Davis and Department of Education, Training and Youth Affairs

DECISION AND REASONS FOR DECISION [2001] AATA 168

ADMINISTRATIVE APPEALS TRIBUNAL )

) No N2000/849

GENERAL ADMINISTRATIVE DIVISION       )
           Re      KATHLEEN DAVIS
  Applicant
           And    SECRETARY, DEPARTMENT OF EDUCATION, TRAINING & YOUTH AFFAIRS
  Respondent

DECISION

Tribunal Mr R P Handley, Senior Member

Date6 March 2001
PlaceSydney

Decision The Tribunal sets aside the decision under review and substitutes a new decision that recovery of the debt must be waived pursuant to the StudentAssistance Act 1973, section 43B.

[Sgd[ R P Handley
Senior Member
CATCHWORDS
Student Assistance Act 1973, section 43B and F
Social Security Act 1991

REASONS FOR DECISION

R P HANDLEY, SENIOR MEMBER

This is an application by Kathleen Davis ("the Applicant") for a review of a decision of the Social Security Appeals Tribunal ("the SSAT") made on 20 April 2000 to set aside a decision of a delegate of the Secretary of the Department of Employment, Training and Youth Affairs ("the Respondent") and review officers to raise and recover a debt of $8089.65 in respect of ABSTUDY paid during the period 1 January 1999 to 18 June 1999. The SSAT remitted the matter to
Centrelink for reconsideration in accordance with directions that:
(a) there is a debt;
(b) the amount of the debt is to be recalculated on the basis that the period of overpayment is 1 January 1999 to 18 June 1999;
(c) a portion of the debt equivalent to the overpayment received by Mrs Davis in an eight-week period to be waived;
(d) the balance of the debt is to be recovered.
At the hearing, the Applicant was represented by Peter Christensen, solicitor, of Shoalcoast Community Legal Centre, and the Respondent was represented by
Greg Peek, solicitor, of the Australian Government Solicitor's office. The evidence before the Tribunal comprised the documents prepared pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 ("the T-Documents") together with the exhibits tendered by the parties. The Applicant gave oral evidence at the hearing.
background
The Applicant, who was born on 2 January 1944 and is aged 57, completed an Advanced Diploma in Community Management at Macquarie University in 1998. During 1998, she received disability support pension ("DSP") together with pensioner education supplement ("PES"). On 30 November 1998, she received notification that she had been accepted into a Master in Commercial Law course at Macquarie University commencing in March 1999.
On 18 December 1998, the Applicant lodged an ABSTUDY "continuing form" for the 1999 academic year. On that form, she stated that she would be receiving DSP during 1999 and gave her Centrelink client reference number. She was granted ABSTUDY living allowance at the masters rate and was paid $618.88 per fortnight from 1 January 1999 to 30 June 1999. The Respondent accepts that this grant of ABSTUDY was solely due to a departmental administrative error. The Applicant continued to receive DSP during this period.
On 29 June 1999, a data matching report led to the detection of the error and the Applicant's entitlement to ABSTUDY was reassessed. The Respondent determined that she was entitled to PES but not ABSTUDY living allowance. The Respondent determined that the Applicant had received an overpayment of $8089.65 in respect of the period 1 July 1999 to 30 June 1999.
The Applicant sought a review of the Respondent's decision to raise and recover a debt arising from the overpayment. This decision was affirmed by review officers on 1 October 1999 (T5) and 6 October 1999 (T6). At the Applicant's request, these decisions were reviewed by the SSAT which, on 20 April 2000, set aside the decision and remitted the matter to the Respondent in accordance with the directions set out in paragraph 1, above. On 5 June 2000, the Applicant lodged an application for a review by the Administrative Appeals Tribunal (T1).
applicable legislation
As stated above, the Respondent accepts that the grant of ABSTUDY at the living allowance rate was solely due to departmental administrative error. The Applicant does not dispute the amount of the overpayment. The issue in dispute is whether recovery of the debt should be waived. The relevant provisions of the Student Assistance Act 1973 ("the Act") are sections 43B and 43F:
43B Waiver of debt arising from error
Administrative error
(1) Subject to subsection (2), 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.
Circumstances under which subsection (1) applies
(2) 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 an obligation to provide information or documents to the Department under this Act the debt is not raised within a period of 6 weeks from the end of the period within which the person was required to comply with that obligation;
whichever is the later.
Underestimating value of property
(3) If:
(a) a debt arose because the debtor, the debtor's partner, or the debtor's parent or parents underestimated the value of particular property; and
(b) the estimate was made in good faith; and
(c) the value of the property was not able to be easily determined when the estimate was made;
the Secretary must waive the right to recover the proportion of the debt attributable to the underestimate.
Proportion of a debt
(4) For the purposes of this section, a proportion of a debt may be 100% of the debt.
(5) In this section:
parent, in relation to a person, means:
(a) if the person is not an adopted child-a natural parent of the person; or
(b) if the person is an adopted child-an adoptive parent of the person.
partner has the same meaning as in the Social Security Act 1991.
43F Waiver in special circumstances
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.

