loans through the SFSS, in 2001, 2002 and 2003 (herein also referred to as the “SFSS loans”). The applicant’s main contentions with respect to his ineligibility at the time to enter into the SFSS loans are:
(a)his age at the time of signing the SFSS loan contract (at the time he signed the 2001 and 2002 SFSS loans he was a minor, under the age of 18 years);
(b)his disability which also prevented him from studying on a full-time basis at the time he entered into the SFSS loans (discussed in later reasons of this decision); and
(c)his family circumstances at the time he entered into the SFSS loans.
On 1 September 2020, the applicant sought an internal review of his eligibility to enter into the 2001, 2002 and 2003 SFSS loans.
On 7 January 2021, a review was undertaken by an Authorised Review Officer (herein referred to as an “ARO”), with respect to the eligibility of the applicant to enter into the 2001, 2002 and 2003 SFSS loans. The ARO found that the applicant was eligible to enter into the relevant loans[3].
[3] Exhibit TR1, T4, pages 21 to 26.
On 22 June 2021, the applicant applied to the Social Services and Child Support Division (herein referred to as the “SSCSD”) of the Administrative Appeals Tribunal (herein referred to as the “Tribunal”) for a first review of the ARO’s decision[4]. On 24 August 2021, the SSCSD of the Tribunal affirmed the ARO’s decision, that is, it was found that the applicant was eligible to enter into the relevant loans[5].
[4] Exhibit TR1, T3, pages 10 to 20.
[5] Exhibit TR1, T2, pages 4 to 9.
On 25 March 2022, the applicant applied to the General Division of the Tribunal for a second review of the decision of the SSCSD of the Tribunal on 24 August 2021 (noting, the application was out of the prescribed time for making an application for review pursuant to section 29(2) of the Administrative Appeals Tribunal Act 1975 (Cth) (herein referred to as the “AAT Act”)[6].
[6] Exhibit TR1, T1, pages 1 to 3; and T2, pages 4 to 9.
On 24 June 2022, an interlocutory hearing was held with respect to an application for a request for an extension of time for review, which was granted by a member of the Tribunal.
The application was scheduled to be heard in Brisbane, by way of telephone, on 9 August 2023. On the evening of 8 August 2023, the applicant’s representative emailed the Tribunal historical correspondence from what was formerly the Social Services Administrative Tribunal, regarding a review of a debt which was raised against the applicant with respect to his ineligibility to receive youth allowance payments during the period of 11 February 2002 to 20 May 2003, and a subsequent settlement[7]. The applicant’s representative was seeking an adjournment of the hearing due to commence on 9 August 2023, as a result of finding relevant correspondence relating to a settlement.
[7] Exhibit A2; Exhibit TR1, T20, pages 163 to 166.
Due to the late nature of this correspondence, the Tribunal was of the view that the hearing should proceed as scheduled in order to ventilate the issues raised by the applicant’s representative and to seek submissions from the respondent. The Tribunal already had reservations with respect to the eligibility of the applicant to enter into the relevant SFSS loans and in turn had numerous questions for the respondent with respect to the respondent’s submissions in light of evidence referred to in an ARO decision dated 28 August 2003, detailed in the section 37 T Documents[8].
[8] Exhibit TR1, T20, pages 163 to 166.
The hearing commenced on 9 August 2023 with the applicant represented by his mother, Ms Monica Anderson from Simply Stronger Communities (a lay representative). The respondent was represented by Mr Riley Calaby from Services Australia. All parties appeared by telephone, as permitted by section 33A of the AAT Act. The Tribunal heard oral submissions from the applicant, the applicant’s representative, and the respondent’s representative. The Tribunal considered submitted evidence outlined in the Exhibit Register, in Annexure 1 of these reasons.
It became clear to the Tribunal that during the course of the first day of the hearing, upon considering opening submissions from the parties, that the respondent’s failure to include information in accordance with section 37 of the AAT Act relating to the settlement of debts raised against the applicant with respect to youth allowance payments during the relevant period of the SFSS loans, made it difficult for the matter to proceed.
It was further evident during the course of the respondent’s opening submissions, that a number of the respondent’s oral contentions made to the Tribunal stood in direct contrast to a number of written submissions provided to the Tribunal. Of most concern to the Tribunal was the respondent’s opening submission which conceded the applicant had been exempted by Centrelink from studying full-time, and that the Secretary acknowledged that the applicant had not engaged in full-time study during the time in which he had applied for the relevant SFSS loans in 2001, 2002, and 2003[9].
[9] Transcript 9 August 2023, pages 8 lines 45 to 47; page 9 lines 1 to 10; page 15, lines 13 to 47; page 16, lines 1 toThis was of concern to the Tribunal because subsections 1061ZZ(2)(a) and (b) of the Act clearly provide that for the eligibility of a person to obtain an SFSS loan, the person’s rate of Youth Allowance must be more than zero (which in the present application was true); and the Youth Allowance is payable because the person is undertaking full-time study [bold emphasis].
The Tribunal had evidence before it with respect to the ARO’s decision of 28 August 2003, and various Centrelink file notes in the section 37 T documents with respect to studying exemptions given to the applicant[10]. This evidence confirmed the applicant had not been studying full-time during the relevant period prior to, and during, the period of the SFSS loans (more fulsomely detailed in later reasons of this decision). This evidence directly brought into question the applicant’s eligibility to enter into such loans in the first place, and stood in contrast to the respondent’s initial position. The Tribunal’s concern was in relation to the Secretary’s position that[11]:
“7.2The Secretary contends that the Applicant was eligible to obtain financial supplement for the 2001, 2002 and 2003 because the he was undertaking a tertiary course at an education institution throughout the period and was a Category 1 student, as required by section 1061ZY of the Act.
7.3Therefore the Secretary submits that there is no evidence to suggest that the Applicant was not eligible scheme or that he was not entitled to the amount that he received, as outlined in the legislation for each for the SFSL years.”
[sic]
[10] Exhibit TR1, T20, page 163-166; T21, pages 300 to 305; Exhibit TR2, ST4, page 43.
[11] Exhibit R1, page 7, paragraphs 7.2 and 7.3.
At the hearing, the respondent helpfully conceded that the position put forward in the respondent’s Statement of Facts, Issues and Contentions was not correct, and on that basis it would be best to adjourn the hearing to provide revised submissions to the Tribunal. The Tribunal requested the revised submissions directly address:
(i)the inconsistencies in oral submissions in contrast to the written submissions provided to the Tribunal in the respondent’s Statement of Facts, Issues and Contentions;
(ii)the incorrect interpretation of the relevant provisions in the Act with respect to the eligibility of the applicant to participate in the SFSS scheme (with reference to subsections 1061ZZ(2)(a) and (b) of the Act);
(iii)omitted material directly relevant to the application; and
(iv)a chronological history of the applicant’s interactions with Centrelink, including the applicant’s arrangements with respect to part-time study and Centrelink’s recording and treatment of such an approved arrangement.
The respondent accordingly filed a revised Statement of Facts, Issues and Contentions dated 22 September 2023, and additionally filed supplementary evidence in accordance with section 37 of the AAT Act on the same date[12]. The applicant filed submissions in reply on 17 October 2023.
[12] Exhibit R2, and Exhibit TR2.
A resumed hearing was held in Brisbane on 25 October 2023, by video conference, as permitted by section 33A of the AAT Act. The Tribunal heard oral submissions from the applicant, the applicant’s representative, and the respondent’s representative. The Tribunal also entered the additional submissions of the parties outlined above into the Exhibit Register, outlined in Annexure 1 of these reasons.
