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

[2019] AATA 5404

Wood and Secretary, Department of Social Services (Social services second review) [2019] AATA 5404 (13 December 2019)

Administrative Appeals Tribunal

ADMINISTRATIVE APPEALS TRIBUNAL              )
  )  No: 2017/6891
GENERAL DIVISION  )

Re: Andrew Wood
Applicant

And: Secretary, Department of Social Services
Respondent

DIRECTION

TRIBUNAL:  G Hallwood, Member

DATE OF CORRIGENDUM:            23 December 2019

PLACE:           Adelaide

The Tribunal directs the Registrar, pursuant to subsection 43AA(1) of the Administrative Appeals Tribunal Act 1975, to alter the text of the decision in this application:

1.To change paragraph number ‘56’ to ‘29’, and to similarly correct every paragraph number thereafter to count sequentially from 29 onwards; and 

2.To change the associate’s certification from ‘…the preceding one hundred and three (103) paragraphs…’, to  ‘…the preceding seventy-six (76)  paragraphs…’.

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G HALLWOOD
(Member)

Division:  GENERAL DIVISION

File Number:2017/6891          

Re:Andrew WOOD  

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

DECISION

Tribunal:Member G Hallwood

Date:13 December 2019

Place:Adelaide

The decision under review is affirmed.

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Member G Hallwood

CATCHWORDS

SOCIAL SECURITY – Austudy – Overpayment debt – Right to recovery – Should debt be written off or waived – Where Applicant enrolled in a Diploma but never progressed in that course – Where Applicant knowingly failed to comply with reporting obligations – Decision under review affirmed.

LEGISLATION
Social Security Act 1991 (Cth)
Social Security (Administration) Act 1999 (Cth)

CASES
Sekhon v Secretary, Department of Family and Community Services (2003) FCAFC 190

REASONS FOR DECISION

Member G Hallwood

13 December 2019

1. This application appeals a decision of the Social Services & Child Support Division of the Administrative Appeals Tribunal (AAT1) made on 8 November 2017 affirming the decision of the Secretary that Mr Andrew Wood owes the Commonwealth a debt of $23,486.73 and that the right to recover this debt should not be waived or written off.

   THE ISSUES

2. Mr Wood was paid Austudy between 27 July 2015 and 17 March 2017. Austudy provides financial help for people 25 years or older that are studying.

3. The Department determined that Mr Wood was paid  for which he did not qualify and a debt was raised by the Commonwealth against Mr Wood to recover the amount the Department found he was overpaid.

4. There is no dispute that Mr Wood qualified for Austudy at the time of his enrolment and application for payments.

5. The issues to be determined in this matter are:

   (a)during what period was Mr Wood qualified for Austudy?

   (b)did Mr Wood receive a payment in excess of his entitlement?

   (c)if Mr Wood received an overpayment, is that overpayment a debt due to the Commonwealth?

   (d)if so, is there any basis not to recover any or all of the debt?

BACKGROUND

1. The facts outlined below are based on documentary evidence tendered and the oral testimony of Mr Wood. I believe the witness presented his evidence honestly, openly and to the best of his recollection although Mr Wood did struggle at times recalling events.

2. In July 2015 Mr Wood enrolled in a Diploma of Leadership and Management with Open Colleges.

3. On 27 July 2015 Mr Wood lodged a claim for  Austudy payments.

4. Mr Wood’s claim was granted by the Department in a letter dated 11 September 2015 and his Austudy instalment payments commenced from 27 July 2015.

5. On 29 March 2017 Centrelink received advice from Open Colleges indicating Mr Wood had not submitted any assignments and had not progressed through the course.

6. As a result of the advice from Open Colleges and subsequent investigation the Department of Human Services raised a debt for the entirety of the Austudy paid between 27 July 2015 and 17 March 2017. This debt totals $23,486.73.

THE LEGISLATION

1. The relevant law is contained in the Social Security Act 1991 (the Act) and Social Security (Administration) Act 1999 (the Administration Act).

2. In order to qualify for Austudy a person must meet the criteria in s 569A of the Act and relevantly satisfy the activity test by undertaking qualifying study. Section 569C of the Act requires enrolled full-time tertiary students to undertake at least 75% of the normal amount of full-time study for a course for any given study period. The normal amount of full-time study is explained in s 569E of the Act.

3. It is a requirement under s 68 of the Administration Act that a person receiving a social security payment must advise the Department of changes in their circumstances. Section 72 goes on to specify that notification of changes of circumstances must be advised within 14 days.

