SOCIAL SECURITY - Austudy - overpayment - whether special circumstances exist to warrant the waiver of all or part of the debt

Social Security Act 1991

Social Security (Administration) Act 1999

Re Callaghan and Secretary, Department of Social Security [1996] AATA 413; (1996) 45 ALD 435

Taylor's Central Garages (Extra) Ltd v Roper [1951] WN 388

RCA Corporation v Custom Cleared Sales Pty Ltd (1978) 19 ALR 123

Re Woodward and Secretary, Department of Family and Community Services [2001] AATA 818

Re Nisha and Secretary, Department of Family and Community Services [2000] AATA 315

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

Beadle v Director-General of Social Security [1984] AATA 176; (1985) 60 ALR 225

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

Re Secretary, Department of Family and Community Services and Radmilovich [2002] AATA 779

Riddell v Secretary, Department of Social Security [1993] FCA 261; (1993) 42 FCR 443

1. On 16 June 2000, a delegate of Centrelink made a decision to raise and recover an overpayment of Austudy allowance paid to the respondent in the amount of $3,528.81. The applicant contends that the respondent failed to advise the Department that he had ceased his studies at Yeronga TAFE, and that he continued to receive Austudy payments to which he was not entitled, from 18 December 1999 to 1 June 2000. The respondent sought a review of the applicant's decision and, on 14 January 2002, the Social Security Appeals Tribunal (SSAT) allowed his appeal. The SSAT decided that the debt of $3,528.81, less the total amount of the respondent's earnings during the overpayment period, should be waived under the special circumstances provisions of the Social Security Act 1991 (the Act). The applicant has sought a review of that decision by this Tribunal.

2. This matter was heard by the Tribunal on 6 June 2002. The applicant was represented by Mr McEwan, a Departmental Advocate. The respondent was represented by Ms Brennan of counsel. The Tribunal had before it the T documents and supplementary T documents, lodged with the Tribunal pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (Exhibits 1 and 2), as well as a computer-generated payment summary relating to Ms Senayt Kindane (Exhibit 3).

3. The issue before the Tribunal is whether the respondent knowingly failed to comply with his obligations under the Act. If the Tribunal finds that he did not knowingly fail to comply with his notification obligations, the Tribunal must then consider whether there are special circumstances in this case to warrant waiving the recovery of part of debt pursuant to s 1237AAD of the Act.

4. Mr Temesgen had been enrolled as a student at Yeronga TAFE and was in receipt of Austudy allowance in the second semester of 1999. On 22 October 1999, Mr Temesgen was sent a letter by the applicant advising him of the grant of Austudy and notifying him of his obligation to notify Centrelink if he ceased full-time study or commenced paid employment (T6, folio 52).

5. On 6 December 1999, Centrelink sent a letter to the respondent advising him that his Austudy allowance had been cancelled from 4 December 1999, as he no longer qualified as a full-time student (T7, folio 55). Mr Temesgen contacted Centrelink by telephone on 15 December 1999, inquiring about Newstart allowance (T8, folio 56). An interview to facilitate the making of a claim for Newstart was arranged for 5 January 2000, and a letter confirming that interview was sent to the respondent by Centrelink on 15 December 1999 (T10, folio 58).

6. On 15 December 1999, the applicant sent Mr Temesgen a further letter advising that he was now being paid Austudy and that payments of that allowance would commence from 3 December 1999. The letter notified the respondent of his obligation to inform Centrelink if he ceased being a full-time student or commenced full-time employment.

7. On 29 December 1999, the respondent contacted Centrelink and cancelled the interview arranged for 5 January 2000.

8. On 19 February 2000, Mr Temesgen commenced casual employment with Yellow Cabs (Queensland) Pty Ltd. He failed to notify Centrelink of the change in his circumstances. In June 2000, data-matching systems utilised by the Department revealed the change in the respondent's circumstances and the debt was raised.

9. The Tribunal is satisfied that the notices sent to the respondent on 22 October and 15 December 1999, regarding the payment of Austudy allowance to him, are notices for the purpose of s 68 of the Social Security (Administration) Act 1999 (the SSA Act).

10. Mr Temesgen explained that his failure to notify Centrelink of the change in his circumstances was due to the fact that he had experienced a family trauma, resulting in mental and emotional turmoil, during which time he could not think straight. The respondent explained that in December 1999, his brother informed him that his parents, two brothers and two sisters had been expelled from Eritrea by Ethiopian authorities. Mr Temesgen could not contact his family and did not learn that were safe until May 2000. Mr Temesgen had himself been a refugee, arriving in Australia in 1991, after spending five years in the Sudan in a refugee camp.

