Phelps and Department of Family and Community Services
[2000] AATA 638
•2 August 2000
DECISION AND REASONS FOR DECISION [2000] AATA 638
ADMINISTRATIVE APPEALS TRIBUNAL )
) N1999/1159
GENERAL ADMINISTRATIVE DIVISION
Re BRIAN THOMAS PHELPS
Applicant
And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNTIY SERVICES
Respondent
DECISION
Tribunal Ms S M Bullock, Member
Date2 August 2000
PlaceSydney
Decision Pursuant to section 43 of the Administrative Appeals Tribunal Act 1975, the decision under review is affirmed and the Tribunal directs that the actual quantum of the debt be remitted to the Department for recalculation to confirm that the debt is made up entirely of the Job Search Allowance paid to the Applicant during the period 20 March 1995 and 2 June 1995 and not including any other payment made to the Applicant during this time.
[Sgd] Ms S M Bullock
Member
CATCHWORDS
Social Security – AUSTUDY - Job Search Allowance – debt - waiver – administrative error – special circumstances
Social Security Act 1991 ss 531, 532, 575, 1224, 1237A, 1237AAD
Secretary, Department of Social Security v Jordan (1998) 49 ALD 496
Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435
McAuliffe v Secretary, Department of Social Security (1992) 28 ALD 609
RCA Corporation v Custom Cleared Sales Pty Ltd (1978) 19 ALR 123
Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 152 ALR 127
Secretary, Department of Social Security v Hales (1998) 51 ALD 695
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
REASONS FOR DECISION
Ms S M Bullock, Member
This is an application for review to the Administrative Appeals Tribunal ("the Tribunal") by Mr Brian Thomas Phelps, ("the Applicant") of a decision made on 13 May 1997 by the Social Security Appeals Tribunal ("SSAT"). The SSAT decided that Mr Phelps failed to declare to the Department of Family and Community Services that he was a full time student and failed also to declare that he was receiving AUSTUDY at the same time as being paid Job Search Allowance and accordingly an overpayment of $2416.08 was a debt due to the Commonwealth. The SSAT further found that there were no circumstances under which the recovery of the debt could be waived pursuant to section 1237 of the Act (T2). The SSAT's decision affirmed the decision of an Authorised Review Officer ("ARO") made on 14 November 1995 (T20) to raise and recover an overpayment of $2416.08 (T20). The ARO's decision affirmed a decision made by a delegate of the Secretary, Department of Family and Community Services ("the Department") made on 1 September 1995 (T15).
A hearing was held in Sydney before the Tribunal on 17 April 2000. Mr Phelps provided oral evidence and was self represented although he was assisted in the provision of a written statement of facts and contentions by Ms L Forbes, Solicitor with the Welfare Rights Centre, Sydney (Exhibit A3). The Respondent, the Department, was represented by Mr A Cox, Departmental advocate. The Tribunal took into evidence documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 ("T-documents" - T1 - T25) and the following exhibits:
Exhibit Number Description Date
A1 Letter from Doctor H Torrevillas, General Practitioner 30 November 1999
A2 Letter from Dr R Moorthy, Consultant Psychiatrist 9 December 1999
A3 Applicant's statement of facts and contentions 2 December 1999
A4 Statement by Mr B Phelps 14 April 2000
R1 Application for AUSTUDY 1995 31 March 1995
R2 National Bank statements for Cheque Account 61 807 1257 22 February 1995 to 13 February 1996
R3 Employer's Statement and attachments (Sir Moses Montefiore Jewish Home) 18 July 1995
R4 Section 1034 Notice completed by Ms A Forbes, Manager Student Administration, University of Western Sydney 12 January 2000
R5 Statement by Mr J Ruscica, Review Officer, Wollongong Student Service Centre 12 April 2000
R6 Respondent's Statement of Facts and Contentions and attachments 7 December 1999
R7 Receipt from University of Western Sydney 10 February 1995
R8 Letter to Mr Phelps from N J S Burnett, Registrar, Undergraduate Unit, University of Western Sydney 31 August 1995 and 21 September 1995
R9 Notice of Assessment – AUSTUDY – Tertiary 13 September 1995
R10 Respondent's Submission 17 January 2000
issues
The issues to be determined in this matter are:
1.whether or not Mr Phelps was overpaid Job Search Allowance between 20 March 1995 and 2 June 1995; and if so
2.whether or not the overpayment is a debt due to the Commonwealth; and if so
3.whether there are any grounds for the non-recovery of the debt in part or as a whole.
legislation
A determination of this matter requires consideration of the provisions of the Social Security Act 1991 ("the Act").
Sections 531 and 532 of the Act deal with circumstances when Job Search Allowance is not payable, and at the relevant time stated:
531. (1) Subject to subsection (2), a job search allowance is not payable to a person who is enrolled in a full-time course of education or of vocational training for the period that:
(a)starts when the person starts the course; and
(b)finishes when the person:
(i)completes the course; or
(ii)abandons the course; or
(iii)gives notice to the provider of the course that the person:
(a)wishes to withdraw from the course; or
(b)wishes to withdraw from such number of subjects that the person's course will no longer be a full-tome course; and
(c)includes periods of vacation.
…
Section 532 as relevant at the time stated:
532 (4) Subject to subsections (5) and (6), a job search allowance is not payable to a person for a period if a payment has been or may be made in respect of the person for that period under:
(a)a prescribed educational scheme other than the ABSTUDY Tertiary Scheme to the extent that it applies to part-time students; or
(b)the scheme to provide an allowance known as the Maintenance Allowance for Refugees; or
(c)a LEAP program.
532 (5) If:
(a) a person enrols in a full-time course of education; and(b)a payment under a scheme referred to in subsection (4) may be made in respect of the person;
the Secretary may decide that, in spite of subsection (4), job search allowance is payable to the person for a period before the person starts the course.
532 (6) If:
(a) a person enrols in a full-time course of education; and(b)the course is to last for 6 months or more; and
(c)an application is made for a payment in respect of the person under:
(i)the AUSTUDY Scheme; or
(ii)the ABSTUDY Schools Scheme; or
(iii)the ABSTUDY Tertiary Scheme; and
(d)the person was receiving job search allowance immediately before the start of the course;
the Secretary may decide that, in spite of subsection (4), job search allowance is payable to the person until:
(e)the application is determined; or
(f)the end of the period of 3 weeks commencing on the day on which the course starts;
whichever happens first.
During the period Mr Phelps received AUSTUDY, he also received notices under section 575 of the Act which as relevant stated:
575 (1) The Secretary may give a person to whom a job search allowance is being paid a notice that requires the person to give the Department a statement about a matter that might affect the payment of the allowance to the person.
Section 1224 of the Act deals with debts arising from a recipient's contravention of the Act and as relevant states:
1224 (1) If:
(a)an amount has been paid to a recipient by way of social security payment; and
(b)the amount was paid because the recipient or another person:
(i)made a false statement of a false representation; or
(ii)failed or omitted to comply with a provision of this Act or the 1947 Act;
the amount so paid is a debt due by the recipient to the Commonwealth.
Section 1237 of the Act deals with the power to waive the Commonwealth's right to recover a debt. As relevant, subsection 1237(1) of the Act states:
1237 (1) On behalf of the Commonwealth, the Secretary may waive the Commonwealth's right to recover the whole or a part of a debt from a debtor only in the circumstances described in section 1237 A, 1237 AA, 1237 AAA, 1237 AAB, 1237 AAC or 1237 AAD.
Section 1237A of the Act deals with the waiver of a debt arising solely from departmental administrative error and as relevant subsection 1237A(1) of the Act states:
1237A (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.
Debts may also be waived in part or as a whole if it is found that special circumstances exist and as relevant, section 1237AAD of the Act provides:
1237 AAD Waiver in special circumstances
The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:
(a)the debt did not result wholly or partly from the debtor or another person knowingly:
(i)making a false statement or a false representation; or
(ii)failing or omitting to comply with a provision of this Act 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 if the debt.
background
The following information is provided by way of background and the facts contained herein are not in dispute.
· Mr Phelps was born on 13 May 1946. He worked variously as a Tip Top bread vendor, in dry cleaning, in saw mills, and as a taxi-driver for some 18 years (T3).
