Ryde Municipal Council v Macquarie University

4. Both applications were heard together when Mr Cooper represented both Mr Gerhardt and Miss Gerhardt. Mr Carpenter represented the Department. The documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 were in evidence ("the SGT documents" in the case of Mr Gerhardt and "the KGT documents" in the case of Miss Gerhardt). Also in evidence were various guide and information booklets issued for the years 1990 and 1992 to 1996. Oral evidence was given by the applicants' mother, Mrs Caroline Gerhardt.

5. I am satisfied on the evidence that, during 1993, Mr Gerhardt was studying for a Bachelor of Mechanical Engineering Degree at the Queensland University of Technology. On 15 December, 1992, he signed, and subsequently lodged, an application for continuing Austudy for that year. He was granted Austudy and the amount he was paid was based on the amount he had shown as his parents' income during the financial year ending 30 June, 1992. That income was shown as $605 for his father and a loss of $42,577 for his mother. These amounts were shown against the words "taxable income" after question 40 asked for "taxable income (even if below the $5,400 tax threshold)" and "any maintenance received or paid out (see guide)" in the application form (SGT documents, page 19).

6. The Notices of Assessment ("Assessments") issued by the Australian Taxation Office ("the ATO") to each of Mr Gerhardt's parents for the year ending 30 June, 1992 were attached to the form. The Assessment issued to his father stated that his taxable income was $605 and that:

"$82,523 Exempt Foreign Salary and Wages has been taken into account to calculate the tax payable on your taxable income." (SGT documents, page 22)

7. I am satisfied on the evidence that, during 1993 and 1994, Miss Gerhardt undertook Years 11 and 12 at the Mackay State High School. On 15 December, 1992, she signed and then lodged an application for Austudy for 1993. The information she included as to her parents' income was the same as that included by her brother in his application for the same year. She also attached a copy of the Assessments issued to her parents for the year ending 30 June, 1992.

8. On 23 November, 1993, Miss Gerhardt signed a Continuing Application Form for Austudy for 1994. On that form, she was asked for details of her parents' income. In relation to her father, I will set out the questions and, in the boxes, the answers given by Miss Gerhardt:

9. Miss Gerhardt answered the same questions in relation to her mother and showed that her mother had incurred a loss of $48,749 during the year ending 30 June, 1993. Copies of the Assessments issued by the ATO to each of her parents were attached. That issued to her father confirmed that his taxable income was $610 and also stated that:

"$69149 Exempt Foreign Salary Wages has been taken into account to calculate the tax payable on your taxable income." (KGT documents, page 50)

10. The issue in relation to the cases of both Mr Gerhardt and Miss Gerhardt was whether the Department should waive its right to recover the whole or part of the amount of Austudy overpaid to them.

11. Mrs Gerhardt, the applicants' mother, said that she completed the forms each year. In 1990, which is not a year in issue in this case, she looked at the booklet called "Your Guide to the Application Form including a Summary of Austudy" ("the 1990 Guide") and the Information Booklet ("the 1990 Information Booklet") before completing the form. She read the notes for parents and guardians relating to income and maintenance questions. Those notes read:

"It is most important that you give the total taxable income and the total of any maintenance payments received 1 July 1988 and 30 June 1989 (the 1988/89 financial year).

* Attach the original Notice of Assessment from the Australian Taxation Office for 1988/89. If a Notice was not received, attach your copy of the taxation return or group certificates, a DSS Statement of Benefit or statement from an employer which clearly shows your total income for the 1988/89 financial year. If no income was received, attach a Statutory Declaration to this effect.

* If either parent received some income but it was less than the tax threshold they must include that amount of income less any deductions allowable for taxation purposes.

* Include income earned overseas or in an external territory, whether it was taxed or not (i.e. even if it was earned in a territory with no taxation provisions, such as the Cocos (Keeling) Islands or Norfolk Island). If it was not taxed in Australia, attach a statement showing the total amount in the currency of the country where it was earned less any deductions allowed for taxation purposes there. We will convert the amount to Australian currency.