the applicant's evidence

The Applicant said she first applied for ABSTUDY in 1995 in order to undertake a Small Business Management Course at Nowra TAFE. Then, between 1996 and 1998, she undertook an Advanced Diploma in Community Management at Macquarie University. Through this period she also received PES.
In late November 1998, the Applicant received a letter from Warawara (Aboriginal and Torres Strait Islander Programs Unit) at Macquarie University with information about the Master in Commercial Law program for 1999 (Exhibit A2). At about the same time, she obtained a claim for ABSTUDY for Australian Aboriginal and Torres Strait Islander students form, with accompanying notes (Exhibit A5) from Centrelink. She then received an ABSTUDY Secondary/Tertiary continuing form 1999 (Exhibit A3) through the post. She also obtained the ABSTUDY Information Book 1999 (T3), which she said she read through from cover to cover.
At the hearing, the Applicant was referred to the Information Book (T3). She said she noted the statement on page three of the book: "You cannot receive other government payments while you receive ABSTUDY, except if you are a pensioner". She thought the statement on page 19 of the book: "If you are eligible for PES, you cannot receive ABSTUDY living allowance" did not apply to her because she was undertaking a Masters degree and PES only applied to undergraduate courses.
The Applicant completed the ABSTUDY continuing form (Exhibit A3) and lodged it before Christmas 1998. The Christmas period was busy, and from 4 to 23 January 1999 she undertook the indigenous pre-law program at the University of NSW (Exhibit A6) in preparation for the Masters program at Macquarie. During this period, she stayed on campus in Sydney and did not, therefore, receive the notification of her ABSTUDY application being approved (dated 7 January 1999) until she returned home to Nowra towards the end of her stay in Sydney.
In completing her ABSTUDY Continuing Form (Exhibit A3), the Applicant stated that she was receiving DSP and gave her client reference number. Question 14 of the form also noted that she was being paid the "pensioner rate" – she thought this referred to her receiving DSP.
The Applicant said that she had believed that approval of her ABSTUDY claim meant that she was entitled to her ABSTUDY living allowance. She assumed that the extra money was because this was for a Masters level course, which involved further study and the purchase of books. She said she had been taught that Social Security were correct: "You applied for an allowance or benefit and if your application was accepted, that was the correct entitlement". She did not question receiving the ABSTUDY living allowance, an extra $618 per fortnight. She assumed this was her correct entitlement as a Masters student and she did not think any more about it. At that time, mid January 1999, the Applicant was also flat out trying to juggle her family situation. In particular, she was concerned about her mother, who had been diagnosed with terminal cancer in March 1998 (Exhibit A1), as well as maintaining her study. She did not have time to think.
The Applicant said she did not inform the Department of Housing about the extra ABSTUDY living allowance because ABSTUDY was classified as "assistance" and not taxable. She had answered "yes" to a question about notifying the Department at the SSAT hearing, because she became extremely upset when the SSAT members kept "throwing questions at her". She answered "yes" to shut them up.
In cross-examination, the Applicant said she was granted DSP in about 1990/1991 and ABSTUDY from 1995. She had previously received other Social Security benefits while she was bringing up her children, from about 1978, and sickness benefit from about 1986. The Applicant did not recall the Department of Social Security making mistakes with her payments. She reiterated that she had always accepted that Social Security was correct in calculating her entitlements.
The Applicant said her DSP was paid into her IMB (Illawarra Mutual Building Society) account. Her ABSTUDY was paid into her Commonwealth Bank account. While studying the pre-law program at UNSW, she did not check her Commonwealth Bank account until about 15/16 January 1999 when she noticed that money had been paid in. She did not have time to be surprised at the amount, which she assumed to be the ABSTUDY living allowance plus incidentals allowance (a one off payment under the ABSTUDY scheme). Generally, she received her DSP payment one week and her ABSTUDY payment the next week.
In answer to a question from Mr Peek, the Applicant said she applied for an ABSTUDY loan supplement for the second semester of 1999 after payment of her ABSTUDY living allowance had stopped. She said she spent the additional ABSTUDY money she received in the first half of 1999 on buying some furniture (about $2000 paid in cash) and electrical goods (paid for on a Grace Brothers card) for her house. She also gave her family some financial help. She has seven children, the youngest being 30/31, 21 grandchildren, and one great grandchild. She did not tell them why she was receiving extra money. She used her DSP for ongoing living expenses.
The Applicant referred to her statement (Exhibit A1) with respect to her background. She said she was the oldest of ten children, eight of whom survived. When she was about 12 years old, her father left because there was no work and began a relationship with another woman. The Applicant said her mother was a sick person and, when her father left, the Applicant, as oldest child, became mother and father to the other children, as was required in their community. The Applicant said she had been physically and sexually abused as a child but had to suffer this in silence. The Applicant had seven children by a violent, alcoholic partner whom she finally left in about 1975.
The Applicant said her mother was diagnosed with cancer on 4 March 1998 and, as the oldest child, the Applicant was responsible for looking after her. Her mother lived with the Applicant's sister in Bateman's Bay. The Applicant spent a considerable time travelling between Nowra and Bateman's Bay. Her need to spend more time in Bateman's Bay became more acute after the Applicant's sister suffered two heart attacks in December 1998 and also needed looking after. The Applicant's daughter also helped care for the Applicant's mother from about March 1999.
The Applicant became very distressed in recalling the events of 1999 prior to her mother's death on 18 March 1999 and of the period afterwards when the Applicant made the funeral arrangements and arranged for her mother's estate to be wound up. The Applicant was studying through this period as well as undertaking her other family responsibilities.
submissions
The applicant:
Mr Chistensen, for the Applicant, did not dispute the amount of the overpayment. (Mr Peek explained that PES of $1568.57 was paid on 2 July 1999 but $1484.57 was immediately recovered from that payment (T4, P58)). Mr Christensen contended that the Applicant received the overpayment in good faith. She stated on the ABSTUDY continuing form (Exhibit A3) that she was receiving DSP and gave her client reference number. The Applicant had no reason to believe she was not entitled to the ABSTUDY living allowance. Question 14 of the form even stated she was receiving the "pensioner rate".
Mr Christensen submitted that the facts of the case are dissimilar from those of Secretary, Department of Education, Training and Youth Affairs v Prince (1998) 152 ALR 127, where Mr Prince knew that he was not entitled to receive Austudy payments. In the present case, the Applicant thought Centrelink knew what it was doing and had no reason to question the payments she received. Nevertheless, Mr Christensen referred to Finn J's judgement in Prince (supra) at page 130, where he said, referring to section 289 of the Act (the predecessor of section 43B which is in almost identical terms):
"…
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
..."

