Halvorsen and Comcare
[2002] AATA 668
•9 August 2002
DECISION AND REASONS FOR DECISION [2002] AATA 668
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q2001/618
GENERAL ADMINISTRATIVE DIVISION )
Re MICHELLE JOY HALVORSEN
Applicant
And COMCARE
Respondent
DECISION
Tribunal Mr R G Kenny, Member
Date9 August 2002
PlaceBrisbane
Decision 1. The Tribunal sets aside the decision under review and remits the matter to the respondent for reconsideration in accordance with the direction that it pay the applicant's higher education contribution payments incurred in relation to the bachelor of commerce degree program at Griffith University. 2. The Tribunal also determines that, pursuant to the General Practice Direction, the respondent shall pay the applicant's costs in so far as those costs were incurred in relation to application Q2001/618.
(Sgd) R G Kenny
Member
CATCHWORDS
COMPENSATION - Military Compensation and Rehabilitation – whether HECS fees should be included as part of the cost of rehabilitation program provided by the Commonwealth
Safety, Rehabilitation and Compensation Act 1988 ss 19, 37
Re Hardin and Comcare (AAT 9201, 22 December 1993)
Hardin v Comcare Australia (1995) 21 AAR 392
Re Hull and Comcare [1999] AATA 766
Re Hazelwood and Comcare [2000] AATA 820
Re Sycz and Comcare [2002] AATA 319
REASONS FOR DECISION
9 August 2002 Mr R G Kenny, Member
Application
On 16 February 2001, a delegate of the Military Compensation and Rehabilitation Service, Department of Veterans' Affairs, as delegate for Comcare (the respondent) determined that a rehabilitation program for Michelle Halvorsen (the applicant) included a bachelor of commerce degree with the provision of course fees (excluding HECS). That decision was affirmed by a further delegate on 22 May 2001.
Mr Harding of counsel appeared for the applicant and Mr Clark of counsel appeared for the respondent.
In evidence were the T documents (T1-T8) as well as the following:
Exhibit A1:a statement of the applicant dated 19 February 2002.
Exhibit A2:a bundle of documents including a rehabilitation plan approved on 16 February 2001, assessment report completed by CRS Australia and Military Compensation and Rehabilitation Service (MCRS), a report completed on 10 February 2001 by Jacqui Broadbridge, occupational therapist and rehabilitation consultant with CRS Australia and a letter, dated 27 February 2001, from the applicant to MCRS.
Exhibit R1: the report of Jacqui Broadbridge (noted above)
Exhibit R2:a rehabilitation plan approved on 16 February 2001 (noted above)
Issues and Legislation
It is not disputed that the applicant, who was born on 13 March 1960, served in the Australian Army from 6 January 1988 and was discharged medically unfit on 21 March 2001. A medical condition relevant to her discharge was a back injury for which the Commonwealth accepted liability on 9 October 2000 (T7).
On 12 March 2001, an MCRS delegate advised the applicant that she would receive compensation payments in the fortnightly amount of $588.24 in accordance with section 37 of the Safety, Rehabilitation and Compensation Act 1988 (the Act) and that this amount would reduce to 75% thereof after the first forty-five weeks of her incapacity (T11).
On 26 March 2001, the applicant was advised by an MCRS delegate that, because of information received about the applicant's classification, she was entitled to compensation under section 19 of the Act at the rate of $596.23 per week. Again the applicant was advised that this would reduce to 75% of that amount after the first forty-five weeks of incapacity (T12).
On 10 April 2001, an MCRS delegate, after receiving further information about the applicant's position, determined that the gross weekly amount that she was entitled to under section 19 of the Act was $794.97. Again, she was advised that this would reduce to 75% of that amount after the first forty-five weeks of incapacity (T13).
While in the Army, the applicant commenced tertiary studies and had completed approximately one-third of a bachelor of commerce degree by the end of 2000.
The assessment by Jacqui Broadbridge on 10 February 2001 (exhibit A2/R1) recommended that approval be given under sub-section 37(3) of the Act for the applicant to complete a bachelor of commerce degree, majoring in financial planning, investment and accounting, at Griffith University commencing in semester 1, 2001.
