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

[2015] AATA 762

PZHC and Secretary, Department of Social Services (Social services second review) [2015] AATA 762 (30 September 2015)

Division	GENERAL DIVISION
File Number(s)	2013/4577
Re	PZHC
APPLICANT
And	Secretary, Department of Social Services
RESPONDENT

DECISION

Tribunal:Dr Ion Alexander, Member

Date:30 September 2015

Place:Sydney

The decision under review is set aside and is remitted to the Respondent for recalculation of the debt in accordance with the reasons set out in this decision.

.......................[sgd]............................................

Dr Ion Alexander, Member

CATCHWORDS

SOCIAL SECURITY – debt – whether debt should be written off or waived – whether there were special circumstances – decision set aside and remitted

LEGISLATION

Social Security Act 1991 (Cth) ss 568, 569, 569A, 1236, 1237AAD

CASES

Boscolo v Secretary, Department of Social Security (1999) 90 FCR 531; [1999] FCA 106

Dranichnikov v Centrelink (2003) 75 ALD 134; [2003] FCAFC 133
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Oberhardt v Secretary, Department of Education, Employment and Workplace Relations (2008) 174 FCR 157; [2008] FCA 1923
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Re Secretary, Department of Employment and Workplace Relations and QX2006/1 (2006) 90 ALD 320; [2006] AATA 372

Re Wilson and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2012] AATA 154

SECONDARY MATERIALS

Guide to Social Security Law

REASONS FOR DECISION

Dr Ion Alexander, Member

30 September 2015

BACKGROUND

1. At various times between 9 February 2009 and 2 March 2012 the Applicant was enrolled in TAFE courses at Randwick and Ultimo. Between 7 March 2009 and 2 March 2012 he received Austudy payments from Centrelink.

2. On 9 March 2012 Centrelink stopped making Austudy payments because the Applicant had failed to respond to a Compliance Enrolment Check review letter.

3. Since then he has been in receipt of Newstart Allowance and has been participating in provider negotiated activities and job searches since then with one period of exemption from 24 July 2013 and 23 October 2013 for medical conditions of anxiety and phobias.

4. On 25 January 2013 Centrelink informed the Applicant that from 20 July 2009 his study workload was not sufficient to qualify for Austudy so that he had been overpaid $39,583.66 for the period 20 July 2009 and 2 March 2012 and were seeking recovery of this amount.

5. On the 27 May 2013 the Applicant agreed to the deduction of $15 per fortnight from his Newstart Allowance towards payment of the debt.

6. The decision to recover the debt of $39,583.66 was affirmed on internal review and subsequently by the Social Security Appeals Tribunal (SSAT) on 16 August 2013. The SSAT found that the debt could not be written off, could not be waived on the grounds of sole administrative error and there were no “special circumstances” that would warrant waiver of the recovery of all or part of the debt pursuant to section 1237AAD of the Social Security Act 1991 (the Act).

7. On 11 December 2013 Centrelink advised the Applicant that the amount of the debt payable was amended to $19,975.25.

8. The debt was recalculated on “debt periods” as follows:

   (a)3 August 2009 to 18 January 2010 – on 3 August 2009 the Applicant withdrew from a course at Randwick TAFE and on 19 January 2010 a new course enrolment form was processed at Randwick TAFE.

   (b)4 March 2010 to 30 June 2010 – on 4 March 2010 the Applicant withdrew from the course at Randwick TAFE and on 1 July 2010 a new course enrolment was processed at Ultimo TAFE.

   (c)5 August 2010 to 24 January 2011 – on 5 August 2010 the Applicant withdrew from the course at Ultimo TAFE and a new course enrolment form was processed on 25 January 2011 at Ultimo TAFE.

   (d)1 June 2011 to 29 June 2011 – on 31 May 2011 the Applicant withdrew from the course at Ultimo TAFE and on 30 June 2011 a new course enrolment form was processed at Randwick TAFE.

9. The decision under review in these proceedings is the decision of the SSAT as varied on 11 December 2013.

10. At the hearing the Applicant was self-represented and gave oral evidence.

11. After the hearing the Tribunal directed the Respondent to file further evidence and provide written submissions on issues that were not fully tested during the hearing. The Applicant was also given an opportunity to make further submissions and provide further information.

