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

[2024] AATA 1018

McClure and Secretary, Department of Social Services (Social services second review) [2024] AATA 1018 (9 May 2024)

Division:         GENERAL DIVISION

File Number(s):2023/4231      

Re:Mr Samuel McClure  

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

Date:9 May 2024

Place:Brisbane

DECISION

Pursuant to subsection 43(1)(b) of the Administrative Appeals Tribunal Act 1975 (Cth), the decision under review is varied such that the applicant has a recoverable debt to the Commonwealth arising on the basis that he was not entitled to Austudy payments in respect of the period of 20 March 2009 to 5 January 2010.

.................................[SGD].......................................

Senior Member B. Pola

CATCHWORDS

SOCIAL SECURITY – applicant recipient of Austudy payments and ceased to be a
full-time student for purposes of participation requirements – where applicant incurred debts to Commonwealth – whether applicant failed to comply with notification obligations and was overpaid by Centrelink – whether special circumstances exist to waive or write off debt – payments not found to be received in good faith – notional entitlement to Newstart considered not appropriate to apply in present case – decision varied

LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth)
Social Security Act 1991 (Cth)
Social Security (Administration Act) 1999 (Cth)

CASES
Beadle and Director-General of Social Security [1984] 6 AATA 176
Callaghan and Secretary, Department of Social Security [1996] 45 ALD 435
Davy and Secretary Department of Employment and Workplace Relations [2007] AATA 1114
Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634
DSGR and Secretary, Department of Education, Science and Technology [2007] AATA 1981
Feneley and Secretary Department of Family and Community Services [2003] AATA 496
Jazazievska v Secretary Department of Family & Community Services [2000] FCA 1484
Oberhardt v Secretary, Department of Education, Employment and Workplace Relations [2008] FCA 1923
Panacci and Secretary, Department of Employment and Workplace Relations [2008] AATA 30
Robinson and Secretary, Department of Social Services [2014] AATA 446
Secretary, Department of Education, Employment, Training and Youth Affairs v Prince [1997] 152 ALR 127
Secretary, Department of Social Security v Hales (1998) FCA 219
Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190

SECONDARY MATERIALS

Social Security Guide – Guides to Social Policy Law

REASONS FOR DECISION

Senior Member B. Pola

9 May 2024

BACKGROUND

1. The applicant, Mr Samuel McClure, was a recipient of Austudy, which was granted with effect from 2 January 2009, on the basis he was a fulltime student undertaking an eligible course with the Bible College of Queensland[1] (also known as the Australian College of Theology[2]).

   [1] Exhibit TR1, T12, page 135.

   [2] Exhibit TR1, T7, page 74.

2. On 20 January 2010, Centrelink (also referred to as the “Agency”) was notified the applicant had been incarcerated from 5 January 2010, and subsequently cancelled the applicant’s Austudy with effect from 6 January 2010[3].

   [3] Exhibit TR1, T12, page 189.

3. On 23 July 2010, Centrelink wrote to the applicant requesting he provide confirmation of his semester 1 2009 studies and a transcript of his academic record listing the subjects and units he had studied, the relevant semesters they were studied in and the relevant hours or units of that study[4].

   [4] Exhibit TR1, T13, page 299.

4. In the absence of a response to the above request, on 5 October 2010, Centrelink raised a debt against the applicant for the amount of $10,157.29 for the period of 1 April 2009 to                5 January 2010 on the basis the applicant ceased being a fulltime student in March 2009[5].

   [5] Exhibit TR1, T5, page 68.

5. On 4 June 2012 the applicant requested a review of Centrelink’s decision to raise a debt[6]. On 8 June 2012 an officer from Centrelink reviewed the decision to raise and recover the $10,157.29 Austudy debt from the applicant. The reviewing officer requested and received further information from the Bible College of Queensland regarding the Applicant’s enrolment status which was received on 13 June 2012. The enrolment status confirmed the applicant had withdrawn from all subjects on 19 March 2009[7]. The Centrelink officer subsequently referred the matter for review with an Authorised Review Officer (herein referred to as an “ARO”)[8].  

   [6] Exhibit TR1, T6, pages 69 and 70.

   [7]  Exhibit TR1, T7, pages 71 to 74.

   [8]  Exhibit TR1, T12, pages 197 to 198.

6. On 6 November 2012 an ARO reviewed and affirmed the decision to raise and recover a debt against the applicant for the amount of $10,157.29 for the period of 1 April 2009 to               5 January 2010 on the basis the applicant ceased being a full-time student in March 2009[9].

   [9]  Exhibit TR1, T8, pages 75 to 80.