4. Section 80 of the Administration Act requires the Secretary, when satisfied that a person is not qualified for a payment, to determine that the payment is cancelled or suspended.

5. Section 1223(1) of the Act sets out that when a social security recipient receives the benefits of a payment to which they were not entitled, they owe the amount overpaid as a debt to the Commonwealth.

6. Section 1236 of the Act enables a debt raised under social security legislation to be written off. Sub-section 1236 (1A) sets out that write-off may occur 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.

7. Section 1237 of the Act contains the power to waive the Commonwealth’s right to recover the whole or part of a debt under limited circumstances. Waivers create a permanent bar to recovery of the debt or part of the debt. It is relevant in this case to consider s 1237A waiver of debt arising from error, and s 1237AAD Waiver in the special circumstances of the case.

CONTENTIONS

1. The Secretary submitted to the Tribunal that Mr Wood was at no point between 29 July 2015 and 17 March 2017 qualified for Austudy. This is because, in the Secretary’s submission, Mr Wood was not a full-time student within that period, and accordingly a debt of $23,486.73, representing the total Austudy payments received by Mr Wood, should be raised in favour of the Commonwealth. The Secretary further submitted that the right to recover the debt should not be written off or waived to any extent. The Secretary submitted that waiver was not available due to a knowing failure by Mr Wood to comply with the reporting requirements attached to the Austudy payments, nor had the debt arisen due solely to administrative error, and in any event Mr Wood’s circumstances were not relevantly special. 

2. Mr Wood submitted that he enrolled to study a course that he thought he would do well in. And that once enrolled, he logged in to the course online page and discovered that some of the assessment involved group work. He was unsure as to how he would find any group members to undertake these assessments. Further that his circumstances, including not having a stable housing situation which Mr Wood described as ‘shocking’ over the last ten years, made it very difficult for him to study. Mr Wood said that he had been recently diagnosed with bi-polar, a condition that was unknown to him at the time. Mr Wood said that he thought that this condition would have probably made study very difficult for him, even if his housing situation was stable during the relevant period.   

During what period did Mr Wood qualify for Austudy?

1. The general rule for Austudy payment qualification is contained in s 568 of the Act:

   Subject to this Subdivision, a person is qualified for an Austudy payment in respect of a period if, throughout the period:

   (a)the person satisfies the activity test (see Subdivision B); and

   (b)the person is of Austudy age (see Subdivision C); and

   (c)the person is an Australian resident.

2. There is no contention that did not Mr Wood meet the age and residency requirements for Austudy.

3. A person will satisfy the activity test in s 569(1) if during the period they are undertaking qualifying study, as defined in s 569A. Section 569A of the Act provides that a person is “undertaking qualifying study” if, relevantly:

   (a)…

   (b)…

   (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).

4. It is not contended that Mr Wood did not satisfy the requirements at ss 569A (a), and (b) as he was enrolled in an approved course of education at an educational institution. What is in issue is whether Mr Wood satisfied the ‘full-time student’ requirement.

5. Section 569C describes what is meant by a full-time student for Austudy purposes:

   For the purposes of this Subdivision, a person is a full-time student in respect of a  course if:

   (a)in the case of a person who is enrolled in the course for a particular study period (such as, for example, a semester)--the person is undertaking at least three quarters of the normal amount of full-time study in respect of the course for that period; or

   (b)in the case of a person who intends to enrol in the course for a particular   study period - the person intends to undertake at least three quarters of the normal amount of full-time study in respect of the course for that period.

   (emphasis added)

6. Mr Wood’s “course enrolment confirmation” letter from Open Colleges dated 20 November 2015[1] noted his course commenced on 22 August 2015, that the course would run for 65 weeks, and that full time hours were 20 hours per week. Mr Wood was enrolled in the course full time and it is not in dispute that his application for Austudy payments, and Centrelink’s acceptance and subsequent payments were on the basis that Mr Wood was to undertake full-time study.[2]

   [2] Section 569E of the Act.

7. In Mr Wood’s case the normal amount of full-time study for his course is 20 hours a week as defined by his institution and under s 569E.

8. In order to be considered a full-time student for Austudy purposes he would be required to undertake at least three quarters of that normal amount of full-time study under s 569C, an amount of 15 hours, in respect of the course for the 29 July 2015 and 17 March 2017 period.

1. The Secretary put to the Tribunal that Mr Wood had given evidence to AAT1 that, after the first week of enrolment, he did not subsequently log into the Open Colleges online lectures or tutorials and, at no stage, did he submit work for the course.  