· Mr Phelps received Job Search Allowance between 2 January 1995 and 2 June 1995. Job Search Allowance claims were submitted by Mr Phelps during the relevant period as follows:
29 December 1994 (T4)
23 February 1995 (T8)
9 March 1995 (T8)
6 April 1995 (T8)
19 April 1995 (T8)
5 May 1995 (T8)
18 May 1995 (T8)
31 May 1995 (T8)
16 June 1995 (T8)
In his Job Search Allowance Claim form of 29 December 1995, Mr Phelps declared he was a student full or part-time (T4, p24).
In Mr Phelp's Job Search Allowance claim 23 February 1995, Mr Phelps did not indicate that he was studying a full-time course between 9 February 1995 and 22 February 1995 or that he had enrolled or changed his enrolment (T8, p36).
In his Job Search Allowance claim of March 1995, Mr Phelps declared that he was not undertaking any study or training at all (T8, p38).
In his Job Search Allowance claim of 6 April 1995, Mr Phelps did not declare that he was studying in a full-time course (Question seven) and he further did not declare whether or not he had applied for AUSTUDY. Mr Phelps answered "No" to the question as to whether he received AUSTUDY or whether he had enrolled or had changed his enrolment including undertaking part-time study (T8, p40). Mr Phelps answered in similar terms for Job Search Allowance claim forms of 19 April 1995, 5 May 1995, 18 may 1995, 31 May 1995 and 16 June 1995.
On 31 March 1995, Mr Phelps lodged an "Application for AUSTUDY 1995" noting that he was commencing a Bachelor of Nursing course at the University of Western Sydney on a full-time basis commencing classes on 27 February 1995 until 4 December 1995 (Exhibit R1). Mr Phelps declared that he will or did receive Job Search Allowance in 1995. Mr Phelps had previously enrolled in the Bachelor of Nursing course in 1994.
Mr Phelps received regular payments of AUSTUDY for the period 8 April 1995 to 13 August 1995 which were deposited in the National Australia Bank cheque account number 618071257 (T22, p77) in the amounts of $210.51 on 8 April 1995; $245.60 on 12 April 1995; $98.06 deposited on 19 April 1995; $298.40 on 26 April 1995; $298.40 on 10 May 1995; $164.15 on 24 May 1995; $164.15 on 7 June 1995; $164.15 on 21 June 1995.
On 25 October 1995, the Administrative Officer of the University of Western Sydney advised that Mr Phelps had enrolled in a Bachelor of Nursing course in February 1995 and confirmed that he was enrolled as a full-time student for the first semester of 1995(T18).
On 13 July 1995, Mr Phelps was notified of his examination results for the Autumn Semester of 1995 which included the subjects;
Health studies A1
Health Studies B1
Behavioural and Social Science 1
Nursing Practise 1
Behavioural and Social Science 2The examination results indicated that the subjects were continuing (T3, p16).
On 8 May 1997, the SSAT was advised by Ms R Moroney, Senior Lecturer, that during 1995, Mr Phelps enrolled in the following full year subjects:
"NNUB 11 Health Studies A – 3 hours/week each semester
NNUB 19 Nursing Practice – 5 hours/week average (this is the clinical placement and the students spend 3 weeks, at weekly intervals at clinical areas during the semester
NNUB 12 Health Studies B1 – 2 hours/week
NSSB 17 1st year Behavioural Sciences – 3hours/week
NSSB 27 2nd year Behavioural Sciences – 3 hours/week" (T23, p85)Ms Moroney further noted that Mr Phelps was enrolled in year long subjects which is why Mr Phelps was given a "continuing" grade at the end of his Autumn Semester 1995 results.
On 19 September 1995, Mr Phelps formally withdrew from his Bachelor of Nursing course.
In addition to receiving Job Search Allowance and AUSTUDY between 20 March 1995 and 2 June 1995, in May 1995, Mr Phelps accepted an offer of an AUSTUDY Financial Supplement which necessitated his trading in part of his AUSTUDY grant. By September 1995, Mr Phelps had received an amount of $3452.64 including a trade back of $517.81 (T22, p73).
On 23 June 1995, a data match between the Department of Education, Employment and Training and the Department of Social Security revealed that Mr Phelps was in receipt of both Job Search Allowance and AUSTUDY (T9). Mr Phelps' AUSTUDY was then cancelled and therfore he received his last payment of Job Search Allowance on 2 June 1995.
On 1 September 1995, Mr Phelps was notified of an overpayment debt of $2416.08 (T15).
On 24 October 1996, Mr Phelps lodged an appeal to the SSAT for review of the ARO's decision. The SSAT affirmed the ARO's decision on 13 May 1997 (T2).
On 29 July 1999, Mr Phelps applied to the Tribunal for review of the SSAT's decision (T1).
evidence of mr phelps
Mr Phelps told the Tribunal that he had completed the Job Search Allowance claim form of 29 December 1994, in which he had declared that he was a student (T4). Mr Phelps confirmed that in a subsequent Job Search Allowance claim form of 23 February 1995, he declared that he was not studying full-time between 9 February 1995 and 22 February 1995. A further Job Search Allowance continuation form of 9 March 1995, indicated also that Mr Phelps was not studying full-time nor did he declare he was studying full-time in the Job Search Allowance claim of 6 April 1995. Six days earlier on 31 March 1995, Mr Phelps told the Tribunal that he had signed an Application for AUSTUDY 1995" in which he stated that he was enrolled in full-time study commencing with classes on 27 February 1995 and expecting his course to continue until 4 December 1995 (Exhibit R1). Mr Phelps further confirmed that at Question 21 of the AUSTUDY application form, he ticked "yes" to the question Will or did you receive any of the following benefits in 1995?", to reflect that he was receiving Job Search Allowance.
Mr Phelps told the Tribunal that he had declared that he was receiving Job Search Allowance in his AUSTUDY claim form and therefore had been truthful. The fact that he then continued to receive Job Search Allowance at the same time as he was receiving AUSTUDY, Mr Phelps stated, was an administrative error between the two departments which did not know what the other was doing. Mr Phelps stated that the communication failure between the two departments caused the problem in the face of Mr Phelps providing truthful information in his AUSTUDY claim and his initial Job Search Allowance claim of 29 December 1994.
Mr Phelps did admit to the Tribunal that in subsequent Job Search Allowance claim forms, he did not declare that he was studying full-time. His explanation for this was that he believed that he could not continue studying Behavioural and Social Sciences 1 and 2 concurrently and therefore did not continue with Behavioural and Social Sciences 2. Mr Phelps told the Tribunal that he had discussed this with the University and received advice from "DEET". Based on this advice, he had ceased his study at Behavioural and Social Sciences 2. Mr Phelps believed that the Department would have known about this, although there were no formal records of him dropping a subject or of AUSTUDY, the University or the department knowing of this reduction of subjects.
Mr Phelps referred the Tribunal to the statement by Ms R Moroney as recorded by Ms D Viney of the SSAT, which he believed confirmed his evidence that he reduced his study program by dropping Behavioural and Social Sciences 2 on advice from the University. In this regard, the Tribunal noted that Ms Viney recorded of her conversation with Ms Moroney that:
"…Ms Moroney said B&S 1 used to be a prerequisite & a person was not allowed to enrol in both, now not a prerequisite. Co-ordinator might suggest to a student to drop one as it may be difficult to cope. Mr Phelps was definitely enrolled in both." (T24)
Mr Phelps asserted to the Tribunal that he thought he had dropped Behavioural and Social Sciences 2 and therefore was studying part-time hence his explanation for not recording in Job Search Allowance forms that he was not studying full-time. Mr Phelps agreed however, that in his Job Search Allowance forms, he did not at question nine or its equivalent in successive Job Search Allowance claim forms, indicate a change in study status from full-time to part-time or declare that he was studying part-time.
Mr Phelps asserted that in the six days from 31 March 1995 when he applied for AUSTUDY to his Job Search Allowance claim of 6 April 1995 that his enrolment situation had changed. He believed that his various conversations with the authorities about the issue of Behavioural and Social Sciences 1 and 2, gave him dispensation from study but that he would continue to receive his allowance. Mr Phelps acknowledged to the Tribunal that he had not formally withdrawn from Behavioural and Social Sciences 2 and indicated that the way he recorded his study status on Job Search Allowance claim forms indicated a genuine misunderstanding by him of his situation and a failure by the departments concerned to take note of his initial AUSTUDY form.
