Smith and Department of Education, Training and Youth Affairs - [2000] AATA 672

DECISION AND REASONS FOR DECISION [2000] AATA 672

ADMINISTRATIVE APPEALS TRIBUNAL )

) No V2000/0613

GENERAL ADMINISTRATIVE DIVISION          )
           Re      MATTHEW SMITH
  Applicant
           And    DEPARTMENT OF EDUCATION TRAINING & YOUTH AFFAIRS
  Respondent

DECISION

Tribunal Mr J. Handley, Senior Member
Dr C Re, Member

Date4 August 2000
PlaceMelbourne

Decision The decision under review is affirmed.

……Sgd. Mr J. Handley……
Senior Member

AUSTUDY:Respondent imposes interest and penalty on a debt; debt to be recalculated; financial circumstances of applicant; whether special; decision affirmed.

Social Security Legislation Amendment (Youth Allowance Consequential and Related Measures) Act 1988 (No. 45 of 1988) (the Amending Act) Schedule 11, s2, s132, s40(5)

Beadle and Director General of Social Security 1984 6ALD1

REASONS FOR DECISION

4 August 2000 Mr J. Handley, Senior Member
Dr C Re, Member

The applicant applied to review a decision of the Social Security Appeals Tribunal (SSAT) made on 23 December 1999, which concerned a decision made by Centrelink with respect to the raising and recovering of an Austudy debt for the 1997 calendar year. The SSAT determined that there was a debt, that it "cannot be waived" but remitted the application to the respondent with directions as to the manner in which the debt should be calculated. It would appear that this latter decision was made having regard to uncertainties as to the methodology adopted by the respondent in originally calculating the debt which at the date of review had been determined by the respondent at $3508.14.
As a result of the reconsideration by the respondent following the remission to it by the SSAT the debt was calculated at $3587.03.
The hearing of the above application was convened in Wodonga on 27 July 2000. Mr Smith appeared with the assistance of his father. The respondent was represented by Mr Pearson a solicitor.
At the commencement of the hearing, we discussed with Mr Smith and his father the manner in which the application would proceed. We were uncertain, having regard to the findings made by the respondent, the statement of facts and contentions lodged by the respondent's representative and other communication received by the Tribunal whether the applicant was seeking to review the existence of the debt, and/or the quantum of the debt and/or whether it should be written off or waived.
Mr Smith and his father indicated that they would not dispute the existence of an overpayment and that their principle reason for appearing at the Tribunal was to reassure us that they had not acted dishonestly or had given incorrect information to the respondent.
We assured Mr Smith and his father that we were satisfied that the existence of the debt was by reason of the unfortunate and perilous financial circumstances that the Smith family found themselves in towards the end of 1996 and 1997 which affected their ability to give an estimate of their future income.
Mr Pearson notified us that despite repayments of the debt being voluntarily made by the applicant's mother at $20 per fortnight, and monies paid by Matthew in 1999 from tax refund, the current amount outstanding was the sum of $3651.60. This amount is greater than the amount reassessed by the respondent (despite the repayments by Mrs Smith) because the respondent had imposed a penalty of $100 and a continuing interest rate of 10% on the amount outstanding. This caused us much concern. Following some discussion Mr Pearson drew to our attention amendments to the Social Security Act in 1998. The effects of these amendments indicate to us that the imposition of interest had been made illegally.
The Social Security Legislation Amendment (Youth Allowance Consequential and Related Measures) Act 1998 (No. 45 of 1998) (the Amending Act) received its Assent on 17 June 1998. The relevant parts, so far as imposition of interest is concerned, is to be found at Schedule 11. Section 2 of the Amending Act does not record when Schedule 11 is to commence its operation. S132 provides that if an application was outstanding at the commencing date and the application was not dealt with by the AAT before the commencement of the Amending Act it is to have operation as if it was in force before the application commenced.
In the present application the decision under review was made by the respondent on 1 October 1997. The decision then made to impose a debt was varied upon reconsideration on 6 June 1998. It would appear that it was the latter decision that was reviewed by the SSAT. Having regard to the date upon which the above AmendingAct received its Assent, at all times material the provisions of the AmendingAct with respect to interest upon a debt were operative and the interest should not have been imposed. This is because s40(5) of the foregoing legislation which purported to give a lawful entitlement to impose a debt was amended by s33 of Schedule 11 of the AmendingAct excepting cases where the decision under review provided that interest was to be paid or an instalment payable by a decision under review was outstanding. Neither of the latter two circumstances apply in the present case.
It follows, therefore, that the amount of the debt presently outstanding inclusive of the imposition of interest must be significantly reduced by the elimination of the interest component.