2. The Secretary stated that it was based on the advice Centrelink received from Open Colleges on 29 March 2017, indicating Mr Wood had not submitted any assignments and had not progressed through the course, that Mr Wood’s payments were eventually ceased and a debt was raised against him.

3. Mr Wood told the Tribunal that a few weeks into the course he felt that he was so far behind that he would not be able to catch up. Mr Wood said that over the next 16 or 17 months he told the Department that he was struggling with the course. Mr Wood also told the Tribunal that he had always intended to finish the course.

4. Mr Wood gave evidence that he enrolled in the course, downloaded some of the course material which he read, and then had completed at least one assignment. Later in evidence he stated that he was not sure if he had completed any of the course and that he may have been confused with a course he undertook in 2012.

5. During the hearing Mr Wood conceded that he did not qualify for Austudy.

6. I note the AAT1’s finding on this issue that:[3]

   Failing to engage with online tuition or submit any work for assessment is not consistent in my view with undertaking any study, even if course materials and text books are perhaps read through.

   [3] Ex T2, 6 [8].

7. I am satisfied that Mr Wood did no more than enrol and download some of his course material. From the evidence provided to the Tribunal, there is nothing that suggests Mr Wood spent more than an hour or two in total undertaking study and he did not complete a single assignment. It seems Mr Wood did spend some time thinking about whether he would study and whether he would complete the course. This is not activity amounting to Mr Wood undertaking at least three quarters of the normal amount of full-time study in respect of the course during relevant period.

8. For the reasons outlined above I find that as Mr Wood’s activity did not at any time during his Austudy payment period meet the definition of normal amount of full-time study contained in s 569E, and because of this he was not at any time during his Austudy payment period a full-time student as described in s 569C of the Act.. On the evidence I find that, in the absence of satisfying the activity test,[4] Mr Wood did not qualify for Austudy at any stage throughout the period as he did not meet the requirement in s 568(a).

   [4] Section 569(1) of the Act.

Did Mr Wood receive a payment in excess of his entitlement?

1. There is no dispute that Mr Wood received $23,486.73 in payments between 29 July 2015 and 17 March 2017. Based on the findings above, Mr Wood was not entitled to receive Austudy at any time during the payment period.

2. Subsection 80(1) of the Administration Act sets out the required actions if someone is receiving payments to which they are not entitled:

   (1)  If the Secretary is satisfied that a social security payment is being, or has been, paid to a person:

   a)    who is not, or was not, qualified for the payment; or

   b)    to whom the payment is not, or was not, payable (other than because of the operation of Division 3AA);

   the Secretary is to determine that the payment is to be cancelled or suspended.

   Note:          Division 3AA is about compliance with participation payment obligations for persons who are not declared program participants.

3. As Mr Wood was not entitled to receive any of the Austudy payments granted to him, the department contends that the Secretary was required to determine payments were cancelled from the date Austudy was granted, 29 July 2015. I find that this is the correct approach and that Mr Wood was overpaid the full amount he received in payments from Centrelink during the period 29 July 2015 to 17 March 2017.

If Mr Wood received an overpayment, is that overpayment a debt due to the Commonwealth?

1. Subsection 1223(1) of the Act sets out what is to occur in the case of an overpayment:

   (1)Subject to this section, if:

   a)    a social security payment is made; and

   b)    a person who obtains the benefit of the payment was not entitled for any reason to obtain that benefit;

   the amount of the payment is a debt due to the Commonwealth by the person and the debt is taken to arise when the person obtains the benefit of the payment.

2. Centrelink paid Mr Wood $23,486.73 between 29 July 2015 and 17 March 2017 and the Tribunal has found that he had no entitlement to any of that benefit.

3. Mr Wood did not dispute the application of ss1223(1) except to say that he was dealing with mental health issues during the time he was receiving Austudy. The issues of his health are best dealt with when considering whether there is any basis not to recover the debt or any part of it. These issues are considered below.

4. I find that, in accord with ss1223(1) of the Act, the amount paid to Mr Wood is a debt owed by him to the Commonwealth.

If Mr Wood owes a debt to the Commonwealth, is there any basis not to recover any or all of the debt?

1. In certain limited circumstances debts raised and owed to the Commonwealth may be written off or waived.

Write-off

1. Section 1236(1A) of the Act provides for discretion to write-off debts in some limited circumstances:

   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.