JURISDICTION
Application can be made pursuant to section 142 of the Social Security Administration Act 1999 (Cth) (herein referred to as the “Administration Act”), for a first review of decisions made under section 135 or section 126 of the Administration Act (subject to carve outs, as per section 144 of the Administration Act, none of which apply to the present application). Therefore, decisions of the Secretary, Chief Executive of Centrelink, or an ARO of the Department may be subject to review by the Tribunal, particularly with respect to Chapter 2B (Student Financial Supplement Scheme) of the Act[13].
[13] Refer to Hailstone and Secretary, Department of Social Services [2022] AATA 1079 at [35] to [37].
Section 179 of the Administration Act provides that application for second review by the Tribunal may be made following a first review by the SSCSD of the Tribunal. The section relevantly provides:
179 Application for AAT second review
(1) Application may be made to the AAT for review (AAT second review) of a decision of the AAT on AAT first review made under subsection 43(1) of the AAT Act.
(2) For the purposes of subsection (1), the decision of the AAT on AAT first review is taken to be:
(a) if an AAT first review affirms a decision—that decision as affirmed; or
(b) if an AAT first review varies a decision—that decision as varied; or
(c) if an AAT first review sets a decision aside and substitutes a new decision—the new decision; or
(d) if an AAT first review sets a decision aside and sends the matter back to the Secretary for reconsideration in accordance with any directions or recommendations of the AAT—the directions or recommendations of the AAT…
[Bolding in original]
With respect to considering section 179(1) of the Administration Act as it applies to this application, and as set out in the reasons above, the Tribunal notes that each of the relevant SFSS loans were internally reviewed by an ARO, in addition to a first review conducted by the SSCSD of the Tribunal. Therefore, in accordance with section 179(1) of the Administration Act, it follows that the Tribunal has jurisdiction to review the application of 25 March 2022.
In determining the jurisdictional limits on the Tribunal in reviewing the relevant SFSS loans, it is important to note that persons taking up an SFSS loan applied to an independent financial institution offering the loans, on the terms set out in the Act. In the present case the 2001, 2002, and 2003 SFSS loans were taken out by the applicant with the Commonwealth Bank through the signing of a contract (more fulsomely detailed in later reasons of this decision). At the conclusion of a five-year period, the assigned rights of the contract are transferred to the Commonwealth[14].
[14] Section 1061ZZCP(2) of the Act.
Following the transfer of the relevant debt, and the associated contract rights along with the contract to the Commonwealth at the end of the five-year period, the debts are recovered by the Commissioner of Taxation.
As outlined in the decision of Hailstone, by Member S. Webb[15], SFSS loans are recovered through the taxation system by the Australian Taxation Office, pursuant to section 1061ZZENA of the Act, with the Commissioner of Taxation administering substantial elements with respect to Part 2B.3 of the Act. Decisions relating to assessment, repayment, and recovery of a person’s SFSS debt are not made by the Secretary, Chief Executive of Centrelink, or an ARO. Decisions of the Commissioner of Taxation in respect of an assessment of a person’s accumulated financial supplement debt or the amount required to be paid are subject to provisions outlined in section 1061ZZFM of the Act.
[15] Hailstone (n 13) at [37].
Chapter 5 of the Act contains provisions with respect to the methods of recovery or non-recovery of debts to the Commonwealth. SFSS loans arise on the basis of a contractual agreement, the rights associated with that contract and the remaining debt are transferred to the Commonwealth five years after the contract was made, and the recovery of this is administered by the Commissioner of Taxation. As it has been found with other applications of this nature concerning the jurisdictional limits of the Tribunal, the Tribunal has no power under the Act to determine whether the contracted debt arising under the SFSS scheme should not be recovered[16].
[16] Refer to Sukkarieh and Secretary, Department of Education, Science and Training [2006] AATA 446 at [11]; Collins and Department of Family and Community Services [2006] AATA 820 at [7] to [10]; and Hailstone (n 13) at [35] to [37].
The Tribunal does note that section 1061ZZFM of the Act provides the Tribunal with power to review decisions of the Commissioner of Taxation, with respect to provisions giving power to the Commissioner of Taxation to make a decision to amend assessments on the basis (for example) of serious hardship[17]. This does not apply in the present application, as no application has been made to the Commissioner of Taxation.
[17] Refer to section 1061ZZFK of the Act.
With respect to the jurisdictional limits on the Tribunal’s review of this application, the Tribunal’s review is therefore limited to decisions relating to the following for each of the relevant SFSS loans:
(a)the applicant’s eligibility;
(b)the amount the applicant was entitled to receive;
(c)the calculation and indexation; and
(d)whether the correct balances were transferred to the Australian Taxation Office.
RELEVANT LEGISLATIVE FRAMEWORK
As outlined in earlier reasons, a description of the SFSS is set out in Chapter 2B, sections 1061ZX(1) to (6) of the Act, which provides:
1061ZX Outline of the scheme
(1) The scheme provides for the reduction of the rate of youth allowance, austudy payment or pensioner education supplement payable to a person who obtains financial supplement.
(2) The scheme contains provisions under which the amount of supplement that the person is eligible to obtain depends on the total rate of youth allowance, austudy payment or pensioner education supplement that the person chooses to receive. Those provisions allow the person to choose to repay some or all of the youth allowance, austudy payment or pensioner education supplement, or to receive a lower rate of payment of such an allowance, payment or supplement, in order to receive a higher amount of financial supplement.
(3) The scheme provides that the person is not liable to pay interest to the financial corporation in respect of financial supplement received by the person, but provides for payment by the Commonwealth, without cost to the person, to the financial corporation of a subsidy that includes an amount in lieu of interest.
(4) The scheme provides for the amount of the financial supplement that has to be repaid under a contract to be indexed on 1 June in the year next following the year in which the contract is entered into, and on 1 June in each later year. The amount by which the supplement is increased by indexation is owed by the person to the Commonwealth and not to the financial corporation.
(5) Under the scheme, the person is entitled, but not required, to make early repayments in respect of the supplement during the period of the contract. The scheme provides for a discount for any repayments made before the end of that period.
(6) The scheme provides that, if financial supplement paid to a person is not repaid in full before the end of the period of the contract, the obligation to repay the outstanding amount of the supplement is transferred to the Commonwealth, and the indexed amount is repayable by the person to the Commonwealth through the taxation system when the person’s income reaches a specified level.
Section 1061ZY of the Act sets out the conditions which determine eligibility to obtain a financial supplement in the now closed SFSS scheme. It provides:
1061ZY Eligibility to obtain financial supplement
(1) Subject to subsection (2), a person is eligible to obtain financial supplement for a period (an eligibility period) that is a year or a part of a year if:
(a) the person is undertaking, or intending to undertake, a tertiary course at an educational institution throughout the period; and
(b) the person does not undertake a course of primary or secondary education at any time during the period; and
(c) the person is a category 1 student or a category 2 student in respect of the period; and
(d) the amount of financial supplement that the person is eligible to obtain under Division 6 for the year is not less than the minimum amount of financial supplement.
(2) A person is not eligible to obtain financial supplement for an eligibility period that begins on or after the day on which the Student Assistance Legislation Amendment Act 2006 receives the Royal Assent.
Section 1061ZZ of the Act sets out the description of a category one student, with respect to the SFSS. It provides:
1061ZZ Category 1 student
(1)A person is a category 1 student in respect of a period if, throughout the period, one or more of the payments referred to in this section are payable to the person.
(2)The payment may be youth allowance if:
(a)the person’s youth allowance general rate is more than zero; and
(b)the youth allowance is payable because the person is undertaking full-time study.
