Ferede and Secretary, Department of Social Services (Social services second review)

Ferede and Secretary, Department of Social Services (Social services second review) [2017] AATA 1427 (5 September 2017)
Division:GENERAL DIVISION
File Number: 2017/2079
Re:Giza Ferede
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Member D K Grigg
Date:5 September 2017
Place:Brisbane

The Tribunal affirms the decision under review.
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Member D K Grigg
CATCHWORDS
SOCIAL SECURITY – Youth Allowance – overpayment – where applicant did not notify of change of circumstances – where no administrative error – where no special circumstances – hearing in the absence of the parties - decision under review affirmed
LEGISLATION
Acts Interpretation Act 1901 (Cth)
Social Security Act 1991
Social Security (Administration) Act 1999
CASES
Beadle and Director-General of Social Security (1984) 6 ALD 1
Secretary, Department of Family & Community Services v Sekhon [2003] FCA 76
Secretary, Department of Social Security v Hales [1997] FCA 1565; (1998) 82 FCR 154
Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190
Williams and Secretary, Department of Family and Community Services [2003] AATA 726
REASONS FOR DECISION
Member D K Grigg
5 September 2017
INTRODUCTION & CLAIMS HISTORY

Mr Ferede became a recipient of the Youth Allowance in 25 February 2008 when he was studying full-time at the Queensland University of Technology.[1]
[1] Exhibit 1, T Documents, T4, page 32, Centrelink Notice dated 12 November 2010.
Between 1 March 2012 and 22 March 2012 respondent received information from QUT that the applicant had ceased studying.[2] The Department of Human Services (“Centrelink”) then suspended Mr Ferede’s youth allowance pending further inquiries regarding his student enrolment status.[3]
[2] Exhibit 1, T documents, T 23, pages 89 – 92
[3] Exhibit 1, T documents, T 13, pages 60 – 62, Centrelink notice dated 22 March 2012.
Mr Ferede contacted Centrelink on 27 March 2012 confirming that he had not been enrolled at QUT since the end of 2011 and that he now wished to claim Newstart allowance.[4] Mr Ferede was advised by Centrelink that as he was no longer eligible for the Youth Allowance from the end of semester 2 of 2011 and that the payments he had received would need to be cancelled back to the end of that semester, which was
[4] Exhibit 1, T documents, T 14, page 63, Centrelink notice dated 3 April 2012.
[5] Exhibit 1, T documents, T 24, page 97, Centrelink records.
19 November 2011.[5]
On 14 October 2016 Centrelink set Mr Ferede a letter, pursuant to section 196 of the Social Security (Administration) Act 1999 (“Administration Act”), concerning a possible overpayment of his youth allowance.[6]
[6] Exhibit 1, T Documents, T15, pages 64 – 65, Centrelink notice dated 14 October 2016.
Centrelink originally contended that during the period between 19 November 2011 and
[7] Exhibit 1, T documents, T 16, pages 66 – 67 Centrelink accounts payable notice dated 24 October 2016.
16 March 2016 Mr Ferede was overpaid because he failed to disclose that he was no longer undertaking qualifying study. As a result of Centrelink’s determination that Mr Ferede had been overpaid, a debt of $2224.24 was raised.[7]
On 24 October 2016 Mr Ferede requested a review of the decision to raise the youth allowance debt on the grounds that he may be entitled to a Newstart payment during the debt period that could be used to offset the debt.[8]
[8] Exhibit 1, T documents, T 17, page 68, Centrelink notice dated 24 October 2016.
The Authorised Review Officer (ARO) affirmed the decision to raise the youth allowance debt and found no administrative error on the part of Centrelink nor any special circumstances which would justify waiving the debts owed.[9]
[9] Exhibit 1, T Documents, T 18, pages 69 – 75, Authorised Review Officer Decision dated 29 November 2016.
Mr Ferede then sought a further review by the Social Services and Child Support Division (“SSCSD”) of this Tribunal.[10] In his application to the SSCSD Mr Ferede wrote:[11]
I believe that there is a mistake in the process. I have been studying and looking for full-time job. Centrelink never notified me that I had to report immediately after the graduations. The spoke twice with centrelink customer service if they can send me a full detail of the payment and latter of notification, but instead they completely ignored my request and forcing me to pay for the amount that I have never got paid. [sic]
[10] Exhibit 1, T documents, T 21, page 80, application for review of decision.
[11] Exhibit 1, T documents, T 20, pages 78 – 79, summary of application to SSCSD dated 2 December 2016.
The SSCSD affirmed the ARO’s decision on 16 March 2017.[12]
[12] Exhibit 1, T Documents, T2, pages 9 – 11, SSCSD’s Decision and Reasons for Decision dated 16 March 2017.
On 8 April 2017 Mr Ferede lodged an application for review of the SSCSD’s decision by this Tribunal.[13]
[13] Exhibit 1, T Documents, T1, pages 1–8, Application for Review dated 8 April 2017.
On 6 July 2017 Centrelink received further information from QUT that showed that

