McMahon and Secretary, Department of Education, Employment and Workplace Relations

[2008] AATA 910

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 910

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2007/3364

GENERAL  ADMINISTRATIVE  DIVISION		)
Re		CHRISTIAN McMAHON

Applicant

And SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Dr R McRae, Member

Date10 October 2008 

PlaceMelbourne

Decision      The Tribunal:

1.sets aside the decision under review, and substitutes a decision that the Applicant has been overpaid youth allowance and rent assistance for the period 31 July 2006 to 6 December 2006 and this is a debt due to the Commonwealth; and

2.remits the matter to the Respondent to re‑calculate the amount of the debt in accordance with this decision.

(sgd) Dr R. McRae

Member

SOCIAL SECURITY – youth allowance ‑ rent assistance - overpayment ‑ whether entitled to youth allowance - whether entitled to rent assistance - whether full-time student - notification of change of circumstances – debt to Commonwealth - whether special circumstances exist – sole error - in good faith ‑ debt recovery

Social Security Act 1991 ss 540, 541, 541B, 543B, 1223, 1237AAD

Social Security (Administration) Act 1999 ss 68(2), 100(2)

Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25

Beadle v Director-General of Social Security (1985) 60 ALR 225

Dranichnikov v Centrelink [2003] FCAFC 133

Groth v Secretary, Department of Social Security (1995) 40 ALD 541

Re Beadle and Director-General of Social Security (1984) 6 ALD 1

Re Green and Secretary, Department of Social Security (1990) 21 ALD 772

Sekhon v Secretary, Department of Family and Community Services (2003) 132 FCR 126

REASONS FOR DECISION

10 October 2008 Dr R. McRae, Member       

1.      Mr Christian McMahon (the Applicant) received Youth Allowance (YA) from Centrelink at the away from home rate following lodgement of a claim as a student on 2 March 2005 until 6 December 2006.  Centrelink acts as the service delivery agency for the Secretary to the Department of Education, Employment and Workplace Relations (the Respondent).  On 8 January 2007 a Centrelink officer decided that the Applicant had been overpaid $4372.48 in YA between 17 July 2006 and 6 December 2006 (the relevant period) because he was not a full-time student during that period.  The officer decided to raise and recover a debt of $4372.48 from the Applicant.  On 9 January 2007 a Centrelink officer decided to raise and recover a further debt of $405.53, for overpayment of dependant rent assistance between 1 September 2006 and 22 November 2006.  This was because the Applicant was living at home and thus was ineligible for rent assistance. 

2.      On 2 May 2007 a Centrelink authorised review officer (ARO) affirmed both decisions.  The Applicant then sought review of the ARO’s decision by the Social Security Appeals Tribunal (SSAT).  On 5 June 2007 the SSAT affirmed the decision.  The Applicant now seeks a review of the SSAT decision by the Tribunal. 

3.      The issue for the Tribunal is whether the Applicant is entitled to YA for the relevant period.  Subsidiary issues relate to entitlement to rent assistance (which only follows if there is an entitlement to YA) and whether there are grounds for any debt to be waived.  The Tribunal’s decision is that the Applicant is not entitled to YA from 31 July 2006 to 6 December 2006; that there is consequently no entitlement to rent assistance for the corresponding period; and that there are no grounds for any debt to be reduced or waived.  

4. The Applicant was self-represented. The Respondent was represented by Mr A Carson, a Centrelink advocate. The Tribunal had before it documents lodged by the Respondent pursuant to s 37 of the Administrative Appeals Tribunal Act1975 (the T Documents).  

Background

5.      The Applicant is 28 years old.  He was undertaking full‑time tertiary studies at the Australian College of Natural Medicine (ACNM).  Originally from Bendigo, he lived in various rented locations closer to the college.  The Applicant received Newstart Allowance (NSA) prior to receiving YA.  He is familiar with receiving communications from and communicating with Centrelink. 