Mr Phelps informed the Tribunal that he had decided to enter the AUSTUDY Financial Supplement system for a period of five years and thought that the AUSTUDY payments he was receiving were in fact the loan payments from the Financial Supplement which he would eventually have to repay. Mr Phelps indicated that he now knew that he was receiving AUSTUDY payments and Job Search Allowance but at the time, he genuinely believed that the two payments he was receiving were Job Search Allowance and the loan payments from the AUSTUDY Financial Supplement.
Mr Phelps reiterated that he was aware that he was getting two payments and that from his National Australia Bank statements, it was clear that he was receiving Job Search Allowance and AUSTUDY and that he was spending these allowances.
Referring specifically to the Job Search application of 9 March 1995 (T8, p37), Mr Phelps admitted that his answer of "No" to Question 15 which asked, "Are you doing any study?", was incorrect and he would have known at the time that he completed this form that this answer was incorrect.
Although a different issue to the one under review, Mr Phelps further noted that in relation to the 9 March 1995 form, that his answer that he had not worked since 1991 was not correct and that in fact he was working permanent part-time at the Sir Moses Montefiore Jewish Home from 2 March 1995 to 16 June 1995 as detailed in Exhibit R3. Mr Phelps told the Tribunal that his answer in terms of his work situation as at 9 March 1995 was "wrong by a long way".
Further on the work issue, Mr Phelps also admitted to the Tribunal that he had declared that he was working at the Masonic Home at Glenfield but had not declared his permanent part-time work at the Sir Moses Montefiore Jewish Home and that it appeared that Mr Phelps had deliberately withheld the information concerning his permanent part-time work at the Jewish Home. As well as admitting to the Tribunal that he did not declare his employment income in the various Job Search Allowance forms, Mr Phelps also agreed that the information which he provided about not studying at all or either on a full-time or part-time basis as required in the Question nine of the Job Search Allowance claim forms was "wrong", noting in answer to Mr Cox, "Yes, I guess so". This was despite Mr Phelps' assertion that he had been unclear about the status of his study and genuinely believed that because he had dropped the Behavioural and Social Sciences 2, he was only studying part-time.
The Tribunal asked Mr Phelps about his circumstances during 1995. He stated that he was living with his stepson as his wife had left some time earlier in 1994. His stepson was aged approximately 15 ½ at the time and had been in considerable trouble with the law. He had been before a Magistrates Court in relation to break and enter charges, fare evasion and on one occasion, Magistrate Holbra indicated that Mr Phelps should care for his stepson and Father Reilly from Boys Town was called in to assist. Mr Phelps explained that he was finding it extremely difficult looking after his stepson in addition to trying to work and study. Mr Phelps also had his own poor health to deal with. Mr Phelps informed the Tribunal that his stepson, now aged 22 years, is married and Mr Phelps and his wife have reunited. Mr Phelps' stepson was living with him until about July 1995.
In August 1995, Mr Phelps lost his house. He had been struggling to maintain the mortgage repayments of approximately $1200.00 per month during the time his stepson was living with him and he was trying to make ends meet by working and studying but eventually he found that he could not do this. At that time, Mr Phelps was extremely overweight, had respiratory problems, sleeping difficulties and was very agitated, anxious and at times aggressive.
In December 1993, Mr Phelps had been referred by the then Commonwealth Employment Service to an Occupational Psychologist, Mr I D Trevallion, who on 2 December 1993, noted that Mr Phelps intended to complete a Bachelor of Education and then move with his stepson to the Philippines where it was his hope to teach English to primary school children. Mr Trevallion reported that Mr Phelps tested intellectually in the top 16 per cent of the general population for intelligence. Such a level is associated with success in TAFE, some University degree courses and is associated with positions such as in teaching, personnel, nursing and supervisory clerical work (T3, p10 - 15). Mr Phelps reported that he saw the psychologist on only three occasions. Mr Trevallion further reported that Mr Phelps had poor communication and social skills and that his personal stress management techniques were inadequate to deal with problems he was facing and this was evidenced by his outbursts and physiological reactions. Mr Trevallion recommended that Mr Phelps receive social skills training and also careful case management through the CES.
On 30 November 1999, Mr Phelps' General Practitioner, Dr H Torrevillas, reported that Mr Phelps was an extremely obese fellow with chronic anxiety state. Dr Torrevillas noted that Mr Phelps becomes very agitated and upset over minor problems and this had been the case since 1993. Mr Phelps had been prescribed Murela. At one time Dr Torrevillas opined that currently Mr Phelps' agitation is linked to his financial problems. It was also reported by the General Practitioner that Mr Phelps' wife had developed Insulin-dependent Diabetes Type II and she constantly suffers from a recurrent strain injury of her shoulder and had to be off work for days and on occasions weeks at a time (Exhibit A1).
A further report was received from Dr R Moorthy, Consultant Psychiatrist, who on 9 December 1999, opined that Mr Phelps suffers from an adjustment disorder with depression and anxiety features. Dr Moorthy noted that Mr Phelps admitted that he has had a long standing gambling problem which has to a large extent contributed to his current financial difficulties. Dr Moorthy recommended that Mr Phelps attend Gamblers Anonymous, have regular follow up and discuss with his superiors about his gambling problems. Mr Phelps told the Tribunal that he attended Gamblers Anonymous on approximately three occasions and had absolutely no intentions of returning. He had consulted with Dr Moorthy on two occasions and was not intending to consult with him further.
In relation to Mr Phelps' medication, he told the Tribunal that he was taking Indosid, medication for sedation and muscle relaxant, Panadeine-Forte for pain, Biquinate for leg cramps, Zyloprim for gout and recently it had been discovered that Mr Phelps has kidney stones and he was now requiring treatment for this condition. Recently, Mr Phelps had spent one month in hospital because of a left leg problem and has been told that he requires surgery. This will not occur, however, until Mr Phelps has lost weight, his target weight being 100kgs where currently Mr Phelps weighs 138kgs. Mr Phelps informed the Tribunal that at the time of the hearing, he had lost 22 kilograms in weight from February 2000 but still had a long way to go.
In 1995, Mr Phelps estimated for the Tribunal that he had debts of approximately $7000.00.
Currently, Mr Phelps earns approximately $729.54 per week, working a 38 hour night shift at Campbell House. He is repaying a HECS debt at $40.15 and has a visa credit card debt of $4000.00 which he is attempting to repay at the rate of $250.00 per week.
Mrs Phelps is employed in two jobs to try to assist in the reduction of debt, however this is problematic because of her diabetes. Her health is precarious, Mr Phelps informed the Tribunal. She should not be working, Mr Phelps stated but is doing so to help with the family's financial difficulties. Mr and Mrs Phelps live in an apartment for which they pay $240.00 per week in rent and have been living there since 1998. Their expenses include $80.00 for utilities such as electricity and water and they spend $115.00 per week on food which includes food for both Mr and Mrs Phelps dietary needs. Their transport costs amount to $39.00 per week. In terms of assets, Mr Phelps informed the Tribunal he had a 1983 High Ace Van, but he is unable to drive it at the moment because of his leg condition. Mr Phelps stated that he has nothing in his savings account, no other assets and is not able to access his superannuation until he is aged 54 years.
If Mr Phelps is unsuccessful at the Tribunal and is found to have to repay the overpayment debt of Job Search Allowance, Mr Phelps indicated that the repayments should be no more than $20 as he could not afford anything higher than that. His health condition is precarious, he finds the anxiety of having to repay the debt extreme and impacting on his day to day to life. Given all these things, and the fact that he has had a great deal of sick leave, resulting in no more leave available to him, Mr Phelps asked the Tribunal to consider the precarious nature of his situation.
Mr Phelps noted that he has not undertaken any gambling activities since March 2000 and although he has had a long term gambling problem, in 1995, Mr Phelps was unable to gamble because he simply did not have enough money.
submissionsMr Phelps indicated that his submission was contained in the Statement of Facts and Contentions prepared with him by Ms L Forbes, solicitor, at the Welfare Rights Centre, Sydney.
Mr Phelps contends that the Job Search Allowance debt was caused solely by administrative error on the part of the Commonwealth and that the overpaid amounts were received by Mr Phelps in good faith. Therefore, Mr Phelps submitted that the recovery of the whole debt be waived pursuant to section 1237A of the Act.
In the alternative, Mr Phelps submitted that special circumstances existed pursuant to section 1237AAD of the Act, to warrant waivering the recovery of a proportion of the debt. It was submitted that the amount which should be waived is $1,090.25 being $2416.08, the amount of the Job Search Allowance/AUSTUDY debt, less $1325.85, the amount of the debt due to the non-assessment of casual employment earnings.