Mr Ferede sat for his last exam on 15 November 2011. This means that the initial debt raised had not incorporated the period 15 November 2011 to 19 November 2011. As a result of this updated information Centrelink reviewed its original decision and raised a youth allowance debt of $2,279.05 (“Youth Allowance Debt”) from Mr Ferede for the period 16 November 2011 to 16 March 2012.[14]
[14] Exhibit 2, Secretary’s Statement of Facts, Issues and Contentions dated 25 July 2017, Attachment A.
Section 126 of the Administration Act provides that the Secretary may review a decision of an officer under the social security law if the Secretary is satisfied that there is sufficient reason to review the decision. The Secretary may review a decision even if, as is the case here, an application has been made to the AAT for review of the decision: section 126(2), Administration Act.
Pursuant to section 182(2) of the Administration Act if, as here, an officer varies or substitutes a decision after an application has been made for AAT second review in relation to the decision:
(a)the AAT is taken, on AAT first review, to have varied or substituted the decision under review in the way the officer did; and
(b)the application is taken to be an application for AAT second review of the decision as varied or substituted.
Therefore, the decision under review by this Tribunal is that made on 19 July 2017.[15]
[15] Exhibit 2, Secretary’s Statement of Facts, Issues and Contentions dated 25 July 2017, Attachment A.
ISSUES FOR DETERMINATION
The issues for determination are whether or not:
(a)
Mr Ferede has been overpaid his entitlement to Youth Allowance between

19 November 2011 and 16 March 2016; and, if yes
(b)the Youth Allowance Debt is recoverable; and
(c)the Youth Allowance Debt should be waived due to administrative error pursuant to section 1237A of the Social Security Act 1991 (“the Act”); or
(d)“special circumstances” exist such that the Youth Allowance Debt should be waived pursuant to s 1237AAD of the Act.
WAS MR FEREDE OVERPAID YOUTH ALLOWANCE PAYMENTS?
If a person is not entitled to the social security benefit they have obtained, the amount of the payment is a debt due to the Commonwealth by the person and the debt is taken to arise when the person obtains the benefit of the payment: section 1223(1) of the Act.
In this instance, for Mr Ferede to qualify for the Youth Allowance between
16 November 2011 and 16 March 2016 he must have satisfied an “activity test”: s 540 of the Act.
Section 541 of the Act provides that a person satisfies the activity test in respect of a period if the person satisfies the Secretary that, throughout the period, the person is:
(a)“undertaking full-time study”; or
(b)actively seeking paid work and complying with the terms of an employment pathway plan (see section 541(1)(b) of the Act).
Pursuant to section 541(4) of the Act:
(4) For the purposes of paragraph (1)(b), a person who has:
(a) ceased undertaking full‑time study; and
(b) been given a notice under section 68 of the Administration Act that has the effect of requiring the person to inform the Department of that cessation; and
(c) refused or failed to comply with the notice in respect of that cessation;
cannot satisfy the Secretary that, at a particular time after the refusal or failure, the person is actively seeking, and willing to undertake, paid work in Australia unless, before that time, the person has informed the Department of that cessation or the Department has become aware of that cessation.
Note: For undertaking full‑time study see section 541B.
Section 541B of the Act sets out the requirements for when someone is taken to be undertaking full-time study. In this instance for Mr Ferede to satisfy this requirement he must have been:
(a)enrolled in an approved course of education at an educational institution; and
(b)undertaking at least two‑thirds of the normal amount of full‑time study in respect of the course for that period.
There is a dispute between the parties regarding the date Mr Ferede ceased full-time study. Mr Ferede submits he officially graduated from his course on 12 December 2011, and that the graduation date is the date he ceased undertaking full-time study for the purpose of determining the quantum of his youth allowance debt.[16] On the other hand, the Secretary submits that Mr Ferede ceased undertaking full-time study on 16 November 2012, the date he completed his final examination.[17]
[16] Exhibit 1, T Documents, T1, pages 1-6, Application for Review dated 8 April 2017.
[17] Exhibit 2, Secretary’s Statement of Facts, Issues and Contentions dated 25 July 2017, para 32.
The Secretary referred the Tribunal to Williams and Secretary, Department of Family and Community Services [2003] AATA 726, where the Tribunal found that the word “undertaking” is used to describe the process of engaging in or entering upon the course of study, and that the activity of undertaking full-time study commences when the course of study begins. The Secretary submits that therefore a person is taken as having ceased undertaking study when they cease to be actively engaged in the course of study.[18]
[18] Exhibit 2, Secretary’s Statement of Facts, Issues and Contentions dated 25 July 2017, paras 31-32.
As at 16 November 2012 Mr Ferede was no longer engaged in study. His exams ended on that day. Even if it were arguable that he was still enrolled at QUT between