7. On 12 April 2023, 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-tier review of the ARO decision[10].

   [10] Exhibit TR1, T9, pages 81 and 82.

8. On 19 May 2023, the SSCSD of the Tribunal affirmed the decision under review[11].  

   [11] Exhibit TR1, T2, pages 6 to 13.

9. On 14 June 2023, the applicant applied to the General Division of the Tribunal for a second-tier review of the SSCSD decision of 19 May 2023[12].

   [12] Exhibit TR1, T1, pages 1 to 5.

   JURISDICTION

10. This is an application to review a decision of the SSCSD of the Tribunal, which affirmed an earlier decision of the respondent to raise and recover a debt against the applicant.

11. The applicant’s debt has been reviewed in accordance with section 135 of the Social Security (Administration Act) 1999 (Cth) (herein referred to as the ‘Administration Act’) by an ARO, per their decision dated 6 November 2012. The SSCSD of the Tribunal subsequently reviewed the decision of the ARO and published its reasons on 19 May 2023.

12. In accordance with subsection 179(1) of the Administration Act, the Tribunal therefore has jurisdiction to review the application made on 14 June 2023.

    ISSUES

13. The issues before the Tribunal for determination are:

    (a)Whether the applicant was overpaid Austudy payments in excess of his entitlement for the relevant debt period?

    (i)If so, whether any overpayment of Austudy payments identified constitutes a debt to the Commonwealth; and 

    (ii)If so, whether any debt owed to the Commonwealth is recoverable in part or in full?

    RELEVANT LEGISLATIVE FRAMEWORK

14. The legislation relevant to the determination of the matter before the Tribunal includes:

    (i)The Social Security Act 1991 (Cth) (herein referred to as the “Act”);

    (ii)The Administration Act;

    (iii)The Administrative Appeals Tribunal Act 1975 (Cth) (herein referred to as the AAT Act); and

    (iv)The Social Security Guide – Guides to Social Policy Law (herein referred to as the “Guide”). The Tribunal will consider the established practices set out in the relevant sections of the Guide when making its decision, as consistent application of relevant policies is desirable unless cogent reasons exist not to[13].

    Entitlement to Austudy

    [13] Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at [645].

15. The relevant qualification requirements with respect to entitlement to Austudy are outlined in section 568 of the Act, which provides that a person is qualified to receive Austudy if they satisfy the activity test. Section 569 of the Act provides that a person satisfies the activity test for Austudy if the person satisfies the Secretary they are undertaking qualifying study. Undertaking qualifying study is defined in section 569A of the Act, which provides:

    “…  569A  Undertaking qualifying study

    For the purposes of this Part, a person is undertaking qualifying study if:

    (a) the person:

    (i) is enrolled in a course of education at an educational institution; or

    (ii) was enrolled in the course and satisfies the Secretary that he or she intends, and has (since no longer being enrolled) always intended, to re‑enrol in the course when re‑enrolments in the course are next accepted; or

    (iii) was enrolled in the course and satisfies the Secretary that he or she intends, and has (since no longer being enrolled) always intended, to enrol in another course of education (at the same or a different educational institution) when enrolments in the other course are next accepted; and

    (b) the course in which the person is enrolled, or intends to enrol, is an approved course of education or study (see section 569B); and

    (ba) if the course is an accelerator program course or a combined course that includes an accelerator program course—the person is entitled to STARTUP‑HELP assistance for the accelerator program course; and

    (c) the person is a full‑time student or a concessional study‑load student in respect of that course (see sections 569C and 569D); and

    (d) if the course is a combined course or a course other than an accelerator program course—the person satisfies the progress rules (see sections 569G and 569H)…”

    Debts

16. The following paragraphs outline relevant legislative provisions which apply to debts incurred resulting from a lack of qualification for a payment, or an overpayment.

17. A debt, pursuant to subsection 1223(1) of the Act, is incurred when:

    “…1223          Debts arising from lack of qualification, overpayment etc.

    (1) Subject to this section, if:

    (a) a social security payment is made; and

    (b) a person who obtains the benefit of the payment was not entitled for any reason to obtain that benefit;

    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…”

    Writing off a debt

18. Section 1236 of the Act provides that the Secretary may write off debt:

    “…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) the debtor’s whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or

    (d) it is not cost effective for the Commonwealth to take action to recover the debt.

    (1B) For the purposes of paragraph (1A)(a), a debt is taken to be irrecoverable at law if, and only if:

    (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.

    (1C) For the purposes of paragraph (1A)(b), if a debt is recoverable by means of:

    (a) deductions from the debtor’s social security payment; or

    (b) deductions under section 84 of the A New Tax System (Family Assistance) (Administration) Act 1999; or

    (c) setting off under section 84A of that Act;

    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.

