EDUCATION - AUSTUDY - overpayment - discontinuation of studies due to illness - notified by telephone but not in writing - recovery - special circumstances

Student Assistance Act 1973 - ss 289(1), 290C

Social Security Legislation Amendment (Youth Allowance Consequential and Related Measures) Act 1998)

Re Wyer and Secretary, Department of Employment, Education, Training and Youth Affairs (AAT 13198, 21 August 1998)

Re Secretary, Department of Employment, Education, Training and Youth Affairs and Nevile (AAT 13120, 24 July 1998)

Beadle v Director-General of Social Security [1984] AATA 176; (1985) 7 ALD 670

Re Beadle and Director-General of Social Security (1984) 6 ALD 1

Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541

Secretary, Department of Social Security v Hales (1998) 153 ALR 259

1. This is an application by Joanne Castle ("the Applicant") for a review of a decision of the Social Security Appeals Tribunal ("the SSAT") made on 9 March 1998 affirming a decision of a delegate of the Secretary of the Department of Employment, Education, Training and Youth Affairs, now the Department of Education, Training and Youth Affairs ("the Respondent"), and a review officer, to raise and recover an overpayment of AUSTUDY of $1228.00.

2. At the hearing, the Applicant was self-represented and the Respondent was represented by Matthew Grey of the Australian Government Solicitor's office. The Applicant and her mother, Lorraine Castle, gave evidence for the Applicant. Jeremy Moreau gave evidence for the Respondent. The Tribunal had before it the documents provided pursuant to s 37 of the Administrative Appeals Tribunal Act 1975. A statement from Mr Moreau was also admitted as exhibit R1.

3. In February 1995, the Applicant, who was born on 22 September 1970, enrolled in a Tertiary Preparation Course ("TPC") at Newcastle TAFE. On 3 February 1995, she lodged a claim for AUSTUDY. By letter dated 12 February 1995 (T4), the Respondent notified the Applicant that she was eligible for AUSTUDY at the independent rate from 13 February 1995 to 31 December 1995. The Applicant commenced the course on 13 February 1995 but stopped attending after two to three weeks because of illness. The date on which she formally ceased studies was 3 March 1995. The Applicant claims she contacted the Commonwealth Employment Service ("CES") in Newcastle in March 1995 and again in April 1995 to tell them she had ceased studying, but that it was not until 8 May 1995 that the Respondent acted on this information and cancelled payment of AUSTUDY to the Applicant.

4. On 9 May 1995, the Respondent notified the Applicant that she had received an overpayment of AUSTUDY of $1473.60 in respect of the period 18 February 1995 to 12 May 1995. On 10 May 1995, the Respondent notified the Applicant that the overpayment was $1228.00 in respect of the period 4 March 1995 to 12 May 1995.

5. On 5 February 1997, a review officer affirmed the decision, which was also affirmed by the SSAT on 9 March 1998. The SSAT obtained a report from the Applicant's treating Endocrinologist, Dr M T Epstein, dated 28 October 1997 (T2, A11), which states the Applicant first consulted him on 24 October 1996 and that she suffers from polycystic ovarian disease. On 25 March 1998, the Applicant lodged an application for review by the Tribunal.

6. AUSTUDY Regulation 12C enables the Respondent to make a new determination if it receives information indicating that a previous determination of a student's entitlement to AUSTUDY was incorrect. If, as a result, a student has received more than their proper AUSTUDY entitlement, Regulation 12E provides that the difference is a student assistance overpayment.

7. Under s 48 of the Student Assistance Act 1973 ("the Act"), a student must tell the Respondent about prescribed events within seven days of their happening. The prescribed events are set out in AUSTUDY Regulation 109(1) and include:

tell the Department about a change in circumstances by stating the change in writing, signing the statement and lodging it with any office of the Department.

8. In accordance with the transitional provisions contained in subitem 133(3) of Schedule 11 of the Social Security Legislation Amendment (Youth Allowance Consequential and Related Measures) Act 1998, the following provisions of the Act are relevant in respect of waiver in the Applicant's case:

289 (1) Subject to subsection (1A), 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.