10. As noted above, approval for the applicant to undertake that course as part of her rehabilitation program was given on 16 February 2001 and affirmed on 22 May 2001. In relation to the costs for which the Commonwealth accepted responsibility, the initial determination provided:"Course fees (excluding HECS) have been included as part of your rehabilitation program. You will be paid an incidentals allowance of $250 per semester. This allowance is to cover the cost of textbooks, stationery, computer, travel and all other study-related costs. Any costs in excess of this amount will be your own responsibility."
11. Provision for rehabilitation programs is made in section 37 of the Act which reads:
"(1) A rehabilitation authority may make a determination that an employee who has suffered an injury resulting in an incapacity for work or an impairment should undertake a rehabilitation program and, where the authority so determines, it may make arrangements with an approved program provider for the provision of a rehabilitation program for the employee.
(2) A rehabilitation authority must not make arrangements for the provision of a rehabilitation program to its employees other than by an approved program provider.
(3) In making a determination under subsection (1), a rehabilitation authority shall have regard to:(a) any written assessment given under subsection 36(8);
(b) any reduction in the future liability to pay compensation if the program is undertaken;
(c) the cost of the program;
(d) any improvement in the employee's opportunity to be employed after completing the program;
(e) the likely psychological effect on the employee of not providing the program;
(f) the employee's attitude to the program;
(g) the relative merits of any alternative and appropriate rehabilitation program; and
(h) any other relevant matter.
(4) The cost of any rehabilitation program provided for an employee under this section shall be paid by the relevant authority in relation to that employee.
(5) Where an employee is undertaking a rehabilitation program under this section, compensation is not payable to the employee under section 19 or 31 but:
(a) if the employee is undertaking a full-time program-compensation is payable to the person of an amount per week equal to the amount per week of the compensation that would, but for this subsection, have been payable under section 19 if the incapacity referred to in that section had continued throughout the period of the program; or
(b) if the employee is undertaking a part-time program-compensation is payable to the employee of such amount per week as the relevant authority determines, being an amount not less than the amount per week of the compensation that, but for this subsection, would have been payable to the employee under this Act and not greater than the amount per week of the compensation that would have been payable under paragraph (a) if the employee had been undertaking a full-time program.
(6) An employee who is entitled to receive compensation under subsection (5) during a period is not entitled to receive rehabilitation allowance under the Social Security Act 1991 during that period.
(7) Where an employee refuses or fails, without reasonable excuse, to undertake a rehabilitation program provided for the employee under this section, the employee's rights to compensation under this Act, and to institute or continue any proceedings under this Act in relation to compensation, are suspended until the employee begins to undertake the program.
(8) Where an employee's right to compensation is suspended under subsection (7), compensation is not payable in respect of the period of the suspension."
12. The applicant's contention was that HECS fees comprised the major cost of her tertiary studies and the issue for the Tribunal is whether those HECS fees are to be included as part of the cost of the rehabilitation program provided by the Commonwealth and for which the Commonwealth should be responsible.
Applicant's Evidence
13. The applicant said that she had commenced tertiary studies while serving in the Army and that 60% of her HECS fees had been paid by the Defence Force Assisted Study Scheme (DFASS). In February 2001, she was not aware of whether her tertiary course would be approved as part of her rehabilitation program and was conscious of the need to enrol at Griffith University to ensure a place in the course. She said that she needed to enrol by the end of January and that the first semester began in mid February. When she enrolled, she did not have sufficient funds to meet the costs of the course on a full "up-front" fee paying basis and, therefore, she adopted the deferred payment option for HECS fees. She understood that there was a census date at the end of March and that, prior to that date, she could re-exercise the option and elect to pay "up-front" fees. She said that she completed her degree after two years of full time study and that, at the end of the financial year 2000-2001, her taxation rebate was taken by the Australian Taxation Office, in the amount of $3,714, to meet her HECS liability for that year. She said that she expected that a similar amount would be due to her as a taxation rebate for the financial year 2001-2002 and that, again, the Australian Taxation Office would use this against her HECS liability.