Mr Christensen submitted that the Applicant's case is "on all fours" with the facts in Haggerty v Department of Education, Training and Youth Affairs [2000] FCA 1287. The Applicant had no reason to be suspicious of the Respondent's decision. She trusted the Respondent to make the correct decision. Mr Christensen referred to French J's judgement in Haggerty (supra) where he said, referring to Finn J's judgement in Prince (supra):
"14. I do not take what his Honour said in that case as supporting the proposition that a person can be found to be receiving payments other than in good faith simply by reason of the fact that there are facts in existence which are known to the recipient sufficient to negative the recipient's entitlement. In my opinion, that is not a sufficient criterion. Knowledge of relevant facts is not enough to generate reason to know of the lack of entitlement.
15. The criterion of receipt in good faith may be characterised as a positive one as counsel for the respondent submitted. That is not to say that a recipient of a mistaken payment must prove that he or she has considered the entitlement and positively concluded that there is an entitlement..."

French J refers in paragraph 17 to the Tribunal's findings of fact and states:
"…
None of these findings go to the state of mind and whether he had a belief, doubt or suspicion as to entitlement which would require a recipient acting in good faith to make an inquiry. Concern, puzzlement, upset and a perception of unusual circumstances, coupled with absence of further inquiry, are not enough themselves to constitute want of good faith..."

Mr Christensen submitted that the ABSTUDY Information Book 1999 (T3) appears to be couched in positive rather than negative terms and is ambiguous. The Applicant seems to have relied on the statement at page 3 of the book: "You cannot receive other government payments while you receive ABSTUDY, except if you are a pensioner."
Mr Christensen acknowledged that statements on page 19 indicate eligibility for PES rather than ABSTUDY living allowance, but said there is no clear statement to alert a person to their not being entitled to ABSTUDY living allowance if already receiving a pension. Mr Christensen said this should be considered in the context of the ABSTUDY continuing form in which the Applicant stated she was receiving DSP.
Mr Christensen submitted that the Applicant's evidence indicated that she received the overpayment in good faith. It should be noted that whether a person received an overpayment in good faith is a matter of the state of mind of the actual person. Mr Christensen referred to the application in Prince (supra) in Re Yildiz and Secretary, Department of Family and Community Services [2000] AATA 899 and in Re Inglis and Department of Family and Community Services [2000] AATA 667.
Mr Christensen also contended that there are special circumstances, which justify exercise of the power of waiver in section 43F of the Act. The matters which constitute special circumstances include:

the Applicant's cultural circumstances – her obligations as head of the family and her family situation at the time of the overpayment involving support of family members, requiring significant travel at a time where she was also studying;
the ambiguity of the ABSTUDY guide; and
the fact that the error was made by the Respondent.