290C 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 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.

9. The Applicant said she had enrolled in the TPC at Newcastle TAFE because she had not completed the School Certificate before leaving school, and needed to complete the TPC in order to be eligible for selection for a career with the Police or to study English at university. She started the TPC course on Monday, 13 February 1995 and attended for two to three weeks until early March 1995. The Applicant could not remember exactly when she stopped attending the course but said the abdominal pain which she was suffering at that time became so intense that she was unable to concentrate. On one occasion, the Applicant collapsed at the TAFE during the day. She was consulting both her family doctor and a gynaecologist but, at that time, neither was able to diagnose the problem.

10. At the end of the last week during which the Applicant attended TAFE, she tried, unsuccessfully, to speak to her course teacher, Lynda Dannatt. She left two messages for her on one day and another message the next day. The following week she left more messages but Ms Dannatt did not contact her.

11. It was at about this time, the Applicant said she first contacted the Student Assistance Centre ("SAC") in Brown Street, Newcastle, by phone to explain her situation and that she wanted to transfer from AUSTUDY to newstart allowance ("NSA"). The Applicant was unaware she was required to notify the Respondent in writing of the change in her situation - and nobody at the SAC ever informed her of this requirement. The Applicant spoke to an older woman who told her not to draw on the continuing AUSTUDY payments the Applicant was receiving. The SAC officer said the Applicant should get a letter from TAFE confirming that she was no longer a full-time student, which she should take to the local office of the Department of Social Security ("DSS") where she should complete an application for NSA.

12. The Applicant continued to try to contact Ms Dannatt without success. After speaking to a neighbour who worked in DSS, the Applicant went to the DSS Mayfield office to explain her situation and that she wanted to transfer to NSA. Once again, the Applicant was told she must first obtain a letter from TAFE confirming that she was no longer a full-time student.

13. The Applicant telephoned the SAC a second time. On this occasion, she spoke to a younger woman, probably aged in her late twenties. The officer told the Applicant there was no record of her first conversation with an SAC officer on the computer but said this was probably because there were problems with the computers as a result of office renovations. The Applicant explained her situation again and received the same advice. She was drawing on her AUSTUDY payments because she needed money to live - in particular, she had expenses connected with her attending medical appointments. The Applicant also continued trying to contact Ms Dannatt, still without success.

14. The Applicant telephoned the SAC a third time, on this occasion speaking to a male officer. She received similar advice and was again told not to draw on her AUSTUDY payments which were continuing. The Applicant again telephoned TAFE and spoke to a man in administration responsible for student rolls. He told the Applicant the rolls had recently been sent to the SAC and that if there was any further problem raised by the SAC, the Applicant should ask them to phone him.

15. The Applicant telephoned the SAC a fourth time, speaking with another female officer. The officer said TAFE procedures were nothing to do with the SAC but that the Applicant should come in and speak to "Jeremy". The officer told the Applicant there was still no record on the computer of her having contacted the SAC about her situation. By this time, the Applicant had become frustrated at having to explain her situation all over again on each contact.

16. The Applicant was able to get an appointment to see Jeremy a couple of days later and, on 8 May 1995, went to see him. The Applicant described the SAC office as being "in chaos" with the renovations going on. She spoke with Jeremy and explained her situation. He confirmed the computers were not operating properly, and gave her some forms to complete. Some she completed immediately; others she took home to complete.

17. Meanwhile, the Applicant's mother went to consult their local Federal Member of Parliament, Alan Morris, about her daughter's situation. Mrs Castle spoke with Alan Morris' assistant, Pam, who subsequently phoned Jeremy at the SAC. On 10 May 1995, Jeremy phoned the Applicant to obtain further information following the inquiry from Alan Morris' office. Next day, the Applicant went into the SAC office with an envelope containing the remaining forms which she had completed at home, together with medical certificates. Jeremy was not at the SAC office at that time so the Applicant left the envelope with an officer at the counter to pass on to Jeremy.