* If there has been a sharp drop in your income, or you are receiving a pension or benefit, a current income or special assessment concession may be possible (see page 11). Even if you are applying for these concessions, you must still give details of your 1988/89 income in Questions 75 and 81." (Exhibit B, page 9)

12. Mrs Gerhardt believed that she had completed the form in accordance with those instructions. She said that she completed the forms for the years 1992, 1993 and 1994, which are at the centre of these proceedings, on the same basis. The forms did not appear to have changed from the 1990 form. She did not think that she had to interpret the form. The form asked for the taxable income and she showed that amount. The amount of overseas income was shown on the taxation assessment.

13. In 1993, Mrs Gerhardt asked for a guidebook ("Guide 93") and was given one in relation to her son's application for continuing Austudy. At pages 34-35 of Guide 93, there were several passages under the heading of "Parental Income Test". Mrs Gerhardt said that she would have read these passages. These differed in some respects from the passages in Guide 1990. In so far as they are relevant in this case, they state:

"All parental income should be declared even when it falls below the taxfree threshold ($5,400). You should provide your parents' original Tax Assessment Notices. If these are not available the following are acceptable:

. Statements of pension/allowance from Department of Social Security or Department of Veterans' Affairs

. Original statement of income from your family accountant

If no income was received, your parents should provide a Statutory Declaration saying so.

For income earned overseas, your parents need to provide a Statutory Declaration showing the total amount in the currency of the country where it was earned, less any deductions for taxation purposes in that country.

If more than one student in your family is applying for AUSTUDY, a copy of your parents' Tax Assessment Notices (or other acceptable documents) should be included with the other student's application. Attach a note advising on whose application the originals were provided." (part of Exhibit D)

14. Questions 58 and 65 of the application form for Austudy lodged by Miss Gerhardt for 1993 related to the income of both of her parents. A further guide accompanied the application form (part of Exhibit D). At page 11, it stated that it was important that the total taxable income and child maintenance was included. It also stated that a more detailed explanation of the income and maintenance details required was given on page 13. In relation to income earned overseas or in an external territory, there was a statement at page 13 that:

"income earned overseas or in an external territory. If it was not taxed in Australia, attach a statement showing the total amount in the currency of the country where it was earned less any deductions allowed for taxation purposes. We will convert the amount to Australian currency."

15. I will set out the question and the answers given in question 58 in relation to Miss Gerhardt's father and in question 65 in relation to her mother:

58. Give your income details between 1 July 1991 and 30 June 1992.

* taxable income (even if below the $5,400 tax threshold);

65. Give your income details between 1 July 1991 and 30 June 1992.

16. Attached to Miss Gerhardt's application for Austudy for 1993 was a Notice of Assessment for her father for the year ended 30 June, 1992. It showed his taxable income as $605 and, under the heading "Additional Information" stated:

"$82523 Exempt Foreign Salary and Wages has been taken into account to calculate the tax payable on your taxable income." (KGT documents, page 29)

17. Mr Gerhardt lodged a form for continuing Austudy in 1993. The guide accompanying that application form was written in the same terms as the guide accompanying the application for Austudy that year (part of Exhibit D). I will not repeat those passages. The information included in Mr Gerhardt's application for continuing Austudy reflected that in his sister's form.

18. Mrs Gerhardt believed that she had attached a statement of her husband's overseas' income by attaching his Notice of Assessment. She did not make a separate statement as it was not requested or asked for. She expected that the assessor would pick up the overseas income from the Notice of Assessment prepared by the ATO. She included in one application, she said, a statutory declaration by her daughter, that her father was overseas and could not sign the forms (see KGT documents, page 32 in relation to the 1993 year).