    ISSUES

12. The Respondent contends that the Applicant was not eligible for Austudy payments during the periods set out above in paragraph 8 because he did not satisfy the “activity test” as required under s 568(a) of the Act.

13. Subsection 569(1) provides that a person satisfies the activity test if the person is undertaking qualifying study. Section 569A provides that a person is undertaking qualifying study if:

    (a)the person:

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

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

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

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

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

    (d)the person satisfies the progress rules (see sections 569G and 569H).

14. The Applicant does not dispute that he withdrew from the TAFE courses as noted above and that he did not inform Centrelink at the relevant times.

15. He contends, however, that after withdrawing from each course he intended to enrol in another course and, in fact did so, but that special circumstances arose which caused him to withdraw and that his situation at that time was covered by s 569A(a)(iii) of the Act.

16. Relevantly, the Guide to Social Security Law (at 3.3.4.20) suggests s 569A(a)(ii) and (iii) of the Act may apply despite a person not remaining enrolled in a course of study where there are special circumstances beyond the person’s control:

    Unless there are special circumstances beyond the person’s control, full-time students who discontinued halfway through their studies but intend to commence a new course in the next study period are not considered to be a continuing student and only qualify for payment of Austudy as a full-time student from the commencement of the new course.

17. Therefore the first issue for the Tribunal to consider is whether during any of the “debt periods” there were special circumstances which were beyond the Applicant’s control so that he was eligible for Austudy payments during those periods.

18. The Applicant also contends that the debt should be written off pursuant to section 1236(1A) of the Act or, alternatively, waived pursuant to section 1237AAD of the Act.

19. Section 1236(1A) of the Act provides for writing off a debt as follows:

    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.

20. In this matter the relevant issue for the Tribunal is whether the debt should be written off because the Applicant has no capacity to repay the debt.

21. Section 1237AAD of the Act provides for waiver of the right to recover all or part of a debt due to special circumstances as follows:

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

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

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

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

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

    (c)it is more appropriate to waive than to write off the debt or part of the debt.

22. At the hearing the Respondent conceded and the Tribunal accepts that subs (a) of section 1237AAD was satisfied.

23. Therefore, the relevant issue for the Tribunal is whether there are special circumstances (other than financial hardship alone) in this case which make it desirable to waive all or part of the debt.

24. The Applicant also submitted that if he had not received Austudy payments during the debt periods he would have been receiving similar amounts of Newstart allowance which raised the issue of “notional entitlement”.

    THE APPLICANT’S EVIDENCE

25. The Applicant told the Tribunal that at the beginning of 2009 he had enrolled in a Certificate III in Fitness course and completed the whole semester which finished in the middle of the year. He then enrolled in a Certificate IV in Fitness course and that during the semester a “multitude of events” occurred.

26. The Applicant explained that his grandmother, who was living with his parents, died, his parents’ relationship deteriorated, his father left to live overseas and his mother was now living alone. Also in August 2009 a new tenant moved into his mother’s public housing building. The new tenant apparently caused a lot of arguments and problems with other tenants so the police were often called. The new tenant eventually started to target the Applicant’s mother and allegedly regularly threatened her with violence. The Applicant started to spend more time with his mother and began sleeping over more frequently.

27. The Applicant claimed that the problems with the new tenant continued until Housing NSW moved him to another building in about September 2011. During this time the Applicant stated that he and his mother attended various courts in respect of matters involving the new tenant as well as matters involving Housing NSW.

28. The Applicant explained that during this time he was essentially living with his mother, was extremely stressed, was spending a lot of time preparing documents, stopped seeing his friends, started eating a lot so that he gained over 20 kilograms in weight and was diagnosed with hypertension and hypercholesterolemia.

29. The Applicant told the Tribunal that in 2010 his mother’s GP told him to “go and seek help” and that in April 2011 she gave him a referral to Camperdown Mental Health Service (CMHS). In fact he did not go to the CMHS until June 2012 when Supreme Court proceedings involving his mother were finalised. He was subsequently placed in a treatment program which included weekly visits with a psychologist, occasional visits with a psychiatrist and oral antidepressant medication. The program continued for more than nine months and currently he is still on antidepressant medication.