14. The degree that the applicant completed included majors in financial planning and accounting and she chose those patterns of study to enhance her job opportunities with dual areas of competence. She has been engaged in part-time employment at the rate of some fifteen hours per week until shortly before the hearing and was about to start a full time position with Whittaker McNaught where she would receive an initial salary of $35,000 per year with a review thereof after six months. She said that the employment that she was undertaking was directly related to her tertiary qualifications. The applicant said that she had discussions in December 2000 about her tertiary course with Ms Broadbridge and with Wayne Riddle, her rehabilitation co-ordinator. She said that, as a result of these discussions, she understood that if her course was approved then all of the costs associated with completing the course would be assumed by the Commonwealth as its responsibility. She said that she believed that this would also include HECS fees. She accepted that, in those discussions, she had not been specifically advised that the Commonwealth would pay the HECS fees.
15. The applicant said that she was aware that the payment of fees on an "up-front" basis attracted a discount when compared with payment on a deferred HECS basis. She also agreed that, by accepting that she would pay in the deferred HECS manner, there was the potential for the loss of that discount. However, she also said that she was aware that she had until the census day of 31 March to amend her choice of payment. The applicant, in cross-examination, was referred to her applications for review of the initial decision (dated 5 March 2001 at T10) and for review by the Tribunal (T1). She agreed that, in those letters, she had expressed her belief that the Commonwealth should make payment of the HECS fees but that she did not indicate that she had been led to believe that the Commonwealth had said that they would do so.
16. The applicant was also referred to the report of Ms Broadbridge and to the references in that report about the costs of the program of tertiary studies. The applicant agreed that she had provided Ms Broadbridge with information referred to in the report about having her own computer, laptop, printer, scanner, workstation and basic seating arrangements with appropriate software to complete the requirements of her course of study. She also said that she could recall discussing HECS fees with Ms Broadbridge and indicating that there were basically three bands for assessing fees and that the nature of her study, in accountancy, mainly fell into Band 2. The applicant agreed that she advised Ms Broadbridge about the approximate costs of books and stationery and the nature of the annual guild fee for students of $236.00.
17. The applicant was referred to a letter she wrote on 27 February 2001 (exhibit A2) in which she requested that the Commonwealth pay her student guild fees for 2001. In the letter, she recorded that she had received an account from the University on 26 February 2001 and that the due date for payment was 2 March 2001. In cross-examination, the applicant agreed that she had responded quickly to the receipt of that account by requesting payment from the Commonwealth and agreed that she had not done so in relation to her HECS fees, having waited until after the decision was made approving her program but without HECS liability being accepted.
The Applicant's Submissions
18. Mr Harding submitted that, under section 37 of the Act, the respondent was obliged to adopt a two stage process. The first was to determine whether or not a particular rehabilitation program should be offered. In doing this, it was open to the Commonwealth to determine the nature of the program and to tailor the program to both the applicant's and the Commonwealth's own needs and capacities. In this case, that was done and the program was the tertiary course at Griffith University.
19. Mr Harding submitted that the second step for the respondent, under section 37, was that provided for in sub-section 37(4) of the Act and this was to meet the costs of that approved program. He submitted that this was a mandatory requirement and that all of the costs of an approved program had to be met in accordance with that provision. That being the case, costs including the HECS fees should be paid by the Commonwealth.
20. In relation to the issue of whether the applicant believed or did not believe that HECS fees would be paid, he submitted that this was not relevant because the Commonwealth was under an obligation to pay the costs of the program, regardless of the applicant's belief.
21. Mr Harding referred to the report of Ms Broadbridge and submitted that it did not reveal that Ms Broadbridge had advised the applicant that the responsibility for HECS fees would not be accepted by the Commonwealth. Mr Harding noted that neither Mr Riddle nor Ms Broadbridge had been called by the respondent to give evidence and urged the Tribunal to accept the applicant's evidence that she had not been told that HECS fees would not be included. He submitted that it was the applicant's understanding that all costs would be paid if the course was approved and she understood that this was the effect of her conversations with Mr Riddle and Ms Broadbridge.
22. Mr Harding submitted that the applicant's decision to enrol at Griffith University and to accept a deferred HECS payment option was reasonable in her circumstances at that time. This was because she was not in a position, financially, to make payment of "up-front" fees and, significantly, at the time of her enrolment she was not aware if her course would be approved. She was, at that time, in a position where, if the course was not approved, she would have to pay herself and the only way she could do that was through the deferred HECS payment system. She was also in the position where, if the course was approved and HECS liability accepted, the change of the payment option could be made before the census date.