Applicant’s Case

6.      During the first semester of 2006 the Applicant enrolled in full‑time study at the ACNM in Melbourne.  His study load comprised of five subjects and each subject required three hours of contact per week (a total of 15 hours per week).  He undertook a subject called Point Location, conducted over two semesters.  This subject had a composite assessment requirement over semester 1 and semester 2.  His result in semester 1 was such that if his result in semester 2 was insufficient, he would have to repeat both components of the subject.  In order to maximise his opportunity to successfully complete the two semesters (composite result) of the subject, and specifically the semester 2 component, he unenrolled in Point Location for semester 2 of 2006.  He obtained a print‑out of his enrolment status from ACNM, and within days, he personally delivered it to Centrelink’s Watergardens office in July 2006.  He gave it over a grill to an unidentified male Centrelink officer who received it.  It was very quick, and there was no conversation.  The Applicant presumed the officer photocopied it before returning it to him and the officer stated that’s fine.  The Applicant gave no further thought to the matter.  He was therefore surprised when there was no money in his bank account just before Christmas [2006].

7.      The Applicant’s case is that he acted within 14 days to advise Centrelink that he was no longer a full-time student.  He had previously received the same amount from Centrelink when receiving NSA, and gave no thought to the basis of the funds he received. 

8.      Under cross-examination the Applicant agreed he was familiar with receiving correspondence from Centrelink.  He said he read the contents and then discarded the correspondence.  He was uncertain if he received monthly statements relating to his YA payments.  He was uncertain whether he expected to receive less YA as he was studying less.  He stated that he knew he had to notify Centrelink of his change of circumstances related to full‑time study within 14 days, and this is why he had delivered the print-out of his enrolment status from his college to the Watergardens Centrelink office.  He did not specifically understand what the term Youth Allowance meant, but did not consider he needed to ask about it.  He acknowledged the accuracy of the Centrelink records of his contacts with Centrelink and the contents of those records.  He was unable to explain how there was no record of the key visit to Watergardens Centrelink office.  He had no witness to his delivering the print-out to the Watergardens Centrelink office.

9.      The Applicant stated he had a negative opinion of Centrelink from past experience, and preferred to minimise his contact with Centrelink.  He preferred to attend the office in person rather than experience the long delays with telephone contact, including getting three different answers from three different people.  In 2004 he had taken papers to Centrelink related to NSA, had watched them being photocopied, but then was asked to bring them in again about a month later for re‑photocopying as the photocopies had been lost.  He did not think this experience would make him more likely on future occasions to ensure any photocopying of a document he provided to Centrelink was correctly marked and filed, or that he would follow up later to ensure it was properly filed.  He said he was unaware that it was possible to get a receipt number related to any interaction with Centrelink and he had never obtained a receipt from Centrelink. 

10.     The Applicant stated that he was a part-time student during Semester 2 of 2006, and that he was not seeking full-time work during that semester.  He accepted that he was not entitled to YA, and that as a consequence he would not be entitled to rent assistance. 

Applicant’s Submission

11.     The Applicant submitted that he had complied with the legislation.  Specifically, he delivered notification of his change of circumstances from full-time student to part‑time student within 14 days of the change of status.  He did not state any reasons why waiver of the debt was warranted.  He did not state any evidence pertaining to special circumstances. 

Respondent’s Submission

12.     The Respondent submitted that the Applicant received payment of YA and associated rent assistance to which he was not entitled.  Under the Social Security Act 1991 (the Act), this is a debt due to the Commonwealth.  He received several letters from Centrelink stating his obligation to notify Centrelink within 14 days if [you are] ... no longer a full-time student.  He had not notified Centrelink of his change from full-time to part-time student status within 14 days of it occurring.  The Respondent further submitted that had Centrelink made an administrative error, the Applicant should have advised Centrelink as soon as he received correspondence stating YA payments were continuing.  Finally, there are no grounds for waiver of the debt due to the Commonwealth. 