The Tribunal was referred to Mr Phelps' poor social skills and his inability to effectively deal with beauracratic requirements as noted in December 1993 by Mr Trevallion, Industrial Occupational Psychologist. These conditions explain Mr Phelps' failure to state his case clearly to the SSAT and also the difficulties reported by the Welfare Rights Centre in its dealing with Mr Phelps. It was contended by Ms Forbes of the Welfare Rights Centre, that such factors contributed to Mr Phelps' inability to sort out his enrolment status in 1995 and to his misunderstanding of the basis of the Student Assistance payments also made to him in 1995.
In relation to his AUSTUDY claim, Mr Phelps had asked a "DEET" Counter Officer about what would happen to his Job Search Allowance payments when he was receiving AUSTUDY and he was told that he could stay on Job Search Allowance until his AUSTUDY payments commenced.
Ms Forbes submitted that the Tribunal should understand that Mr Phelps had been advised by the course coordinator that he should not attempt undertaking Behavioural and Social Sciences 1 and 2 at the same time. While Mr Phelps resisted this advice initially, he subsequently did "drop" Behavioural and Social Sciences 2 in April 1995 after attending only a few lectures. When he advised AUSTUDY of this, Ms Forbes submitted that Mr Phelps was lead to understand that he was now a part-time student, that he was no longer eligible for AUSTUDY and that he would be required to repay AUSTUDY paid to him in 1995. At the time of the SSAT hearing, Mr Phelps believed that the AUSTUDY payments paid to him up until that time were to be recovered from him as part of the AUSTUDY Financial Supplement Commonwealth Bank loan arrangement. Mr Phelps perceived that the payments made to him were totally different in character to the payments made to him when he perceived himself to be a full-time student and understood the offer and approval of the AUSTUDY Financial Supplement as being a direct consequence of him being transferred from full-time to part-time study.
In relation to the AUSTUDY Financial Supplement, Mr Phelps was granted AUSTUDY from 20 March 1995 and the Financial Supplement was not granted until 24 May 1995. Trade back of an amount $517.00 was involved in terms of taking $517.00 of AUSTUDY previously paid to Mr Phelps and trading this on the books to the supplement.
Ms Forbes' understanding of the trade back arrangement is that this could not occur on loan supplement applications lodged after 1 May in any one calandar year. This indicated that Mr Phelps must have applied for the loan supplement by 1 May 1995 as he has asserted. This would support Mr Phelps' perception that he had changed to part-time study and made application for the supplement contemporaneously. Ms Forbes reiterated that the complexity of the AUSTUDY Financial Supplement arrangements are difficult for an ordinary person to understand and difficult for the Department of Employment, Education and Training to explain to applicants both verbally and in writing. In Mr Phelps' circumstances, where he was suffering from a severe anxiety condition, the Financial Supplement was impossible to comprehend. It is therefore reasonable to accept, Ms Forbes submitted, in the light of his assertions, that Mr Phelps regarded himself as studying part-time and he perceived the arrangement to remain on Job Search Allowance as appropriate and believed he had traded in his AUSTUDY payments for the loan.
Ms Forbes submitted that Mr Phelps was adamant that Ms Moroney's advice to the SSAT was incorrect that Mr Phelps was enrolled in the 1995 Autumn semester in five subjects which was considered to be a full-time enrolment. Mr Phelps submitted and was adamant in his submission to the Tribunal that he discontinued Behavioural and Social Science 2 in April 1995 despite what the University and Department of Employment, Education and Training records might have indicated.
While Mr Phelps now accepts that he received AUSTUDY payments in addition to the AUSTUDY Financial Supplement, at the time of the SSAT hearing he did not understand this was so. Ms Forbes submitted that the Welfare Rights Centre had explained to Mr Phelps that his acceptance of the AUSTUDY Financial Supplement, involved the trading in of a portion of his AUSTUDY entitlement, an entitlement that depended on the University considering him to be a full-time student.
Ms Forbes submitted that Mr Phelps' explanation as to what he understood regarding his Job Search Allowance, AUSTUDY and AUSTUDY Financial Supplement entitlements is reasonable to accept. Mr Phelps had fully disclosed his circumstances when he claimed Job Search Allowance in December 1994 and also when he claimed AUSTUDY in March 1995, but was confused regarding verbal advice given to him about the impact of not being able to cope with a full-time course load in 1995 and also the technicalities of the AUSTUDY Financial Supplement. While Ms Forbes acknowledged that at face value, it may be difficult to accept that Mr Phelps could be unaware of simultaneously receiving AUSTUDY and Job Search Allowance payments, when the facts of the administration of the three types of payments made to Mr Phelps are considered in the context of his anxiety condition and poor communication and social skills and, the administrative errors that occurred, then the source of his confusion could be understood, Ms Forbes contended.
Specifically, it was submitted on Mr Phelps' behalf that he had fully disclosed his status as a student when he claimed Job Search Allowance on 29 December 1994. Further, the notes for Module E advise that the person completing it has to complete sections A and B if the person is no longer studying. Mr Phelps completed section A of the Module in the Job Search Allowance Claim form but did not complete section B which had to do with proposed study and which asked amongst other things, whether the person is going to study within the next six months. Ms Forbes contended that the failure of the Department to insist that section B be completed by Mr Phelps, constituted administrative error on the part of the Department. Had the Department insisted on the completion of section B, Mr Phelps would have had the opportunity to explain his uncertainty regarding his study and payment options for 1995. Had this occurred, it is reasonable to conclude, Ms Forbes contended, that it would have been clearly explained to Mr Phelps that if he did re-enrol and apply for AUSTUDY, there would be a transfer from Job Search Allowance to AUSTDUY from the date of enrolment, as was Departmental policy.
The fact that Mr Phelps' AUSTUDY payments were granted from 20 March 1995 rather than 1 January 1995, indicates that he had advised the Department of Employment, Education and Training on his AUSTUDY claim form that he was receiving a Job Search Allowance. The Department of Employment, Education and Training's standard administrative practice in this situation was to inform the Department of the date it was to commence AUSTUDY payments and by implication, the date that the Department should cease Job Search Allowance payments. This clearance procedure, Ms Forbes submitted, was designed to prevent the making of dual Department of Education, Employment and Training and Departmental payments to students who, like Mr Phelps, had claimed Job Search Allowance at the end of the calandar year, while they considered their options in relation to study, for the following year.
Had the Department of Education, Employment and Training delegates followed accepted procedures, the continued payments of Job Search Allowance to Mr Phelps would have been prevented and he would not have been overpaid, Ms Forbes contended. Further, it was submitted that the decision to grant Mr Phelps AUSTUDY from 1995 without obtaining a clearance to do so from the Department constitutes administrative error on the part of the Department of Employment, Education and Training, thus causing the overpayment of Job Search Allowance.
Furhter administrative error occurred on the part of the Department of Employment, Education and Training in the processing of Mr Phelps' AUSTUDY Financial Supplement, Ms Forbes contended. In this regard, it was submitted that the Department of Employment, Education and Training failed to explain the "trade back" and "trade in" concepts to Mr Phelps in a manner that was capable of being understood by him. This lead to him not appreciating the fact that he was a recipient of the AUSTUDY living allowance after the supplement payments commenced.
Ms Forbes submitted that the complexity of the AUSTUDY Financial Supplement and the Department of Employment, Education and Training's failure to ensure that Mr Phelps understood the contract that he was entering into was a major contribution to Mr Phelps' misunderstanding that he received a "loan" from the Department of Employment, Education and Training in 1995 which did not qualify him from Job Search Allowance. This understanding compounded Mr Phelps' misconceptions regarding his enrollment status.
Ms Forbes submitted that Mr Phelps' understanding and perception that he was a part-time student is reasonable to accept when considering the context of his state of mind at the time and his misconceptions regarding the AUSTUDY Financial Supplement. Given that Mr Phelps perceived himself to be a part-time student, his answers to Question 7 of the Job Search Allowance continuation forms (T8) are not false. If Mr Phelps did not understand that he was a full-time student, his answer in the negative to the Question "Did you enrol or are you intending to enrol in a full-time course in the above period?", would, in his mind have been correct. Similarly, the answer to question 15 on the forms submitted on 9 March 1995 (T8, p38) was correct as this was before he commenced study.