19. In 1994, Miss Gerhardt applied for Continuing Austudy. The booklet called "Austudy `94" has a passage headed "How do I calculate my parent's income?". The first paragraph is relevant and it reads:

"Normally, AUSTUDY looks at what it calls your `adjusted family income' for the 1992-93 financial year. This means that you need to give details of your parents' taxable income for this period as well as any income earned and taxed overseas and any maintenance payments either parent received from, or paid to, a separated or former spouse. All parental income should be given even when it falls below the tax-free threshold of $5,400." (Exhibit E, page 43)

20. A little later in the narrative, there is a section setting out how to calculate the "adjusted family income" for the 1992-1993 financial year. The effect of it is that the total of four specified items is deducted from the total of another four specified items and the sum remaining is the adjusted family income. The four items from which the other amounts are to be deducted are:

4. any maintenance payments your parents received

21. The notes to the Austudy Continuing Form for 1994 included a section headed "Parent or spouse income" which read, in part:

"Taxable income is any income received during the 1992-93 financial year, including:

. taxable income as shown on your 1992-93 Taxation Notice of Assessment;

. any taxable pensions, allowances or benefits from the Departments of Social Security or Veterans' Affairs;

. income earned below the tax threshold (i.e. $5,400), less deductions allowed for taxation purposes;

. income earned and taxed overseas or in an external territory. If it was not taxed in Australia, attach a statement showing the total amount in the currency of the country where the income was earned less any deductions allowed for taxation purposes. We will convert the amount to Australian currency." (Exhibit F, pages 5-6)

22. Two paragraphs followed regarding maintenance payments and there was then included a paragraph which read:

"Proof of income must be attached for payment to start.

. an Australian or overseas Taxation Notice of Assessment for the 1992-93 financial year;

. a copy of an Australian or overseas tax return for the 1992-93 financial year;

. a Department of Social Security or Veterans' Affairs statement of benefit, pension or allowance for the 1992-93 financial year." (Exhibit F, page 6)

23. The continuing application form for 1994 lodged by Miss Gerhardt is at pages 47-49 of the KGT documents. It is in a format different from the previous year. It summarised information taken from her 1993 form and asked her to correct the information in the boxes provided if there were any changes. With regard to her rate of pay, the form noted that she was being paid a standard-dependent rate based on the income of Mrs Caroline Gerhardt and Mr Rodney Gerhardt. Miss Gerhardt was asked to tick either a "yes" or a "no" box as to whether the information was correct for 1994. If the "no" box was ticked, the form asked for an explanation of the change.

24. Question 2 on the second page of the form asked for details regarding income and is set out at paragraph 8 above.

25. The Notice of Assessment attached to the continuing

application show Mr Gerhardt's taxable income as $610 for the year ending 30 June, 1993. Under the heading "Additional Information", it was stated that

"$69149 Exempt Foreign Salary and Wages has been taken into account to calculate the tax payable on your taxable income." (KGT documents, page 50)

26. Mr Cooper submitted that all of the forms from 1990 to 1995, provided only one little box for taxable income. In that box was to be included income whether taxed or not and whether overseas or Australian. Mrs Gerhardt provided details of the income according to the Guide. She was not trying to hide it for it appeared in her husband's Notice of Assessment. The Department has come to an interpretation of what was meant by "taxable income" but this interpretation was not shared by Mrs Gerhardt.

27. With regard to the waiver provisions of sub-section 289(2) of the Act, Mr Cooper argued that they could be exercised if the Commonwealth was in part to blame. The word "solely" did not mean that it alone was to blame. The dictionary meaning of the word "solely", he argued was to mean "one and only, singly, exclusive". The word "exclusive" meant "excluding, not inclusive, tending to exclude outsiders" The meaning of "tending to exclude outsiders" meant that there may be some outsiders who are included. Therefore, the definition of "solely" is wider than the Tribunal has previously held.

28. This wider meaning is apparent from the every day usage of the word in an expression such as a "sole yachtsman". A sole yachtsman does not sail his or her yacht alone for he or she has assistance from such aids as satellite navigation from NASA. It follows, Mr Cooper argued, that the words "solely by the Commonwealth" as they appear in sub-section 289(2) means that the error may not have been made solely by the Commonwealth but may have been made with outside assistance. Mrs Gerhardt's contribution to the Commonwealth's error would have been very small.