16 November 2011 and 12 December 2011, he was not, between those dates, undertaking at least 75% of the normal amount of full time study, as his course had ended. Therefore, he does not satisfy section 541B(1)(b).
I find therefore that Mr Ferede was not undertaking full-time study between
16 November 2011 and 16 March 2016. There is also no evidence that Mr Ferede was actively seeking paid work and complying with the terms of an employment pathway plan (see section 541(1)(b) of the Act).
Mr Ferede had been sent numerous notices informing him of the need to advice Centrelink of any change in his circumstances.[19] The first record of Mr Ferede notifying Centrelink that he had ceased studying was on 27 March 2012.[20]
[19] Exhibit 1, T Documents, T4-T12, Centrelink notices.
[20] Exhibit 1, T documents, T 24, page 97, Centrelink records.
I find therefore that Mr Ferede owes the Youth Allowance Debt to the Commonwealth.
IS THE YOUTH ALLOWANCE DEBT RECOVERABLE?
Even if a debt is owed, the Secretary may write off a debt in certain circumstances set out in section 1236. Section 1236 provides relevantly:
1236 Secretary may write off debt
(1)Subject to subsection (1A), the Secretary may, on behalf of the Commonwealth, decide to write off a debt, for a stated period or otherwise.
(1A)The Secretary may decide to write off a debt under subsection (1) if, and only if:
(a) the debt is irrecoverable at law; or
(b) the debtor has no capacity to repay the debt; or
(c)...; or
(d)it is not cost effective for the Commonwealth to take action to recover the debt.
The Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt: section 1237A.
Further, the Secretary may exercise its discretion to waive the right to recover all or part of the debt if satisfied that:
1237AAD Waiver in special circumstances
The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:
(a)the debt did not result wholly or partly from the debtor or another person knowingly:
(I)making a false statement or a false representation; or
(ii)failing or omitting to comply with a provision of this Act, the Administration Act or the 1947 Act; and
(b)there are special circumstances (other than financial hardship alone) that make it desirable to waive; and
(c)it is more appropriate to waive than to write off the debt or part of the debt.
SHOULD THE YOUTH ALLOWANCE DEBT BE WRITTEN OFF? (S 1236)
Is the debt irrecoverable at law?
Section 1236(1B) sets out when a debt is taken to be irrecoverable at law:
(1B)For the purposes of paragraph (1A)(a), a debt is taken to be irrecoverable at law if, and only if:
(a)the debt cannot be recovered by means of deductions, or legal proceedings, or garnishee notice, because the relevant 6 year period mentioned in section 1231, 1232 or 1233 has elapsed; or
(aa)the debt cannot be recovered by means of deductions or setting off because the relevant 6 year period mentioned in section 86 of the A New Tax System (Family Assistance) (Administration) Act 1999 has elapsed; or
(b)there is no proof of the debt capable of sustaining legal proceedings for its recovery; or
(c)the debtor is discharged from bankruptcy and the debt was incurred before the debtor became bankrupt and was not incurred by fraud; or
(d)the debtor has died leaving no estate or insufficient funds in the debtor’s estate to repay the debt.
None of those circumstances exist in this case and therefore I find the debt is not irrecoverable at law.
Further, sections 123(1) and 123(3) of the Administration Act state as follows:
123(1) A determination that:
(a)       a person’s claim for social security payment is granted; or
(b)       the social security payment is payable to a person; continues in effect until:
(ba) the payment is cancelled by section 38M of the 1991 Act; or
(c)       a further determination in relation to the payment under section 80, 81 or 82, 124H, 124M or 124NF takes effect; or
(d) the payment ceases to be payable under section 90, 91, 93, 94 or 95; or
(e) the end of the day immediately before the day on which the person dies.
(3) A determination of the rate of a social security payment continues in effect until:
(a) a further determination in relation to the payment under section 78, 79, 81A or 85A takes effect; or
(b) the payment becomes payable at a lower rate under section 98, 99 or 100.
Pursuant to section 100(1) of the Administration Act:
100 Automatic rate reduction—recipient not complying with subsection 68(2) notice
(1) Subject to subsection (2), if:
(a)a person who is receiving a social security payment is given a notice under subsection 68(2); and
(b)the notice requires the person to inform the Department of the occurrence of an event or change of circumstances within a specified period (the notification period); and
(c) the event or change of circumstances occurs; and
(d)the person does not inform the Department of the occurrence of the event or change of circumstances within the notification period in accordance with the notice; and
(e)because of the occurrence of the event or change of circumstances, the rate of the social security payment is to be reduced;
the social security payment becomes payable to the person at the reduced rate on the day on which the event or change of circumstances occurs.
Mr Ferede was under an obligation to advice Centrelink of any changes in his circumstances within 14 days: section 72 of the Administration Act. Because he failed to comply with his obligations, he ceased to be qualified to receive a social security payment and his youth allowance was cancelled: section 94 of the Administration Act.
As referred to earlier, because Mr Ferede was not entitled to the social security benefit he received between 16 November 2011 and 16 March 2012, the amount of the payment he received during that period is a debt due to the Commonwealth and arose arise when he obtained the benefit of the payment: section 1223(1) of the Act.
Does Mr Ferede have capacity to repay the debt?
Section 1236(1C)(a) provides that if a debt is recoverable by means of deductions from the debtor’s social security payment the debtor is taken to have a capacity to repay the debt unless recovery by those means would result in the debtor being in severe financial hardship.
Since January 2017 Mr Ferede has been paying $60/fortnight towards repayment of the Youth Allowance Debt. As at 11 July 2017 the balance owing is $1,444.24.[21]
[21] Exhibit 2, Secretary’s Statement of Facts, Issues and Contentions, para 46, Attachment C – Payment Arrangement List and Debt list extracts.
There is no evidence to suggest that Mr Ferede suffers from severe financial hardship. Mr Ferede did not submit that the recovery of the Youth Allowance Debt was causing him severe financial hardship.
Is it cost-effective for the Commonwealth to recover the debt?
There is no indication from the Respondent that it is not cost-effective for it to recover the debt.
CONCLUSION
There is no basis for the debt to be written off under section 1236 of the Act.
DID MR FEREDE RECEIVE THE OVERPAYMENT IN GOOD FAITH AND WAS THE DEBT, OR A PROPORTION OF THE DEBT, ATTRIBUTABLE SOLELY TO AN ADMINISTRATIVE ERROR? (S 1237A)
Was the Debt Attributable Solely to an Administrative Error?
If administrative error was the sole cause for the debt arising, the Secretary must waive the right to recover the debt. The debt “must be "attributable solely" to administrative error. It is not enough that, in the absence of administrative error, the debt would not have arisen. Administrative error must be the sole cause, not merely one of multiple causes”: Secretary, Department of Family & Community Services v Sekhon[2003] FCA 76, per Wilcox J (at [41]) and on appeal to the Full Federal Court Sekhon v Secretary, Department of Family.
A clerical error, such as referring to “QUT” as “UQ”, is not an error which gave rise to Mr Ferede being overpaid. Mr Ferede submits Centrelink did not notify him to remind him to notify them that he was about to cease study.[22] Yet, the reminder letters were sent to his residential address which is the same address Mr Ferede provided on his Application for Review by this Tribunal. Further, the letters are deemed to have been served by virtue of section 237 of the Administration Act and sections 28A and 29 of the Acts Interpretation Act 1901 (Cth). Section 29 of the Acts Interpretation Act 1901 (Cth) provides that where an Act authorises or requires any document to be served by post, the service shall be deemed to be effected by properly addressing, prepaying and posting the document as a letter and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post. There is no evidence that the letters were returned to the Department or any other indication that something had gone awry in their delivery. I therefore find that the letters were sent by normal post to Mr Ferede’s correct residential address. They are deemed to have been received by him in the ordinary course of post.
[22] Exhibit 1, T Documents, T1, pages 1–8, Application for Review dated 8 April 2017.