Ms Forbes noted that Mr Phelps was employed part-time by the Sir Moses Montifiore Jewish Home from 9 March 1995 to 2 June 1995 and his failure to advise of this lead to the raising of an overpayment of $1325.85. Ms Forbes submitted that Mr Phelps was only able to work part-time while formally enrolled in an intensive full-time course, by not undertaking a full-time load, whatever the faculty records may indicate.
In all of the circumstances, Ms Forbes contended that the recovery of the whole debt at $2,416.08 be waived pursuant to section 1237A of the Act. If not for the error on the part of the Department of Employment, Education and Training in failing to liase with the Department to ensure that Mr Phelps' Job Search Allowance payments were cancelled prior to the grant of AUSTUDY for 1995, there would have been no overpayment of Job Search Allowance, either in terms of the dual payment with AUSTUDY or in respect of Sir Montefiore Moses Nursing Home. Mr Phelps was confused with regards to his entitlements and the operation of the AUSTUDY Financial Supplement. Given the facts surrounding Mr Phelps' claims for both Job Search Allowance and AUSTUDY, his reasonable belief that the Department of Employment, Education and Training would liase effectively, the fact that AUSTUDY was granted from 20 March 1995 rather than 1 January 1995 and the timing of Mr Phelps' application for a Financial Supplement, then his confusion is understandable. In all of these circumstances, Ms Forbes contended that it was reasonable for the Tribunal to accept that Mr Phelps received the overpaid Job Search Allowance in good faith.
In the alternative, should the Tribunal not accept that the debt arose solely due to administrative error, Ms Forbes submitted that the recovery of the amount of $1090.23 be waived given the special circumstances of the case as previously outlined. Such special circumstances included the strong element of administrative error, Ms Forbes contended. Ms Forbes referred the Tribunal to the principles established in Secretary, Department of Social Security v Hales (1998) 219 FCA. Although the amount proposed for waiver is not great, for Mr Phelps the burden of the debt is substantial. His sense of frustration due to his inability to explain his case effectively, clearly exacerbates his anxiety condition. The appeal process itself has caused him extreme stress and anxiety and yet he feels compelled to pursue the appeal process to vindicate himself. The existence of the debt itself is exacerbating Mr Phelps' anxiety condition, Ms Forbes submitted.
The special circumstances of Mr Phelps' case include the strong elements of administrative error on the part of both the Department and the Department of Employment, Education and Training in the commencement and accrual of the overpayment; the complexities of the Department of Employment, Education and Training policies regarding AUSTUDY eligibility; the processing of the AUSTUDY Financial Supplement; and the contribution of Mr Phelps' anxiety condition to the accrual of the debt. A further special circumstance following discovery of the debt is the impact of the existence of the debt on Mr Phelps' anxiety condition. While Mr Phelps has not been receiving psychiatric treatment or counselling recently, the Welfare Rights Centre had suggested to Mr Phelps that he needs intervention by way of counselling or psychiatric treatment. Mr Phelps' General Practitioner, Dr Torevellais has advised him, Ms Forbes noted, that he is currently unfit for work due to anxiety but Mr Phelps feels he must keep working.
Mr Phelps concluded his personal submission to the Tribunal requesting that the Tribunal accept that he did not set out to obtain Department of Education, Employment and Training and social security payments at the same time. The situation Mr Phelps now finds himself in is causing him a great deal of worry and he is further worried about his painful back and leg conditions for which he was recently hospitalised for over a month. Mr Phelps asked the Tribunal to consider that his left leg is now totally without feeling from the knee down, which is particularly frightening and he is scared of further falling and damaging his spine. Mr Phelps works because he is worried about the social security debt and his $4000 visa credit card debt. He also has a substantial HECS debt and the AUSTUDY Financial Supplement loan which he has to repay. For the moment, Mrs Phelps is also working due to financial difficulties, despite her doctor's advice that she should not be working.
If Mr Phelps is successful in his application for review, he indicated that this is at least one problem that he can put behind him which can lessen the pressure which he feels. Mr Phelps reiterated his submission in relation to the relevance of the Federal Court decision of Hales (supra) which involved a person with a debt which caused her psychiatric condition to worsen. In such circumstances, Mr Phelps requested that the Tribunal waive the recovery of his debt.
Mr Cox for the Department submitted that in the period 20 March 1995 to 2 June 1995, Mr Phelps received a total of $2416.08 in payments of Job Search Allowance to which he was not entitled.
Mr Cox submitted that Mr Phelps was enrolled in a full-time Bachelor of Nursing course at the University of Western Sydney from February 1995 until 19 September 1995. Information from Ms R Moroney, Senior Lecturer at the University of Western Sydney, indicated that Mr Phelps was enrolled in year long subjects in 1995 (T23). Mr Phelps was enrolled in five subjects as indicated in T3 and T18. These subjects required an average attendance of 16 hours per week. That Mr Phelps was enrolled in a full-time course is also confirmed by the statements he made when completing his application for AUSTUDY 1995 on 31 March 1995. In that application, Mr Phelps noted at Question 16 that he would be in full-time study and that he began his studies on the first day of classes on 27 February 1995. Further, Mr Cox contended that Mr Phelps' assertions that Ms Moroney's advise as advised to the presiding member of the SSAT on 13 May 1997, were not correct and her advice did not in fact support his contentions that he was told that he could not undertake Behavioural and Social Science 1 and 2 concurrently. Mr Cox referred to the substance of this advice that the subject of Behavioural and Social Science 1 used to be a prerequisite and a person was not allowed to enrol in both, whereas the coordinator may have suggested to a student, in this case, Mr Phelps, that he drop one as it may be difficult to cope. The evidence was, however, that Mr Phelps was definitely enrolled in both subjects and there was no formal withdrawal noted (T24).
The Tribunal was also referred to Mr Phelps' Autumn Semester 1995 notification of exam results which was issued on 13 July 1995 in which the five subjects being undertaken by Mr Phelps were listed and it was noted that he was continuing those subjects (T3). Again there was no indication of any withdrawal from any subject, Mr Cox noted.
Mr Cox turned to consider the issue of Mr Phelps' study status at the time and noted subsections 531 (1) and (2) of the Act which indicate that if a student was enrolled in a full-time course of education, Job Search Allowance is not payable and further, Job Search Allowance is not payable to a person pursuant to subsections 532 (4), (5) and (6) of the Act where AUSTUDY was being paid. Central to the application of subsections 531 (1) and (2) is whether or not Mr Phelps could be considered to be enrolled in a full-time course of education. Mr Cox referred the Tribunal to Secretary, Department of Social Security v Jordan (1998) 49 ALD 496, for a discussion of this issue. Hill J, noted at 501 – 503;
"…Indeed the explanatory memorandum is silent on the question of the meaning of the words "course of full-time education". What it makes clear, and it follows in any event from the change in language from the 1947 Act and the present Act, is that the disqualification for benefit is dependent not on being engaged in full-time study but being enrolled in a course of full-time study. No longer would it be relevant to consider the particular activities of a student to determine the level of engagement of that student. Instead there was to be concentration on the course of study itself. But how should a course of study be classified as full-time or part-time?…
The classification of the course by the educational institution offering it is a factor to consider; indeed it may provide at least a prima facie indication and perhaps often will, absent other factors, be determinative. But that classification can not be the only factor to be considered…"
Mr Cox submitted that the evidence from the University of Western Sydney is that Mr Phelps was enrolled in a full-time basis. Specifically, Mr Cox referred the Tribunal to T18, which indicated that Mr Phelps was enrolled in full-time study in the first semester in 1995. Further, information provided by Ms Moroney, Senior Lecturer, explained that Mr Phelps was involved in year long subjects and provided a list of subjects with their contract hours, totalling 16 in all (T23, p85). In addition, the presiding member of the SSAT recorded a conversation with Ms Moroney in which it was confirmed that Mr Phelps was definitely enrolled in both Behavioural and Social Sciences subjects 1 and 2 (T24). The University of Western Sydney examination results showed that Mr Phelps was still enrolled in all subjects listed by Ms Moroney (T3, p16; T23, p85). Mr Cox referred the Tribunal to Mr Phelps' own statement in his application for AUSTUDY at Questions 14 and 16 which confirmed his full-time study status. Therefore, Mr Cox submitted that Mr Phelps had been enrolled in full-time study and was not entitled to Job Search Allowance in the relevant period further. Mr Phelps was in receipt of AUSTUDY payments in respect of the period 20 March 1995 to 2 June 1995 and he was not entitled to Job Search Allowance. As a result, the Job Search Allowance payments made in that period constitute an overpayment, Mr Cox submitted.