    (2) A decision made under subsection (1) takes effect:

    (a) if no day is specified in the decision—on the day on which the decision is made; or

    (b) if a day is specified in the decision—on the day so specified (whether that day is before, after or on the day on which the decision is made).

    (3) Nothing in this section prevents anything being done at any time to recover a debt that has been written off under this section…”

    Administrative error

19. Section 1237A of the Act provides that:

    “…(1) Subject to subsection (1A), 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.

    Note: Subsection (1) does not allow waiver of a part of a debt that was caused partly by administrative error and partly by one or more other factors (such as error by the debtor)…”

    Special circumstances

20. Section 1237AAD of the Act provides that:

    “…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…”

    Relevant notice

21. Subsection 68(2) of the Administration Act, provides the following:

    “…(2)The Secretary may give a person to whom this subsection applies a notice that requires the person to do any or all of the following:

    (a)inform the Department if:

    (i)a specified event or change of circumstances occurs; or

    (ii)the person becomes aware that a specified event or change of circumstances is likely to occur;

    (b)give the Department one or more statements about a matter that might affect the payment to the person of the social security payment; …”

22. Subsection 94(1) of the Administration Act provides that a person’s social security payment is automatically cancelled when they fail to comply with a notice issued pursuant to section 68(2) of the Administration Act, it provides:

    “… 94  Automatic cancellation—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:

    (i) the person ceases to be qualified for the social security payment; or

    (ii) the social security payment ceases to be payable to the person;

    the social security payment is cancelled, by force of this subsection, on the day on which the event or change of circumstances occurs…”

23. Therefore, in circumstances where a person is in receipt of a social security payment and is given notice under subsection 68(2) of the Administration Act by the Agency, and there is a change in the person’s circumstances and the person does not inform the Agency, the social security payment can be retrospectively cancelled.

    CONSIDERATION

24. The application was heard in Brisbane on 30 April 2024 with all parties appearing in person. The applicant was self-represented, and the respondent was represented by Ms Alicia Henderson of Services Australia. The Tribunal considered oral submissions made by the applicant and respondent, in addition to submitted written evidence, as outlined in the Exhibit Register (marked as Annexure 1 at the end of these reasons).

    Evidence of the applicant

25. The applicant gave brief submissions at the hearing, and conceded that he had in fact wrongly claimed Austudy during the period of the debt which is the subject of this application. The applicant told the Tribunal that at the time he had withdrawn from his studies, he was of the belief that there would be an eight-week waiting period before he could receive an alternate social security payment. The applicant confirmed to the Tribunal that his main contention in seeking to have his debt reviewed is one of notional entitlement.

26. The Tribunal found the applicant to be a truthful witness. He did not dispute the facts before the Tribunal, which he helpfully acknowledged in his submissions[14]. The Tribunal will seek to address the applicant’s main contention in the reasons which follow.

    [14] Exhibit A1.

    Was the applicant overpaid Austudy in excess of his entitlement for the relevant debt period?

27. As set out in earlier reasons, the applicant was a recipient of Austudy, which was granted with effect from 2 January 2009, on the basis he was a fulltime student undertaking an eligible course. Following Centrelink being notified of the applicant’s incarceration, the applicant’s Austudy payment was cancelled with effect from 6 January 2010[15].

    [15] Exhibit TR1, T12, page 189.

28. On 23 July 2010 Centrelink wrote to the applicant requesting he provide confirmation of his semester 1 2009 studies and a transcript of his academic record listing the subjects and units he had studied, the relevant semesters they were studied in and the relevant hours or units of that study[16].

    [16] Exhibit TR1, T13, page 299.

29. In the absence of a response to the above request, on 5 October 2010 Centrelink raised a debt against the applicant for the amount of $10,157.29 for the period of 1 April 2009 to                5 January 2010 on the basis the applicant ceased being a fulltime student in March 2009[17].

    [17] Exhibit TR1, T5, page 68.

30. In submissions before the Tribunal, the applicant conceded that he was not entitled to receive Austudy payments during the relevant debt period, to which the Tribunal refers[18]:

    “… I was not entitled to the Austudy payment I received during the period   1 April 2009 to 5 January 2010 or the period 20 March 2009 to 5 January 2010 (retrospectively), because I did not meet the requirements as set out in section 568 of the Act…”

    [18] Exhibit A1, page 2, paragraph 1.