11. To qualify for Austudy payments, a person must be undertaking qualifying study (ss 568 and 569(1) of the Act). The Tribunal is satisfied that, during the period of the overpayment, the respondent was not undertaking qualifying study and therefore was not entitled to receive the payments made to him. Therefore, the Tribunal is satisfied that the overpayment of Austudy allowance is a debt due to the Commonwealth under s 1223(1) of the Act. This means that, unless there is some basis for the waiver of the debt under the Act, the monies paid to Mr Temesgen must be repaid.

12. Under the Act, a debt due to the Commonwealth may be waived where the debt arose solely as a result of administrative error by the Department (s 1237A) or where there are special circumstances (s 1237AAD). In the decision under review, the SSAT correctly determined that the debt could not be waived under s 1237A as the debt had arisen from the respondent's failure to notify Centrelink that he had ceased full-time study (T2, folio 6) and not from an error solely attributable to the Department.

13. However, the SSAT found that there were special circumstances in this case that warranted the waiving of the debt pursuant to s 1237AAD. Section 1237AAD provides:

"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 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."

14. Firstly, it is necessary to consider whether the debt arose wholly or partly from the respondent knowingly failing to comply with his obligations under the Act to notify Centrelink of the changes in his circumstances. The principles in Re Callaghan and Secretary, Department of Social Security [1996] AATA 413; (1996) 45 ALD 435 at 445 are relevant with respect to the meaning of "knowingly" in s 1237AAD:

"There is nothing in s 1237AAD which suggests that the word 'knowingly' should be given any meaning other than that a person has actual knowledge, rather than constructive knowledge, that he or she is making a false statement or representation or that he or she is failing or omitting to comply with a provision of the Act. That actual knowledge is to be ascertained by reference to the statements of the person as to his or her actual state of knowledge at the time and to events surrounding the false statement or the act or omission."

15. In Taylor's Central Garages (Extra) Ltd v Roper [1951] WN 383 at 385, Devlin J considered the meaning of the word "knowledge" and found that actual knowledge can be inferred from the evidence and the nature of the acts done. Further, in RCA Corporation v Custom Cleared Sales Pty Ltd (1978) 19 ALR 123 at 126, Hope, Reynolds and Hutley JJA, in a joint judgment stated:

"... a court is entitled to infer knowledge on the part of a particular person on the assumption that such a person has the ordinary understanding expected of persons in his line of business, unless by his or other evidence it is convinced otherwise. In other words, the true position is that the court is not concerned with the knowledge of a reasonable man but is concerned with reasonable inferences to be drawn from a concrete situation as disclosed in the evidence as it affects the particular person whose knowledge is in issue. In inferring knowledge, a court is entitled to approach the matter in two stages; where opportunities for knowledge on the part of the particular person are proved and there is nothing to indicate that there are obstacles to the particular person acquiring the relevant knowledge, there is some evidence from which the court can conclude that such a person has the knowledge. However, this conclusion may be easily overturned by a denial on his part of the knowledge with the court accepts, or by a demonstration that he is properly excused from giving evidence of his actual knowledge."

16. Following the RCA Corporation case, it is open to the Tribunal to infer that a person had actual knowledge of their obligations under the Act where there were opportunities for them to gain that knowledge and where there were no obstacles to them acquiring the knowledge.

17. In this case, the applicant has sent letters to the respondent notifying him of his obligations under the Act. However, there may well have been obstacles that would have prevented Mr Temesgen from understanding his obligations under the Act. Those obstacles were his emotional and mental state at the time of the overpayment.

18. In Re Woodward and Secretary, Department of Family and Community Services [2001] AATA 818, the Tribunal found that an applicant who was suffering from emotional and psychological trauma at the time of an overpayment of social security benefits had been significantly impaired and unable to manage her affairs. Ms Woodward had been providing care for her elderly mother for some time. Her mother was in poor health and was admitted to a nursing home, the applicant failing to notify Centrelink of her mother's admission. The Tribunal accepted, in that case, that Ms Woodward's emotional state was such that it prevented her from understanding her obligations under the Act.