Mr Cox contended that Mr Phelps made a number of false statements and accordingly the overpayment was a debt under subsection 1224(1)(b)(i) of the Act. Those false statements were made on the "Application for payment of Job Search/ Newstart/ Youth Training Allowance" forms signed by Mr Phelps on 9 March 1995, 6 April 1995, 19 April 1995, 5 May 1995, 18 May 1995, 31 May 1995 and 16 June 1995, as recorded at T8. Mr Cox submitted that the false statements were made in relation to answers to Question 7 on each of the forms. Mr Phelps was studying in a full-time course of education in the periods relevant to each form. In relation to Question 9, false statements were also made once Mr Phelps started receiving payments for AUSTUDY that is, from the form signed on 19 April 1995 onwards.
A further submission was made by Mr Cox that Mr Phelps also failed or omitted to comply with a provision of the Act as provided in subsection 1224 (1)(b)(ii) of the Act. The "Application for payment of Job Search/ Newstart/ Youth Training Allowance" forms are notices under section 575 of the Act. Mr Phelps had omitted to inform the Department of his claim for AUSTUDY or his receipt of AUSTUDY and the fact that he was a full-time student. Clearly on the evidence provided by Mr Phelps at the hearing, Mr Cox submitted that there was no element of confusion. Mr Phelps had stated that he knew that he was incorrect in recording in various forms that he was not studying when infact he was. Whether or not this study was part or full-time, Mr Phelps had failed to disclose the fundamental point that he was a student.
Referring to McAuliffe v Secretary, Department of Social Security (1992) 28 ALD 609, Mr Cox submitted that the decision in that matter is authority for the proposition that false statements need only be a contributory factor to the decision to make payment of a benefit. In Mr Phelps' case, he had been receiving benefit from 2 January 1995. Mr Phelps did not notify of his study in a full-time course of education in the relevant period and even if the Tribunal accepted Mr Phelps' belief that he was in part-time study, Mr Phelps had also failed to disclose this in his Job Search application forms. Because Mr Phelps also did not inform of his claim or receipt of AUSTUDY, this lead to the payment of a Job Search Allowance which would not have been made if the Applicant had properly advised the Department, Mr Cox submitted.
In relation to the non-recovery of the debt, Mr Cox submitted that the overpayment of Job Search Allowance of $2416.08 could not be waived under any provision of the Act.
Considering the issue of sole administrative error as pursuant to section 1237A of the Act, Mr Cox submitted that there is no overpayment to Mr Phelps caused solely or otherwise by administrative error and accordingly waiver under section 1237A is not available. The debt was caused solely by false statements made by Mr Phelps and his failure also to comply with the provisions of the Act, Mr Cox submitted. Mr Cox asked the Tribunal to consider that the Department had to take the statements made by Mr Phelps at face value and that if Mr Phelps had notified the Department that he was not in receipt of AUSTUDY and that he was not in full-time or indeed part-time study, then the Department accepted this.
Should the Tribunal find that there was some contributing administrative error in this matter, Mr Cox submitted that the waiver provision is not applicable in section 1237A as Mr Phelps himself contributed to the debt by his making false statements and omitting to comply with provisions of the Act. Section 1237A can only be used where the debt arose solely through administrative error.
Turning to the issue of waiver under section 1237AAD of the Act in relation to special circumstances, Mr Cox submitted that the Tribunal must firstly consider whether or not the debt had resulted wholly or partly from Mr Phelps or another person knowingly making a false statement or false representation or failing or omitting to comply with a provision of the Act as provided for in subsection 1237AAD (a)(i)(ii) of the Act.
In Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435 at 445, Deputy President Forgie discussed the meaning of "knowingly" as contained in section 1237 AAD of the Act, noting:
"There is nothing in section 1237AAD of the Act which suggests the word "knowingly" should be given any other 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 the 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 events surrounding false statement or the Act or omission."
Mr Cox contended that the reference to "events surrounding the false statement or the Act or omission" surely relates to a process of inference from those events to the conclusion that a person had actual knowledge of their false statement or failure to comply. This is why Deputy President Forgie previously referred to the joint judgement of Hope, Reynolds and Hutley JJA in RCA Corporation v Custom Cleared Sales Pty Ltd (1978) 19 ALR 123 which in part noted:
"It seems to us that the principle is more accurately put by saying that a court is entitled to infer knowledge on the part of a particular person on the assumption that such a person has the ordinary understanding expected of persons in his line of business, unless by his or other evidence it is convinced otherwise. In other words, the true position is that the court is not concerned with the knowledge of a reasonable man but is concerned with the reasonable inferences to be drawn from a concrete situation as disclosed in the evidence as it effects the particular person who's knowledge is in issue."
In Mr Phelps' situation, Mr Cox submitted that the Tribunal is entitled to infer knowledge on the part of Mr Phelps by assuming that he has the ordinary understanding of a 48 year old man with broad experience of life and with some University training. Referring to Mr Phelps' previous occupations, Mr Cox noted that Mr Phelps had previously worked as a taxi driver, in the saw mills, as a Tip Top bread vendor and in the dry cleaning industry (T3, p12). Such experience would indicate a knowledge of commerce and particularly in relation to work as a taxi driver, a knowledge of the importance of honest record keeping. Mr Cox further noted that Mr Phelps has been rated by Mr Trevallion, Occuptational Psychologist, as having a Full Scale IQ of 115 which puts Mr Phelps in the top 16 per cent of the general population for intelligence.
Mr Cox submitted that in this case, the concrete situations from which reasonable inferences could be drawn included the situation of the classes in the Bachelor of Nursing course commencing on 27 February 1995. On Mr Phelps' relevant fortnightly Job Search Allowance application forms, he denied undertaking any study or attending any training course in the fortnight 23 February 1995 to 8 March 1995, yet admitted that in evidence he had in fact started study then. There was also a contradiction by Mr Phelps when he stated on his AUSTUDY application form that he started studies on the first day of class. Further, Mr Cox referred the Tribunal to the fact that during his evidence to the Tribunal, Mr Phelps had admitted to knowing that what he had written on his Job Search application forms was incorrect and that he had made a false statement. Also, although not relevant to this specific matter, Mr Phelps had indicated that he was not working when in fact he was and admitted that this also was a false statement.
Mr Cox further noted that Mr Phelps completed his application for AUSTUDY on 31 March 1995 and only six days later on 6 April 1995 he completed a fortnightly Job Search Allowance application form for the period 5 March 1995 to 5 April 1995 in which he denied studying a full-time course (Question 7 of T8, p40). Thus within a period of six days, Mr Phelps had stated that he was a full-time student for the purposes of claiming AUSTUDY and then denied he was studying a full-time course for the purposes of claiming Job Search Allowance. Further, Mr Phelps did not complete all of the question on the relevant Job Search Allowance form in relation to his claim for AUSTUDY (Question seven T8, p40).
It was also noted by Mr Cox that Mr Phelps first received an AUSTUDY payment of $210.51 on 10 April 1995 and received his next two AUSTUDY payments on 12 April of $245.60 and on 19 April $98.06 (T22, p77). On the fortnightly Job Search Allowance form for 6 to 19 April 1995, Mr Phelps stated that he did not receive any other government payment for example AUSTUDY or ABSTUDY in the relevant period. This was clearly incorrect, Mr Cox submitted as by that time Mr Phelps had received three AUSTUDY payments totalling $554.71. An examination of Mr Phelps' National Australia Bank account's statement demonstrates that he had withdrawals after receiving these payments. In such circumstances, Mr Cox submitted that Mr Phelps could not have been unaware that he was receiving these payments. He had only recently claimed AUSTUDY and consistently withdrew money from this account a short time after receiving the payments.
Mr Cox asked the Tribunal to consider that Mr Phelps continued to make false statements in relation to his studies and receipt of AUSTUDY right through the relevant period and including the form he completed on 16 June 1995. The consistency of the false statements is a factor which must be considered. It was not a case of oversight, Mr Cox contended. The receipt of both Job Search Allowance and AUSTUDY could only be obtained by the making of false statements with actual knowledge that they were false and Mr Phelps admitted making false statements during his evidence to the Tribunal. The two payments of AUSTUDY and Job Search Allowance are mutually exclusive, Mr Cox submitted. The questions which Mr Phelps answered falsely were in clear simple English, they were neither ambiguous nor complex and certainly must have been intelligible to Mr Cox, particularly noting to Mr Phelps' his high intelligence.