31. The Tribunal notes, the applicant has consistently conceded this point, at first-tier review before the SSCSD of the Tribunal (as recorded by the member in the decision of  19 May 2023, and to Centrelink when he requested a review of the debt on 4 June 2012[19].

    [19] Exhibit TR1, T2, page 8; T6, pages 69 and 70.

32. Evidence before the Tribunal confirms the applicant withdrew from all subjects he had been enrolled in on 19 March 2009[20].

    [20] Exhibit TR1, T7, page 74.

33. It is noted the applicant had numerous contacts with Centrelink when he applied for emergency payments throughout 2009, during such contacts the applicant did not advise Centrelink that he had ceased studying from 19 March 2009[21].

    [21] Exhibit TR1, T12, pages 135 to 189.

34. The Tribunal also notes the applicant has provided materials from a course he claimed he had undertaken with respect to becoming a qualified personal trainer, after ceasing his enrolment with the Bible College of Queensland. The applicant has submitted hand annotated notes from that course as evidence[22].

    [22] Exhibit TR1, T2, pages 24 to 42.

35. In terms of the procedural history of this application, this Tribunal vacated an earlier hearing date listed for 14 February 2024, in order to provide the applicant with an opportunity to source further evidence to support the above claims. At the hearing, the applicant conceded that he was unable to provide further evidence to the Tribunal. On reflection of the available evidence, the Tribunal is not satisfied the applicant was appropriately enrolled in an approved course following his withdrawal from his enrolled units with the Bible College of Queensland on 19 March 2009, for the purposes of satisfying the legislative requirements for the payment of Austudy.

36. As such, the Tribunal is of the view the applicant was not a full-time student from   20 March 2009, and therefore did not satisfy the activity test pursuant to section 569 of the Act, as the applicant was not undertaking qualifying study pursuant to section 569A of the Act.

1. The Tribunal notes the applicant received numerous notices from the respondent prior to and during the period of the applicant’s debt which were issued pursuant to subsection 68(2) of the Administration Act[23]. These notices advised the applicant of his ongoing obligation to inform the respondent of changes to his circumstances, such as the cessation of his studies. The Tribunal is of the view the respondent correctly cancelled the applicant’s entitlement to Austudy with effect from 20 March 2009 pursuant to subsection 94(1) of the Administration Act, given the applicant’s non-compliance with notices issued to him pursuant to subsection 68(2) of the Administration Act.

   [23] Exhibit TR1, T13, pages 227 to 229; pages 235 to 237; pages 241 to 244; pages 245 to 247; pages 254 to 256; pages 259 to 261; pages 265 to 267; pages 271 to 274; pages 279 to 281; and pages 282 to 285.

2. For the reasons given, the Tribunal therefore finds the applicant was overpaid Austudy for the period 20 March 2009 to 5 January 2010 (also referred to as the “relevant debt period” in these reasons) in the amount of $10,157.29[24].

   [24] The Tribunal has verified the overpayment of Austudy, as per Exhibit TR1, T10, pages 83 to

   91, as detailed by the Respondent.

   Whether any overpayment of Austudy identified constitutes a debt to the Commonwealth?

3. Subsection 1223(1) of the Act states that for debts arising from overpayment (where a social security payment has been made to a person who obtains the benefit of a payment they were not entitled to), the amount of that payment is a debt due to the Commonwealth (arising from when the person obtains the benefit of the payment).

4. The Tribunal has found the applicant was in receipt of Austudy payments for which he was not eligible to receive following his withdrawal from his enrolled units of study on  20 March 2009, until the period prior to his incarceration, being 5 January 2010. The Tribunal finds the payment of Austudy entitlements received by the applicant for the period of 20 March 2009 to 5 January 2010 to be a legally recoverable debt due to the Commonwealth pursuant to subsection 1223(1) of the Act.

5. The Tribunal notes the debt period in the decision under review related to the period of                   1 April 2009 to 5 January 2010. The Tribunal finds that the debt period for the applicant’s debt in this application ought to be for the period of 20 March 2009 (being the date from which the applicant had withdrawn from his enrolled units of study and ceased being eligible for Austudy payments) to 5 January 2010 (being the date from which the applicant’s Austudy had been cancelled due to his incarceration).

6. Therefore, the Tribunal varies the decision under review such that the applicant has a legally recoverable debt to the Commonwealth pursuant to subsection 1223(1) of the Act in the amount of $10,157.29 for the period of 20 March 2009 to 5 January 2010.

   Whether any debt owed to the Commonwealth is recoverable in part or in full?

