Shannon and Secretary, Department of Education, Science and Train Ing

[2003] AATA 498

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2003] AATA 498

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2002/1664

General Administrative Division		)
Re		Joanne Shannon

Applicant

And Secretary, Department of Education, Science & Training

Respondent

DECISION

Tribunal Ms N Bell

Date 30 May 2003

PlaceSydney

Decision The decision under review is affirmed.

[sgd] Ms N Bell, Member

CATCHWORDS

AUSTUDY – overpayment – debt and recovery – waiver provisions not applicable – whether administrative error – special circumstances.

Students Assistance Act 1973 ss 43B, 43F

AUSTUDY Regulations 82, 12C, 12E

REASONS FOR DECISION

30 May 2003 Ms N Bell               

1.This is an application By Dr Joanne Shannon (“the Applicant”) for review of the decision of the Social Security Appeals Tribunal (“the SSAT”) dated 30 September 2002 that:

§   there is a debt due by the Applicant to the Commonwealth in the sum of $788.61;

§  recovery of the debt is deferred until the Applicant resumes full time employment or until 30 September 2003, whichever is the earlier; and

§  After the relevant date, Centrelink should make an arrangement with the Applicant for repayment of the debt by one or more instalments.

2.The Respondent to the application is the Secretary, Department of Education, Science and Training and was represented by Mr G Peak of the Australian Government Solicitor’s Office.  The Applicant appeared on her own behalf and gave oral evidence to the Tribunal.  The following documentary evidence was before the Tribunal:

Exhibit	Description	Date
T – Docs	Documents prepared pursuant to Section 37 of the Administrative Appeals Act 1975 pages1-118
A1	Summary Of Income Figures (copy)
A2	Copy of a letter to the Applicant from AUSTUDY	17.September 1997
A3	Copy of a letter to the Applicant from AUSTUDY	4.December 1997
R1	Respondent’s  Statement of Facts and Contentions	13 May 2003

Background

3.The facts of this application are not in dispute.  The Applicant was paid Austudy for 1997 and 1998 in respect of study in the Graduate Medical Program at Sydney University.  The following summary of undisputed facts and background information is taken from the Statement of Facts and Contentions lodged by the Respondent  (Exhibit R1).

4.On her AUSTUDY Continuing Application for 1997, lodged on 13 January 1997, the Applicant notified her actual income for the period 1 July 1996 to 31 December 1996 as $5688. She estimated her income other than AUSTUDY as $1720 for the period 1 January to 30 June 1997, and as $2050 for the period 1 July to 31 December 1997. (T5/Q6 and Q7, page 25).  She was assessed as eligible for AUSTUDY for 1997 and her rate of entitlement was calculated on the actual and estimated income figures provided in the continuing application.

5.On 25 August 1997, the Applicant submitted an AUSTUDY Eligibility Check form, which confirmed that her actual income other than AUSTUDY for the period 1 July 1996 to 31 December 1996 was $5688. (T8/Q9, page 30) She re-estimated her income as $2223 for the period 1 January to 30 June 1997, and as $3395 for the period 1 July to 31 December 1997. (T8/Q10, page 31) The Applicant’s ongoing entitlement to AUSTUDY was re-assessed on the basis of this information, and the amount of $198.88 was recovered in respect of an overpayment resulting from it. (see at T23, page 83, Items 20-22).

6.On her AUSTUDY Continuing Application for 1998, lodged on 19 November 1997, the Applicant confirmed her actual income for the period 1 January to 30 June 1997 as $2223. She reduced her estimated  income for the period 1 July to 31 December 1997 to $3037.25, estimated her income other than AUSTUDY as $7200 for the period 1 January to 30 June 1998, and as $5200 for the period 1 July to 31 December 1998   (T9/Q6 and Q7, page 35)

7.On 24 July 1998 the Applicant advised that her actual income for the period 1 January to 30 June 1998 was $6326, less than the estimate previously provided, and that her income from 1 July 1998 to 31 December 1998 would be $9100. This had no impact on the amount of AUSTUDY the applicant had been paid from 1 January to 30 June 1998, but disentitled her to AUSTUDY payments from 1 July 1998 (T11, page 42)

8.The Applicant’s entitlement to AUSTUDY for 1997 was re-assessed on the basis of her actual income being $7911 for the 1996-1997 financial year and $9363 for the 1997-1998 financial year. An overpayment was raised in the amount of $1040.75, in respect of the difference between the amount of AUSTUDY the applicant was paid in 1997 and the amount she was entitled to. The amount of $198.88 had already been recovered from AUSTUDY payments made to the Applicant in 1997. A further $53.26 was subsequently repaid, leaving an outstanding balance of $788.10.

