Bruce and Department of Family and Community Services

[2000] AATA 523

DECISION AND REASONS FOR DECISION [2000] AATA 523

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No S1999/64

GENERAL ADMINISTRATIVE DIVISION          )          
           Re      HOLLY SKYE BRUCE     
  Applicant
           And    SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES        
  Respondent

DECISION

Tribunal       Miss WJF Purcell (Senior Member)        

Date28 June 2000

PlaceAdelaide

Decision      The Tribunal sets aside the decision under review only insofar as it affirmed a decision to raise and recover a debt of Family Allowance of $449.20 and substitutes a decision that the debt of Family Allowance shall be $314.50.           

..      (Sgd) WJF Purcell
  Senior Member
CATCHWORDS
 SOCIAL SECURITY – overpayment of Family Allowance and Parenting Payment – payments continued after applicant notified Department of a change in circumstances – whether overpayments received in good faith
Social Security Act 1991 ss 1223, 1237
Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 50 ALD 186

REASONS FOR DECISION

28 June 2000                   Miss WJF Purcell (Senior Member)         

1. This is an application for review of a decision of the Social Security Appeals Tribunal (the SSAT) of 15 January 1999, which affirmed a decision to raise and recover an overpayment of Parenting Payment (single) of $2,160, and an overpayment of Family Allowance of $449.20.  The Family Allowance overpayment was recalculated by the respondent (the Department) on 2 November 1999, and determined at $314.50.

2. The evidence before the Tribunal comprised the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (the T documents) together with exhibits tendered by the Department. The applicant did not attend the Hearing but had been notified by Registered Mail of the date and time of the Hearing, and also, that if she failed to attend, the matter would proceed in her absence. Mr Goldie represented the Department.

3. The applicant whose son Jordan was born on 2 November 1995, had been in receipt of Family Allowance and Parenting Payment (single) when she completed a "Parenting Payment review – for sole parents" at Centrelink's Edwardstown office on 24 June 1998.  [T3/21-26]  She declared that she would be moving with her partner Joel Newcombe (Jordan's father) to their jointly owned home on 27/28 June 1998.  She was provided with a Module P "Partner Details" and "Change of Marital Status" form and requested to provide proof of her partner's identity at the personal interview the following day, 25 June 1998, at 3.30pm. [T4/27]  The interview took place, all the required forms were completed, but Centrelink payments continued at the rate of $360 per fortnight Parenting Payment (single) and $113.34 per fortnight Family Allowance, a total of $473.34 per fortnight until a delegate determined on 23 September 1998, that overpayments had occurred.

4. The delegate decided to raise and recover $2,160 in Parenting Payment, and $449.20 in Family Allowance in accordance with subsections 1223(1) and 1223(5) of the Social Security Act 1991 (the Act) which provide:

   "Recipient not qualified for payment or amount not payable
   S1223(1) Subject to subsections (1A) and (1B), if an amount has been paid by way of social security payment on or after 1 October 1997 and:

(a)  the recipient was not qualified for the social security payment when it was granted; or

(b)  the amount was not payable to the recipient:

the amount so paid is a debt due to the Commonwealth
Incorrectly paid amount
S1223(5) If:

(a)  an amount (the 'received amount') has been paid to a person by way of social security payment on or after 1 October 1997; and

(b)  because the received amount had not been correctly calculated using the relevant rate calculator, or for any other reason, the received amount is greater than the amount (the correct amount) of social security payment that should have been paid to the person under this Act;

the difference between the received amount and the correct amount is a debt due to the Commonwealth.

1. On 28 September 1998 the applicant telephoned Centrelink, and is noted as stating that she did not believe that she should have to repay the debt, as both she and her partner advised Centrelink that they were living in a marriage-like relationship from 24 June 1998, and Centrelink did not act on this information to cancel her Parenting Payment (single). [T11/52]  On 8 October 1998 the applicant telephoned Centrelink.  She requested review by an Authorised Review Officer, and is noted as stating that she had no statements from her bank and did not realise this money was going into her account.