18. The following day, the Applicant received a phone call from Jeremy thanking her for the further documentation. He said he had gone through the papers and as far as he could tell, there had been a muddle, and he doubted the Applicant would hear anything further about the overpayment. The Applicant said she heard nothing more about it until February 1997.

19. The Applicant said she had repaid the last AUSTUDY payment received - $245.60 - on 11 May 1995. She could not understand how, having heard nothing from the Respondent for nearly two years, they could seek to recover interest on the outstanding debt. Mr Grey confirmed that interest had been charged up until the time the Applicant had sought a review. The outstanding debt, including interest of $324.99, was $1207.39 as at 1 February 1999.

20. The Applicant said she is currently receiving NSA although she does not have to lodge continuation forms fortnightly because of her acknowledged health problems. She continues to suffer from polycystic ovarian disease for which she is being treated by a gynaecologist and an endocrinologist. The cost of the medication she takes for this condition is largely covered by Medicare.

21. The Applicant has also suffered from a knee condition since the age of 5 which prevents her walking more than short distances. The condition is as a result of a misalignment of the patella in both legs, which also makes it difficult for her to climb stairs. The Applicant has already undergone surgery on her right leg to break the patella and crack and reset the tibia to allow greater freedom of movement of the patella. She is due to undergo the same surgery on her left leg on 25 February 1999. After the operation, she has to use crutches for four to five months and then wear a zimmersplint and walk with a cane for a further two months. In total, it takes about eight months to recover from the surgery, which also involves intensive physiotherapy immediately after surgery - four sessions a week - reducing to one session a week by the end of the period. The Applicant has been waiting twelve months for the operation on her left leg, the cost of which is covered by Medicare. The Applicant has been issued with a disabled parking permit in recognition of the limitations imposed by her leg condition.

22. In addition, the Applicant suffers from two or three severe headaches per month and must take a blood thinning agent. She takes one Asterix tablet per day, one Desserill tablet in the morning and one at night, and Mercindol Forte or Panadeine Forte tablets when she has the headaches.

23. The Applicant said she has had surgery on her hands to remove knots in the tendons which cause locking of her fingers, described as "trigger finger" - in particular, the first and fourth fingers on her left hand are affected and the first finger on her right hand. As a result of these problems, the Applicant is unable to type.

24. The Applicant lives with her mother who is currently paying the shortfall in her medical expenses. The Applicant's main expenses are food, board paid to her mother, and petrol and running expenses for her car which she needs to attend medical appointments, there being no regular pubic transport from her mother's house. The Applicant is also attending Weight Watchers which costs $30 a week.

25. The Applicant said she has initiated legal action against the John Hunter Hospital in Newcastle for negligence in giving her the wrong anaesthetic when she had surgery in November 1997. The result of giving her the wrong anaesthetic was that her heart and lung function were significantly affected and required post-operative treatment. To enable the legal action to proceed, the Applicant is required to pay $700 for two medical reports and $250 to her solicitors on account of their costs. The Applicant is trying to save the money to make these payments.

26. The Applicant said her various medical conditions, especially her headaches, have prevented her finding and maintaining employment. She has experience in the hospitality industry but can no longer perform this work because she cannot bend, squat or lift trays.

27. Mr Moreau acknowledged his statement dated August 1998 (R1). He said he is currently employed by Centrelink having left the SAC in 1996. In early 1995, Mr Moreau was one of three or four team leaders in the SAC office in Brown Street, Newcastle, responsible to an Assistant Manager and Manager. Mr Moreau said there had been renovations of the SAC office at various times and, at the relevant time in early 1995, the SAC had acquired more floor space and was extending its reception area.

28. Mr Moreau could not recall particular problems with the SAC's computer system but said that even if there had been computer problems, a file note of the telephone conversations with the Applicant should have been made. However, Mr Moreau acknowledged that it was quite likely that the Applicant had contacted the SAC before 8 May 1995 and that a file note had not been made.