(3)The payment may be austudy payment if the person’s austudy payment general rate is more than zero.
[Tribunal bolding for emphasis]
Chapter 2B, Part 2B.3, Divisions 2 to 10 of the Act provides for the recovery of the financial supplement made through the SFSS via the taxation system. Of note, section 1061ZZEO of the Act provides that debt is owed by a person:
1061ZZEO FS debt owed by person
(1) If, at the termination date of a financial supplement contract made by a person with a participating corporation, there was or is an amount outstanding under the contract, the person owes an FS debt to the Commonwealth.
(2) The FS debt is taken to have been incurred, or is incurred, as the case may be, on 1 June immediately after the termination date.
The validity of SFSS contracts is preserved by strict provisions in the Act, specifically section 1061ZZBA of the Act, which provides:
1061ZZBA Validity of financial supplement contract
(1)The validity of a financial supplement contract with a person is not affected merely because the person was not eligible to obtain financial supplement when the contract was made, or ceases at a later time to be eligible.
(2)The contract is not invalid, and is not voidable, under any other law (whether written or unwritten) in force in a State or Territory.
(3)The contract is not invalid merely because the person is an undischarged bankrupt when the contract is made.
(4)Bankruptcy does not release a person from his or her obligations under the contract.
ISSUES
The issues to be decided in this application are:
(a)the applicant’s eligibility to apply for the SFSS loans;
(b)the amount of financial supplement the applicant was entitled to receive under the SFSS, and the calculation of the applicant’s outstanding SFSS loan (including the calculation of indexation); and
(c)whether the Commissioner of Taxation was correctly advised as to the relevant SFSS loan amounts of the applicant.
CONSIDERATION
Was the applicant eligible to apply for the SFSS loans?
Section 1061ZZ (with respect to category one students) and 1061ZZA (with respect to category two students) of the Act require a person (either as a category one or category two person), to be studying on a full-time basis, in order to be eligible to obtain a financial supplement in accordance with subsection 1061ZY(1) of the Act.
The Tribunal is of the view that the applicant was not eligible to apply to obtain an SFSS loan in the 2001, 2002 and 2003 financial years because the applicant was not studying on a full-time basis during the relevant SFSS loan periods. The Tribunal refers to the following available evidence which supports this finding:
(i)A Centrelink file note dated 9 August 2000, confirming the applicant was studying 10 hours per fortnight on a part-time study load, stating, “…he has a disability have approved hours and signed activity agreement…”. A further file note on this date states the applicant’s mother phoned Centrelink to discuss an exemption from full-time study, and documentation was to be provided to prove the applicant’s disability. The applicant’s mother is recorded as advising Centrelink the applicant was studying two days at TAFE but was unable to cope with more study days[18].
[18] Exhibit TR1, T21, page 305.
(ii)A Centrelink file note dated 5 September 2000, stating that Centrelink had telephoned the applicant, with the following file note recorded, “… client has been given an appt for tomorrow re jobsearch training. client is under the impression that he doesnt need to attend the appt due to his activity type. he had an appt with julie to sign an activity agreement. he has a disability and his current agreement is to do his part time studies only. pfu and advise client. thanks. permission given for mum to enquire also…”[19]. [sic] [Tribunal bolding for emphasis]
[19] Exhibit TR1, T21, page 303.
(iii)A Centrelink file note dated 4 December 2000, with a Centrelink officer recording the following. “… Customer has a disability intelectual and is studying 10hrs per week have signed an activity agreement and we are considering this is his fulltime activity even though it does not show this on nat…”[20]. [sic]
[20] Exhibit TR1, T21, page 303.
(iv)A Centrelink record dated 12 December 2000, of a telephone conversation from the applicant’s mother, advising that the applicant had been granted a part-time status with respect to his studies due to a medical condition, and that he was continuing to study the same part-time course[21].
[21] Exhibit TR1, T21, page 302.
(v)A Centrelink record dated 1 February 2001, where the applicant telephoned Centrelink and with the following file note recorded, “… Cust is p/t student with add problem. Last year he had an aaa with julie at gosford csc to get yal and study p/t as he can only manage p/t study…”[22]. [sic]
[22] Exhibit TR1, T21, page 300.
(vi)A Centrelink record dated 2 February 2001, stating, “… Cust is continuing with part-time study this year and will provide enrolment details to verify…”[23].
[23] Exhibit TR1, T21, page 300.
(vii)A form completed on 20 February 2001 to Centrelink entitled, “Youth Allowance or ABSTUDY – Unreasonable to live at home”, with an attached copy of a TAFE NSW enrolment form dated 20 February 2001, which stated that the applicant was enrolled in a course with a study load of 21 hours per week[24].
[24] Exhibit TR2, ST4, page 41-43.
(viii)A decision statement of an ARO dated 13 December 2006, which made the following findings of fact with respect to the applicant’s study load[25]:
[25] Exhibit TR1, T20, page 163-166.
“… Evidence I considered
This includes:
• Letter from Newcastle Campus TAFE received by Centrelink on 10 June 2003;
• Letter from Belmont TAFE received by Centrelink on 5 June 2003;
• Letter from Moree TAFE dated 28 July 2003;…
…
“… Findings of fact and reasons for decision
…
… • Newcastle TAFE advise that during semester 1 in 2002 your attendance was between 4 to 6 hours per week. Full time students are required to attend 21 hours per week.
• Belmont TAFE advise that during semester 2 in 2002 you only attended the first 2 weeks then did not attend at all after 25 July 2002.
• Moree TAFE advise that during semester 1 in 2003 you were enrolled as a part time student…”It is clear from the evidence outlined in the above sub-paragraphs of this decision, that the applicant was studying on a part-time basis at the time he applied for each of the relevant SFSS loans and was not eligible to enter into each of the relevant SFSS loans.
The Tribunal notes the respondent has conceded the applicant was not eligible to be offered the relevant SFSS loans in 2001, 2002 and 2003[26].
[26] Exhibit R2, page 14, paragraphs 90 to 91; page 16, paragraph 99.
The Tribunal notes that Centrelink separately raised a debt against the applicant for youth allowance payments he had received in the period of 11 February 2002 through to 20 May 2003, on the basis the applicant had not been undertaking a full-time study load. This debt was affirmed by an ARO on 28 August 2003[27]. The former Social Security Appeals Tribunal affirmed this debt at first review on 8 September 2011[28]. Following application for second review to the General Division of the Administrative Appeals Tribunal, the respondent made a decision to exercise the discretion pursuant to section 180 of the Administration Act to erase the debts raised against the applicant for youth allowance payments received in the period of 11 February 2002 through to 20 May 2003, on the ground of special circumstances, noting “that a debt should not have been raised”[29]. On 17 May 2012, the applicant’s application for review in the General Division of the Administrative Appeals Tribunal was dismissed on the basis that the matters in dispute had been resolved and the Tribunal had no jurisdiction[30]. A Centrelink file note dated 21 May 2012 recorded the following[31]:
“… Mrs Anderson the CUS's mother appealed to the AAT on behalf of her son against the decn of the Social Security Appeals Tribunal dated 29 August 2011 affirming Centrelink's decn to raise and recover a YAL debt in the sum of $7895.76 for the period 11/2/2002 to 20/5/2003. In the course of the AAT appeal, Mrs Anderson tendered evidence which was highly suggestive of Centrelink's error in not informing the CUS that he had an exemption from full-time study for a limited period only and that his failure to inform Centrelink of his change of circumstances in studying was because he and his mother were under the belief the exemption continued for the whole of his TAFE course. In addition, Mrs Anderson expressed a concern that Centrelink had failed to take into account her son's ADHD and the impact it had on her son's ability to undestand and comply with Centrelink notices. The evidence presented to th AAT was subsequently put to the BC who agreed that a decn could be mad pursuant to s180 of the Social Security (Administration) Act 1999 to waive the debt and refund the amount of $7895.76 to the CUS…” [sic]
[Tribunal bolding for emphasis]
[27] Exhibit TR1, T20, pages 163 to 166.