23. Mr Harding also submitted, in the applicant's circumstances while she was undertaking her course, the HECS liability was a current and ascertainable amount. This was because, at all times, the applicant was in receipt of income over and above the threshold which triggered the need for HECS fees to be paid. Given that the Commonwealth was the source of the applicant's income, the Commonwealth, therefore, was in a position where it was aware that HECS would be immediately redeemable in relation to the applicant's course. This meant that it was not some uncertain amount which would be payable in the future.
24. Mr Harding also referred to the overall purpose of the rehabilitation program and submitted that, in the applicant's case, those purposes had been achieved thoroughly. This was because she was able to undertake a relatively brief period of study and obtain employment pertaining to that field of study where her salary level would obviate the need for the Commonwealth to continue to pay compensation to her. He described the rehabilitation program as an "unqualified success".
25. Mr Harding further submitted that the Act constituted beneficial legislation and that, in the event that there were particular interpretations open, then that which most favoured the employee should be adopted.
The Respondent's Submissions
26. Mr Clark submitted that the process of determining an appropriate rehabilitation program is set out in section 37 of the Act. Pursuant to sub-section 37(3), a written assessment completed in accordance with sub-section 36(8) of the Act had to be considered. In this case, the assessment was completed by Ms Broadbridge and her report made reference to the costs of the program.
27. He submitted that, in this case, there had never been any representation by Ms Broadbridge or Mr Riddle that the HECS fees would be paid by the Commonwealth as part of the cost of providing the program to her. He submitted that the applicant was never led to believe that HECS fees would be paid by the Commonwealth and that it was not material that Ms Broadbridge or Mr Riddle had not been called to give evidence because, in the result, it was the applicant's state of mind that was relevant.
28. Mr Clark submitted that the approach adopted in the decision under review was correct in that, on the authority of the decision of Re Hardin and Comcare (AAT 9201, 22 December 1993), the Commonwealth would not be responsible for a future liability which would be dependent in amount on the applicant's future earnings.
Consideration
29. It is not disputed that the applicant was enrolled in and undertaking a bachelor of commerce degree at Griffith University in 2001 and in the first semester of 2002. It is also not disputed that the course in which the applicant was enrolled is one to which the Higher Education Contribution Scheme (HECS), implemented under the Higher Education Funding Act 1988 (the HECS Act), is applicable. Sub-section 39(1) of the HECS Act reads:
"An Institution shall, in respect of each semester require each contributing student who is undertaking a designated course of study at the Institution on the census date in respect of that course of study in respect of that semester to pay to the Institution in respect of that semester a contribution, ascertained in accordance with this section towards the cost of the provision of that course of study."
30. The HECS Act enables a student to make a choice between making a lump sum payment at the time of enrolment each semester or making payments through the taxation system with these commencing once the person's income reaches a certain threshold. In this case, it has not been disputed and the Tribunal finds that the applicant's income comprised compensation payments made by the Commonwealth throughout her period of study, that these exceeded the relevant threshold, and that the Australian Taxation Office utilised the applicant's taxation rebate to meet HECS liabilities for the period ending June 2001. The Tribunal accepts that this will also be the case in relation to study completed in the year ending June 2002.
31. In Re Hardin and Comcare (AAT 9201, 22 December 1993), the Tribunal determined that the HECS liability was not a cost envisaged by sub-section 37(4) of the Act stating:
"The solution to the problem turns, essentially, upon the answer to the question of what 'costs' are referred to in sub-section 37(4). If the term means the expenses which are incurred in completing the program, being the program for the particular period, the HECS liability of the employee is an amount which may become payable at some time in the future depending on the financial position of the employee. It is not a cost which arises presently in getting the employee from the employee's present non-employable position to the position brought about by successful rehabilitation. On the other hand if 'cost' means the reimbursement of the employee of all actual and contingent expenses connected with the rehabilitation program, the HECS liability would, when ascertained, be required to be discharged by the rehabilitation authority. It appears to the Tribunal that the plain language of section 37 envisages by the term 'cost' those payments which are necessary to bring about the completion of the rehabilitation program of the particular employee. It is our view that there would need to be a clearer expression if the term were to include unascertained liabilities of the employee in future periods. Accordingly, the Tribunal does not see that there is an absolute liability upon the rehabilitation authority to make such payment…" (at paragraph 9).