The Tribunal was also referred to Mr Phelps' consistent pattern of making false statements in relation to employment and income from employment. Though not strictly relevant to the subject of review, Mr Phelps' propensity for blatantly making false statements that he was not working when in fact he was indicated a clear intention to deceive the Department, Mr Cox submitted. In making false statements in relation to employment on each of the fortnightly forms in the T-documents, the Tribunal should take this as an indication that Mr Phelps was both aware and capable of reporting his employment income details but that he made a deliberate decision to make false statements. This pattern of behaviour indicates Mr Phelps' overall intent and course of deception, Mr Cox submitted. Further, Mr Cox noted that on Mr Phelps' evidence to the Tribunal that he was working at both the Sir Moses Montefiores Jewish Home and also the Massonic Home at Castlefield where he reported his income from the Massonic Home yet not from the Sir Moses Montefiores Jewish Home, that it did seem, on Mr Phelps' direct evidence to the Tribunal, that he was deliberately withholding information about his income from work at the Jewish Home.
From all of the above circumstances, Mr Cox submitted that it is reasonable for the Tribunal to infer that Mr Phelps "knowingly" gave false statements and "knowingly" failed to comply with provisions of the Act. As a result, Mr Cox submitted that the special circumstances provisions contained in section 1237AAD of the Act are not available to Mr Phelps in this case.
In the alternative, Mr Cox submitted that if the Tribunal did not accept that Mr Phelps knowingly made false statements and therefore considered that there may be special circumstances in this case, then the Respondent submitted that there is no evidence that administrative error was the cause of the debt and therefore could not be a special circumstances. Mr Cox submitted that there is clear evidence that the cause of the debt was the making of false statements in various Job Search Allowance claim forms particularly in various Job Search Allowance claim forms.
Mr Cox further submitted that the operation of the AUSTUDY payments and the AUSTUDY Financial Supplement scheme is not an element that would go towards special circumstances given that Mr Phelps was able to take advantage of both schemes. The AUSTUDY Financial Supplement scheme was wholly voluntary and must have been participated in by Mr Phelps because he thought it would be to his benefit to do so, Mr Cox submitted.
In relation to the anxiety felt by Mr Phelps as a result of the debt he owed to the Commonwealth and the stress resulting from this, it would not make it appropriate to waive the debt in the circumstances where Mr Phelps' debt had been caused by his false statement and dual payments being received. Mr Cox submitted that there is nothing unfair or harsh in the recovery of a debt in such circumstances and in this regard referred the Tribunal to Secretary, Department of Social Security v Hales (supra) in which French, J concluded at page 260:
"The tax payer 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 lead to the overpayment and the circumstances of the person concerned."
In all the circumstances, Mr Cox submitted that special circumstances do not exist that would make it appropriate to waive any or all of the debt. Accordingly, Mr Cox submitted that the Tribunal affirm the decision of the SSAT.
findingsThe Tribunal has reached a decision in this matter taking into account the oral and documentary evidence, the submissions and by applying the legislation. The Tribunal found Mr Phelps cooperative in the provision of his evidence.
The first issue for the Tribunal to determine is whether or not there is a debt arising out of an overpayment of Job Search Allowance to Mr Phelps for the period 20 March 1995 to 2 June 1995. It is clear to the Tribunal that certainly Mr Phelps was receiving during this period, both Job Search Allowance and AUSTUDY payments.
Mr Phelps claimed AUSTUDY on 31 March 1995 and he stated in his claim form that he was enrolled in full-time study in the course Bachelor of Nursing at the University of Western Sydney and that he would start his studies in 1995 on the first day of class/lectures which he noted at question 16 of the form commenced on 27 February 1995 until 4 December 1995 (Exhibit R1). At Question 21 of the AUSTUDY claim form, in answer to the question "Will or did you receive any of the following benefits in 1995?", Mr Phelps ticked that he was in receipt of Job Search Allowance and provided his DSS client number.
The Tribunal notes that six days later in a Job Search Allowance application form dated 6 April 1995 and covering the period 23 March 1995 to 3 April 1995, Mr Phelps had indicated that he had not enrolled or was not studying in a full-time course in the above period and further, noted that at question 9 of that form that he was not enrolled nor had changed any enrolment for any course or started a course part-time. This written statement is clearly at odds with the statements contained in the AUSTUDY application form of 31 March 1995. Mr Phelps' explanation to the Tribunal of this seeming inconsistency is that in the six day period between the end of March and 6 April 1995, he had received advice that he could not study one of his subjects, Behavioural and Social Sciences 2 and accordingly had dropped this subject. While Mr Phelps acknowledged that there is no record of this advice nor of him dropping his subject, including no formal withdrawal from that subject, Mr Phelps was adamant that he had indeed dropped a subject, and from that point considered himself to be studying part-time. Mr Phelps' further evidence was that because he considered himself to be a part-time student he did not think he was receiving AUSTUDY and therefore his statements in Job Search Allowance claim forms that he was not enrolled in full-time study nor receiving AUSTUDY payments was consistent with his understanding. Further, because Mr Phelps had made an application to join the AUSTUDY Financial Supplement scheme, he believed that the payments which were coming from AUSTUDY were in fact loan payments to him as part of the Financial Supplement. Clearly this was not the case and Mr Phelps was receiving Job Search Allowance, AUSTUDY payments and funds from the AUSTUDY Financial Supplement scheme.
Against this evidence provided by Mr Phelps, the Tribunal must balance other evidence which is that consistent with his AUSTUDY claim form in which Mr Phelps indicated that he was in full-time study. Mr Phelps received examination results in July 1995 indicating that he was enrolled in five subjects and those five subjects were continuing (T3, p16, statements from the Administration Officer of University of Western Sydney on 25 October 1995). That Mr Phelps was actually enrolled as a full-time student for first semester in 1995 (T18) was supported by a statement by Ms R Morony, Senior Lecturer at the University of Western Sydney of 8 May 1997 who noted that Mr Phelps was enrolled in five year long subjects and was enrolled full time (T23). A record of a conversation, detailed by the presiding Member of the SSAT with Ms Morony recorded on 13 May 1997 indicated that previously it was not possible to study Behavioural and Social Science 1 and 2 concurrently but that that was not the case now and that the coordinator could have explained to Mr Phelps he might have been better to drop a subject as it may be difficult to cope. Despite Mr Phelps' contentions, it is clear to the Tribunal that he was still definitely enrolled in both subjects (T24).
Some guidance has been provided by Secretary, Department of Social Security v Jordan (supra) as to what is meant by a course of full time education. While Mr Phelps asserts that he had dropped a subject, there is no record of him having done so, which he acknowledges. All of the formal information provided, including that of the institution of the University of Western Sydney, points to Mr Phelps continuing to be enrolled as a full-time student. Ms Morony, who Mr Phelps had indicated was very helpful to him during his course, also considered that Mr Phelps was enrolled as a full-time student. There is no other evidence apart from that provided by Mr Phelps, that he was not enrolled full-time. That Mr Phelps may have considered himself a part-time student does not dissuade the Tribunal from its view that Mr Phelps was in fact enrolled as a full time student and as such was entitled to receive AUSTUDY which indeed he did. If Mr Phelps was, as he asserts, a part-time student, then the Tribunal is at a loss to understand why Mr Phelps did not declare that he was a part-time student in his Job Search Allowance application forms from 6 April 1995 onwards. Clearly, Mr Phelps did not declare at Question 9 in the subsequent Job Search Allowance forms that he was enrolled in any type of course, be that part or full-time or in receipt of any government payment such as AUSTUDY. That he did not complete question 7 of the various Job Search Allowance claim forms indicating as to whether he was studying full-time and the fact that he did not at Question 9 then go on to indicate that he was studying at all or indeed studying part-time as he asserted at the Tribunal detracts from the veracity of Mr Phelps' overall assertions. As Mr Phelps admitted in his evidence to the Tribunal, he did know he was studying and that he did know that the information that he completed on the Job Search Allowance claim forms in terms of being enrolled and studying part-time was incorrect .
The Tribunal acknowledges that Mr Phelps may well have been confused or misunderstood that he was not a full-time student and that indeed, if the Tribunal were generous in its assessment of Mr Phelps evidence, that he was not receiving AUSTUDY but a loan payment. This still does not excuse Mr Phelps from not declaring in the various Job Search application forms that indeed he was undertaking any study and, on his presentation of the facts, part-time study. He simply failed to declare this information in the Job Search Allowance claim forms.