9.On 9 September 1998 the Applicant sought review of the decision to raise and recover the overpayment. (T17, page 60; T12, pages 43-44). On 14 May 1999, the decision was affirmed by an authorised review officer. (T21).

10.On 21 June 2000, the Applicant sought an extension of time to review the review officer’s decision. This was subsequently refused by the Respondent and the Social Security Appeals Tribunal (SSAT), but remitted to the SSAT by consent when the Applicant sought review of its decision by this Tribunal. (T27-T33, T2, paragraphs 31-32).

11.The SSAT affirmed the authorised review officer’s decision on 30 September 2002 but deferred recovery of the debt (T2). The Applicant sought review of that decision by this Tribunal on 4 November 2002 (T1).

Issues and Legislation

12.The issue to be considered by the Tribunal is whether the Applicant owes a debt to the Commonwealth and, if so, whether that debt should be recovered.

13.As to whether the Applicant owes a debt, there is dispute between the parties as to the correct application of regulation 82 of the former Austudy Regulations. That Regulation provides in part:

Effect of student income-test on living allowance

(1) A student eligible for living allowance can get the maximum allowance in the entitlement period only if his or her relevant income is not more than the amount calculated under the following formula:

1A) Subject to subregulation (1B), a student's relevant income is his or her income calculated under the following formula:

where:

T is the total income earned by the student in the relevant income period.

RIP is the relevant income period.

EP is the entitlement period.

…2) The maximum amount of allowance a student can get is reduced by $1 for each $2 that the student's relevant income exceeds the amount worked out under subregulation (1).

…(3) In this regulation:

entitlement period means:

(a) for the period 1 January to 30 June in a year of study; or

(b) for the period 1 July to 31 December in a year of study;

the number of days during the period for which the student would, apart from this regulation, be entitled to AUSTUDY.

relevant income period means, for the period, in a year of study:

(a) from 1 January to 30 June — the number of days the student is entitled to AUSTUDY in the financial year ending in the year of study; or

(b) from 1 July to 31 December — the number of days the student is entitled to AUSTUDY in the financial year starting in the year of study.

14.In particular, the parties dispute the interpretation of the words “relevant income period”..

15.If a debt is found by the Tribunal to exist, then it must be considered whether the debt should be recovered. The Applicant’s contention is that the debt arose as a result of administrative error on the part of the Respondent and, in the alternative or in addition, the special circumstances of the Applicant justify the waiver of the debt. The provisions relevant to these contentions, which have now been re-numbered as sections 43B and 43F of the Student Assistance Act 1973 (“The Act”) respectively, are:

43B Administrative error

(1)

Subject to subsection (2), the Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt.

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

Circumstances under which subsection (1) applies

(2)

Subsection (1) only applies if:

(a)

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

(b)

if the debt arose because a person has complied with an obligation to provide information or documents to the Department under this Act, the debt is not raised within a period of 6 weeks from the end of the period within which the person was required to comply with that obligation;

whichever is the later.

43F 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; 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.

Note: Section 43 allows the Secretary to write off a debt on behalf of the Commonwealth.

Applicant’s Evidence and Submissions

16.The Applicant adopted the argument made on her behalf to the SSAT in respect of the correct application of Regulation 82 of the Austudy Regulations. That is, she submitted that paragraphs 3(a) and (b) of the regulation under the words ”relevant income period” are constrained by the words “in the year of study” appearing immediately before and that it is only the number of days in the period during the year of study in which a student is eligible for Austudy that is to be taken into account. In this way it would only be income earned by a student during the year of study which is taken into account for the purposes of the formula in Regulation 82.