2. On 2 November 1998 the Authorised Review Officer noted a telephone conversation with the applicant, in part, as follows: [T16/62-63]

   "Discussion:
   Ms Bruce advised the Edwardstown Centrelink office on 24/6/98 that she had commenced living in a marriage-like relationship.  She was given a form for her partner to complete and an interview was booked for the following day.  Ms Bruce and her partner attended the interview and provided details of his income, including payslips.  They were told that their payments would be reduced to about $60 for Parenting Payment and $50 for Family Allowance, and that Centrelink would calculate their entitlement and get back to them…
   Ms Bruce points out quite correctly that Edwardstown Centrelink should have prioritised cancelling and reducing her payments to the correct rate.  Whilst it is quite clear that both debts arose due to error by the Edwardstown Centrelink, to decide that recovery of the debt is to be waived, it needs to be established that Ms Bruce received these payments in good faith.  I have referred to commentary on the definition of good faith re the matter of Falconer and SDSS (1996) and find parallels with Ms Bruce's situation.  Whilst Ms Bruce may not have been aware that payments were going into her account, she was aware that she was not entitled to continue to receive Parenting Payment (Single).
   Ms Bruce states that she was expecting $110 per fortnight to go into her account and continued to use her savings account card for EFTPOS transactions.  Ms Bruce states that she only paid for groceries $50-$70 per week and some clothes for her son.  Major bills including the mortgage and groceries purchased at the market were paid for by her partner.  Ms Bruce did not receive any statements from her bank over this period of time.  Ms Bruce concedes that a statement may have been sent to her, but not received by her as the bank did not have her current address.  Ms Bruce did not check the balance of her account.  An additional $408.64 per fortnight was being paid into Ms Bruce's account over and above her expected entitlement.
   Whilst Ms Bruce may not have been aware that her Parenting Payment (Single) and Family Allowance were continuing to be paid into her bank account, she knew that she was not entitled to receive Parenting Payment (Single) and Family Allowance and also was told that she would be contacted by Centrelink regarding her new rate of payments.  Ms Bruce wasn't contacted by Centrelink and Ms Bruce made no attempt to check that she was being paid the correct rate of payment."

1. The Authorised Review Officer affirmed the decision on 2 November 1998 and concluded that it was not appropriate to waive recovery of the overpayment pursuant to section 1237A of the Act, which as far as is relevant for the purposes of this review provides:

   "Waiver of debt arising from error – Administrative Error
   S1237A(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.
   Note:  Subsection (1) does not allow waiver of a 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).
   S1237A(1A) Subsection (1) only applies if:

(a)  the debt is not raised within a period of 6 weeks from the first payment that caused the debt; or

(b)  if the debt arose because a person has complied with a notification obligation, the debt is not raised within a period of 6 weeks from the end of the notification period;

Whichever is the later.
Proportion of a debt.
S1237A(3) For the purposes of this section, a proportion of a debt may be 100% of the debt."

The applicant applied to the SSAT for review of the decision, and on 15 January 1999 the decision was affirmed.  In the course of its Reasons for Decision the SSAT stated: [T2/4-5]

"MS BRUCE'S CASE:
Ms Bruce began by telling the Tribunal that she could not understand why she should repay the debts as they had occurred solely through departmental error.  She said that she thought it was disgraceful that it took the Department three months from the time of her notification of change in circumstances on 24 June 1998 before her records were amended and reductions in payment of parenting allowance and family allowance were commenced.
Ms Bruce continued by telling the Tribunal that her Parenting Payment and Family Allowance were always paid into a bank account, which was held solely in her name.  She has a cheque account and she was in the habit of withdrawing money when she visited the supermarket and did not regularly check the balance.  She further advised that at the time when the debts arose, she had not advised the bank of a change of address and thus she had not received any bank statements.  She did not realise that she was still being paid parenting allowance and family allowance at the rate applicable to her when she was living as a sole parent with one child, that is, a total of $470 per fortnight.
Ms Bruce agreed that she had been told by the Department that her payments would reduce but that she had been confused when one officer advised that she would receive approximately $209 per fortnight and another subsequently said it would be $110 per fortnight.  She then advised that the latter sum was given to her when the payslips of her partner, Joel, were taken to the Department.  Ms Bruce added that she now received approximately $60 per fortnight in parenting allowance and $50 per fortnight in family allowance." 