30. The Applicant told the Tribunal that he is getting better and is now motivated to do things. He has been studying financial planning at St George TAFE and has successfully completed the second semester of 2014. His is currently receiving Newstart allowance and is paying $20 per fortnight towards his Centrelink debt which he claims has already been reduced by more than $1,000.

31. In cross-examination the Respondent asked the Applicant why he kept enrolling in various courses from 2009 to 2011 and then withdrawing given that he had difficulty in completing them.

32. The Applicant stated as follows:

    I thought that my life was going to be a normal lifestyle. I was going through a difficult time but I didn’t realise that this was going to carry on for two or three years. I thought that, you know, this individual has been taken to court, he’ll be sorted out, but it wasn’t the case. Plus the inaction of Housing. So these issues continued. So I had the intentions to study, I had started at the beginning of the semester, but I found myself exhausted with all the other issues plus the study and I quickly had to withdraw.

33. In a subsequent written submission the Applicant states the following:

    The legal disputes that I found myself embroiled in were many and more were popping up as a consequence of the conclusion of the previous. For example my mother and myself took Housing NSW to the then CTTT on many occasions as a result of Housing NSW inaction with a violent neighbour and his damage to property. These tribunals took time and adjournments and needed further submissions and then the violent neighbour kept on getting arrested for his criminal activity and we were witnesses to a lot of that and had to appear in the local and district courts. These were then adjourned as well…

    OTHER EVIDENCE

34. A Mental Health Assessment dated 21 June 2012 notes that the Applicant presented on that day with his mother complaining of “low mood worsening over the past 2 years … feeling lethargic, anxious and agraphobic”.

35. A Mental Health Review dated 6 November 2012 notes that the Applicant is currently experiencing “major depression” and “has been oriented to the Schema therapy model. Schema therapy has been utilised for [the] treatment of depression…”.

36. In July 2014 the Commonwealth Director of Public Prosecutions (CDPP) charged the Applicant with four counts of obtaining a financial advantage from a Commonwealth entity. Each charge related to his receipt of Austudy during the semesters between 2009 and 2011.

37. The Applicant pleaded not guilty and made an application under section 20BQ (Person suffering from mental illness or intellectual disability) of the Crimes Act 1914 (Cth). On 27 January 2015 after several adjournments the Magistrate ordered that the Applicant provide relevant medical reports and set a hearing date for 23 April 2015.

38. Mr Patrick McGee, consultant psychologist, provided a comprehensive psychological report dated 23 January 2015 as to the mental state of the Applicant in relation to the four charges brought by the CDPP.

39. In that report Mr McGee notes that the Applicant entered therapy seeking assistance for “longstanding mental health issues, namely depression, severe anxiety and agoraphobia” and indicates that he had seen him on a regular basis for a total of 32 sessions.

40. Mr McGee notes the Applicant grew up in a difficult family environment and after his parents separated and his father moved back to Greece the Applicant started to feel anxious and depressed. His poor mental health was precipitated by several factors that has resulted in chronic ongoing stress and in the middle of 2009 his “slide into poor mental health was triggered by his involvement in a protracted legal matter” involving a tenant living in the same block of units as his mother.

41. Mr McGee makes the following diagnoses:

    1.    Generalised Anxiety Disorder

    2.    Agoraphobia without a History of Panic Disorder

    3.    Dysthymic Disorder

42. Mr McGee concludes that, as a result of his sessions with the Applicant and from clinical reports provided, he has suffered a declining state of health for at least six to seven years and that that the circumstances as described between mid-2009 and 2011 further exacerbated his condition.

43. Mr McGee expresses the opinion that at the time of the alleged offences the Applicant “presented with a longstanding mental illness” and that he was facing “exceptional circumstances” to the degree that may only be experienced over one’s lifetime.

44. I note that in the interests of privacy I have provided only limited extracts from Mr McGee’s comprehensive report but will consider all aspects of the report in respect of the issues before the Tribunal.

45. On 12 May 2015 the charges were withdrawn on the basis of several public interest factors including the Applicant’s mental health.

    CONSIDERATION

46. After due consideration of the evidence before the Tribunal I am not persuaded that the Applicant’s debt should written off pursuant to section 1236 of the Act.

