Treacy and Department of Education, Training and Youth Affairs

DECISION AND REASONS FOR DECISION [2001] AATA 724

ADMINISTRATIVE APPEALS TRIBUNAL Nº V2000/1263
GENERAL ADMINISTRATIVE DIVISION

Re: GAVIN TREACY
Applicant
And: SECRETARY TO THE

DEPARTMENT OF EDUCATION,
TRAINING AND YOUTH AFFAIRS
Respondent

DECISION

Tribunal: M.J. Carstairs, Member

Date:17 August 2001
Place:Melbourne
Decision:The Tribunal sets aside the decision of the Social Security Appeals Tribunal dated 14 July 2000 and substitutes the decision that:
1.the amount of $4226.25, being AUSTUDY paid to the applicant in 1994, is a debt recoverable by the Commonwealth; and
2.no late payment charge or interest applies to the debt as at the date of this decision.

(sgd) M.J. Carstairs
Member
STUDENT ASSISTANCE - AUSTUDY – student income – method of calculating income- debt to Commonwealth – waiver – special circumstances
Social Security Act 1991 s1237AAD
Student and Youth Assistance Act 1973 s40, s290C
Student Assistance Act 1973 s40, s41, s43F
AUSTUDY Regulations reg 12E, reg 61(c), reg 82
Re Beadle and Director-General of Social Security (1984) 6 ALD 1

