Editors --- "Austudy debt: notional entitlement and special circumstances waiver; incorrect clai" [2005] SocSecRpr 14; (2005) 7 Social Security Reporter, Article 14

• VARHEGYI and SECRETARY TO THE DFaCS
• The issues
• The decision of the AAT
• Incorrect claim
• Formal decision

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Austudy debt: notional entitlement and special circumstances waiver; incorrect claim

VARHEGYI and SECRETARY TO THE DFaCS

(2005/635)

Decided: 1st July 2005 by S.A. Forgie

On 2 August 2002 Varhegyi was granted Austudy to study computing at the Onkaparinga TAFE. He told Centrelink that he intended studying a course leading to an IT Network Administration Certificate III and IV. On 11 December2002 Varhegyi advised Centrelink that he would be studying Certificate IV in Information Technology (Network Management) at the TAFE in 2003. The course would start on 3 February 2003 and conclude on 30 June 2003. Centrelink wrote to Varhegyi advising of the requirement to tell Centrelink within 14 days if he applied for or varied his enrolment, or stopped being a full time student.

Varhegyi did not start the Certificate IV in Information Technology at the TAFE in 2003. Instead, he decided at some time in December or January 2003, but after 20 December 2002,to undertake a course conducted by Vision Fix Software and Support Pty Ltd. The course was conducted by correspondence. He did not tell Centrelink that he had not started the TAFE course or that he had started the Vision Fix course.

In June 2003 Centrelink raised a debt of $3,417.21 for the period from 3 February 2003 to 9 June 2003 on the basis that Varhegyi was not a full time student and therefore not entitled to Austudy.

In a decision of 12 September2003, the SSAT affirmed the decision that Varhegyi had been overpaid Austudy in the sum of $3,417.21 but waived the debt and set aside recovery, stating that:

... the nature and content of the course, the misleading information about its Austudy status and the fact that Mr Varhegyi was seeking full-time work and might otherwise have qualified for newstart allowance, can all be combined as special circumstances that make it preferable to waive recovery of the debt rather than write it off. (Reasons.para.9)

DFaCS applied for a review of the SSAT’s decision.

The issues

As the Vision Fix course was not an approved course of education, it was not in dispute that Varhegyi failed to meet the qualification requirements for Austudy and that he had receivedAustudy to which he was not entitled. The main issue was whether the debt should be waived under s.1237AAD of the Social Security Act 1991 (the Act), on the basis that “there are special circumstances (other than financial hardship alone) that make it desirable to waive”.

It was also argued that Varhegyi’s claim for Austudy should be treated as an incorrect claim under s.15(1)(a) of the Social Security Administration Act 1999(the Administration Act).

The decision of the AAT

Varhegyi gave evidence that he had obtained information from Vision Fix indicating that the course was approved for Centrelink purposes as well as being a TAFE accredited course. Therefore he did not think he had to tell Centrelink of the change of courses. This was accepted by the AAT, and it was concluded that he did not knowingly fail to advise Centrelink of his change in enrolment.

The AAT concluded however that Varhegyi’s circumstances were not sufficiently special as to justify waiving the debt. The Tribunal in particular noted Varhegyi’s lack of compliance with letters sent to him. It noted his misunderstanding of his circumstances but concluded that:

it would be unfair to other recipients of Austudy to permit Mr Varhegyi to rely on his interpretation of his entitlements and his interpretation of his obligations to Centrelink as a basis for waiving the Austudy debt he owes.(Reasons, para. 34)

Can ‘notional entitlement’ to another payment be a special circumstance?

It was argued that the concept of “notional entitlement” was one that is relevant and that has found favour in a number of Tribunal decisions in the context of waiving a debt (Re Huynh and Secretary, Department of Social Security (1994) 34 ALD 694; Re Dobbie and Secretary, Department of Social Security (AAT 8661, 23 April1993))

However the AAT noted that after these decisions were made, the waiver provisions of the Act were amended with effect from 1 January 1996, introducing specific waiver provisions where there is a notional entitlement to parenting allowance or family allowance. The effect of these amendments on “notional entitlement” was canvassed in Schulze and Secretary to the DFaCS[2003] AATA 1315; (2004) 81 ALD 636, where it was said:

Notional entitlement has been found to constitute part of the factual matrix of special circumstances in several cases such as Re Secretary, Department of Family and Community Services and Leyster [2000] AATA 380; (2000) 59 ALD 587. However, I note that the legislature has seen fit to amend the Act to provide for set-off of notional entitlement in the circumstances provided for in s 1237AAC. That provision provides for set-off of notional entitlement in only very limited circumstances and by reference to specific payments. It was the respondent’s contention that any attempt to expand notional entitlement by virtue of the special circumstances provision would defeat the intention of Parliament. I think this submission is well founded.

The Tribunal agreed with the comments in Re Schultze and concluded that “There is no room to introduce a concept of notional entitlement in that of special circumstances in s.1237AAD(1)of the Act.” (Reasons, para. 37)

Incorrect claim

It was submitted that Varhegyi’s claim for Austudy should be regarded as an incorrect claim for newstart allowance so that the payments that he received as Austudy should be regarded as payments of newstart allowance. In support of this proposition Varhegyi pointed to his actively seeking full time employment while undertaking the Vision Fix course.

While the AAT accepted that Varhegyi made serious attempts to find work while studying the Vision Fix course, it was not the case that his initial claim for Austudy was an incorrect claim within the meaning of s.15(1)(a) of the Administration Act. His claim for Austudy was made in July 2002 and approved on 2 August 2002, when he was studying a TAFE course. He intended to claim Austudy and was entitled to it based on the information he provided.

Formal decision

The AAT set aside the decision of the SSAT and substituted a decision that the decision of the Secretary to raise an overpayment of Austudy in the sum of $3,417.21 for the period 3 February 2003to 9 June 2003 was affirmed.

[A.T.]