[28] Exhibit TR2, ST27, pages 120 to 127.
[29] Exhibit TR2, ST29, pages 128 and 129.
[30] Exhibit TR2, ST30, pages 130 to 132.
[31] Exhibit TR2, ST31, page 133.
The Tribunal observes the respondent settled the matter with the applicant and accepted the administrative error, and notes this was done in circumstances where a letter was sent to the applicant on 9 August 2000, which exempted the applicant from the requirement to study from 11 July 2000 to 7 December 2000[32]. The Tribunal notes there were numerous further attempts as outlined by the interactions detailed in the reasons in earlier paragraphs of this decision, where the applicant and his mother had sought to notify the respondent that the applicant was granted an exemption to receive a full-time rate of youth allowance, when he was in fact studying on a part-time basis.
[32] Exhibit TR2, ST3, pages 38 to 40.
The Tribunal notes the records of the respondent contain a letter sent to the applicant on 23 May 2003, notifying the applicant that the respondent had ceased SFSS loan payments to the applicant because the respondent’s records showed the applicant was not studying full-time and was not eligible to be receiving the SFSS loan payments[33]. This was with respect to the applicant’s 2003 SFSS loan (detailed in later reasons of this decision).
[33] Exhibit TR2, ST17, page 84.
The Tribunal’s finding that the applicant was ineligible for each of the 2001, 2002 and 2003 SFSS loans raises a number of considerations which the Tribunal will consider in the reasons which follow.
Are there any relevant considerations which void the 2001, 2002 and 2003 SFSS loans?
In circumstances where the Tribunal has found the applicant was not eligible to enter into the relevant SFSS loans, the Tribunal’s consideration now turns to the validity of the relevant SFSS loan contracts, and whether any relevant considerations void the relevant SFSS loan contracts.
As outlined in earlier reasons of this decision, SFSS loans arise on the basis of a contractual agreement. The rights associated with that contract and the remaining debt are transferred to the Commonwealth five years after the contract was made, and the recovery of the SFSS loans is administered by the Commissioner of Taxation.
In considering whether there are any relevant considerations with respect to the voiding of an SFSS loan contract, the Tribunal refers to a number of relevant provisions within the Act which seek to preserve SFSS loan contracts. Firstly, section 1061ZZBA of the Act provides:
“1061ZZBA Validity of financial supplement contract
(1) The validity of a financial supplement contract with a person is not affected merely because the person was not eligible to obtain financial supplement when the contract was made, or ceases at a later time to be eligible.
(2) The contract is not invalid, and is not voidable, under any other law (whether written or unwritten) in force in a State or Territory.
(3) The contract is not invalid merely because the person is an undischarged bankrupt when the contract is made.
(4) Bankruptcy does not release a person from his or her obligations under the contract.”
The effect of subsection 1061ZZBA(1) and (2) of the Act is clear. To the extent any law of a State or Territory in the Commonwealth of Australia may void an SFSS loan contract entered into by a person under the age of 18, section 1061ZZBA of the Act displaces that effect. Parliament’s intent in designing the scheme in such a way was ventilated in the decision of Boscolo and Secretary, Department of Education, Employment and Workplace Relations[34] (herein referred to as “Boscolo”), further discussed in later reasons which follow.
[34] [2009] AATA 794 (15 October 2009).
Such is the force of the Act with respect to preserving SFSS loan contracts, that State or Territory legislation which relates to the giving of credit or other financial assistance does not apply to an SFSS loan. The Tribunal refers to section 1061ZZBI of the Act, which provides:
“… 1061ZZBI Financial supplement contract exempt from certain laws and taxes
(1) A law of a State or Territory about giving credit or other financial assistance does not apply to a financial supplement contract.
(2) An application for the payment of financial supplement, a financial supplement contract, or an act or thing done or transaction entered into under such a contract, is not taxable under any law of a State or Territory…”
[Bolding in original]
Further, the Tribunal observes that section 1061ZZBN of the Act further preserves SFSS loan contracts by treating them as absolutely inalienable. This section of the Act provides:
“…1061ZZBN Financial supplement to be absolutely inalienable
Financial supplement is absolutely inalienable, whether by way of, or in consequence of, sale, assignment, charge, execution, bankruptcy or otherwise…”
[Bolding in original]
Having regard to the legislative provisions outlined above, the Tribunal will consider the circumstances of the applicant. Documents before the Tribunal confirm the applicant entered into the following loan arrangements under the SFSS:
(a)A loan for the amount of $5,927, signed by the applicant on 15 August 2001[35] (herein referred to as the “2001 SFSS loan”). This application was accepted on 16 August 2001 and the applicant was provided with notice that he had an SFSS loan of $5,927 for 2001[36] (it is noted at the time the applicant signed the contract for this SFSS loan, he was 17 years of age);
(b)A loan for the amount of $6,214, signed by the applicant on 4 January 2002[37] (herein referred to as the “2002 SFSS loan”). This application was accepted on 14 January 2002 and the applicant was provided with notice that he had an SFSS loan of $6,214 for 2002 on 18 January 2002[38] (it is noted at the time the applicant signed the contract for this SFSS loan, he was 17 years of age)[39]; and
(c)A loan for the amount of $6,406 signed by the applicant on 12 February 2003 (herein referred to as the “2003 SFSS loan”)[40]. This application was accepted on 13 February 2003 and the applicant was provided with notice that he had an SFSS loan of $6,406 on 13 February 2003[41] (it is noted that the applicant was 19 years of age when the 2003 SFSS loan contract was signed). As mentioned in earlier reasons of this decision, ultimately the respondent came to the view that the applicant was not entitled to an SFSS loan in 2003. On 1 May 2003, the applicant’s SFSS loan entitlement was reassessed to $2,283[42]. On 23 May 2003, the respondent ceased the applicant’s 2003 SFSS loan because the applicant’s records showed the applicant was not studying full-time[43].
[35] Exhibit TR1, T9, page 97.
[36] Exhibit TR1, T21, page 239 to 241.
[37] Exhibit TR1, T10, pages 98 and 99.
[38] Exhibit TR2, ST6, pages 48 to 53.
[39] A revised notice was sent from the respondent to the applicant on 14 January 2002 (refer to Exhibit TR1, T21,[40] Exhibit TR1, T11, pages 100 and 101.
[41] Exhibit TR1, T21, pages 257 to 259.
[42] Exhibit TR2, ST16, pages 81 to 83.
[43] Exhibit TR2, ST17, page 84.
At the hearing the applicant did not contest the fact that he had signed the relevant loan contracts[44].
[44] Transcript 25 October 2023, page 27, lines 15 to 27.
The applicant submitted before the Tribunal a number of contentions regarding the validity of the relevant SFSS contracts. The first contention the Tribunal will consider relates to the applicant’s minority at the time of signing the 2001 and 2002 SFSS loan contracts, and his disability which the applicant submits impaired his ability to fully understand the arrangements he had entered into with respect to the relevant SFSS loans[45].
[45] Exhibit A1, page 2, section 2, paragraphs (a) and (b).