29. Mr Moreau said if the SAC had been advised that a student had discontinued their studies, the normal practice should have been for the SAC to suspend the student's AUSTUDY payments pending confirmation from TAFE. An SAC staff member should have phoned TAFE to check whether the student had ceased studying.

30. Mr Moreau had no knowledge of the original of the Applicant's AUSTUDY file having been lost, and had no recollection of the envelope of documents which the Applicant said she had left for him on 11 May 1995, nor of his subsequent telephone call acknowledging receipt.

31. Mr Grey submitted the Applicant had failed to comply with her obligation to notify the Respondent of her change of circumstances in so far as she had not given written notification as required by AUSTUDY Regulation 110. Oral notification was insufficient to comply with this obligation. The Respondent submitted that the Applicant incurred an AUSTUDY debt due to her failure to notify the Respondent in writing within seven days of her ceasing studies on 3 March 1995.

32. With respect to waiver, Mr Grey submitted that waiver under s 289 was not available because the Applicant's debt was not solely attributable to an administrative error by the Respondent. However, waiver under s 290C was available if the Applicant's circumstances were sufficiently "special". Mr Grey said the Respondent accepts that there was no intention on the part of the Applicant to knowingly mislead the Respondent.

33. Mr Grey submitted that although the Applicant's financial situation was difficult, she had not established other circumstances that were sufficiently unusual or exception to warrant exercise of the s 290C discretion. Nor was the outcome unfair, unjust or unintended such that would take her situation out of the ordinary. Mr Grey contended that the debt should, therefore, be recovered.

34. Section 48 of the Act, read in conjunction with AUSTUDY Regulations 109 and 110, requires that a student who discontinues his or her studies must notify the Respondent in writing within seven days. There is no dispute that the Applicant did not notify the Respondent in writing when she ceased her studies. She stated in evidence that she was not aware of this obligation.

35. However, the Tribunal finds, on the basis of the Applicant's evidence, she did notify the SAC office in Newcastle orally that she had ceased her studies because of ill-health. The Applicant described four telephone calls to the SAC office between early March 1995 and 8 May 1995. Her account of the advice she received and her attempts to obtain written confirmation of the discontinuance of her studies from TAFE are entirely credible. Mr Moreau said in evidence it was quite likely that the Applicant had contacted the SAC before 8 May 1995 and that a file note had not been made. He also confirmed there were renovations to the SAC office being undertaken at that time.

36. The Tribunal also notes the Applicant's complaint, via her mother, to Alan Morris, the local Federal Member, as evidence of the frustration the Applicant was experiencing in attempting to arrange the termination of her AUSTUDY payments and her transfer to NSA. The Tribunal finds the Applicant's attempt to terminate her AUSTUDY payments were thwarted by the Respondent until early May 1995. The Applicant needed a source of income and found her transfer to NSA hindered by the advice received from the Respondent.

37. Nevertheless, the Tribunal finds the Applicant did receive an overpayment of AUSTUDY - in respect of the period after she ceased full-time study when she was not qualified for AUSTUDY - which is a debt due to the Commonwealth. At issue is whether that debt should be recovered. The relevant provisions of the Act with respect to waiver are ss 289(1) and 290C. However, waiver under s 289(1) is only available if the debt or a proportion of the debt is attributable solely to the Respondent's administrative error. That was not the case because the overpayment would not have occurred had the Applicant notified the Respondent of the discontinuance of her studies in writing within seven days.

38. Thus, the relevant waiver provision in the Applicant's case is s 290C. Three conditions must be satisfied for this discretion to waive recovery of all or part of a debt to be exercisable. First, the Applicant must not knowingly have made a false statement or representation, or failed or omitted to comply with a provision of the Act. There is no suggestion that the Applicant made a false statement or representation, nor does the Respondent contend that the Applicant knowingly failed to comply with her notification requirement. Thus, s 290C(a) is satisfied. The Tribunal notes the facts of this case can be distinguished from those of Re Wyer and Secretary, Department of Employment, Education, Training and Youth Affairs (AAT 013198, 21 August 1998) where the Tribunal did not accept the claimant's evidence as to oral notification, and Re Secretary, Department of Employment, Education, Training and Youth Affairs and Nevile (AAT 13120, 24 July 1998) where the Tribunal found neither written nor oral notification.