2. There was no evidence provided to the Tribunal in relation to s1236 (a), (c) or (d). In relation to s1236 (b) Mr Wood told the Tribunal that he had been living an itinerant lifestyle, and had a gambling addiction that was consuming his money. This is confirmed in a report from Dr Cervantes.[5] Mr Wood went on to say that he now lived in state housing and also indicated his circumstances were now better.

   [5] T16 p137.

3. Mr Wood has previously repaid money to the Commonwealth and there was no evidence provided to the Tribunal that his current situation is worse than existed previously when he demonstrated a capacity to pay. While Mr Wood may well be in a difficult financial situation there is nothing to suggest that he has no capacity to repay the debt.

4. For these reasons I find no basis on which to write off Mr Wood’s debt.

   Waiver – administrative error

5. The Act provides for some circumstances in which debts may or must be waived. The two mechanisms that are relevant to issues raised by this matter are:

   (a)Waiver of a debt solely attributable to an error of the department (s1237A); and

   (b)Waiver of a debt in special circumstances (s1237AAD).

6. Mr Wood contends that because he had a history of being undisciplined at study in the past, the Department erred in allowing him to obtain Austudy. Mr Wood provided the example of a course he had embarked upon in 2012 which he had been unable to complete. He also stated that his school report said he was “very capable if only he’d shut up and stop being class clown”.

7. I know of no authority on which the Department can exclude an applicant from Austudy because they are undisciplined or a class clown. There is simply no test in the legislation. Had someone in the Department recognised that an applicant was undisciplined and a class clown, they would have no ability to refuse the application on this basis. I find that there was no error by the Department.

8. While s 1237A offers discretion to waive debts that are solely as a result of administrative error, decisions such as Sekhon v Secretary, Department of Family and Community Services have applied a strict application of the term “solely attributable”.[6] RD Nicholson J, with whom Selway J agreed (Heerey J dissenting) set out at paragraph 23, as follows:

   The word 'attributable' brings into play the notions of causation 'as an effect to a cause'. The word ‘solely' brings notions of exclusivity. Solely means as the only one or ones' or 'exclusively or only'. It means 'one and only, single; only', also 'singular, unique, unrivalled'. It is used elsewhere in the Act but not in conjunction with' attributable' so that other usage does not assist in relation to the subsection in question. In that subsection the word 'solely' has a function to play. [. ..]There is therefore no reason not to give the word ' solely' its proper application in the circumstances.

   [6] [2003] FCAFC 190 (3 September 2003).

9. The wording of s1237A is not simply looking to ascertain if the applicant’s contribution to the overpayment was significant, it is looking to see if there is any contribution from the applicant.

10. Mr Wood’s failure to inform the Department that he was not studying is enough to find that any error in paying him Austudy during the period resulting in the raising of a debt could not be “solely attributable” to departmental error.

    Waiver – special circumstances

11. Mr Wood put to the tribunal that, as well as his lack of discipline and financial hardship; there were a number of other special circumstances that applied to him. He cited homelessness and an inability to settle anywhere, as well as his mental health disorders as special circumstances.

1. Section 1237AAD sets out criteria for a waiver as a result of 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, 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.

2. Before considering whether Mr Wood’s stated special circumstances are adequate to enliven the waiver provision in s1237AAD, the Tribunal must be satisfied relevantly that the debt did not result wholly or partly from the debtor knowingly making a false statement or representation or failing or omitting to comply with a provision of the Act, or the Administration Act.

3. Mr Wood applied for Austudy on 29 July 2015. The Department did not contend that he intended to commence and complete his study as set out in his application.

4. It is a requirement under s 68 of the Administration Act that a person receiving a social security payment must advise the Department of changes in their circumstances. Section 72 of the Administration Act goes on to specify that notification of changes of circumstances must be advised within 14 days.

5. A Centrelink letter of 11 September 2015[7] sent to Mr Wood informed him, relevantly, under a bold heading Important Information:

   ·     A decision has been made that you will be paid Austudy from 27 July 2015,

   ·     Your Austudy is based on you studying full time at OPEN COLLEGES, Tertiary Group D Course with the course ending on 12 December 2016. If your study load changes or if you cease study you should let us know within 14 days.

   [7] T8 p 54.

6. The letter also contained further notices including:

   When to contact us

   You must tell us within 14 days about events or changes in circumstances affecting your payment. You can tell us about these changes via self service (online or phone), in writing (fax or post) or visiting one of our customer service centres.