47. The Applicant’s mental health appears to be improving and he has been able to pay off the debt on a fortnightly basis with no apparent difficulty.

48. Therefore, the resolution of the issues before Tribunal depends on whether the circumstances in this case can be considered to be “special circumstances” for the purposes of the Act.

49. The term “special circumstances” is not defined in the Act but has been considered widely in case law.

50. In Dranichnikov v Centrelink (2003) 75 ALD 134; [2003] FCAFC 133 the Full Federal Court said at [66]:

    … what is required will be circumstances which distinguish the case in consideration from the usual case. There will be a requirement that the circumstances are such that takes the case out of the ordinary.

51. In Re Beadle and Director-General of Social Security (1984) 6 ALD 1 the Tribunal stated:

    An expression such as “special circumstances” is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend on the context in which they occur.

52. In Boscolo v Secretary, Department of Social Security (1999) 90 FCR 531; [1999] FCA 106, French J said:

    The word “special” conditioning “reasons” or “circumstances” guards the entrance to the exercise of many different statutory discretions. It is generally futile to search for its meaning in terms of other words. It is in essence instrumental, a direction to the decision maker that the discretion it constrains is not lightly to be enlivened… The core of the requirement for “special circumstances” or “special reasons” is that there be something unusual or different to take the matter the subject of the discretion out of the ordinary course.

53. In Groth v Secretary, Department of Social Security (1995) 40 ALD 541 the Federal Court stated:

    The phrase “special circumstances”, it has been said, although imprecise is sufficiently understood not to require judicial gloss … it is sufficient to observe that it would require something to distinguish Mr Groth’s case from others, to take it out of the usual or ordinary case. That was, I consider, the only enquiry to be undertaken in this case. It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.

54. With reference to the first debt period, August 2009 to January 2010, it is not disputed that the Applicant was enrolled in Certificate IV in Fitness at Randwick TAFE on June 2009 after having successfully completed Certificate III during the first semester of 2009.

55. It is during this second semester of 2009 that his personal circumstances suddenly changed. His grandmother died, his parents separated, his father left home to live in Greece and a new and disruptive tenant arrived in his mother’s public housing building and began causing problems for his mother.

56. The Applicant withdrew from Certificate IV Fitness on 3 August 2009, but failed to inform Centrelink. However, on 23 November 2009 he informed Centrelink that that he intended to complete the Certificate IV in Fitness in 2010 and his enrolment was duly processed on 19 January 2010. I note that in a document provided by the Applicant the second semester in 2009 was scheduled to end on 26 November 2009.

57. In my view the evidence before the Tribunal supports a conclusion that the Applicant found himself unable to complete the Certificate IV in Fitness during the second semester of 2009 because of a sudden change in his personal circumstances and fully intended to complete the certificate in the first semester of 2010.

58. I accept that each of the circumstances confronting the Applicant during the second semester, when considered alone, may not necessarily be seen as unusual or exceptional, however, when one considers that they occurred together in such a short period of time it is, in my view, unusual. Furthermore, I am satisfied that the circumstances were beyond his control.

1. It follows that I am satisfied that section 569A(a)(ii) covers the Applicant’s situation for the first debt period 3 August 2009 to 19 January 2010 and that there should be no debt raised in respect to this period since he satisfied the activity test.

2. For the other three debt periods I accept the Respondent’s submissions that the Tribunal cannot be reasonably satisfied that during those periods the circumstances causing the Applicant to withdraw from enrolment were beyond his control and that he always intended to re-enrol in the following semester. This means that he owes a debt in relation to these periods because he failed to satisfy the activity test.

3. Therefore, the Tribunal must now consider whether there were special circumstances that make it desirable to waive all or part of the debt in respect of any of these three periods.

4. At the hearing the Applicant raised the issue of “notional entitlement” to another Centrelink payment.

5. In Oberhardt v Secretary, Department of Education, Employment and Workplace Relations (2008) 174 FCR 157; [2008] FCA 1923 Spender J expressed the view that notional entitlement should not be excluded from the range of available relevant considerations in deciding whether there are “special circumstances” to waive a debt under section 1237AAD.