39. The second requirement of s 290C is that "there are special circumstances (other than financial hardship alone) that make it desirable to waive" recovery of the debt. Although the Act provides no guidance as to the meaning of "special circumstances", this has been the subject of statutory interpretation by the Federal Court and the Tribunal.

40. The leading case is probably Beadle v Director-General of Social Security [1984] AATA 176; (1985) 7 ALD 670, a decision of the Full Federal Court. In Beadle, the Court did not think it possible to lay down precise limits or precise rules. It would depend upon the circumstances of a particular case as to whether they constituted special circumstances. Moreover, even though the phrase "special circumstances" lacks precision, it "is sufficiently understood in our view not to require judicial gloss" (at 228).

41. The Court affirmed the decision under review in that case, Re Beadle and Director-General of Social Security (1984) 6 ALD 1, in which the Tribunal, whilst acknowledging that the phrase 'special circumstance' is "incapable of precise of exhaustive definition", said, nevertheless, that the circumstances "must have a particular quality of unusualness that permits them to be described as special" (at 3).

42. In Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541 at 545, Keifel J, after referring to the Federal Court's decision in Beadle, observed that special circumstances:

would require something to distinguish Mr Groth's case from others, to take it out of the usual or ordinary 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.

43. In the Federal Court decision in Secretary, Department of Social Security v Hales (1998) 153 ALR 259 at 267, French J said of the "concept" of special circumstances in the parallel provision in the Social Security Act 1991, s 1237AAD:

The evident purpose of s 1237AAD is to enable a flexible response to the wide range of situations which could give rise to hardship or unfairness in the event of a rigid application of a requirement for recovery of a debt. It is inappropriate to constrain that flexibility by imposing a narrow or artificial construction upon the words.

44. The Tribunal finds that the Applicant's financial circumstances are straitened. She is receiving NSA, from which she has to bear additional costs associated with her medical conditions. She is also trying to finance the preliminary stages of legal action again the John Hunter Hospital. Of the other relevant circumstances affecting the Applicant, the Tribunal has found the Applicant did notify the Respondent orally that she had ceased her studies because of ill-health. It is likely that such notification first took place in early March 1995. Thereafter, the Applicant notified the Respondent on a number of other occasions before 8 May 1995. The delay in the cancellation of the Applicant's AUSTUDY meant she was unable to transfer to NSA earlier, which, on the evidence before the Tribunal, she would have been entitled to between March 1995 and May 1995.

45. The condition the Applicant was suffering at that time, and from which she still suffers, is poly-cystic ovarian disease. The Tribunal accepts the Applicant's evidence that she also suffers from a condition of the patella which has affected the freedom of movement of both legs, for which she is to undergo surgery on her left leg on 25 February 1999, having already undergone surgery on her right leg. The Applicant also suffers from a tendon problem in her hands and periodic severe headaches.

46. In the Tribunal's view, the combination of these factors amount to circumstances which are sufficiently unusual to be special. In particular, the Tribunal considers it would be unjust or unfair not to take into account that it was the Respondent's failure to act on the Applicant's oral notification which led to the AUSTUDY payments continuing after early March 1995 and the consequent overpayment.

47. The third and final requirement of s 290C is that it is more appropriate to waive than to write off recovery of the debt. To write off a debt is to postpone recovery until a later date. In the Tribunal's view, waiver is more appropriate in the Applicant's case given the circumstances set out above.

48. In conclusion, the Tribunal decided to exercise the Respondent's power to waive recovery of the debt pursuant to s 290C of the Act.

I certify that this and the 12 preceding pages are a true copy of the decision and reasons for decision herein of Senior Member R P Handley.

Signed: .....................................................................................

Solicitor for the Respondent Australian Government Solicitor