7. There are circumstances where the recovery of outstanding debts to the Commonwealth can be either written off or waived. In establishing whether the applicant’s debt is recoverable in part or in full, the Tribunal refers to His Honour French J (as his Honour then was), in Secretary, Department of Social Security v Hales[25], where he stated:

   “…The taxpayer is entitled to expect that in the ordinary course money paid to people which they are not entitled to receive will be recovered, albeit in a way appropriate to the circumstances which led to the overpayment and the circumstances of the persons concerned. However, the confining of a recovery regime by rigid rules, particularly in this area of the law, is likely to be productive of unfair or harsh outcomes in some of the great variety of fact situations that can arise. There are provisions in the Act which recognise that reality. They relate to the writing off and the waiver of debts otherwise due to the Commonwealth…”

   [25] (1998) FCA 219 at [1].

8. Relevant to the applicant’s legally recoverable debt, and whether it may be written off or waived, the Tribunal will consider whether sections 1236, 1237A or 1237AAD of the Act were met, and whether the applicant’s circumstances enliven any of these provisions.

   Debt write off (section 1236 of the Act)?

9. Section 1236 of the Act gives the Secretary the power to write off a debt for a stated period, or otherwise if one or more criteria are met pursuant to subsection 1236(1A) of the Act (set out in earlier reasons of this decision).

10. At the hearing, the applicant gave evidence regarding their personal financial circumstances. The applicant told the Tribunal he recently started his own gardening business and had been earning approximately $1,000 a month in income from this. The respondent confirmed at the hearing the applicant had also been in receipt of support payments of $887 per fortnight. The applicant confirmed to the Tribunal he had been managing his financial affairs and coping with current Austudy debt repayments of $25 per fortnight. The Tribunal is satisfied the applicant would not suffer severe financial hardship in repaying his debt to the Commonwealth[26].

    [26] Refer to Feneley and Secretary Department of Family and Community Services [2003] AATA 496 at [36].

11. The Tribunal is satisfied that the debt is recoverable at law, that the applicant has the capacity to repay the debt, that the whereabouts of the applicant are known, and that there is no evidence to suggest it is not cost effective for the Commonwealth to take action to recover the debt. 

12. The Tribunal finds that the applicant’s debt to the Commonwealth cannot be written off pursuant to section 1236 of the Act.

    Waiver of debt arising from sole administrative error (section 1237A of the Act)?

13. Section 1237A of the Act provides that the Commonwealth 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.

    Sole administrative error

14. The Tribunal refers to Sekhon v Secretary, Department of Family and Community Services[27], where the Full Federal Court observed:

    “…The ordinary or usual interpretation of the phrase ‘attributable solely to’ is that it refers to the single or sole cause of the relevant act or event. The word ‘attributable’ means ‘capable of being attributed’. It involves an objective assessment of causation. The words ‘a debt attributable solely to an administrative error’ can be paraphrased as meaning that the only cause that objectively can be ascribed to the relevant debt is an administrative error…”

    [27] [2003] FCAFC 190 at [35].

15. The Tribunal is satisfied the applicant was correctly notified of their obligations pursuant to subsection 68(2) of the Administration Act, to inform the respondent of changes to his circumstances (such as his cessation of studies with effect on 19 March 2009). Despite numerous notices sent by the respondent to the applicant prior to and during the period of the debt, the applicant did not comply with his obligations. It is incumbent upon the applicant to ensure he has upheld his obligations with respect to the conditions upon which he has received a social security payment. This includes the timely provision of information to the respondent where his personal circumstances have changed, to ensure his ongoing eligibility for that social security payment.

16. Therefore, the Tribunal is satisfied that the debt raised against the applicant was not solely due to an administrative error on the basis that the applicant was informed of his obligation to provide updated information to the Agency in notices sent to the applicant pursuant to subsection 68(2) of the Administration Act. 

    Good Faith

17. Although the Tribunal has established the debt raised against the applicant was not due to sole administrative error, the Tribunal will also consider whether the payments which gave rise to the debt (being his Austudy payments during the relevant debt period), were received in good faith.

18. In considering whether the applicant received Austudy payments in good faith, the Tribunal refers to their Honour Finn J, in Secretary, Department of Education, Employment, Training and Youth Affairs v Prince[28]:

    “…the burden of the formula…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 – ie is not entitled to use the moneys received as his or her own – that person does not receive the payment in good faith. Absent such knowledge or reason to know, the receipt would be in good faith.”
    

    [28] [1997] 152 ALR 127 at [130].

    [Tribunal bolding for emphasis]

19. Additionally, the Federal Court has found that a person does not act in good faith where they turn a blind eye to the circumstances which raise doubt as to the entitlement to receive a payment, with reference to their Honour Cooper J, found in Jazazievska v Secretary Department of Family & Community Services[29].