REASONS FOR DECISION

17 August 2001 M.J. Carstairs, Member

This is an application by Mr Gavin Treacy (the applicant) for review of a decision of the Social Security Appeals Tribunal (SSAT) dated 14 July 2000 which varied a decision of a delegate of the Secretary to the Department of Employment, Training and Youth Affairs (the respondent) in regard to a debt of AUSTUDY for the 1994 calendar year. The decision reviewed by the SSAT was the respondent's decision that the applicant owed a debt of AUSTUDY in the sum of $5428.45. The total debt comprised three sums: overpaid AUSTUDY of $4226.25; a late payment penalty of $100; and penalty interest of $1102.20. Essentially the SSAT decided that the AUSTUDY overpayment should be recovered but that the late payment and penalty charges should be waived. This left to be recovered the amount of $4226.25, which is the subject of this application for review.
The hearing of this matter took place on 26 July 2001. The applicant represented himself and gave evidence by telephone. The respondent was represented by Mr N. Abrams, solicitor.
The documents lodged with the Tribunal pursuant to s37 of the Administrative Appeals Tribunal Act 1975 (T Documents) were accepted into evidence along with a chronology, which was prepared by the respondent.
BACKGROUND
The applicant received AUSTUDY as a full-time student at William Angliss College in 1993. On 15 November 1993 he filled out a "Continuing Application Form 1994" (T3) to ensure his AUSTUDY payments in 1994 when he resumed his studies after the summer vacation. At Question 5 the form asked if he would be receiving AUSTUDY for the full 1994 calendar year. The applicant answered "Yes". Where asked to estimate income in that period, he wrote "Nil". On the basis of that information he was paid the maximum rate of AUSTUDY applying to his circumstances (i.e. independent rate).
It was not in dispute between the parties that the information concerning anticipated income proved to be incorrect. The applicant commenced employment with Crown Casino in July 1994 and in September 1994 he advised the respondent that his income to the end of 1994 would be $14,000.
Once the respondent had this new information about the applicant's earnings, a recalculation of his entitlement to AUSTUDY was done. On the basis that $14,000 was to be earned in 1994, fortnightly payments of AUSTUDY were reduced to $88. Previously, the applicant had been receiving $241.50 per fortnight (T6). By arrangement between the applicant and the respondent (as appears from T4) the $88 was not paid to him, but was used to reduce the overpayment dating from the start of the 1994 calendar year.
The debt originally was calculated at $2684.93. The applicant contested the debt, seeking review with the SSAT on 7 December 1994. On 9 March 1995 the SSAT set aside the debt of $2684.93 on the basis that it was premature to raise a debt in respect of the 1994 calendar year until the applicant's income for the full financial year was known.
On 19 January 1996 the respondent advised the applicant by letter that after taking into account financial information supplied by the employer, Crown Casino, and from information on tax returns submitted by the applicant, it had been decided that he was not eligible for any AUSTUDY benefits in 1994 and that the debt was $4226.75 (T17). The letter was sent to the address held by the respondent since 1994. As the applicant had moved from this address, the respondent's correspondence did not reach him. There was some contact with the respondent during 1998 but it was not until 1999 that the applicant again sought review by the SSAT, and by this time the debt had attracted late payment and penalty interest charges.
After the SSAT decision dated 14 July 2000 the applicant sought review by the Tribunal on 6 December 2000.
EVIDENCE
The applicant told the Tribunal that he secured work as a waiter with Crown Casino in July 1994 and notified the respondent on 6 September 1994 (T4). The file note of telephone contact by the applicant recorded "Student got a job earning $14,000 calendar yr." The applicant told the Tribunal he did not advise the respondent until he knew he could handle the demands of work as well as his study. In September 1994 he advised the respondent that he would receive $14,000 to the end of the calendar year. He said that this information was correct to the best of his ability at the time. He had derived the figure by taking roughly half the annual income that had been discussed with his employer when he took up employment.
The applicant said that he took a full-time job because he could not survive on AUSTUDY. He said he was a professional waiter and the job at Crown Casino was "a top job on top money" but he could not be sure that he could handle the hours along with his commitments as a full-time student.
The applicant told the Tribunal that in 1995 after receiving the SSAT decision he believed that he had no debt. He submitted that he had been honest at all times and had given all available information to the respondent. He said that he had worked hard and that he had not anticipated that his original agreement with his employer concerning wages would be varied on three occasions, or that bonus payments would increase his income beyond the estimate given to the respondent in September. He accepted that his income from wages in the 1994/95 financial year was $38,502. The applicant said that he did not know at the time that he was earning that amount. He submitted that the question was ultimately one of his honesty and his preparedness to work hard in difficult circumstances. In 1994 he had been out of the workforce for two years and was unsure that he would cope with the workload of full-time employment and study.
The applicant told the Tribunal that presently he is receiving WorkCover payments as a result of a back injury sustained in 1996. He receives $508 per week in ongoing payments. He has had two back operations, one in 1997 and one in 1998. The hearing of his compensation matter was listed for 6 August 2001. His other circumstances are that he lives with his mother. His relationship with his partner broke down after his work injury. He has credit card debts of some $4900 with the Commonwealth Bank and a debt of some $1300 with the ATO.
The Australian Taxation Office (ATO) provided information that in 1994/95 the applicant's earnings from wages were $38,502 and taxable income was $38,096 (T14). An Employer Report from Crown Casino gave gross earnings from 1 January 1994 to 31 December 1994 as $38,502.93 and gross earnings from 1 January 1995 to the end of employment with them (24 August 1995) as $14,004.37 (T15).
CONSIDERATION OF THE ISSUES
A student assistance overpayment is defined at s3 of the Student and Youth Assistance Act 1973 as "an amount paid under the AUSTUDY scheme that should not have been paid". The Student and Youth Assistance Act 1973 was repealed with effect from 1 July 1998. Under s43 of the Student and Youth Assistance Act a student assistance overpayment was a debt recoverable by the Commonwealth, and these remain recoverable under sections 38 and 39 of the new Act, the Student AssistanceAct 1973 (the Act). Section 3 of the Act provides that a student assistance overpayment means an amount paid under the AUSTUDY scheme as in force before 1 July 1998 that should not have been paid.