With respect to the applicant’s disability, the Tribunal refers to the applicant’s submissions, that[46]:
“…Mr Chadwick was diagnosed with Attention-Deficit/Hyperactivity Disorder in about 1994 at the age of about 10, by Dr Gordon Serfontein, Paediatrician and leading researcher into children and adolescents with learning and behaviour concerns and author of The Hidden Handicap and several research papers. The Serfontein Clinic was the leading medical facility in it’s [sic] time for diagnosis and treatment using MRI to show chemical imbalances in the brain, and it was expensive with quite a long waiting list for diagnosis and treatment. This was a very professional diagnosis…”
[46] Exhibit A3, page 1, paragraph 5.
In the decision of Boscolo, in determining the application of section 1061ZZBA of the Act, Deputy President Handley similarly dealt with an applicant who had also entered into SFSS loans as a minor. With respect to the application of this section in the context of an applicant’s minority at the time of signing contracts for SFSS loans, Deputy President Handley arrived at a considered view that the purpose or object of this provision (as it was then), was to[47]:
“… ensure the validity of the SFS Scheme loan contracts made with persons who are under 18 or who might otherwise be found to lack mental capacity to enter into such a contract by reason of their minority or lack of capacity…
…
… I am not therefore satisfied that the purpose of the legislation was to negate other protections afforded by the law which have no particular relationship to a person’s minority or lack of mental capacity. Thus, in my view, the purpose or object does not extend to the common law principle of non est factum unless, in the particular case, the facts relied on in seeking to establish the defence involve the minority or a lack of mental capacity on the part of the person… ”.
[47] Boscolo (n 34) at [47].
With respect to the common law defence of non est factum in contract law, the Tribunal refers to the decision of Petelin v Cullen[48], where the High Court of Australia found:
“… The class of persons who can avail themselves of the defence is limited. It is available to those who are unable to read owing to blindness or illiteracy and who must rely on others for advice as to what they are signing; it is also available to those who through no fault of their own are unable to have any understanding of the purport of a particular document. To make out the defence a defendant must show that he signed the document in the belief that it was radically different from what it was in fact and that, at least as against innocent persons, his failure to read and understand it was not due to carelessness on his part. Finally, it is accepted that there is a heavy onus on a defendant who seeks to establish the defence. All this is made clear by the recent decision of the House of Lords in Saunders v. Anglia Building Society (Gallie v. Lee) (1971) AC 1004, esp at p 1019…”
[Tribunal bolding for emphasis]
[48] [1975] HCA 24 at [12].
In response to questioning by the Tribunal, the applicant stated that at the time he had signed the relevant SFSS loans, he was aware that he would receive twice as much income if he signed the loan agreement, and would only have to pay the loans back once he earned a certain level of income. Relevantly, the Tribunal refers to the following exchange during the hearing on 25 October 2023[49]:
SENIOR MEMBER: Okay. I guess the question I have for you is you’ve obviously acknowledged that’s your signature and they’re the signed documents for you?
APPLICANT: Yes.
SENIOR MEMBER: … with respect to the loans that you took out at that time. My question is did you – were you aware that if you signed that document you would get additional funds to live off?
APPLICANT: Yes. Yes. From what I recollect that I would get twice as much money if I signed that loan. So, it was pretty attractive to be able to live off that amount of money, I guess, because obviously it’s hard just as a student to kind of make ends meet, I guess, but - when you’re moving out of home.
SENIOR MEMBER: Were you aware of the conditions of the loan that were offered to you with respect to the interest that might accumulate on that debt?
APPLICANT: Yes. No. That’s definitely something that I didn’t think would – that I would be looking at at this time in my life, that it would still be affecting me and my kids, and the interest and that sort of thing. I honestly didn’t understand that there was interest with it. I thought it was just that I could pay it back once I got to a certain level in my salary.
SENIOR MEMBER: So, you didn’t think that interest would accumulate on the loans?
APPLICANT: No. I don’t even think I was smart enough at that time to understand interest and how that whole thing actually worked. It wasn’t till later on in my life until I started figuring out interest and how you can, I guess, benefit financially or not benefit financially from that, because I did leave school very early.
[49] Transcript 25 October 2023, page 30, lines 44 to 45 and page 31, lines 1 to 21.
The applicant has readily conceded that he understood at the time of signing each of the relevant SFSS loan contracts that he would receive twice the income he would ordinarily receive by way of youth allowance, and that once his income met a certain threshold he would begin paying back the SFSS loans. The Tribunal is of the view that the applicant understood the nature of the documents he had signed with respect to the relevant SFSS loans.
With respect to the applicant’s minority at the time of signing the 2001 and 2002 SFSS loan contracts, the Tribunal is of the view that section 1061ZZBA of the Act is operative and prevents the invalidation of these SFSS loan contracts.
Supporting the above view, historical evidence exists in the documents before the Tribunal with respect to enquiries made by the applicant’s mother on behalf of the applicant just after the applicant had signed the 2001 SFSS loan contract (on 15 August 2001), and in early January 2002. The Tribunal refers to the following evidence:
(a)A Centrelink file note dated 17 August 2001 which stated the applicant’s mother had wanted to know “… the ins and outs advantages plus disadvantages…” of the relevant SFSS loan of the applicant[50].
(b)A Centrelink file note dated 23 August 2001 which stated the applicant’s mother had enquired to understand the applicant’s rate of youth allowance and SFSS loan payment[51].
(c)A Centrelink file note dated 4 January 2002 with respect to a phone call by the applicant’s mother, with the file note stating, “… re: letter issued 191201 advising customer is entitled to lodge a variation to 2001 fss. customer has apparently lodged at cba under the understanding it was related to 2002 and apparently the cba at first under the same understanding and then have reject due to application no as it is a 2001 letter…. rang mother back explaining letter and requirements that customer will need to undertake to apply for fss 2002 mother hung up during conversation as quite distressed at what had happened in regards to her son.”[52].
[50] Exhibit TR1, T21, page 297.
[51] Exhibit TR1, T21, page 297.
[52] Exhibit TR1, T21, page 294.
The Tribunal is of the view that with respect to the applicant’s disability, being the diagnosis of Attention-Deficit/Hyperactivity Disorder, there was a lack of corroborative evidence from the applicant to suggest that this diagnosis prevented the applicant from understanding the nature of the SFSS loan documents (particularly with reference to suggestions by the applicant’s mother during re-examination of the applicant that he had an inability to comprehend contract letter terms, and that the applicant was verging on illiteracy)[53].
[53] Transcript 25 October 2023, page 41, lines 17 to 33.
The Tribunal is not convinced on the state of submissions and the evidence before it that the applicant’s diagnosis prevented him from understanding the nature of the documents he had signed with respect to the relevant SFSS loan contracts. Further, the Tribunal is not satisfied that the applicant has satisfied the high onus of proof required to establish a successful plea of non est factum with respect to the applicant’s minority or disability for the 2001 and 2002 SFSS loans, or the applicant’s disability for the 2003 SFSS loan.
The evidence before the Tribunal does not indicate the applicant thought he was signing something radically different from the relevant SFSS loan contracts. It is for these reasons that the Tribunal is not satisfied the applicant has established the defence of non est factum with respect to each of the relevant SFSS loan contracts.
The Tribunal has considered the applicant’s submissions with respect to his vulnerability and family circumstances at the time in which he entered into the relevant SFSS loan contracts. Submissions provided by the applicant detail a very unfortunate homelife, with the applicant stating there was domestic violence, which contributed to him leaving the family home[54].
[54] Exhibit A3, page 1, paragraphs 6 and 7.