13.     The Respondent also submitted that if Centrelink had made a sole administrative error, thereby entitling the Applicant to retain his YA payments, the Applicant had still received rent assistance between 1 September 2006 and 22 November 2006 to which he was not entitled.  This was a debt due to the Commonwealth and there are no grounds for waiver of this debt to the Commonwealth either. 

Legislation

14.     The relevant legislation:

540Qualification for youth allowance—general rule

Subject to this Subdivision, a person is qualified for a youth allowance in respect of a period if:

(a)       either of the following applies:

(i)        throughout the period the person satisfies the activity test ...

(b)       throughout the period the person is of youth allowance age ...

(c)throughout the period the person satisfies any requirements relating to Youth Allowance Activity Agreements ...

(d)       throughout the period, the person:

(i)        is an Australian resident ...

541 Activity test

General

(1)Subject to section 541A and subsection (3) of this section, a person satisfies the activity test in respect of a period if:

(a)the person satisfies the Secretary that, throughout the period, the person is undertaking full-time study (see section 541B); or

(b)subject to subsection (4), the person satisfies the Secretary that, throughout the period, the person is actively seeking, and willing to undertake, paid work in Australia (other than paid work that is unsuitable for the person)...

People who cease undertaking full-time study

(4)For the purposes of paragraph (1)(b), a person who has:

(a)       ceased undertaking full-time study; and

(b)been given a notice under section 68 of the Administration Act that has the effect of requiring the person to inform the Department of that cessation; and

(c)       refused or failed to comply with the notice in respect of that cessation;

cannot satisfy the Secretary that, at a particular time after the refusal or failure, the person is actively seeking, and willing to undertake, paid work in Australia unless, before that time, the person has informed the Department of that cessation or the Department has become aware of that cessation.

541B  Undertaking full-time study

General

(1)For the purposes of this Act, a person is undertaking full-time study if:

(a)       the person:

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

...

(b)       the person:

(i)is undertaking in the particular study period (such as, for example, a semester) for which he or she is enrolled for the course; or

(ii)intends to undertake in the next study period for which he or she intends to enrol for the course;

either:

(iii)in a case to which subsection (1A) does not apply—at least three-quarters of the normal amount of full-time study in respect of the course for that period (see subsections (2) to (4)); or

...

(c)the course in question is an approved course of education or study (see subsection (5));

...

Meaning of normal amount of full-time study

(2)For the purposes of paragraph (1)(b), the normal amount of full-time study in respect of a course is:

(a)       if:

(i)the course is a course of study within the meaning of the Higher Education Support Act 2003; and

(ii)there are Commonwealth supported students (within the meaning of that Act) enrolled in the course;

the full-time student load for the course; or

...

(4)For the purposes of paragraph (1)(b), a person is taken to be undertaking full-time study in respect of a course during the period (the relevant period):

(a)       starting on the first day of classes in a study period; and

(b)ending on the Friday of the second week of classes in the study period;

if the person is enrolled in the course and undertakes study in respect of the course on at least one day in the relevant period.

Meaning of approved course of education or study

(5)For the purposes of paragraph (1)(c), the course is an approved course of education or study if it is a course determined, under section 5D of the Student Assistance Act 1973, to be a secondary course or a tertiary course for the purposes of that Act.

543B  Maximum age for youth allowance

General

(1)Subject to subsection (2), the person has attained the maximum age for youth allowance if:

(a)the person is not undertaking full-time study and is at least 21 years old; or

…

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.

…

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:

(a)the debt cannot be recovered by means of deductions, or legal proceedings, or garnishee notice, because the relevant 6 year period mentioned in section 1231, 1232 or 1233 has elapsed; or

...

(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

...

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.

…

1237A  Waiver of debt arising from error

(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).