29. Mr Carpenter submitted that both the assessor and Mrs Gerhardt made errors. It was quite obvious that both the Australian and overseas income should have been included. If it was in a different currency then a statement should have been attached.

30. In relation to the meaning of the word "solely", Mr Carpenter submitted that it means that the error must have been the responsibility of the Commonwealth alone. This follows from the definition of the word in the Shorter Oxford English Dictionary.

31. The provisions under which I must consider whether the debts may be waived are found in the Student and Youth Assistance Act 1973 ("the Act"). Provisions relating to waiver were first included in the Act by the Student Assistance (Youth Training Allowance) Amendment Act 1994 ("the 1994 Amending Act"). They were sections 288, 289 and 290 which came into force on 1 January, 1995. While those sections apply specifically to debts recoverable by the Commonwealth under Subdivision B of Part 8 of the Act, they apply also to an amount paid under the AUSTUDY scheme that should not have been paid. This follows from section 43 when read with the definition of a "student assistance overpayment" in sub-section 3(1).

32. Sections 288, 289 and 290 were repealed and substituted by the Student and Youth Assistance Amendment (Youth Training Allowance)(No.2) Act 1995 ("the 1995 Amending Act"). This took effect on 1 January, 1996 (sub-section 2(3)) of the 1995 Amending Act. Clause 5 of Schedule 5 to the 1995 Amending Act provides that the amendments made in the schedule apply to debts arising on or after 1 January, 1996 and to the amounts of debts arising before 1 January, 1996 that were outstanding at the start of that day.

33. The hearing proceeded on the basis that these were the provisions which were applicable in this case. In light of the provisions in clause 5 of Schedule 5 to the 1995 Amending Act, I have also adopted that basis. That clause indicates Parliament's intention that the amended provisions apply and that waiver is no longer to be considered in light of the repealed provisions.

34. Sub-section 288(1) provides that the Secretary may waive the Commonwealth's right to recover a debt only in the circumstances described in sections 289, 290, 290A, 290B and 290C. Only sub-sections 289(1) and section 290C are relevant.

"(1) 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)."

35. What is the meaning of the word "solely"? The New Shorter Oxford English Dictionary defines the word "solely" as:

"1. As a single person or thing; without any other as an associate, partner, etc.; alone. I.ME. 2 Only, merely, exclusively. Also (contextually), entirely, altogether"

The word "exclusively" means, in so far as it is relevant:

"1 The action or an act of excluding; (an instance of) shutting out from a place, debarring from an office or society, rejecting from consideration..."

36. It follows that, in its ordinary meaning, the word "solely" means "only" or "to the exclusion of all else". This is the meaning it has been given when interpreted in other contexts. This was so in, for example, Ryde Municipal Council v Macquarie University [1978] HCA 58; (1978) 23 ALR 41. In that case, the High Court considered whether certain land was vested in the Macquarie University and used or occupied by the University solely for the purposes of the University. If it was used solely then the University was exempt from rates. The land was in the centre of the campus and was the site of a building constructed by the University Union. The Union leased most of the building to various shops and banks which were open to the public but used mostly by the students. The leases also provided a source of income for the Union.

37. In his judgement, Gibbs ACJ, who was one of the majority, decided that the use of the land was wholly ancillary to, and directly facilitated, the carrying out of the principal objects of the University. It was not collateral or additional to those purposes. He continued that

"_Was it used `solely' for those purposes? The question must be considered from the point of view of the University - was the use, by the University, solely for its purposes? The fact that the University derives some subsidiary and incidental benefit from using the land for its purposes does not mean that the land is not used exclusively for University purposes: Salvation Army (Victoria) Property Trust v Fern Tree Gully Corporation, supra, at p. 170. In Randwick Corporation v Rutledge, Windeyer J said (102 CLR at 94): `When such words [as `exclusively' or `solely'] are present, it is a question of fact whether the land is being used for any purpose outside the stipulated purpose ... As Kitto J said in Lloyd v Federal Commissioner of Taxation [(1955) [1955] HCA 71; 93 CLR 645 at 671], such words confine the use of the property to the purpose stipulated and prevent any use of it for any purpose, however minor in importance, which is collateral or independent, as distinguished from incidental to the stipul_ated use'.