17.The Applicant submitted, in relation to the issue of waiver of recovery, that the Respondent had available to it in August 1997, all of the information it required in order to properly calculate the correct rate of payment of the Applicant’s Austudy for 1997.  She referred the Tribunal to the information included in her Austudy Eligibility Check form, completed by her on 22 August 1997 (T8) and to Exhibit A2, a letter to the Applicant from Austudy acknowledging her revised estimate of income and advising that her rate of payment would be affected.  In addition, the Applicant noted that she had submitted her Austudy Continuing  Application to the Respondent in November 1997 and that this form contained the figure for her actual earnings for 1 July 1997 to 31 December 1997 and her estimate of income for 1 January 1998 to 30 June 1998 and that this would have allowed accurate calculation of her rate of payment for the remainder of the year.  She also noted that this estimate was above her actual earnings.  The Applicant also noted that the first notification she received of the debt for 1997 was in August 1998, one year after she had advised of her new estimate of income.  She submitted that the above constituted administrative error and also pointed to a pattern of other errors on the part of the Respondent, including a later recalculation of the amount of the debt and advice that she was entitled to receive a back payment.  She did not assert that these additional errors gave rise to the debt.

18.In relation to the issue of waiver on the basis of special circumstances, the Applicant pointed to the debt not having been raised until one year after she had provided her revised estimate of income.  She also noted that she had requested a review of the decision to raise a debt in September 1998 (T12) and that this was not acted on by the Respondent until May 1999.  In addition she noted that her request for access to her files under freedom of Information legislation was not provided until January 2000 and even then access to some documents was denied notwithstanding that the same documents had been made available to the SSAT and were included in the T documents lodged with the Tribunal in this application.  The Applicant referred the Tribunal to its decision in Department of Education, Training and Youth Affairs v “SRAA” (No. N1998/1208) in relation to delay as a special circumstance warranting waiver.

19.The Applicant also submitted that the addition by the Respondent of late fees to the total of her debt, in circumstances of delay by the Respondent, amounted to special circumstances as did the fact that she was contacted on some four occasions by a debt collection agency in relation to the debt.  The Applicant stated that her health, previously a problem, has improved and she has now returned to full time work but is as yet unable to undertake overtime.  She said that she earns approximately $1,200.00 net per fortnight and pays $380.00 per week rent.  Her only debts are her HECS debt and a debt of $2,500.00 on a credit card.

Respondent’s submissions

20.Mr Peak for the Respondent submitted that the “relevant income period” for calculating the Applicant’s “relevant income” under sub-regulation 82(1A) was the 1996-1997 financial year for the “entitlement period” 1 January to 30 June 1997, and the 1997-1998 financial year for the “entitlement period” 1 July to 30 December 1997.  In this respect he submitted that the Tribunal should adopt the same conclusion as the SSAT (at T2, paragraphs 35-39) in relation to the “alternative interpretations” of Regulation 82 proposed by the Applicant (see also T1, pages 3-5).

21.Mr Peak submitted that it is open to the Tribunal to determine whether all or part of the overpayment should be waived under section 289 or 290C of the Student and Youth Assistance Act 1973 as it stood prior to 1 July 1998 (now sections 43B and 43F respectively).

22.Section 43B provides that an overpayment must be waived if it arose solely as the result of administrative error on the part of the Commonwealth, provided any resulting payments were received in good faith.

23.Mr Peak submitted that section 43B has no application because the overpayments were not caused solely by any action or inaction on the part of the Respondent. While he acknowledged that the Applicant took reasonable steps to make accurate estimates of her income and to advise of changes to them, he submitted that the overpayment was caused solely by the uncertain nature of the Applicant’s income and that it was not until July 1998 that the Applicant’s actual income for the period 1 January to 30 June 1998 was known. He submitted that the income estimate for this period provided in the Applicant’s AUSTUDY Continuing Application for 1998 could not have been applied by the Respondent in order to avoid or reduce an AUSTUDY overpayment in 1997 except to cancel the last two payments of the period and even then an overpayment would still have arisen.

24.Mr Peak also submitted that Regulations 12C and 12E of the former AUSTUDY Regulations provided for the re-calculation of entitlement to AUSTUDY at any time and for any overpayment to be a debt to the Commonwealth.

25.Mr Peak also submitted that here is no evidence before the Tribunal on which it could find that there are, or were, special circumstances which would make it desirable to waive the debt under this provision.

26.In relation to the question of delay, Mr Peak submitted that this amounts neither to an error solely giving rise to the debt nor to a special circumstance relevant to the issue of waiver of recovery.  In this respect he sought to distinguish the present application from that in the Tribunal’s decision in SRAA in that the Applicant has pointed to no other significant circumstances, whereas such additional circumstances were taken into account by the Tribunal in SRAA.

27.Mr Peak also addressed a number of the matters referred to by the Applicant as errors on the part of the Respondent.

