Howard and Secretary, Department of Education, Science and Training

[2006] AATA 107

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 107

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2005/490

GENERAL APPEALS DIVISION		)
Re		STUART IAN HOWARD

Applicant

And SECRETARY, DEPARTMENT OF EDUCATION, SCIENCE & TRAINING

Respondent

DECISION

Tribunal Deputy President P E Hack SC
Mr R G Kenny, Member

Date9 February 2006

PlaceBrisbane

Decision The Tribunal affirms the decision under review.

..............................................

Deputy President

CATCHWORDS

SOCIAL SECURITY – Austudy – student financial supplement scheme – failure to notify change of circumstances – overpayment – debt due to the Commonwealth – whether debt should be written off or waived – whether payment received in good faith – special circumstances

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

Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 50 ALD 186

Dranichnikov v Centrelink [2003] FCAFC 133; (2004) 75 ALD 134

REASONS FOR DECISION

9 February 2006  Deputy President P E Hack SC
Mr R G Kenny, Member     

introduction

1.Between 18 February 2002 and 16 September 2002 Mr Stuart Howard received Austudy allowance totalling $4,804.89. In September 2002 Centrelink determined that he had not been entitled to all of that allowance. Between September 2002 and October 2004 there was further consideration of the issue within Centrelink. Ultimately on 19 October 2004 an Authorised Review Officer determined,

·that Mr Howard had not been qualified to receive Austudy allowance in the period 10 April 2002 to 16 September 2002 and had accordingly been overpaid by $3,625.60;

·that the debt of $686.16 incurred in the period from 19 August 2002 to 16 September 2002 ought to be waived in accordance with s 1237A of the Social Security Act 1991 (the Act);

·that, in the result, Mr Howard was required to repay an amount of $2,939.34.

2.Mr Howard sought a review of this decision by the Social Security Appeals Tribunal. On 16 June 2005 that Tribunal affirmed the decision of the Authorised Review Officer. Mr Howard now seeks a review of the decision.

3.In our view the decision should be affirmed.

the legislation

4.Austudy is dealt with in Part 2.11A of Chapter 2 of the Act. Section 568 sets out three matters to be satisfied in order to qualify for an Austudy payment. The only one relevant here is in paragraph (a) – “the person satisfies the activity test”.

5.In order to satisfy the activity test the person must satisfy the Secretary that, throughout the period, the person is undertaking qualifying study: see s 569 (1). By virtue of s 569A a person is undertaking qualifying study if, relevantly for present purposes,

(a)  the person is enrolled in a course of education at an educational institution, and,

(b)  that course is an approved course of education or study, and,

(c)  the person is a full-time student, and,

(d)  the person satisfies the progress rules.

6.The only element relevant in the present case is that of a full-time student. By virtue of s 569C of the Act a person is a full-time student in respect of a course if the person is undertaking at least three quarters of the normal amount of full-time study in respect of the course.

the facts

7.What follows is not in issue. Mr Howard enrolled in the Diploma in Sports (Development) in Golf, a one year course offered by the University of New England, Shafston. The course commenced on 15 February 2002. It was an approved course of education or study.

8.Mr Howard made a claim for Austudy payment. It was granted and, on the Secretary’s case, Mr Howard was notified of this by letter dated 11 February 2002. Mr Howard denies receipt of this letter. Austudy payment commenced on 18 February 2002.

9.Mr Howard was unable to continue the course because he could not obtain a financial supplement loan sufficient to pay the second semester tuition fees. According to a letter from the University of New England dated 22 September 2003, Mr Howard attended the course between 18 February 2002 and 9 April 2002. Mr Howard accepts that he ceased study on 9 April 2002.

10.As a consequence of advice received from the course provider Centrelink wrote to Mr Howard on 13 August 2002 seeking proof of his commencement date and continuing enrolment. On 19 August 2002 Mr Howard telephoned Centrelink and advised that he was no longer studying.