6. In Re Secretary, Department of Employment and Workplace Relations and QX2006/1 (2006) 90 ALD 320; [2006] AATA 372 Deputy President Hack and Member Carstairs made the following comments, relevant to “notional entitlement” with regard to “special circumstances” in s 1237AAD of the Act:

   We are well satisfied that special circumstances exist where the payments made are identical to those to which the respondent would have been entitled had he applied in his own name. Provisions of this nature are designed to protect the revenue and permit the recovery of payments made in excess of an entitlement. Here, were it to be determined that there was a debt, the fact that the respondent had an equivalent, but not claimed, entitlement takes the present case out of the ordinary run of cases and give it a “special” character.

7. In Re Wilson and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2012] AATA 154 Deputy President Hack stated the following:

   [16] The term “notional entitlement” is somewhat of a misnomer because it would be impossible for Ms Wilson to now establish that she was qualified for Newstart allowance between May 2007 and May 2008 and, in particular, to establish that she was seeking to engage in employment and undertake activities required by Centrelink and suchlike. Notional entitlement, in this context, is no more than a recognition of the high probability that Ms Wilson would have applied for, and been granted, another equivalent benefit from the date of removal of S from her care, had she notified Centrelink of the fact of the removal. Here Centrelink was notified on 8 May 2008 that S was in the care of the Department of Family and Community Services. Ms Wilson’s parenting payment and family tax benefit was cancelled with effect from that date. On 16 May 2008 Ms Wilson claimed Newstart allowance. It was granted with effect from that date. In early December 2008 she went on to disability support pension. There is, therefore, every reason to suppose that Ms Wilson would have applied for, and been granted, Newstart allowance on and before 29 May 2007 had she notified Centrelink on the day of the removal of S from here care.

   …

   [19] I am satisfied that there are, in Ms Wilson’s case, special circumstances that make it desirable to exercise the discretion to waive all or part of the debt…

8. In a document provided by the Respondent after the hearing the equivalent Newstart allowance for the four debt periods was calculated to be $20,155.08, which is almost the same as the total debt for those periods.

9. On consideration of the evidence before the Tribunal I am satisfied that there is every reason to suppose that the Applicant would have applied for and been granted Newstart allowance on 4 March 2010 if he had notified Centrelink that he had withdrawn from his TAFE course.

10. In adopting the approach used by Deputy President Hack in Wilson I am of the view that the likelihood that the Applicant would have received a similar benefit supports a conclusion that his circumstances were out of the of the ordinary.

11. Furthermore, I am satisfied that the evidence before the Tribunal demonstrates that, during January 2010 to mid-2012, the Applicant was increasingly entangled in his mother’s affairs as well as the vagaries of court processes and that during this time his mental health deteriorated significantly. In June 2012 after his mother’s affairs had been settled the Applicant finally sought assistance for his mental health conditions and after considerable intervention by mental health professionals there is evidence of significant improvement.

12. In my view, the Applicant’s circumstances during the debt periods between March 2010 and June 2011 were sufficiently unusual to be considered “special circumstances” for the purposes of the Act.

13. It follows that I am satisfied that the Applicant’s circumstances were such that it is desirable to consider waiving part or all of his debt pursuant to section 1237AAD of the Act.

14. I note that there has been a significant reduction of the original debt of $39,583.66, which was the total amount of Austudy paid from 20 July 2009 to 2 March 2012, and I believe that the Applicant should accept some responsibility for failing to notify Centrelink when he withdrew from the various courses so that I am not persuaded that the total debt should be waived.

15. I find that the preferable decision is that in respect to each of the three debt periods from 4 March 2010 the debt should be recalculated from the dates of withdrawal from the relevant courses to the scheduled dates of the end of each semester.

    DECISION

16. The decision under review is set aside and is remitted to the Respondent for recalculation of the debt in accordance with the reasons set out above.

I certify that the preceding 74 (seventy -four) paragraphs are a true copy of the reasons for the decision herein of Dr Ion Alexander, Member

...............[sgd]........................................................

Associate

Dated 30 September 2015

Dates of hearing	7 and 17 July 2015
Date final submissions received	27 August 2015
Applicant	In person
Solicitors for the Respondent	Ms K Hehir, Department of Human Services