At the time that the applicant was receiving AUSTUDY in 1994 the AUSTUDY Regulations provided that the maximum amount of AUSTUDY (independent rate) was $6296 per year (reg 61(c)). Regulation 82(2) provided that the amount of AUSTUDY living allowance was to be reduced by $1 for every $2 earned above the formula worked out according to regulation 82(1). In 1994, $16,593 was the level of income at which any entitlement to AUSTUDY living allowance ceased for a student aged over eighteen.
The applicant did not submit that the information provided by the ATO that he had taxable income of $38,096 in 1994/95 was incorrect. The Tribunal takes into account that the applicant believed that the information he gave in September 1994 in regard to his anticipated income of $14,000 was correct, however he acknowledged that he did not subsequently advise the respondent when the income was higher than he anticipated. Whatever the applicant's understanding of his responsibilities about providing information to the respondent, the legislation is clear that accurate information must be given by students so that entitlement may be reassessed from time to time. Where subsequent information shows that the entitlement has not been correctly assessed, regulation 12E of the AUSTUDY Regulations allows for the entitlement to be recalculated and for a student assistance overpayment to arise.
Regulation 12E provided at the relevant time:
If, in a year, the total of the AUSTUDY payments made to a student under determinations of entitlement is greater than the amount that would have been payable if, when the first of the determinations was made:
(a)all information relevant to the student's entitlement at any time in the year had been known to the Department; and
(b)acting on that information - the determination had correctly decided the student's entitlement for the whole year;
an amount equal to the difference between the total amount paid and the amount that would have been properly payable under paragraph (b) is taken to be a student assistance overpayment for the purposes of Part 6 of the Act.
It is not possible to arrive at an exact figure of the applicant's taxable income for the 1994 calendar year. However, inferences can be drawn from the evidence set out at paragraph 14 of these reasons. It was submitted by the respondent that the inconsistency in the evidence of income between the information from the ATO and that from Crown Casino should be resolved in the applicant's favour and that the amount of $38,502.93 given by Crown Casino for the 1994 calendar year earnings, should be taken as entered in error, being figures for the whole financial year. The respondent further submitted that the preferred method for working out the applicant's income in 1994 would be to take the figure of earnings i.e. $36,360, less benefit payments $1736, and less the sum of $10,743.63 for 1995 earnings imputed to 30 June 1995. This gave a figure of $25,619.37.
The respondent submitted that even on the most favourable interpretation of the figures available, the applicant's earnings were in excess of the cut-off amount of $16,593.
As the provisions for calculating the rate of AUSTUDY refer to taxable income (reg 83(1)), the taxable income in this case is the amount stated by the ATO for 1994/95 i.e. $38,096. Imputing half of that figure to the year ended 31 December 1994 produces the amount of $19,048. On the basis of the information from the ATO and the employer, the Tribunal is satisfied that the applicant's income to the end of 1994 was above the level of $16,593 at which AUSTUDY ceased to be payable and the applicant had no entitlement to the AUSTUDY payments he received in 1994. Therefore the amount of $4226.25 received by him, is a student assistance overpayment within the meaning of the Act.
The respondent initially submitted that the $100 late payment charge and the $1102.20 penalty interest should not have been waived by the SSAT. However the respondent acknowledged that there was a lack of certainty that the notices were properly served on the applicant when the additional charges were levied. Section 40 of the Act and its predecessor, s40 of the Student and Youth Assistance Act requires that the person be put on notice of any additional charges. Section 40(1A) of the Act states that the Secretary may give the person notice specifying how much of the recoverable amount remains due and drawing the person's attention to the possibility that three months after service of the notice the person may be liable to pay the additional charges under s40(2), that is, the late payment charge and penalty interest.
Section 41(1) of the Act gives the Secretary power to determine that the late payment charge under s40(2)(a) and the penalty interest under s40(2)(b) are not payable. In its decision dated 14 July 2000 the SSAT waived the penalty interest and late payment charges by reason of special circumstances, applying the provisions of s1237AAD of the Social Security Act 1991. The SSAT had no power to make that decision. The Tribunal will exercise the powers under s41 to determine that no late payment charge or penalty interest rate applies.
The question of waiver had not been addressed prior to the decision of the SSAT dated 14 July 2000. As stated, the Student and Youth Assistance Act 1973 was repealed, effective 1 July 1998. The applicant had not sought review of the decision to raise and recover the debt prior to the repeal of those provisions, therefore any question of waiver requires the application of the provisions of the new Act. Section s43F of the Act re-enacted the provisions of s290C of Student and Youth Assistance Act 1973, which allowed for waiver in "special circumstances".
The phrase "special circumstances" has been considered in many previous Tribunal cases. In Re Beadle and Director-General of Social Security (1984) 6 ALD 1 Toohey J stated that for circumstances to be "special" they must be "unusual, uncommon or exceptional". Whilst the applicant now faces difficulties with his health as a consequence of his work injury, the Tribunal is satisfied that he has sufficient capacity to repay the debt. He receives $508 as ongoing fortnightly payments and he has the prospect of a lump sum in respect of his injury. The Tribunal finds that there is no sufficient financial hardship in this case and no other special circumstances as grounds for waiving the debt.
For these reasons the Tribunal finds that AUSTUDY paid to the applicant in 1994 is a debt due to the Commonwealth.
DECISION
The Tribunal sets aside the decision of the Social Security Appeals Tribunal dated 14 July 2000 and substitutes the decision that:
1.the amount of $4226.25, being AUSTUDY paid to the applicant in 1994, is a debt recoverable by the Commonwealth; and
2.no late payment charge or interest apply to that debt as at the date of this decision.
I certify that the twenty-seven [27] preceding paragraphs are a true copy of the reasons for the decision herein of
M.J.Carstairs, Member
(sgd)       Catherine Thomas
              Clerk
Date of hearing:  25.07.01
Date of decision:  17.08.01
Solicitor for applicant                   Nil — self-represented
Solicitor for respondent:              Mr N. Abrams, Phillips Fox

[2001] AATA 724

17 August 2001

Key Legal Topics

Areas of Law

Administrative Law

Legal Concepts

Standing

Res Judicata

Compensatory Damages

Contract Formation

Breach of Contract