11.Payment of Austudy ceased on 16 September 2002. Centrelink determined, initially, that Mr Howard had never been entitled to receive Austudy and that, accordingly, he had been overpaid an amount of $4,804.89. Thereafter there was further consideration within Centrelink leading to the decision by the Authorised Review Officer on 19 October 2004.

The Case for Mr Howard

12.Mr Howard’s case is that when he was interviewed by Centrelink officials in late 2001 and early 2002 he was told that he would be able to borrow $7,000.00 from the Commonwealth Bank in the form of a financial supplement loan. He lodged his claim in late January 2002 and was informed, he says, that a supplementary entitlement notice would be sent to him in the mail. As he understood the processes involved he required that notice to take up the financial supplement loan. Despite one personal attendance and numerous telephone calls to Centrelink he did not receive that notice until shortly after 17 June 2002.

13.Importantly, Mr Howard says that he did not receive from Centrelink letters dated 11 February 2002 (Exhibit 5) and 27 March 2002 (Exhibit 6). Exhibit 5, under the heading “IMPORTANT INFORMATION” said that Mr Howard was eligible to apply for a Financial Supplement loan “of between $500.00 and $3,990.00 for 2002”. Mr Howard’s case is that at all times he believed, on the basis of what he had earlier been told by Centrelink officials, that he could obtain a loan for $7,000.00 and that, had be been informed at the outset or subsequently that his entitlement was in the range advised by Exhibit 5, he would not have expended his own money in paying course fees of some $2,625.00 to the University and would not have proceeded with a claim for Austudy.

14.Mr Howard accepts that he received a letter from Centrelink dated 24 January 2002 (T 2, pp 37 – 39). That letter made it clear that he was obliged to notify Centrelink about a number of events or changes in his circumstances including, relevantly, if he stopped being a full-time student. Mr Howard accepted in his evidence that he was aware from the commencement of receipt of Austudy payments that he was obliged to inform Centrelink if he ceased being a fulltime student. He also accepted, at least initially, that he did not inform Centrelink of the fact of his having ceased study when that occurred and that he first informed Centrelink of this fact on 19 August 2002. He said however that what he had said, on many occasions when he was speaking to Centrelink officials regarding the non-receipt, was that if he did not get that notice he would not be able to continue studying.

15.The material from Centrelink’s files is both directly, and by omission, inconsistent with Mr Howard’s account of events. In particular there are no notations that record many of the conversations that he says occurred. But we accept that in an organisation the size of Centrelink there can be failings in administration and that it is possible that from time to time telephone conversations are not recorded accurately or at all. But even accepting the possibility of administrative failing of the type contended for by Mr Howard there is much of his evidence that is difficult to accept and, were it necessary to reach a concluded view, we would not have been disposed to accept the critical parts of it.

16.It is, however, not necessary for us to determine whether his account of events is correct. That is so because, on the view we take of the matter, even if it were to be assumed, favourably to Mr Howard, that he was told that he was entitled to a loan of $7,000.00 and that he did not receive Exhibits 5 and 6 and that the numerous conversations of which he speaks took place, Mr Howard cannot succeed.

The Secretary’s Contention

17.In addition to submitting that Mr Howard was overpaid in the period from 10 April 2002 to 18 August 2002 the Secretary also submitted that the decision of the Authorised Review Officer that the debt which existed from 19 August 2002 to 16 September 2002 be waived was incorrect. He contends in this Tribunal that the waiver decision was wrong.

18.In the Secretary’s Statement of Facts and Contentions lodged with the Tribunal on 12 December 2005 the Secretary accepts that the requirement that the debt be solely attributable to administrative error is satisfied so far as this period is concerned. He puts in issue, however, receipt “in good faith”, relying on the decision in Secretary, Department of Education, Employment, Training and Youth Affairs  v Prince (1997) 50 ALD 186.

Discussion

19.The issues that fall to be decided are whether there has been an overpayment and, if there has been, whether it ought to be recovered.