Per the supplementary submissions filed by the respondent, the applicant had completed a form, signed on 5 February 2001, which indicated that it was unreasonable for the applicant to live at home. In completing the form the applicant stated, “… Grandmother is sick on mums side. Dad kicked me out…”[55] [sic]. The applicant’s submissions state that his mother had sought to arrange financial assistance for the applicant through Centrelink[56]. The Tribunal refers to the following submissions of the applicant[57]:
“… As a layperson, it is quite a complex task to address all the issues and the repercussions to Mr Chadwick’s peace of mind as a 16-18 year old with a disability who placed his trust in Centrelink, when confronted with the complexities of Centrelink and the solicitation into the Student Financial Supplement Loans, especially when coupled with Mr Chadwick being a youth in a situation of domestic violence with his father, and isolated from his mother who became geographically distant because of the ill health, and later death, of his grandmother in a small country town northwest of Newcastle…”
[55] Exhibit TR2, ST4, pages 41 and 42.
[56] Exhibit A3, page 1, paragraph 6.
[57] Exhibit A3, page 2, paragraph 10.
The Tribunal accepts the submissions of the applicant detailing the unfortunate situation he was in when he entered into the relevant SFSS loans.
The Tribunal has considered whether equitable principles of undue influence or unconscionable conduct void the relevant SFSS loan agreements[58].
[58] Commercial Bank of Australia v Amadio [1983] HCA 14; 151 CLR 447 at [474] and [475].
The process involving the initiation of an SFSS loan, on the face of the evidence before the Tribunal, involved Centrelink (incorrectly) inviting the applicant, by way of a letter on 10 August 2001, to apply an SFSS loan. This letter stated[59]:
“… Under the Student Financial Supplement Scheme, full-time tertiary students can apply for a Student Financial Supplement loan that provides extra money to help meet living expenses. The loan is paid each fortnight over a maximum period of one year…
… Further information about Financial Supplement loans is available in the booklet, "Student Financial Supplement Scheme - A Guide for Applicants". To apply for the Student Financial Supplement you will need to complete the application form enclosed in the information booklet and take it with this notice to any branch of the Commonwealth Bank of Australia (CBA). You will also need to take proof of your identity…
…
When you accept a Student Financial Supplement loan, you are entering into a contract with the Commonwealth Bank of Australia. The amount you receive is repayable under the conditions of the Student Financial Supplement Scheme…”
[59] Exhibit TR1, T21, pages 234 to 236.
This continued by way of a letter sent to the applicant by Centrelink on 11 January 2002, again (incorrectly) inviting the applicant to apply for an SFSS loan. This letter stated, “… Full-time tertiary students can apply for a Student Financial Supplement loan to help meet living expenses. This money is paid in fortnightly instalments over the period of the loan (maximum of 1 year)…”[60]. The letter further informed the applicant to, “… To apply, please take a completed application form and this notice to any branch of the Commonwealth Bank of Australia. You will also need to take proof of your identity…”.
[60] Exhibit TR1, T21, pages 242 to 243.
A further letter sent to the applicant by Centrelink on 11 February 2003, again (incorrectly) inviting the applicant to apply for an SFSS loan, stating, “… Full-time tertiary students can apply for a Student Financial Supplement loan to help meet living expenses. This money is paid in fortnightly instalments over the period of the loan (maximum of 1 year)… To apply, please take a completed application form and this notice to any branch of the Commonwealth Bank of Australia. You will also need to take proof of your identity…”[61].
[61] Exhibit TR1, T21, pages 251 and 252.
In earlier reasons, the Tribunal has already found that the applicant understood the nature of the documents he had signed with respect to the relevant SFSS loans.
For the Commonwealth Bank’s part in establishing the loan contract with the applicant, on the face of the evidence before the Tribunal, this seems like an automatic process once Centrelink identifies an individual is eligible to apply (with reference to section 1061ZZAI of the Act).
Once the applicant completed an application form and took proof of his identity along with the notice from Centrelink (the letters received by the applicant on 10 August 2001, 11 January 2002 and 11 February 2003 for each of the relevant SFSS loans), Commonwealth Bank would process the relevant SFSS loans as a matter of course. There is no evidence before the Tribunal to suggest that the Commonwealth Bank exerted undue influence or acted unconscionably in its dealings with the applicant.
In coming to this view, the Tribunal again notes the force of the Act preserving SFSS loan contracts with respect to State or Territory legislation which stipulate that the giving of credit or other financial assistance do not apply to SFSS loans (with reference to section 1061ZZBI of the Act transposed in earlier reasons).
In summary, for the reasons outlined, the Tribunal has found that despite finding the applicant was not eligible to enter into the relevant SFSS loans, on reflection of the evidence and submissions before the Tribunal, the Tribunal could find no further relevant considerations which void the relevant SFSS loan contracts.
As an aside, during the course of the hearing, the Tribunal addressed the submissions of the applicant, which relate to the review of decisions made by the Secretary, specifically in relation to sections 1061ZZFS and 1061ZZFT of the Act, which provide[62]:
“… 1061ZZFS What happens if a decision of the Secretary is set aside
(1)Subject to subsection (2), if a decision of the Secretary under this Chapter is set aside after a review under Chapter 6, this Chapter has effect, and is taken to have always had effect, as if the decision had not been made.
(2)If the decision is set aside after a review under Chapter 6 and another decision is substituted for the original decision, this Chapter has effect, and is taken to have always had effect, as if the substituted decision had been the original decision.
[62] Exhibit A1, page 4.
1061ZZFT What happens if a decision of the Secretary is varied
If a decision of the Secretary under this Chapter is varied after a review under Chapter 6, this Chapter has effect, and is taken to have always had effect, as if the decision as varied had been the original decision…”
It is the Tribunal’s view that the operative effect of the above transposed provisions of the Act do not displace the operation of section 1061ZZBA of the Act (regarding the validity of financial supplement contracts).
The amount of financial supplement the applicant was entitled to receive under the SFSS, and the calculation of the applicant’s outstanding SFSS loan (including the calculation of indexation)
From the applicant’s perspective, the Tribunal understands he may have a view that the relevant SFSS loans ought to be nil, in circumstances where the Tribunal has found the applicant was never eligible to be offered such loans, when considering this aspect of the Tribunal’s jurisdictional review of this application. The Tribunal has taken the approach of reviewing the relevant SFSS loans, in order to ensure that the indexation calculations, and the outstanding SFSS loan balances, were correct.
The Tribunal notes that with respect to the rate of youth allowance paid to the applicant during the relevant SFSS loan periods, the applicant was entitled to a full-time equivalent rate of youth allowance, despite having been granted an exemption to undertake study on a part-time basis. On 9 August 2000, the applicant was granted youth allowance at a full-time rate, on the basis he was living at home[63]. On 5 February 2001, the applicant completed a form and provided it to the respondent on 20 February 2001, stating that it was unreasonable for him to live at home[64]. Although the evidence before the Tribunal is not entirely clear, the Tribunal is of the view that it is reasonable to conclude that the applicant was paid a full-time rate of youth allowance on the basis he was not living at home during the relevant period of the SFSS loans[65].
[63] Exhibit TR2, ST3, pages 38 to 40.
[64] Exhibit TR2, ST4, pages 41 to 44.
[65] Refer to 5.2.1.50 Youth related payments - July 1986 to present date | Social Security Guide (dss.gov.au).