32. That case was appealed to the Federal Court (Hardin v Comcare Australia (1995) 21 AAR 392) where Einfeld J determined the matter on another ground. His Honour referred to the Tribunal's approach to the meaning of the term "cost" and said that it was not necessary for him to determine the correctness of that view (at 394) although he also noted that a broader interpretation of the term "cost" in sub-section 37(4) was "certainly arguable and may well be appropriate" (at 397).
33. In subsequent Tribunal decisions, HECS fees have been accepted as being part of the responsibility of the rehabilitation authority. In Re Hull and Comcare [1999] AATA 766, the Tribunal found that Ms Hull was under the clear impression that HECS fees for the University course in that case would be paid by the Commonwealth as part of the program and that the plan into which she had entered was one which had approved the estimated costs of the HECS liability for the first year of the degree. There, the Tribunal distinguished the facts from those of Hardin because Ms Hull had a specific and ascertained HECS liability of which the rehabilitation authority had been aware. The Tribunal stated (at par 43):
"The Tribunal is of the view that it is appropriate in the circumstances, as submitted by the applicant to give a narrow meaning to the term 'costs', as the price charged by the University for providing the course of study and an amount which is required to be paid by the student at some time subsequent to the commencement of that study. The Tribunal was not convinced by the respondent's argument that, at least in the circumstances of this case, because of the nature of the HECS liability was such that it did not have to be paid by Ms Hull to get her from a point of not being qualified to a point of being qualified, it cannot be considered a cost under sub-section 37(4) of the Act. It would seem, outside the fees charged to enrol in the course, in the form of a calculated HECS liability, there was really very little else over which the applicant and the respondent could negotiate. Given the protracted nature of the negotiations of Ms Hull, and in particular Ms Humble, and the fact that many of the other costs had already been met by the respondent as part of the compensation program package, the Tribunal is of the view it would be unreasonable to assume that the respondent did not have knowledge that Ms Hull was requesting payment of her HECS fees."
34. In Re Hazelwood and Comcare [2000] AATA 820, the Tribunal held that HECS fees should be regarded as a current rather than a future liability. The Tribunal said:
"…Section 39 of the HECS Act, provides that a contributing student undertaking a course on the census date is required to pay to the institution/University, a contribution, ascertained by using the formula set out in the Section. The contribution towards the cost of the provision of that Course of Study, may be paid by the student direct to the University, and thus the student receives the 15% discount; or if the student has not made the payment, the Commonwealth will, as a benefit to the student, lend the amount of the payment to the student, and make the payment, to the University in discharge of the student's current liability. The Commonwealth recovers the debt then, through the taxation system, when the student's taxable income reaches a level above which payment is required.
The quantum of the HECS fees is known to the student at the time of enrolment. It is not some nebulous figure to be ascertained in the future. The University requires a student undertaking a course on the census date, to pay the contribution. Comcare, by its determination, purported to limit the costs of the rehabilitation program, by excluding HECS fees, on the basis that they were not "rehabilitation costs" which arise in the present, in the process of successful rehabilitation. Comcare regarded them as an amount which might become payable at some time in the future. I consider that Comcare's view is flawed. A student may defer repayment of his or her loan to the Commonwealth, by electing to pay through the taxation system. The loan however, is incurred at the time the Commonwealth agrees to pay to the University the student's HECS fees. It is a current liability and the student continues to be indebted to the Commonwealth until the loan in discharged.
In my view, when Comcare makes a determination that an injured employee should undertake a rehabilitation program, which includes a course of study at a University or other Institution, the payment of HECS fees must be included in the rehabilitation program. In this matter, the applicant was liable to pay HECS fees in relation to a Graduate Diploma in Legal and Justice Studies Course, and such fees should have been included in Comcare's determination made pursuant to Section 37(1) of the Act."
35. In Re Sycz and Comcare [2002] AATA 319, the Tribunal again found that HECS payments were included as costs of the rehabilitation program within the meaning of sub-section 37(4) of the Act on the basis that the HECS payments were not an unascertained liability because Comcare was aware of what the applicant was earning and could have determined that the applicant would have become liable to make HECS contributions during the course of his studies.