20.As to the first of these there can be no dispute, we think, that there was an overpayment in the period after 9 April 2002. If, as Mr Howard accepts, he was no longer a full-time student after that date then he was no longer undertaking qualifying study and could not then satisfy the activity test required by s 568 of the Act to be satisfied in order to be entitled to Austudy. Because Mr Howard received a payment to which he was not entitled, the amount so paid is a debt due to the Commonwealth: see s 1223(1) of the Act. It matters not, for the purposes of s 1223, how payment came to be made; the debt arises when the person who was not entitled to the payment receives the benefit of it. We note Mr Howard’s contention that he told Centrelink that, without payment, he would not be able to continue his course. However we are satisfied that this falls well short of informing Centrelink, as he was obliged to do, that he had ceased being a full-time student.

21.Although the matter was not put forward by Mr Howard in this way the real issue in the case is whether the debt ought to be recovered. Where there is a debt due to the Commonwealth arising in this way it may be written off by the Secretary (and thus by the Tribunal) under s 1236 or it may be waived under  s 1237.

22.Of the four criteria in s 1236 the only one that has any possible application is that in s 1236(1A) (b), “the debtor has no capacity to repay the debt”. But that cannot be said of Mr Howard. He is presently employed, albeit on less than a full-time basis. He earns, on average, $400.00 per week. Rent costs, he said were $160.00 per week or thereabouts. His debts are modest. Mr Howard’s circumstances are not such as would enable us to find that he has no capacity to repay – indeed it seems to us that he has a capacity to repay, perhaps at a modest rate.

23.Given the case put forward by Mr Howard it is necessary for us to consider waiver under s 1237A (1). That sub-section obliges the Secretary to 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 give rise to that proportion of that debt” [emphasis added].

24.Even on the assumptions that we have made for the purposes of considering the issue the overpayment debt is not attributable solely, or even principally, to administrative error. The overpayment debt that has been identified is attributable to the failure on the part of Mr Howard to notify Centrelink that he had ceased full-time study when that occurred in April 2002. Moreover given that Mr Howard was receiving the Austudy payments after he had ceased full-time study he cannot be regarded as having acted in good faith. It is unnecessary to determine the extent of the meaning of “in good faith” in the present context but it must at least comprehend that the recipient has a genuine belief, based on genuine grounds, that the recipient is entitled to receive the payment.

25.In Prince (supra) Finn J was concerned with s 289 of the Student and Youth Assistance Act 1973, a section relevantly identical to s 1237A(1) of the Act. His Honour said, at 189,

“For my own part, I consider the burden of the formula in the s 289 setting to be obvious enough. Its concern is with the state of mind of a person concerning his or her receipt of the payment: if that person knows or has reason to know that he or she is not entitled to a payment received – i.e. is not entitled to use the money received as his or her own – that person does not receive the payment in good faith.” 

26.According to the Centrelink annotation Mr Howard advised on 19 August 2002 that he had “not commenced study in semester two”. The note of other matters discussed on that day do not exclude the possibility that Mr Howard was left with the view that he had a residual entitlement to payment of benefit of some type. He was not cross-examined about his state of mind during this period and, in those circumstances, we would not be prepared to conclude that he had reason to know that he was not entitled to the payments that were made to him after his notification to Centrelink. In our view the material leads to the conclusion that the requirements of s 1237A were made out so far as the period from 19 August 2002 is concerned.

27.It is also relevant to consider s 1237AAD of the Act. That section gives a discretion to waive in “special circumstances”. In our view Mr Howard does not satisfy the requirement of paragraph (a), that is, that the debt did not arise from Mr Howard failing to comply with a provision of the Act. Nor does the evidence and other material show that there are special circumstances that take his case out of the ordinary: cf. Dranichnikov v Centrelink [2003] FCAFC 133 at [66]; (2004) 75 ALD 134, 148.

28.For these reasons we affirm the decision under review.

I certify that the 28 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President P E Hack SC and Mr R G Kenny, Member

Signed:         .....................................................................................
  Robert Hayes, Associate

Dates of Hearing  27 January 2006, 2 February 2006
Date of Decision  9 February 2006  
The Applicant appeared in person  
For the Respondent                  Ms H Wallis-Dunn, Departmental Advocate