For the 2001 SFSS loan, the Tribunal summarises its calculations:
2001 Date contract was approved 15/08/2001[66] Date contract expires 31/05/2006[67] Contracted SFSS loan amount $5,927[68] Repayments made prior to transfer of loan to the ATO - $60[69] Early repayment bonus (prior to transfer to ATO) - $11[70] Balance as at 31 May 2002 $5,856 Annual indexation 1 June 2002 (rate of 3.6%) $210[71] Balance as at 31 May 2003 $6,066 Annual indexation 1 June 2003 (rate of 3.1%) $188[72] Balance as at 31 May 2004 $6,254 Annual indexation 1 June 2004 (rate of 2.4%) $150[73] Balance as at 31 May 2005 $6,404 Annual indexation 1 June 2005 (rate of 2.4%) $153[74] Balance as at 31 May 2006 $6,557 Annual indexation 1 June 2006 (rate of 2.8%) $183[75] Final balance transferred to ATO on 1 June 2006 $6,740 [66] Exhibit TR1, T9, page 97.
[67] Exhibit TR1, T16, pages 112 to 115.
[68] Exhibit TR1, T9, page 97; and Exhibit TR1, T21, pages 239 to 240.
[69] Exhibit TR1, T15, page 109.
[70] Exhibit TR1, T15, page 109; and Exhibit TR1, T12, page 102.
[71] Exhibit TR1, T21, pages 234 to 236; also refer to section 20(1) of the Act with respect to definition for index number;[72] Ibid.
[73] Ibid.
[74] Ibid.
[75] Ibid.
The Tribunal is satisfied that the respondent correctly calculated the applicant’s outstanding SFSS loan balance as at 1 June 2006.
For the 2002 SFSS loan, the Tribunal summarises its calculations:
2002 Date contract was approved 11/01/2002[76] Date contract expires 31/05/2007[77] Contracted SFSS loan amount $6,214[78] Repayments made prior to transfer of loan to the ATO Nil[79] Early repayment bonus (prior to transfer to ATO) Nil[80] Balance as at 31 May 2003 $6,214 Annual indexation 1 June 2003 (rate of 3.1%) $192[81] Balance as at 31 May 2004 $6,406 Annual indexation 1 June 2004 (rate of 2.4%) $153[82] Balance as at 31 May 2005 $6,559 Annual indexation 1 June 2005 (rate of 2.4%) $157[83] Balance as at 31 May 2006 $6,716 Annual indexation 1 June 2006 (rate of 2.8%) $188[84] Balance as at 31 May 2007 $6,904 Annual indexation 1 June 2007 (rate of 3.4%) $234[85] Final balance transferred to ATO on 1 June 2007 $7,138 [76] Exhibit TR1, T21, pages 242 and 243; and Exhibit TR1, T10, page 98.
[77] Exhibit TR2, ST26, pages 118 and 119.
[78] Exhibit TR1, T10, page 98; and Exhibit TR2, ST6, pages 48 to 53.
[79] Exhibit TR1, T15, pages 108 and 109.
[80] Ibid.
[81] Refer to section 20(1) of the Act with respect to definition for index number; also refer to section 1061ZZCH of the Act;[82] Ibid.
[83] Ibid.
[84] Ibid.
[85] Ibid.
The Tribunal is satisfied that the respondent correctly calculated the applicant’s outstanding SFSS loan balance as at 1 June 2007.
With respect to the applicant’s 2003 SFSS loan, the Tribunal again notes the following chain of events:
(a)on 12 February 2003 the applicant was initially approved for a $6,406 SFSS loan[86];
(b)on 26 March 2003 the respondent varied the applicant’s 2003 SFSS loan to $1,611 on the basis that the applicant’s entitlement to youth allowance had been reassessed due to the respondent suspending the applicant’s payment as he had not complied with a request to provide documents[87];
(c)on 8 April 2003 the applicant lodged the documents the respondent had requested[88], and the respondent reinstated the applicant’s 2003 SFSS loan entitlement to $6,406 with effect from 16 April 2003[89];
(d)on 30 April 2003 the applicant’s youth allowance payment was suspended for failure to respond to a request for information regarding the applicant’s study details[90]; and
(e)on 1 May 2003, the respondent sent a further letter to the applicant advising that they had reassessed the applicant’s maximum 2003 SFSS loan entitlement to $2,283[91]; and
(f)on 23 May 2003, the respondent sent a letter to the applicant, notifying him that his 2003 SFSS loan had ceased payments because the respondent’s records showed the applicant was not studying full-time, and was therefore not eligible to be receiving the SFSS loan payments[92].
[86] Exhibit TR1, T11, pages 100 and 101; and Exhibit TR1, T21, pages 257 to 259.
[87] Exhibit TR2, ST11, page 66.
[88] Exhibit TR1, T21, page 281.
[89] Exhibit TR2, ST13, page 72; Exhibit TR2, ST14, pages 76 to 78.
[90] Exhibit TR1, T21, page 280; Exhibit TR2, ST15, pages 79 to 80.
[91] Exhibit TR2, ST16, pages 81 to 83.
[92] Exhibit TR2, ST17, page 84.
For the 2003 SFSS loan, the Tribunal summarises its calculations:
2003 Date contract was approved 12/02/2003[93] Date contract expires 31/05/2008[94] Contracted SFSS loan amount $2,283[95] Repayments made prior to transfer of loan to the ATO Nil Early repayment bonus (prior to transfer to ATO) Nil Balance as at 31 May 2004 $2,743 [per respondent’s calculations][96]
[$2,283 was contracted] [97]Annual indexation 1 June 2004 (rate of 2.4%) $65[98] Balance as at 31 May 2005 $2,808 Annual indexation 1 June 2005 (rate of 2.4%) $67[99] Balance as at 31 May 2006 $2,875 Annual indexation 1 June 2006 (rate of 2.8%) $80[100] Balance as at 31 May 2007 $2,955 Annual indexation 1 June 2007 (rate of 3.4%) $100[101] Balance as at 31 May 2008 $3,055 Annual indexation 1 June 2008 (rate of 2.8%) $85[102] Final balance transferred to ATO on 1 June 2008 $3,140[103] [93] Exhibit TR1, T11, pages 100 and 101.
[94] Exhibit TR1, T16, pages 120 to 123.
[95] Exhibit TR2, ST16, pages 81 to 83.
[96] Exhibit TR1, T15, page 108.
[97] Exhibit TR2, ST16, pages 81 to 83. The Tribunal notes that this was the final adjusted total that the applicant was notified of.
[98] Refer to section 20(1) of the Act with respect to definition for index number; also refer to section 1061ZZCH of the[99] Ibid.
[100] Ibid.
[101] Ibid.
[102] Ibid.
[103] See the Tribunal’s comments at n (96).
Whether the Commissioner of Taxation was correctly advised as to the relevant SFSS loan amounts of the applicant
The Tribunal is satisfied that the respondent correctly calculated the applicant’s outstanding SFSS loan balances for the 2001, and 2002 SFSS loans[104], and advised the Commissioner of Taxation accordingly:
(a)On 1 June 2006, the 2001 SFSS loan balance of $6,740 was transferred to the ATO[105]; and
(b)On 1 June 2007, the 2002 SFSS loan balance of $7,138 was transferred to the ATO[106].
84.The Tribunal notes that there appears to be a discrepancy between the applicant’s maximum entitlement as at 2003, being the contracted amount of $2,283 (which the applicant was notified of), and the amount that is referred to in the respondent’s calculations, being $2,743. The final balance of $3,140 being transferred to the ATO on 1 June 2008 suggests that the balance as at 31 May 2004 was, in fact, $2,743. The Tribunal requested the respondent to clarify this discrepancy on 2 November 2023. The Tribunal followed up on this request on 16 November 2023. By the time of the finalisation of these reasons, the respondent had not responded to this request.
[104] Taking into account the respondent’s failure to clarify the discrepancy with respect to the 2003 SFSS loan, as[105] Exhibit TR1, T15, page 109.
[106] Exhibit TR1, T15, pages 108 and 109.