    [29] [2000] FCA 1484 at [40] and [44].

20. Further to this, the Tribunal refers to the decision of Panacci and Secretary, Department of Employment and Workplace Relations[30], where Senior Member Handley stated:

    “… An absence of good faith does not amount to fraudulent conduct on the part of the recipient of a benefit but it does mean that the recipient acts without an honestly held belief of entitlement to receive and retain the payment. The state of mind of the recipient must be examined and the test of good faith is entirely subjective…”

    [30] [2008] AATA 30 at [25].

21. The Tribunal has already found the applicant was correctly notified of their obligations pursuant to subsection 68(2) of the Administration Act, to inform the respondent of changes to his circumstances (such as his cessation of studies with effect from 19 March 2009). Despite this, the applicant did not inform the respondent of the cessation of his studies. In fact, the applicant in submissions before the Tribunal conceded he did not report the cessation of his studies to the respondent[31]:

    “… I am not seeking to have the overpayment waived under section 1237A or written off in part or full under section 1236…

    …

    …I submit, I knew that I was entitled to the Newstart Allowance, however, with the added burden of the 8-week non-payment period in addition to the severe financial hardship I was already experiencing at that time, did not inform Centrelink of the change of circumstances in withdrawing from full-time study on 19 March 2009, resulting in an incorrect payment of Austudy allowance amounting to an overpayment of $10,157.29 for the period 1 April 2009 to 5 January 2010…”

    [31] Exhibit A1, page 2, paragraphs 3 and 5.

22. Therefore, the Tribunal is of the view the applicant did not receive the overpayment of his Austudy income during the relevant debt period in good faith.

23. As the Tribunal has found that the debts were not due solely to administrative error and the Austudy income received by the applicant during the relevant debt period was not done so in good faith, the associated debt is therefore unable to be waived pursuant to section 1237A of the Act.

    Waiver in special circumstances (section 1237AAD of the Act)?

24. As outlined in earlier paragraphs of these reasons, section 1237AAD of the Act sets out provisions relating to circumstances where the Secretary may waive the right to recover all or part of a debt where they are satisfied certain provisions are met.

25. Subsection 1237AAD(a) of the Act requires the Secretary to waive the right to recover all or part of a debt if the Secretary is satisfied that the debt did not result wholly or partly from the person knowingly making a false statement or representation, or knowingly failing or omitting to comply with a provision of the Act or the Administration Act.

26. Regarding the application of subsection 1237AAD(a) of the Act, and the term “knowingly” in the circumstances of this application, the Tribunal refers to Callaghan and Secretary, Department of Social Security[32]:

    “… There is nothing in section 1237AAD which suggests that the word "knowingly" should be given any meaning other than that a person has actual knowledge, rather than constructive knowledge, that he or she is making a false statement or representation or that he or she is failing or omitting to comply with a provision of the Act. That actual knowledge is to be ascertained by reference to the statements of the person as to his or her actual state of knowledge at the time and to events surrounding the false statement or the act or omission…”

    [32] [1996] 45 ALD 435 at [48].

27. The Tribunal refers to authority in Beadle and Director-General of Social Security which sets out what amounts to special circumstances[33]:

    “… An expression such as "special circumstances" is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special…”

    [33] [1984] 6 AATA 176 at [12].

28. The Tribunal also refers to Davy and Secretary Department of Employment and Workplace Relations[34]:

    “…“special circumstances” are not merely directed to the person’s own circumstances. Rather, they are directed to those that are “special circumstances ... that make it desirable to waive”. That necessarily requires a consideration of the person’s individual circumstances but also a consideration of the general administration of the social security system. Waiver of the debt would mean that Mr Davy would have had the benefit of part of his DSP in circumstances in which he was not entitled to it. Certainly, he did not know that his father was giving him his own money but the fact that he was deceived by his father does not mean that it is desirable to waive the debt. He has had the benefit of the money and there is no injustice in requiring him to repay the money of which he has had the benefit but not the entitlement. His not knowing that his father had continued to receive the money does not take him outside the expectation that all social security recipients should repay money when they receive money but are not entitled to it. The system of administration of the SS Act does not visit any injustice for many if not all social security recipients but it did not lead to any injustice or unfairness on Mr Davy that is not visited, or potentially visited, upon all other recipients of social security payments under the Act. Therefore, I am not satisfied that there are special circumstances that make it desirable to waive the debt under s 1237AAD of the Act…”

    [34] [2007] AATA 1114 at [80].