Consideration

28.There is no dispute between the parties as to the amounts of the estimates provided to the Respondent by the Applicant at various times or her actual earnings over various periods.  There is, however, dispute as to which of those periods of income earning should be taken into account by the Respondent in calculating the Applicant’s correct rate of payment of Austudy during 1997.  This turns on the interpretation of the words “relevant income period” in Regulation 82.  For convenience, the definition of those words in the regulation is, again, as follows:

relevant income period means, for the period, in a year of study:

(a) from 1 January to 30 June — the number of days the student is entitled to AUSTUDY in the financial year ending in the year of study; or

(b) from 1 July to 31 December — the number of days the student is entitled to AUSTUDY in the financial year starting in the year of study.

29.The submission put by the Applicant was that the proximity of the words “in a year of study” to paragraphs (a) and (b) of the definition mean that it is only the number of days in the period during the year of study that are to be taken into account.  The Tribunal rejects this submission and considers that the words “in a year of study” relate, given their placement in the regulation, rather to the period of study described in the first part of each paragraph, that is, to either the period 1 January to 30 June or the period 1 July to 31 December.

30.The Tribunal also notes and agrees with the conclusion of the SSAT that the interpretation preferred by the Applicant would mean there would be no difference between the meaning of the words “entitlement period” and “relevant income period” in the regulation.  This would make redundant the clear distinction, in the regulation, between those items.

31.On this basis, it was correct for the Respondent to have had regard to the Applicant’s income in the 1996/1997 and 1997/1998 financial years.  Two matters flow from this conclusion.  First, it supports the calculations made by the Respondent, initially on the basis of the Applicant’s estimates and, later, on the basis of her actual income.  Second, it justifies the Respondent’s recalculation of the Applicant’s 1997 overpayment and the raising of the debt in August 1998, shortly after the Applicant’s actual income for the 1997/1998 financial year was known.  The perceived delay in raising the debt is also justified and cannot be said to constitute an administrative error or special circumstances that should give rise to waiver of recovery.  Nor does the failure of the Respondent to act on the information provided by the Applicant in November 1997 in her application for Austudy payments for 1998 amount to an administrative error that is the sole cause of the overpayment.  If the estimate provided then by the Applicant had been acted on immediately by the Respondent, the time of year at which the information was provided meant that even if remaining payments had been cancelled there would still have been an overpayment for 1997.  On this basis, the debt cannot be said to be solely attributable to the Respondent’s inaction.

32.On the issue of whether there are special circumstances that justify the waiver of recovery of the debt the Tribunal had regard to the decisions in Re Ivovic and Director General of Social Services (1981) 3 ALN 95 Re Beadle and Director General of Social Security (1984) 6 ALD 1. While the Tribunal also notes its decision in SRAA, it does not consider that the delay, either in raising the debt or in the conduct of its internal review of its decision to raise the debt, is significant enough, on its own, to justify waiver in this case.  Similarly, the Tribunal does not consider that the imposition of late fees, which were waived by the SSAT, or the contact made with the Applicant by a debt collector amount to special circumstances within the meaning of the legislation.  In the absence of any other matter amounting to special circumstances, the Tribunal concludes that recovery of the debt cannot be waived on this basis..

33.The Tribunal notes that the decision under review is that the Applicant has a debt due to the Commonwealth of $788.61.  In arriving at this amount the SSAT decided pursuant to section 41 of the Act that late payment fees and interest charges imposed by the Respondent were not payable.  The Tribunal considers that decision to be appropriate given the various delays experienced by the Applicant during the course of internal and other review of the decision.  The Tribunal also notes that the Respondent has not sought to submit against this aspect of the decision under review.  As to the deferral of recovery of the debt, the Applicant is now, on her evidence, in full time employment and, under the terms of the decision under review, the deferral is expired.  As to that aspect of the decision under review that directs that an arrangement be made for the repayment of the debt in instalments, the Tribunal notes the provisions of section 39A of the Act which allows for the Secretary to allow payment by instalments.  Given the Applicant’s relatively limited income and her other debts, the Tribunal considers it appropriate that the debt be repaid by instalments.

34.For the reasons outlined above, the Tribunal considers that the decision under review should be affirmed.

Decision

35.The decision under review is affirmed.

I certify that the   preceding paragraphs are a true copy of the reasons for the decision herein of  

Signed:       Georgie Zuzak
  Associate

Date/s of Hearing   19 May 2003
Date of Decision   30 May 2003
Counsel for the Applicant          Self-represented
Solicitor for the Respondent      Mr G Peak