36. In the present case, the applicant was subjected to rigorous cross-examination but maintained that she had always believed that the HECS fees would be included in the costs of the rehabilitation program relating to her course of study. The Tribunal accepts that the applicant is a witness of truth. She did not attempt to indicate that she had been specifically advised that the HECS would be paid by the Commonwealth. The report of Ms Broadbridge refers to HECS payments but it does not indicate that she advised the applicant that HECS fees would not be paid. The report includes the following observation:
"I understand the MCRS does not fund HECS payments and Ms Halvorsen has advised me that she is considering the up-front payment option."
37. Ms Broadbridge was not called to give evidence and the reference to her "understanding" does not indicate that there was a communication to the applicant that HECS fees would not be paid. The fact that the applicant was considering the "up-front" payment options is not necessarily inconsistent with the applicant's understanding that the Commonwealth would pick up the HECS fees. At that stage, the applicant was not aware of whether or not her course of study would be approved and, in that event, she was in a position where she could either make the "up-front" payment and, thereby, gain the benefit of a reduction of her overall fees, or accept the deferred payment option. Ms Broadbridge's dealings with the applicant occurred in December 2000. Two months later when the applicant was in the position where she had to make a decision about the mode of payment, she decided, because of her financial position at that time, that she would not commit to "up-front" fees. The Tribunal accepts her evidence that she believed that the option taken by her at that time could be changed prior to the census date at the end of March.
38. The Tribunal had in evidence (exhibit R2) the rehabilitation plan approved on 16 February 2001. It refers to the overall plan goal as being to "gain suitable durable employment following completion of tertiary studies (Bachelor of Commerce)". The plan is set out as follows:
Service Description Activity By Whom Start Date End Date Estimated Cost
Monitor Vocational Training, Conditions & Return to Work Strategy Continue to liaise with client and relevant treating practitioners to ensure continuation of studies and obtainment of durable and suitable employment CRS Australia J Broadbridge 10/02/01 31/01/02 10hrs $1080.00
Physical Conditioning Activities Provision of access to suitable centre for physical management Griffith University Exercise Clinic 10/02/01 31/01/02 $900.00 includes GST
39. The plan makes no further references to any aspect of the applicant's tertiary studies. To that extent, it clearly is not a complete plan. For example, it makes no reference to the payment of the applicant's guild fees or the payments for books and stationery. Neither does it make reference to HECS liability. The document cannot be considered to be a final determination of the financial arrangements as between the applicant and the respondent.
40. At all times, the respondent was aware of the applicant's income and, indeed, the Commonwealth was the source of her income through the making of compensation payments (see paragraphs 5-7 above). It has not been disputed that the level of that income was in excess of the threshold which would precipitate action by the Australian Taxation Office to reclaim HECS fees. It has not been disputed that this action was taken by the Australian Taxation Office in relation to the applicant's taxation refund for the financial year ending June 2001. In that situation, the facts of this case are distinguishable from those in Hardin in that the liability was not a future unascertainable one. It was a certain amount for which the applicant was responsible in the period of study.
41. The Tribunal accept the submission of Mr Harding that, while sub-section 37(1) of the Act enables the respondent to be flexible in the way in which it devises a particular program, sub-section 37(4) mandates that the cost of that program is to be met by the Commonwealth. The term "cost" as used in that provision extends to the HECS fees as they arose in the circumstances of the applicant's case. That being so, the respondent must meet the cost of the applicant's HECS contributions as an element of the rehabilitation program within the meaning of that provision.
Decision
42. The Tribunal sets aside the decision under review and remits the matter to the respondent for reconsideration in accordance with the direction that it pay the applicant's higher education contribution payments incurred in relation to the bachelor of commerce degree program at Griffith University.
43. The Tribunal also determines that, pursuant to the General Practice Direction, the respondent shall pay the applicant's costs in so far as those costs were incurred in relation to application Q2001/618.
I certify that the 43 preceding paragraphs are a true copy of the reasons for the decision herein of Mr RG Kenny, Member
Signed:
AssociateDate of Hearing 26 July 2002
Date of Decision 9 August 2002
Counsel for the Applicant Mr Harding
Solicitor for the Applicant D'Arcys Solicitors
Counsel for the Respondent Mr Clark
Solicitor for the Respondent Australian Government Solicitor
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