29. In the present matter, the applicant has conceded that he failed to notify the respondent of the cessation of his studies, despite numerous notices having been sent to the applicant prior to and during the debt period, notifying him of his obligation to do so pursuant to subsection 68(2) of the Administration Act. Given this, the Tribunal is of the view the applicant fails to satisfy subsection 1237AAD(a)(ii) of the Act. That is, the applicant knowingly failed to comply with his notification obligations throughout the relevant debt period.

    Notional entitlement

30. Despite the above finding, the Tribunal will address the crux of the applicant’s argument which he has made in his submissions with respect to his Austudy debt. The applicant’s argument is one of notional entitlement, that is, he would otherwise have been entitled to Newstart payments at the time he had accrued his Austudy debt, and therefore, the applicant’s debt should be reduced by a payment he claims he would have otherwise been entitled to during the relevant debt period[35].

    [35] Exhibit A1, page 2, paragraphs 4 and 5.

31. At this point it is important for the Tribunal to note the applicant has submitted that he did not advise the Agency of his cessation of studies on 19 March 2009, as he was of the belief that an eight-week non-payment period would apply to him before he could receive Newstart Allowance. The applicant further submitted that at the time of the debt, he was experiencing severe financial hardship, was unemployed, and had been on a treatment program at the time for opioid substance dependency[36].

    [36] Exhibit A1, page 2, paragraph 5; page 3, paragraph 7.

32. The Tribunal notes in earlier reasons the applicant had stated that shortly after the cessation of his studies on 19 March 2009, he commenced a personal trainer course which he did not complete and could not substantiate, apart from hand annotated notes.

33. Further, it is recorded in the SSCSD decision of 19 May 2023, that the applicant had stated he entered bankruptcy prior to the debt period in question in this application, which was not disclosed to the Agency[37].

    [37] Exhibit TR1, T2, page 12, paragraph 40.

34. With respect to the consideration of notional entitlement, the Tribunal refers to their Honour Spender J in the Federal Court decision of Oberhardt v Secretary, Department of Education, Employment and Workplace Relations[38], where their Honour described “notional entitlement” as referring to “an unclaimed benefit; a benefit which was not actually claimed by the person, but to which that person would have been entitled had they applied for it[39]”, and found:

    “…notional entitlement should not be excluded from the range of available relevant considerations in deciding whether there are ‘special circumstances’ to waive a debt under s1237AAD…[40]”  

    [38] [2008] FCA 1923.

    [39] Ibid at [32].

    [40] Ibid at [64].

35. Deputy President Hotop considered the concept of notional entitlement in the decision of Robinson and Secretary, Department of Social Services[41], and set out guidance in considering how notional entitlement to Newstart allowance can be considered in deciding whether there are special circumstances to waive a debt pursuant to subsection 1237AAD(b) of the Act. The Tribunal summarises as follows:

    (a)It is insufficient to assume an applicant claimed Newstart allowance, because such an assumption raises questions which must be answered in order to determine for notional setting off purposes, the total amount of Newstart allowance the applicant would have received in the relevant debt period. Additionally,

    (i)For what period(s) would the applicant have been unemployed during the debt period?

    (ii)How much by way of income from either full or part time employment would the applicant have received during the relevant debt period?

    (iii)For what period(s) would the applicant have satisfied the “activity test” pursuant to subsection 593(1)(b) of the Act, or taken to have satisfied the “activity” test pursuant to section 603AA, during the relevant debt period?

    (iv)Assuming that the applicant entered into a "Newstart Employment Pathway Plan", within the meaning of paras (c) to (f) of subsection 593(1) of the Act, for what period(s), while the plan was in force, would the applicant have been complying with the requirements in the plan?

    (b)Even if a “high probability” or “likelihood” that the applicant would have been qualified for, and received, Newstart allowance during the relevant debt period would suffice for the purposes of the application of the “notional entitlement” concept; the Tribunal, having regard to the whole of the evidence before it, would still be unable to determine the answer to each of the questions set out in paragraphs (a)(i) to (iv) above, and, accordingly, would still be unable to determine for what period(s) the applicant would (probably) have been qualified for Newstart allowance during the relevant period and what amount of Newstart allowance would (probably) have been paid to them during that period – to its reasonable satisfaction.

    [41] [2014] AATA 446.

1. The Tribunal in the present application accepts the circumstances the applicant found himself in at the time leading up to, during, and after the relevant debt period were certainly unfortunate.

2. However, there is scant evidence before this Tribunal as to the applicant’s eligibility for receipt of an alternate social security payment during the relevant debt period, such that this Tribunal can be reasonably satisfied he would have otherwise been entitled to Newstart allowance in the relevant debt period. This includes a lack of evidence as to whether the applicant had been actively seeking employment, whether he would have satisfied an activity test or had qualified for a medical exemption, or whether he would have been complying with the requirements of a Newstart Employment Pathway Plan.