In such circumstances, the Tribunal considers that Mr Phelps was in full-time enrolment, and as such, was receiving a Job Search Allowance when he was also receiving AUSTUDY allowance and accordingly he was not entitled to the Job Search Allowance. The Tribunal determines that pursuant to subsections 531(1) and (2) of the Act, Mr Phelps was enrolled in a full-time course of education and was not entitled to Job Search Allowance in the relevant period and further at the relevant time, in relation to subsections 532(4), (5) and (6) of the Act, as Mr Phelps was receiving AUSTUDY as a prescribed AUSTUDY scheme and the payments of AUSTUDY were made in the period 20 March 1995 to 2 June 1995, he was not entitled to Job Search Allowance in the same period. The payments of Job Search Allowance made in this relevant period constitute an overpayment. The overpayment is considered by the Tribunal to be a debt pursuant to subsection 1224(1)(b)(i) of the Act as the Tribunal finds that Mr Phelps made a false statement or false representation in the Job Search Allowance forms both in that he was not in full-time enrolment, and even if, as the Tribunal has previously stated, it accepted that Mr Phelps misunderstood his student status, and accepted that he was a part-time student, Mr Phelps still failed to indicate that he was studying part-time. Mr Phelps also failed or omitted to comply with the provision of the Act because the Job Search Allowance continuation forms were notices under sections 575 of the Act and required that he provide information. Specifically at Question 9, information as to whether he was receiving any other government payment, which he was, and whether he was enrolled in any course or had changed enrolment for his course, which he submits he did, were not declared. Further, on Mr Phelps' evidence he had started part-time study again, which Mr Phelps did not declare. Hence, the Tribunal finds that pursuant to subsection 1224(1)(b)(i) and (ii) of the Act, Mr Phelps has made a false statement or false representation and failed or omitted to comply with the provision of the Act and in such circumstances, given that he had been paid a social security payment of Job Search Allowance to which he was not entitled, then a debt was due to the Commonwealth. The debt, the Tribunal considers, occurred between 20 March 1995 and 2 June 1995. The amount of debt has been determined by the Department and affirmed by the SSAT as being represented by an amount of $2416.08. There was some concern expressed at the Tribunal that the quantum of debt may not be correct, particularly noting the impact of the AUSTUDY Financial Supplement scheme. In such circumstances, the Tribunal is of the view that if the Tribunal finds that the debt should be recovered, the actual quantum of debt should be remitted to the Department for recalculation to ensure the quantum of debt is correctly raised.
In so finding, the Tribunal noted Mr Phelps' evidence that he provided truthful advice in his AUSTUDY claim form that he was in receipt of the Job Search Allowance during 1995. This is clearly correct. The difficulty for the Tribunal is however that in subsequent Job Search Allowance claim forms, Mr Phelps failed to advise that he was receiving other AUSTUDY payments, be that from the loan system or from AUSTUDY payments themselves. He also failed to inform that he was studying either part or full-time in any course.
It is accepted by the Tribunal, however, that there was some administrative error by the Department of Employment, Education and Training in that it had failed to follow up Mr Phelps' advice in the AUSTUDY application form that he was in 1995 in receipt of Job Search Allowance. Further, the Department itself had committed administrative error in that it had not followed up Mr Phelps' Job Search application of 29 December 1994 in which Mr Phelps had failed to complete section C of that claim form which dealt with his proposed study within the next six months (T5, p32). The debt arose because of errors committed by both Mr Phelps and the Department of Education, Employment and Training and the Department itself. That there is a debt in such circumstances is supported by McAulliffe v Secretary, Department of Social Security (1982) 28 ALD 609 in which the court found that a false statement need only be a contributory factor in the decision to make payment of the benefit.
Turning to the issue of whether or not the debt owed by Mr Phelps to the Commonwealth should be recovered, the Tribunal considered that there is no application of section 1236 of the Act which deals with the write-off of debts. Mr Phelps is in employment, his whereabouts are known and he has a capacity to repay the debt even though this may be severely restricted.
The Tribunal next turned to consider the issue of waiver of the debt pursuant to section 1237A of the Act which deals with the waiver of a debt arising from sole administrative error. The Tribunal has already found that errors were committed by Mr Phelps and administrative errors by the Department and the other authority in this matter, the Department of Employment, Education and Training. Having so found, the Tribunal is not able to use section 1237A of the Act as there is no sole administrative error in this case, errors having been committed by a number of parties to this matter.
The Tribunal next turned to consider whether or not waiver of the debt could occur due to the special circumstances in this case as provided for in section 1237AAD of the Act.
A threshold issue before turning to a consideration of Mr Phelps' special circumstances is whether or not pursuant to subsection 1237AAD of the Act, the debt arose wholly or partly from Mr Phelps or another person, knowingly making a false statement or representation or failing or omitting to comply with the provisions of the Act.
It is the Tribunal's view that in this case the debt did partly result from Mr Phelps knowingly making a false statement or representation and failing or omitting to comply with the provision of the Act. Gaining some guidance from the decision in Re Callaghan (supra), the Tribunal finds that Mr Phelps knew that he was incorrectly providing details as to his course of study at the University or Western Sydney. Even if the Tribunal accepted that Mr Phelps was confused about his enrolment status and believed he was studying part-time, he still did not in numerous Job Search Allowance application forms indicate that he was studying at all or indeed studying part-time. Mr Phelps' evidence to the Tribunal was that he knew that his completion of those details was incorrect. Further, the Tribunal notes that Mr Phelps' other evidence was that in relation to his work details he knew that he was in fact working and he did not declare this nor his income for such work in Job Search Allowance application forms. In the context of his circumstances at the time and his evidence to the Tribunal, the Tribunal considers that Mr Phelps was aware that he was making false statements and was omitting to comply with the requirements of those Job Search Allowance application forms to fully inform the Department of various circumstances.
The Tribunal accepts that during 1995 and particularly the period under review, Mr Phelps was under great stress. Financially, he was experiencing grave difficulties, he was attempting to care for his stepson who was in trouble with the law, attempting to study and all in the context of poor physical and mental health, including a gambling problem. The Tribunal however also notes that Mr Phelps is an intelligent man capable of understanding the requirements of the forms he was required to complete and while his circumstances were difficult and the Tribunal has some sympathy for his predicament at that time, Mr Phelps still had a responsibility to fully and accurately complete the Job Search Allowance forms. Similarly, the Tribunal is concerned at the lack of communication between the Department and the Department of Education, Employment and Training and their respective failures to follow up incomplete or inconsistent details contained within various documents provided to them by Mr Phelps.
Given all these circumstances, the Tribunal is in a position where it must apply the law. Given subsection 1237AAD (a)(i) and (ii) of the Act, the Tribunal, having found that the debt resulted wholly or partly from Mr Phelps knowingly making a false statement and failing or omitting to comply with the Act, is therefore unable to proceed to a consideration of whether or not there are special circumstances in Mr Phelps' case to enable it to waive the debt in part or as a whole. The Tribunal wishes to comment and agrees with the court's conclusion in Hales (supra) in which it was noted that the tax payer is entitled to expect that money paid to Social Security recipients for which they have no entitlement, should be able to be recovered. It would be unjust and unfair, in the Tribunal's view and, in Mr Phelps' circumstances that such a debt was not recovered.
Accordingly, pursuant to section 43 of the Administrative Appeals Tribunal Act 1975, the Tribunal affirms the decision under review but determines that the actual quantum of the debt be remitted to the Department for recalculation to confirm that the debt is made up entirely of the Job Search Allowance paid to Mr Phelps during the period 20 March 1995 and 2 June 1995 and not including any other payment made to Mr Phelps during this time.
The debt should be recovered by way of instalments commensurate with Mr Phelps' financial ability to pay. He should not be propelled into a situation of poverty because of unrealistically high debt repayments.
I certify that the 101 preceding paragraphs are a true copy of the reasons for the decision herein of MS S M BULLOCK.
Signed: .....................................................................................
AssociateDate of Hearing 17 April 2000
Date of Decision 2 August 2000Representative for the Applicant Self-represented, with written submissions by Ms L Forbes, Solicitor, Welfare Rights Centre, Sydney
Representative for the Respondent Mr A Cox, Departmental Advocate
3
3
0