1. The applicant applied to this Tribunal for further review, and her covering letter reads in part as follows: [T1/1]

   "The tribunal came to the decision that the overpayments were not received in good faith by myself, which I disagree with.
   Both the members of the tribunal and myself agreed that the overpayment was due completely to Administrative error and I was unaware of still being paid at a single rate.
   The department took three months to change my payment from single to de-facto, too long for such an important change."

1. Mr Goldie provided the applicant and the Tribunal with a written outline of the Department's submissions prior to the Hearing.  The Department acknowledges that the applicant advised Centrelink, and that Centrelink failed to act on the information provided.  It concedes that the debts arose solely from administrative error, but submits that the payments were not received in good faith, as the applicant knew that her entitlement to Parenting Payment would be reduced when she was no longer single.  Centrelink officers gave her two different indicative figures, and it was reasonable for the applicant to anticipate a substantial reduction in the rate of payments.  As to the applicant's assertion that she was unaware of the amount she was being paid, this ignorance does not constitute good faith, the determining factor being that she knew, or had reason to know that she was not entitled to that payment.

2. In Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 50 ALD 186 Finn J said at 188-9 in part as follows:

   "The section asks that a quite specific question be addressed: was the payment received in good faith?  It is quite unconcerned, for example, with whether, after 22 December, Mr Prince acted in good faith towards DEETYA.  Its sole concern is with whether a particular state of affairs exists at the time a payment (or payments) is received.
   For my own part, I consider the burden of the formula in the s 289 setting to be obvious enough.  Its concern is with the state of mind of a person concerning his or her receipt of the payment: if that person knows or has reason to know that he or she is not entitled to a payment received – ie is not entitled to use the moneys received as his or her own – that person does not receive the payment in good faith.  Absent such knowledge or reason to know, the receipt would be in good faith.
   Given the conventional liability of a mistaken payee of money from consolidated revenue to repay that money irrespective of his or her belief as to an entitlement to it (ie the "rule" in Auckland Harbour Board v R [1924] AC 318), the concession made to the mistaken payee by s 289 of the SYA Act does seem in all probability to be directed to a payee who receives the money (to put the matter positively) in the good faith belief that he or she is entitled to receive it.  In other words the frame of the section is to exclude from the right to a waiver, a person who knows or has reason to know that he or she is not entitled to receive the payment.  It would be surprising to find that the parliament intended otherwise."

1. In my view, it is clear on the whole of the evidence, that the applicant knew that the rates of payment of both the Parenting Payment and the Family Allowance would be reduced; firstly, because she was no longer single, and secondly, in the light of her partner's income. Her statements contained in the T documents, disclosed that she was advised at the first interview (24 June 1998) that she would receive about $209 per fortnight; and at the second interview, the following day (25 June 1998), when her partner's financial circumstances had been provided, she was told that the payment would be about $110 per fortnight.  Centrelink payments continued for the period of the debt at $473 per fortnight.  A perusal of her bank statements [Exhibit R2] indicates that the applicant withdrew from her account much more than either of the fortnightly estimates provided by Centrelink, and on 16 September 1998, the day before the last of the erroneous payments, the balance in her account stood at $13.34.

2. It would appear that, although the applicant was aware her payments would reduce, she continued to make withdrawals from this account at the same rate as previously.  The pattern of withdrawals did not change.  One would have expected in the circumstances, that she would have reduced her spending to $110 per fortnight, or even $209 per fortnight.  In any event, on the whole of the evidence, and in the light of the decision in Prince I consider that there are no grounds to waive recovery of the debts pursuant to section 1237A of the Act.  The payments were not received in good faith in my view, and in addition, I consider that there are no circumstances in this matter, which could be regarded as "special circumstances" in accordance with  section 1237AAD of the Act, where waiver of recovery of the debt would be appropriate.  The Family Allowance debt has been recalculated at $314.50; and this sum should be substituted for the sum of $449.20.

3. For these reasons the Tribunal sets aside the decision under review, only insofar as it affirmed a decision to raise and recover a debt of Family Allowance of $449.20, and substitutes a decision that the debt of Family Allowance shall be $314.50.

I certify that the 13 preceding paragraphs are a true copy of the reasons for the decision herein of Miss WJF Purcell (Senior Member)

Signed:         .....................................................................................
  Associate

Date of Hearing  1 June 2000
Date of Decision  28 June 2000
Applicant  No appearance
Respondent  Mr Goldie, Departmental Advocate