The Youth Allowance Debt arose due to a failure to comply with the relevant notification requirements. As a result the debt owed by Mr Ferede was not ‘attributable solely to an administrative error made by the Commonwealth’ for the purposes of section 1237A(1) of the Act.[23]
[23] See Wecker v Secretary, Department of Education Science and Training[2008] FCAFC 108, at [102].
SHOULD DEBT 1 AND/OR DEBT 2 BE WAIVED UNDER SECTION 1237AAD?
There are a few elements to be satisfied under section 1237AAD before a debt may be waived. First, the debt must not have arisen from the debtor, that is he must not have knowingly made a false statement or a false representation or knowingly failed or omitted to comply with a provision of the Act or the Administration Act. Second, there must be special circumstances (other than financial hardship alone) that make it desirable to waive. Third, it must be more appropriate to waive than to write off the debt or part of the debt.
The Act does not define what constitutes “special circumstances”.
However, decisions of the Federal Court make it clear that “special” denotes something different from the usual or ordinary.[24]
[24] Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541, at 545 per
Kiefel J, Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs v Jones (2012) 89 ATR 267; [2012] FCA 639, at [51], Boscolo v Secretary, Dept of Social Security [1999] FCA 106; (1999) 90 FCR 531, at [18]; Barker J in Kazmierczak v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] FCA 1084, at [37].
French J (as he then was) said in in Secretary, Department of Social Security v Hales[1997] FCA 1565; (1998) 82 FCR 154, at 162:
The concept of special circumstances is broad. A constellation of factors, including financial circumstances, may fall within it. The express exclusion of financial hardship alone as a special circumstance is an indicator that it would otherwise be included. This gives some measure of the range of circumstances which will qualify as special. But as a matter of grammar and ordinary logic, the exclusion of financial hardship alone as a special circumstance does not mandate its inclusion in the range of matters constituting such circumstances for the purpose of enlivening the Secretary's discretion. ... The evident purpose of s 1237AAD is to enable a flexible response to the wide range of situations which could give rise to hardship or unfairness in the event of a rigid application of a requirement for recovery of debt. It is inappropriate to constrain that flexibility by imposing a narrow or artificial construction upon the words. It may be that there will be few cases in which the Secretary will be satisfied that there are special circumstances in the absence of financial hardship. It may be that there are few cases in which having found special circumstances to exist, the Secretary would exercise the discretion to waive in the absence of financial hardship. But to anticipate the limits of the categories of possible cases by imposing on the language of the section a fetter upon its application which is not mandated by its words, is to erode its useful purpose.
The AAT has also considered the phrase and held that the interpretation in Beadle and Director-General of Social Security (1984) 6 ALD 1, at [12] (i.e. that the circumstances must be unusual, uncommon or exceptional), applies to the Act.[25]
[25] See Hunnibell and Secretary, Department and Community Services [2004] AATA 992, at [19]; Papps
and Secretary, Department of Family and Community Services [2005] AATA 660, at [37]
Even if Mr Ferede was not aware of his obligations to notify the Department, ignorance of the legal requirements is not a special circumstance. “Centrelink is not required to advise claimants about their legal rights to any particular social security payment or the rate of payment”.[26]
[26] See Brian Murphy and Secretary, Department of Families, Housing, Community Services and
Indigenous Affairs [2010] AATA 115, at [17]; Ivor Biddlecombe and Secretary, Department of Families,
Housing, Community Services and Indigenous Affairs [2010] AATA 451; Barnard and Secretary, Department of Social Services [2016] AATA 436, at [47]; Scott v Secretary, Department of Social Security [1999] FCA 1774, and on appeal Scott and Another v Secretary, Department of Social Security [2000] FCA 1241
The Secretary alerted the Tribunal to notes of a discussion Mr Ferede had with the ARO on 29 November 2016 where it is recorded that Mr Ferede told Centrelink that he believed he had been underpaid income support payments, and that therefore he should not have to repay the debt given the timeframe taken to raise it.[27] However Mr Ferede has provided no evidence in support of this assertion.
[27] Exhibit 1, T Documents, T18, page 74, ARO notes dated 29 November 2016.
Mr Ferede also queried whether the decision made by the SSCSD Member was made independently. Firstly, there is simply no evidence to support this contention. Secondly, this review is an independent merits review and the Tribunal is not bound by earlier decisions. Thirdly, the decision being reviewed is the decision of 19 July 2017 for reasons explained earlier.
No other special circumstances have been raised for the Tribunal’s consideration.
I find that no special circumstances exist within the meaning of section 1237AAD to warrant the exercise of the discretion in section 1237AAD to waive the debt.
CONCLUSION
Mr Ferede’s appeal fails.
The decision under review is affirmed.

I certify that the preceding 55 (fifty-five) paragraphs are a true copy of the reasons for the decision herein of Member D K Grigg

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Associate
Dated: 5 September 2017

Date of hearing: 31 August 2017

Hearing on Papers: 31 August 2017

[2017] AATA 1427

5 September 2017

Key Legal Topics

Areas of Law

Administrative Law

Statutory Interpretation

Legal Concepts

Judicial Review

Procedural Fairness

Statutory Construction

Appeal

Remedies

Date of hearing:	31 August 2017
Hearing on Papers:	31 August 2017