3. The Tribunal refers to the decision of DSGR and Secretary, Department of Education, Science and Technology[42] with respect to considering the context as to why an alternate social security payment was not claimed:

   “… In circumstances where a discretion may be exercised, subject to it being fettered by the legislation as is the case under s 1237AAD, consideration would need to be given as to why the notional entitlement was in fact not claimed. In the present application, newstart allowance was not claimed because the applicant was receiving youth allowance. Had she been more alert to whether she had an entitlement to that benefit before 1 March 2004, she may well have then considered applying for the newstart allowance. In all probability, that benefit would have been paid. Unlike Sara, criticism cannot be levelled at Centrelink for failing to advise of an entitlement to newstart allowance because Centrelink, in the absence of responding to recipient notices, was of the belief that the applicant had an entitlement to youth allowance…

   …

   … On balance I am not satisfied that it would be appropriate to consider any notional entitlement in deciding whether it would be appropriate to waive the debt. I am also of the view that having regard to the manner in which s 1237AAD is presently constructed, consideration of notional entitlement would only occur in very limited and unusual circumstances…”

   [42] [2007] AATA 1981 at [45] and [47].

4. In the present application, the applicant had been in receipt of Austudy, and did not in fact claim Newstart allowance because he was under the belief that he would be subject to an eight week exclusion period, and instead chose to continue receiving Austudy despite conceding he was no longer eligible to receive such a payment following cessation of his studies on 19 March 2009. Further, the applicant’s evidence to this Tribunal was that he had undertaken a personal training course three months following the cessation of his studies on 19 March 2009, with no additional evidence provided to substantiate his claim[43]. 

   [43] Exhibit TR1, T6, page 70.

5. On reflection of the evidence, the Tribunal is of the view that it is not appropriate to apply the concept of notional entitlement to Newstart allowance to waive part of the applicant’s Austudy debt, given the context in which the applicant’s debt arose as outlined in these reasons. This is particularly so given the Tribunal’s finding the applicant knowingly failed to comply with his notification obligations throughout the relevant debt period. Therefore, the Tribunal is of the view that the applicant’s contention regarding notional entitlement does not advance the applicant’s case for a waiver of his debt pursuant to section 1237AAD of the Act for the reasons given.

   Summary - Waiver in special circumstances (section 1237AAD of the Act)

6. Based on the evidence before it, the Tribunal does not consider the applicant’s circumstances to be sufficiently special or unusual as to warrant the exercise of the discretion in section 1237AAD of the Act to waive the applicant’s debt, nor that it is more appropriate to waive than to write off the applicant’s debt, or part of the applicant’s debt. Therefore, the applicant’s debt cannot be waived pursuant to section 1237AAD of the Act.

   Summary  

7. The Tribunal concludes that the applicant’s debt to the Commonwealth must be recovered. Write-off on the basis of severe financial hardship and waiver on the basis of administrative error, or special circumstances is not warranted.

   DECISION

8. Pursuant to subsection 43(1)(b) of the Administrative Appeals Tribunal Act 1975 (Cth), the decision under review is varied such that the applicant has a recoverable debt to the Commonwealth arising on the basis that he was not entitled to Austudy payments in respect of the period of 20 March 2009 to 5 January 2010.

   I certify that the preceding 79 (seventy-nine) paragraphs are a true copy of the reasons for the decision herein of Senior Member B. Pola

……………[SGD]………………

Associate

9 May 2024

Date of Hearing:  30 April 2024

Applicant:  Mr Samuel McClure (self-represented)  

Respondent Representative:         Ms Alicia Henderson (Services Australia)

EXHIBIT	DESCRIPTION OF EVIDENCE	PARTY	DATE OF DOCUMENT	DATE RECEIVED
TR1.	Section 37 T-Documents (T1-T13, 308 pages)	-	-	13 July 2023
R1.	Respondent Statement of Facts, Issues and Contentions and attachment (20 pages)	R	14 November 2023
A1.	Applicant Statement of Facts, Issues and Contentions (7 pages)	A	12 November 2023
A2.	Email from New Hope Care		-	18 March 2024
A3.	2009 Guide to Australian Government Payments		-	12 February 2023
A4.	Statement of Attendance (5 pages)		-	10 January 2024
A5.	Debt Summary Spreadsheet		-	12 December 2023
A6.	2010 Guide to Australian Government Payments		-

Annexure 1