_The word ´_solely' may do no more than add emphasis, or perhaps precision. The present is not one of those cases in which part of the land in question was used for one purpose, and part for another. The question is whether in letting the land, or in approving of the grant of the leases by the union (whichever was technically the position), the University was pursuing the independent object of obtaining revenue from the rents. It was put in argument before us that the learned primary judge did not expressly find that the purpose of gaining revenue was only incidental, but that is, I consider, implicit in his findings. He found that the Council of the University was `fully entitled to come to the conclusion that the establishment of the facilities in question was calculated to promote the objects and interests of the University by avoiding the necessity of students and staff seeking such facilities having to spend time travelling to other shopping centres'. He further found that the land `should be regarded as used by the University for its purposes because, although leased to various tenants for commercial purposes, they provide facilities which the University considers to be necessary or incidental to achieving its purposes'. It cannot be inferred from his findings, and the evidence does not suggest, that the University, in letting the land, was pursuing the independent purpose of raising money. The receipt of the rent by the union was a subsidiary and incidental (although, no doubt, by no means a negligible) benefit from the use of the land for the purposes of the University.

For the reasons I have given I have reached the conclusion that Waddell J and the majority of the Court of Appeal were correct in holding that the land was used by the University solely for the purposes thereof ..." (pages 50-51)

38. Aickin J, who formed part of the minority in the case, referred to the same authorities as Gibbs ACJ as well as to others. He drew a contrary conclusion on the facts before him when applying those cases. He said:

"All these observations are in my opinion opposed to the decisions of the trial judge and the majority of the Court of Appeal in this case and to the University's argument. Even if one can say, contrary to the observations which I have quoted above, that the University is using the land the subject of these leases, it cannot be said that the land is being used solely for its purposes or that the University's use by letting is solely for the purposes of the University. The land is undoubtedly being used by, and for the purposes of, the tenants, which purposes are by no means identical with those of the University. I think that `use' means physical use and that mere letting does not in this exemption constitute `use'. The fact that the University finds the use to which the tenants put the land convenient to it cannot make their use that of the University. The use by the tenants for their own purposes is independent of whatever use (if any) by the University is involved in its letting of the premises; in my opinion it cannot be described as `incidental' to the University's use for its purposes.

In my opinion both the ordinary meaning of the words of the exemption in s132(1)(fii) and the cases to which I have referred are fatal to the exemption claimed by the University." (page 66)

39. Gibbs ACJ and Aickin J were consistent in their statements of the principles but differed in their application of those principles to the facts under consideration. Their statements of the principles were consistent with the ordinary meanings of the word "solely" given in the New Shorter Oxford English Dictionary to which I have already referred_._

40. There is nothing in sub-section 289(1) which indicates that any meaning should be given to "solely" other than its ordinary meaning. Applying those ordinary meanings to the sub-section mean that the Secretary must waive the right to recover the proportion of the debt that is attributable only to the Commonwealth's administrative error. The Secretary's duty to waive does not extend to those debts which are attributable to errors or other factors which are independent of the Commonwealth's administrative error. It makes no difference that those other errors or factors are minor. If those other errors or factors follow as a result of the Commonwealth's administrative error (i.e. they are incidental to the Commonwealth's error), then it may be that the debt is attributable solely to the Commonwealth's administrative error. Whether it is or is not attributable in that situation to the Commonwealth's administrative error will be a question of fact.

41. In this case, Mrs Gerhardt completed the application form and continuing application forms for Austudy on behalf of her son and daughter. If regard is had only to the forms, it would be quite understandable that she did not include her husband's overseas' income. The boxes on the forms are very small and refer only to "taxable income". Mrs Gerhardt, however, did not have regard simply to the forms.