19. In Re Nisha and Secretary, Department of Family and Community Services [2000] AATA 315, the applicant had received an overpayment of social security benefits as she had failed to disclose to the Department the fact that she had recommenced a relationship with her estranged husband. The Tribunal heard that the applicant was suffering depression brought about by the ill-health of one of her children. The Tribunal stated that (at par 87):

"The Tribunal accepts that although Ms Nisha had the opportunity during this period to properly advise the Department of her circumstances, her failure to do so should be seen within the context of her health and that of her son at the time. The Tribunal finds that Ms Nisha's capacity to properly consider her situation and deal with her responsibilities was severely impaired and reduced. Accordingly, the Tribunal finds that from 17 September 1996, although Ms Nisha failed to meet her obligations under the Act, this was not done so knowingly, given her impaired capacity to understand and meet her obligations under the Act."

20. The Tribunal in Nisha found that it was possible, in the continuum of a period under review, to determine that in one period there was a knowing failure to comply with a provision of the Act; whilst determining that in another period, because of changed circumstances arising out of hardship, a person's capacity and ability to comprehend their obligations and responsibilities under the Act was reduced.

21. In this case, the Tribunal is satisfied that from December 1999 to May 2000, as a result of his emotional trauma and concern for his family's safety, the respondent's ability to comprehend his obligations and responsibilities under the Act was reduced. Accordingly, the Tribunal is satisfied that the respondent did not knowingly fail to comply with his obligations under the Act.

22. The question then is whether the circumstances of this case are sufficiently "unusual, uncommon or exceptional" (see Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 3) to warrant the debt being waived. The term "special circumstances" has been considered in a number of cases. In Beadle v Director-General of Social Security [1984] AATA 176; (1985) 60 ALR 225, the Full Federal Court observed (at 228) that the phrase "special circumstances" would usually include events that rendered the operation of the statute in a particular case "unfair or inappropriate".

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

"would require something to distinguish [the] 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."

24. In the present case, the respondent contends that the circumstances in this case which are unusual, uncommon or exceptional are:

* The respondent's prevailing state of mental and emotional distress at the time the debt was incurred, caused by:

* The social alienation and sense of powerlessness experienced by the respondent in relation to his inability to adequately deal with his family's security; and

* His continuing concern over the physical safety of his family;

* The financial hardship the respondent and his family would be exposed to if the Department could recover the debt; and

* The likelihood that the respondent would have been eligible for Newstart allowance for a considerable time during the overpayment period.

25. In relation to the last of these circumstances, the ability to offset one entitlement against another was considered in the Tribunal recently in Re Secretary, Department of Family and Community Services and Radmilovich [2002] AATA 779. In that case, the respondent received a Widow allowance to which she was not entitled, although she was notionally entitled to receive unemployment benefits. The Tribunal held that she could not offset the entitlement to a Newstart allowance against the debt. Therefore, in this case, the fact that the respondent may have been entitled to Newstart allowance during the period of the overpayment is not a relevant consideration.

26. In relation to the question of financial hardship, the Tribunal is not satisfied that the respondent's circumstances are sufficiently unusual to amount to special circumstances. It is not unusual for people in receipt of social security benefits to have financial difficulties. In any event, the Tribunal notes that the Department is recovering the overpayment at a rate of $20 per fortnight, which does not appear to be excessive.

27. However, the Tribunal is satisfied that the particular circumstances in this case regarding the respondent's family and emotional state are sufficiently unusual, uncommon or exceptional, as to amount to special circumstances under the Act. The breadth of the discretion in relation to "special circumstances" was commented on by the Full Federal Court in Riddell v Secretary, Department of Social Security [1993] FCA 261; (1993) 42 FCR 443, where the Court said (at 450):

"Each particular case must be considered on its merits. It is the essential nature of the provision to create a broad discretion to meet the great variety of circumstances which must occur, raising considerations of individual hardship, need, fairness, reasonableness, and whatever else may move an administrator, keeping in mind the scope and purposes of the Act, to make a decision one way or the other."

28. The Tribunal is satisfied that this case is one in which the discretion to waive part of the debt was properly exercised. The Tribunal is also satisfied that it is more appropriate to waive the debt than to write it off.

29. Accordingly, the Tribunal affirms the decision under review.

I certify that the 29 preceding paragraphs are a true copy of the reasons for the decision herein of Mr O Rinaudo, Member

Solicitor for the Applicant Mr Z McEwan, Departmental Advocate

Solicitor for the Respondent Welfare Rights Centre Inc