   The amount of Austudy you receive may need to be changed if there are changes in your circumstances. If you are paid too much Austudy because you don’t tell us when you are required to do so, we may ask you to pay it back.

   This is an information notice given under social security law.

   What you must tell us

   If you or your partner:

   ·stop being a full-time student or concessional workload student

   ·start paid work or any form of profession, trade, business or self-employment

   ·are sick or injured and cannot continue studying….

7. Similar notices were contained in letters from Centrelink to Mr Wood on 11 September 2015, 12 October 2015, 19 August 2016, 24 August 2016, and 14 September 2016. [8]

   [8] T8.

8. Mr Wood acknowledged receiving the correspondence containing the notices.

9. In a letter dated 15 November 2016[9] Centrelink sent Mr Wood a letter titled “Your course is ending” requiring Mr Wood to provide information about his intentions for the next study period on the basis that Centrelink’s records indicated the course would end on 12 December 2016. On 21 November 2016 Mr Wood contacted Centrelink and told them he would be continuing to study until 19 May 2017.

   [9] T8 pp 92-93.

10. On 23 December 2016 Mr Wood contacted Centrelink to ask why his Austudy had been cancelled on 13 December 2016.[10] Mr Wood told Centrelink that he had already informed them his course had been extended to 19 May 2017. Centrelink reminded him of his reporting requirements and they extended his Austudy until 19 May 2017.[11]

    [10] T17 p 176.

    [11] T17 p 177.

11. There is no evidence that on either of these occasions Mr Wood informed Centrelink that he had not completed any study despite being specifically reminded of his obligation to report any changes in his circumstances.

12. Initially Mr Wood stated that he believed he had informed the Department that he was struggling with the course. This was not reflected in Centrelink’s records. When questioned during the hearing, Mr Wood conceded that he had probably told the college and not Centrelink about his difficulties.

13. The question then becomes whether Mr Wood “knowingly” failed or omitted to comply with the relevant legislation and report his circumstances to Centrelink.[12] As stated earlier, Mr Wood suffers from diagnosed mental health issues including bipolar II disorder, OCD and anxiety and depression. His GP, Dr Cervantes, in a letter dated 6 November 2017 states:[13]

    “I certify that considering Mr Wood’s mental health conditions these would have been negatively impacting on his ability and fitness to study, making it impossible for Mr Wood to undertake any type of studies.”

    [12] Section 66A(2) of the Administration Act requires a person in receipt of a social security payment, like Austudy, to inform Centrelink of any changes in their circumstances that might affect their payment.

    [13] T16 p 137.

14. A report from Dr Bagato, psychiatrist, dated 19 October 2017[14] describes Mr Wood’s conditions and also states that he is intelligent with intact cognition and preserved judgement.

    [14] A1 pp1-3.

15. Mr Wood received Austudy payments for more than 19 months and at no time, by his own admission at the hearing, informed Centrelink that he had ceased studying. Mr Wood stated in evidence that he knew he should tell Centrelink if his circumstances changed.

16. I have found no medical evidence that Mr Wood was compelled to withhold information he was aware he had to disclose. Based on Dr Bagato’s report and Mr Wood’s sworn evidence I am satisfied that Mr Wood knowingly failed to comply with the legislation.

17. Based on his lack of disclosure in the telephone calls with Centrelink on 15 November 2016 and 23 December 2016 I am also, on balance, satisfied that Mr Wood knowingly falsely represented that he was studying full time when he was not.

18. As Mr Wood knowingly failed to comply with s 68 and s 72 of the Administration Act a waiver under s 1237AAD cannot be enlivened even if he were to satisfy the Tribunal special circumstances applied in this matter.

19. For these reasons I find there is no basis on which to waive Mr Wood’s debt to the Commonwealth.

CONCLUSION

1. The Tribunal finds that Mr Wood did not qualify for Austudy at any time during the relevant period. As he did not qualify for Austudy Mr Wood received a payment in excess of his entitlement which was correctly raised as a debt due to the Commonwealth.  The Tribunal also finds that there is no basis to write-off or waive the debt raised.

DECISION

1. For the above reasons the Tribunal affirms the decision under review.

I certify that the preceding one hundred and three (103) paragraphs are a true copy of the reasons for the decision herein of Member G Hallwood

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Administrative Assistant Legal

Dated 13 December 2019

Date of hearing:	2 July 2019
Applicant:	In person
Advocate for the Respondent:	Mr  Morris
Solicitors for the Respondent:	Department of Human Services