(1A)Subsection (1) only applies if:

(a)the debt is not raised within a period of 6 weeks from the first payment that caused the debt; or

…

1237AADWaiver in special circumstances

The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:

(a)the debt did not result wholly or partly from the debtor or another person knowingly:

(i)making a false statement or a false representation; or

(ii)failing or omitting to comply with a provision of this Act or the 1947 Act; and

(b)there are special circumstances (other than financial hardship alone) that make it desirable to waive; and

...

15. Section 68(2) of the Social Security (Administration) Act 1999 (the Administration Act) states:

68  Person receiving social security payment or holding concession card

(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

...

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

...

16. Section 100(2) of the Administration Act provides:

100  Automatic rate reduction—recipient not complying with subsection 68(2) notice

…

(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 event or change of circumstances, the person's working credit balance or student income bank balance is reduced to nil in an instalment period of the person that is the same as, or later than, the instalment period in which the event or change of circumstances occurs; and

(f)either because of the reduction of the balance to nil or because of the balance having already been reduced to nil–the rate of the person's social security payment is to be reduced;

the social security payment becomes payable to the person at the reduced rate on:

(g)if the rate reduction is attributable to the reduction of the balance to nil–the day on which the balance was so reduced; and

(h)if the rate reduction is attributable to the balance having already been reduced to nil–the first day on which the opening balance was nil.

Considerations

17. The YA provisions are set out in s 540 of the Act. In order to qualify a person must satisfy an activity test, which is provided for in s 541 of the Act. A person can satisfy the activity test by undertaking full-time study or actively seeking ... paid work, or by being subject to a YA Activity Agreement. In accordance with s 541B, a YA recipient must be enrolled in a course of education at an educational institution, must be undertaking the study for which he is enrolled, which ought to be at least three-quarters of the normal amount of full-time study, and the Secretary must hold the opinion that the person is making satisfactory progress towards [completion]. 

18.     Section 1236 of the Act provides for the circumstances under which the Secretary may write off a debt.  At least one of the specific pre-requisites provided for in s 1236(1A) of the Act must exist.  None of those prerequisite conditions in s 1236(1A) exist in this case.  Thus s 1236 does not apply. 

19.     Section 1237A(1) of the Act provides that the Secretary must waive debt recovery where the debt is solely attributable to an administrative error by the Commonwealth.  The Applicant was paid $406.50 for the fortnight ending 20 July 2006.  On 8 January 2007 a Centrelink officer decided to recover a YA debt for the period between 17 July 2006 and 6 December 2006.  The debt was not raised within a period of six weeks from the first payment that caused the debt (s 1237A (1A)), so s 1237A(1) may apply. 

20.     However, there is no evidence that the overpayment of YA arose solely due to an administrative error by Centrelink.  Selway J in Sekhon v Secretary of the Department of Family and Community Services (2003) 132 FCR 126 stated at [35]:

… The words ‘a debt attributed 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. [emphasis added]

21.     Other than the Applicant’s oral evidence, there is no independent, objective contemporaneous evidence that the Applicant advised Centrelink of the change in his status from a full-time to a part-time student.  Given the accuracy of recordings of the many communications between the Applicant and Centrelink, the Tribunal has difficulty accepting the Applicant’s evidence relating to his delivering the key document to Centrelink.  The evidence indicates the Applicant was in a position to notice that he was inappropriately receiving YA and could have advised Centrelink of this.  This did not occur.  Section 1237A(1) of the Act therefore does not apply.  The Tribunal notes that consideration of the payments having been received in good faith is consequently not necessary. 

22.     Section 1237AAA of the Act which provides for waiver of a small debt does not apply through operation of s 1237AAA(2).  The debt is greater than $50.00 and can be recovered by deductions from Social Security payments. 