The issue then remaining was whether there were any special circumstances which would permit waiver of the above debt. In proceeding to this stage of the review we were satisfied that the debt did not arise wholly from administrative error on the part of the Commonwealth.
Matthew told us that he completed the first year only of his course at the Wangaratta TAFE at the end of 1997. He said he was forced to abandon the course because he did not have sufficient funds to live away from home. He has not obtained any full-time employment since the end of 1997. He has only been able to engage in seasonal, casual or temporary jobs.
At the present time he is working as a labourer and gardener at the Lakeside Caravan Park at Mulwala at eight hours per week at $13 per hour. It is expected that the quantity of work will increase later this year when the weather improves. Matthew also obtains four hours casual work per week delivering pizzas in Mulwala. He earns $10 per hour in this employment. He therefore earns $144 per week gross at the present time. He does not receive any Social Security benefits or income from any other source. He intends to return to his course at the Wangaratta TAFE subject to income.
At the present time Matthew spends $50 per week on fuel for his car, $50 per week for food and board and repays a bank loan of $50 per week with respect to a motor cycle. He said he presently has a loan of $3000 outstanding to a bank with respect to his motor cycle. This appears to be a personal loan which was increased early this year to obtain additional funds. Matthew had obtained some work earlier this year, relief milking at Barooga, which involved a 50 km return trip on two days per week. He was forced to abandon this work because the cost of fuel was greater than the amount earned.
Matthew's parents unfortunately are in considerable debt. They lost their farm in 1998 and presently have a mortgage of $118,000, Visa and Bankcard debts of $12,000 and are indebted to a stock and station agent for $26,000 with respect to livestock from the former farm. Apparently bankruptcy has been threatened by the agent. Mr Smith is a casual employee at a local factory and Mrs Smith has been able to secure full-time employment at the Mulwala Golf Club.
Nonetheless, the debt is a responsibility, in law, of Matthew, Mr and Mrs Smith are not responsible for repayment of his debt. Mr Smith indicated to us at the hearing that he and his wife felt responsible for the debt and it is likely, irrespective of this decision, that Mrs Smith will continue to make voluntary repayments on behalf of Matthew at $20 per fortnight.
conclusion
This is not an application where there are "special circumstances". That expression was discussed in a decision of the Tribunal in Beadle and Director General of Social Security 1984 6ALD1 where the Tribunal decided that the expression was "incapable of precise or exhaustive definition". The Tribunal decided that the context of a person's circumstances needs to be observed and whilst circumstances need not be "unique", the word "special" "looks to circumstances that are unusual, uncommon or exceptional".
Unfortunately the economic climate in Australia in recent years would suggest that a perilous economic state is not a circumstance which is special. In so far as the many cases that come before this Tribunal are concerned, suggests to us that it is often not unusual, uncommon or exceptional.
Nonetheless it cannot also be overlooked that Mr Smith has been paid monies from the Commonwealth to which he was not entitled.
In all of the circumstances we are satisfied that Mr Smith was overpaid Austudy and that the overpayment constitutes a debt. We are unable to fix the amount of the overpayment having regard to the incorrect imposition upon the amount presently said to be outstanding by interest. We would suggest the starting point is to return to the amount calculated by the respondents representative on 23 February 2000 (T27 page 228) and withdraw from that sum the amounts paid to date by Matthew and Mrs Smith and the amount imposed as interest.
Having said this we are alert to the financial circumstances of Matthew at the present time. It is to be hoped that he will obtain more work towards the end of this year, as was his expectation. If that occurs he will have a greater capacity to repay the debt.
In the circumstances we have decided that any repayment of the debt, when recalculated, should be deferred and reconsidered at 1 January 2001 upon reconsideration of Matthew's financial circumstances at that time. Mrs Smith may continue to voluntarily make repayments at $20 per fortnight in the interim. That is obviously to Matthew's benefit but it is not something that we would decide.
In the circumstances the decision under review with respect to the overpayment and imposition of a debt is affirmed. The decision as to the quantum of the debt is remitted to the respondent for recalculation in accordance with this decision. Any repayment of the debt by Matthew shall be deferred until 1 January 2001 for reconsideration then of his financial circumstances and his capacity then to make repayment.

I certify that the twenty three (23) preceding paragraphs are a true copy of the reasons for the decision herein of Mr J. Handley, Senior Member
Signed:    Linda Nemeth    ............................................
                 Secretary
Date of Hearing  27 July 2000
Date of Decision
Counsel for the Applicant        Self
Solicitor for the Applicant
Counsel for the Respondent
Solicitor for the Respondent    Mr Pearson