The Tribunal is of the view that the calculation of the applicant’s 2003 SFSS ought to be remitted to the respondent for reconsideration, in order for the opening balance of the applicant’s loan to be recalculated, observing the discrepancy in the final contracted amount the applicant was notified of on 1 May 2003 by way of letter[107], and the calculation of the 2003 SFSS loan by the respondent with a differing opening balance[108].
[107] Exhibit TR2, ST16, page 81.
[108] Exhibit TR1, T15, page 108.
Alternative avenues of relief for the applicant
The Tribunal has a great deal of sympathy for the position the applicant has found himself in. The respondent has readily conceded the applicant was not eligible to receive the three SFSS loan offers which the respondent invited the applicant to apply for in 2001, 2002 and 2003. Evidence before the Tribunal clearly indicates that the applicant was not studying on a full-time basis during the relevant SFSS loan periods and did not qualify for the scheme.
The Tribunal remarked at the hearing, and repeats in these reasons, the draconian operative effect of section 1061ZZBA of the Act. In circumstances where the SFSS loan contracts are preserved, and there are no review rights or relief available to the applicant in the Act, and where it is clear that there were administrative failings in offering the relevant SFSS loans to the applicant in the first place, the operative effect of section 1061ZZBA denies the applicant any right of review.
Some 20 years later, the applicant is still burdened with the resultant SFSS loans which were incorrectly offered to him by the respondent.
Compounding matters for the applicant, the respondent raised debts against the applicant for youth allowance payments he had received for the period of 11 February 2002 through to 20 May 2003 for the sum of $7,895.76 on the basis he had only been studying part-time, despite an exemption having been granted to the applicant from full-time study (during the loan period for the 2002 and 2003 SFSS loans). This resulted in the respondent subsequently erasing the debt during a review process in this Tribunal in May 2012, many years after the debts were initially raised.
During the course of the hearing, the Tribunal heard submissions from the applicant about the effect that this matter has had on opportunities in his life with respect to pursuing an education and obtaining a job in information technology. Instead of pursuing this goal, the applicant has taken an alternative career path because he was unable to finish his courses in information technology due to the issues he has endured with the respondent and his ability to access appropriate financial assistance.
Alternative avenues of relief were discussed during the course of the hearing between the Tribunal and respondent. The Tribunal refers to the following exchange with the respondent, regarding the discretion available to the Secretary to waive the applicant’s debt[109]:
SENIOR MEMBER: So, why then did the respondent refer the applicant – and I note this is provided in TR1, T18, pages 128 to 129 - to a waiver of debt information with respect to section 63 of the Public Governance Performance and Accountability Act 2013, and I note that was put forward as relief in the original SFIC filed in July?
MR CALABY: My understanding, Senior Member, is that it would be open to the Commonwealth through the Department of Finance to waive the debts under that provision of the Public Governance Performance and Accountability Act 2013 because that provision doesn’t have the same limitation that the waiver provisions within the Social Security Act do as to being only in respect of debts under part 5.2 of the Social Security Act.
[109] Transcript 25 October 2023, page 35, lines 44 to 46; page 36, lines 1 to 33.
The Tribunal observes that the respondent has provided relevant application forms as part of their submissions to the Tribunal, for the applicant to consider making an application for a waiver of debt to the Minister for Finance pursuant to section 63 of the Public Governance, Performance and Accountability Act 2013 (Cth) (herein referred to as the “PGPA Act”)[110]. In submissions to the Tribunal, the respondent submitted[111]:
“… 8. Alternative avenues for relief
8.1 If the Tribunal were to affirm the decision of the AAT1, this would not have the effect of entirely denying the Applicant any relief. As discussed above, waiver of amounts or modification of payment terms come within the ambit of the Finance Minister pursuant to section 63 of Public Governance, Performance and Accountability Act 2013 (which replaced the Financial Management and Accountability Act 1997) and subsequently it is open to the Applicant at any time to approach the Department of Finance.
8.2 The Secretary contends that it is open to the Applicant to request the Department of Finance to consider a waiver or to modify the terms and conditions in relation to his 2001, 2002 and 2003 outstanding SFSL amounts. This request to consider is made by completing and submitting with the Department of Finance an “Application for a waiver of debt form” (Attachment A). If the Applicant disagrees with the outcome of his application with the Department of Finance he can apply for reconsideration – the Department of Finance website provides information on this process.
8.3 Overall, the Secretary contends that the Applicant should pursue these alternative avenues of relief…”
[Bold in original]
[110] Refer to Application for a Waiver of Debt owed to the Government (finance.gov.au).
[111] Exhibit R1, page 9, paragraphs 8 to 8.3.
The Tribunal has no jurisdiction to make such an award under the PGPA Act. Nevertheless, the Tribunal notes that the admission by the respondent regarding its administrative failings by offering the applicant the 2001, 2002 and 2003 SFSS loans, in circumstances where the applicant was not entitled to participate in such a scheme, in the Tribunal’s opinion, makes for a compelling case.
DECISION
Pursuant to section 43(1)(c)(i) of the Administrative Appeals Tribunal Act 1975 (Cth), the Tribunal sets aside the decision of the Social Services and Child Support Division of the Administrative Appeals Tribunal dated 24 August 2021, and in substitution determines, that the applicant was not eligible to be offered Student Financial Supplement Scheme loans in 2001, 2002 and 2003.
Further, pursuant to section 43(1)(c)(ii) of the Administrative Appeals Tribunal Act 1975 (Cth), the Tribunal remits the matter to the respondent for reconsideration and directs the respondent to recalculate the applicant’s 2003 Student Financial Supplement Scheme opening loan balance, with reference to the reasons of the Tribunal in this decision.
I certify that the preceding 95 (ninety-five) paragraphs are a true copy of the reasons for the decision herein of Senior Member B. Pola
……………[SGD]….………………
Associate
Dated: 28 November 2023
Date of hearing: 9 August 2023
Resumed hearing: 25 October 2023
Applicant: Mr Greg Michael Chadwick
Applicant’s representative: Ms Monica Anderson from Simply Stronger Communities (a lay representative, the applicant’s mother)
Solicitor for Respondent: Mr Riley Calaby
Services AustraliaAnnexure 1 – Exhibit Register
EXHIBIT
DESCRIPTION OF EVIDENCE
PARTY
DATE RECEIVED
TR1.
Section 37 T-Documents (T1-T23, 373 pages)
R
27.07.2022
TR2.
Supplementary Section 37 T-Documents (ST1-ST31)
R
22.09.2023
A1.
Applicant Statement of Facts, Issues & Contentions (4 pages & covering email)
A
17.07.2023
A2.
Applicant Centrelink correspondence (covering email and 2 x attached correspondences from 2012)
A
09.08.2023
A3.
Applicant Statement in Reply
A
17.10.2023
R1.
Respondent Statement of Facts, Issues and Contentions (including List of Authorities and Attachments A-C)
R
17.07.2023
R2.
Respondent Revised Statement of Facts, Issues & Contentions & List of Authorities (21 pages)
R
22.09.2023
October 1992 by the then Minister for Higher Education and Employment Services.
15.
pages 244 to 246), this was superseded by the notice sent by the respondent on 18 January 2002.
also refer to section 1061ZZCH of the Act; Exhibit R2, page 18, paragraph 114; and Exhibit TR1, T15, page 109.
Exhibit R2, page 18, paragraph 114; and Exhibit TR1, T15, pages 108 and 109.
Act; Exhibit R2, page 18, paragraph 114; and Exhibit TR1, T15, pages 108 and 109.
explained at n (96).
0
6
0