23. Section 1237AAD of the Act also provides for waiver of the debt in special circumstances (other than financial hardship alone) that make it desirable to waive the debt.  In Re Green and Secretary, Department of Social Security (1990) 21 ALD 772 the Tribunal stated that Hardship is a relevant consideration, but regard must be given to the manner in which the hardship arose.  The Tribunal also stated that there must exist factors which justify the making of an exception in whole or in part to the principle of liability which the Act otherwise establishes.  Regard must be had as to whether exercise of the discretion achieves or frustrates the objects which are within the scope and purpose of the Act. 

24.     The Tribunal stated in Re Beadle v Director-General of Social Security (1984) 6 ALD 1 at 3 … An expression such as “special circumstances” is by its very nature incapable of precise or exhaustive definition.  The circumstances would need to be unusual, uncommon or exceptional.  The Tribunal highlighted the context in which [the circumstances] occur.  However, the Full Federal Court considered the Tribunal’s decision in Re Beadle in Beadle v Director-General of Social Security (1985) 60 ALR 225 and did not subsequently endorse the words unusual, uncommon or exceptional. 

25.     Kiefel J in Groth v Secretary, Department of Social Security (1995) 40 ALD 541 considered at 545:

…special circumstances … would require something to distinguish Mr Groth’s case from others, to take it out of the usual or ordinary case. … It would … follow that if … something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary. 

Besanko J in Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25 stated at [33] that:

… the test will be overstated if the word ‘exceptional’ is emphasised… less risk of overstatement if the words ‘unusual’ or ‘uncommon’ are emphasised…there must be something that distinguishes the case from the ordinary or usual case…close attention must be given to the …context. 

Hill J in Dranichnikovv Centrelink [2003] FCAFC 133 at [66] stated that:

To some extent the question whether there were special circumstances must depend on how it came about that the error occurred. 

26.     It is plausible that every Applicant would consider their circumstances to fall within the boundary of being special.  However, that is not the measure the Tribunal needs to apply.

Findings

27.     The Applicant received correspondence from Centrelink requiring him to report changes in his educational status within 14 days. 

28.     On the evidence before it the Tribunal does not accept that the Applicant notified Centrelink of the change in his educational status from a full-time to part-time student. 

29.     The ACNM indicated the Applicant was no longer a full-time student from 31 July 2006.  He became a part-time student at the ACNM.  He was undertaking study at 55 per cent of the full-time study load.  He attended in the order of 50 per cent of available classes according to his college.  It is reasonable that this is the date at which YA payments ought to have ceased.  During the relevant period the Applicant was over 21 years of age and did not qualify for YA as a job seeker.  He continued to receive YA to which he was not entitled.  He is consequently not entitled to rent assistance for the relevant period. 

30.     The Applicant presented no evidence related to severe financial hardship (as defined in s 19C(2) of the Act). 

Conclusion

31.     The Applicant was in a position to know he had to report the changes in his education status within 14 days.  The Tribunal is satisfied that the Applicant did not report the changes which occurred within the required 14 days. 

32.     The Tribunal is satisfied that the Applicant was overpaid YA between 31 July 2006 to 6 December 2006 and this amounts to a debt due to the Commonwealth. 

33.     The Tribunal concludes that the Applicant did not satisfy the requirements necessary to allow for writing off or waiver of the debt. 

34.     The Applicant presented no evidence to support the presence of special circumstances for the Applicant. 

Decision

35.     The Tribunal sets aside the decision under review and substitutes a decision that the Applicant has been overpaid YA and rent assistance between 31 July 2006 and 6 December 2006, and this is a debt due to the Commonwealth.  The Tribunal remits the matter to the Respondent to re‑calculate the amount of the debt in accordance with this decision. 

I certify that the thirty‑five [35] preceding paragraphs are a true copy of the reasons for the decision of:

Dr R. McRae, Member

(sgd):        Cassie Renfrew

Clerk

Date of Hearing:  22 August 2008

Date of Decision:  10 October 2008

Advocate for the Applicant:           Self‑represented

Advocate for the Respondent:      Mr A Carson, Centrelink Legal Services Branch