42. In relation to the 1994 continuing application form completed on behalf of her daughter, I find on the basis of her evidence that Mrs Gerhardt read the passages from the "Austudy `94" booklet I have set out at paragraphs 19 and 20 above. Those passages set out the information required very clearly. In particular, they set out very clearly that overseas' income is to be included. It was also clear that a separate statement should be attached if overseas income had been earned. The statement was dealt with separately from the Notice of Assessment from the ATO and it is reasonable to expect that the statement lodged with the form would have been separate from the Notice of Assessment.

43. In relation to the 1993 application form lodged on behalf of her daughter and the continuing application form lodged on behalf of her son, Mrs Gerhardt, I find on the basis of her evidence, read the passages from the Guide 93 which I have set out at paragraph 13 above. Again, these passages make it clear that overseas income should be included in the form against "taxable income". They also make it clear that a statement separate from any Notice of Assessment should be provided.

44. These clear instructions need to be balanced against the application and continuing application forms which are less clear when read without the guide in 1993 or the notes in 1994. They were not read without the guide or the notes, however, and they were not intended to be read without them. If Mrs Gerhardt had followed the instructions, she would have included the amount of her husband's overseas income in the box marked "taxable income" and she would have attached another statement showing that income. That would have been a statement separate from his Notice of Assessment issued by the ATO. When all of the instructions are read together, I am not satisfied that Mrs Gerhardt's error in completing the forms arose from any error of the Commonwealth in the manner in which it sought the information.

45. The Commonwealth, I find, did make an error when the figure for overseas income on the Notice of Assessment was overlooked in calculating the Austudy entitlements of Mr and Miss Gerhardt. This was an error which followed from Mrs Gerhardt's error in completing the form and providing the information in the form requested. It follows that Mrs Gerhardt's error and the Commonwealth's oversight of the amount of the overseas income in the information that was provided both contributed to the overpayment of Austudy. Both, therefore, contributed to the overpayment and the debts now owed by Mr Gerhardt and Miss Gerhardt. The debts arose because of errors, first by Mrs Gerhardt and then by a consequential error of the Commonwealth. In the terms of sub-section 289(1), the debts, I find, did not arise solely because of administrative error of the Commonwealth and there is no power to waive the debts, or any part of them, under that section.

"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 287 allows the Secretary to write off a debt on behalf of the Commonwealth."

47. The words "special circumstances" have been considered in a number of cases in a number of contexts. These include Beadle v Director-General of Social Security (1985) 60 ALR, Secretary, Department of Social Security v Hulls (1991) 22 ALD 570, Trimboli v Secretary, Department of Social Security (1989) 86 ALR 64 and Secretary, Department of Social Security v Smith (1991) 13 AAR 454. The essence of cases such as these is that a consideration of whether or not there are special circumstances must be undertaken in the context in which the discretion is given. It is clear from Division 15 of Part 8 of the Act that the purpose of the provisions is to ensure the recovery of amounts paid under the Act to persons who are not entitled to be paid those amounts. What are special circumstances must be considered against that background. There will be special circumstances if the circumstances are such that it is unreasonable, unjust or inappropriate to recover the amount paid bearing in mind that the provisions are intended to ensure the recovery of amounts incorrectly paid. As von Doussa J said in Secretary, Department of Social Security v Smith "the circumstances of a particular case will give rise relevantly to an unreasonable or unjust result only if the operation of ... [the relevant provisions], apart from the ameliorating provisions ... produces that result". (at page 460)

48. Applying those principles to this case, I find that there are no circumstances that lead to a conclusion that it is unreasonable, unjust or inappropriate to receive the amount. Mis-reading or misunderstanding the material which is provided by the Department but which is clear is not something that leads to that conclusion. They do not support a conclusion that it is unreasonable to recover an amount that would not have been paid had the material been correctly read and followed. No other circumstances have been put forward. In view of that conclusion, I am satisfied that there are no special circumstances and that the amount of the debts cannot be waived under section 290C.

49. For the reasons I have given I affirm the decisions of the Social Security Appeals Tribunal dated 13 June, 1995.