Mr Christensen said that the Applicant's situation made it more appropriate to waive rather than write off the debt. Mr Christensen also said that he was unable to explain why the SSAT had decided to wave eight weeks of the overpayment.
respondent:
Mr Peek, for the Respondent, said the SSAT were in error in referring to the waiver provision in the Social Security Act 1991. The relevant provisions are subsection 43B and F of the Act. With regard to section 43B, there is no issue that the payments were made solely as a result of Commonwealth error. However, the Respondent contended that the Applicant did not receive the overpayment of ABSTUDY living allowance in good faith. The need for good faith required a fact finding exercise by the Tribunal to determine whether the Applicant knew she was not entitled to the overpayment, or subjectively suspected she was not entitled, when coupled with objective facts that would lead to that suspicion.
Mr Peek submitted that a person in the Applicant's situation could not possibly have arrived at the understanding of ABSTUDY which she claims. She is an intelligent and literate person who has high academic achievements. The sheer increase in the amount of benefit she received, and the total of DSP and ABSTUDY total amounting to more than double the DSP and PES she received in 1998 and in the previous three years, should, at least, have made her suspicious and led her to inquire whether she was receiving her correct entitlement.
Mr Peek agreed that French J's interpretation of good faith in Haggerty (supra) following Finn J's explanation in Price (supra), constituted the exposition of the law that the Tribunal should follow. Mr Peek submitted that the preponderance of facts were against the Applicant's state of mind being as she contended. She had been unable to explain adequately the basis of her view that she was entitled to ABSTUDY living allowance.
considerations of law and findings

There is no dispute between the parties as to the existence and amount of the debt. The sole issue is whether recovery of the debt should be waived. There are two relevant provisions: section 43B and F of the Act, rather than the equivalent provisions of the Social Security Act 1991, mistakenly applied by the SSAT.
Section 43B requires that recovery of a debt be waived where the debt is attributable solely to an administrative error made by the Commonwealth and the recipient received the payments that gave rise to the debt in good faith. The Respondent accepts that the overpayment of ABSTUDY to the Applicant was attributable solely to departmental administrative error. When the Applicant lodged her ABSTUDY continuing form (Exhibit A3), she stated that she was receiving DSP and gave her client reference number. The Respondent made an administrative error in granting her ABSTUDY living allowance rather than the PES to which she was entitled as a recipient of DSP.
However, the Respondent contends that the Applicant did not receive the overpayment of ABSTUDY living allowance in good faith. The Respondent submits that the Applicant actually knew the payments had been made to her by mistake or at least held the requisite degree of subjective suspicion that she was not entitled to them so as to negate good faith on her part.
The meaning of good faith in this context was recently considered by French J in Haggerty (supra), who cited with approval Finn J's discussion of good faith in Prince (supra) Finn J said, at page 130, that good faith is concerned with:
"…the state of mind of a person concerning his or her receipt of the payment: if the 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."

In Haggerty, French J said, referring to Prince:
"14. I do not take what his Honour said in that case as supporting the proposition that a person can be found to be receiving payments other than in good faith simply by reason of the fact that there are facts in existence which are known to the recipient sufficient to negative the recipient's entitlement. In my opinion, that is not a sufficient criterion. Knowledge of relevant facts is not enough to generate reason to know of the lack of entitlement.
15. The criterion of receipt in good faith may be characterised as a positive one as counsel for the respondent submitted. That is not to say that a recipient of a mistaken payment must prove that he or she has considered the entitlement and positively concluded that there is an entitlement. There is no question of an onus here to be met by the recipient who claims benefit of the mandatory waiver. Nor is there some twilight zone between good faith and want of good faith. A waiver can only, in my opinion, be declined where there has been a receipt, without good faith, of moneys mistakenly paid. These accords with the general approach taken by Finn J whose construction of the provision is related to the criteria for want of good faith.
16. Consistently with what his honour said in the Prince case want of good faith will arise where there is a positive belief that the payment has been made by mistake. It will also arise where there is a suspicion held by the recipient that he or she may not be entitled to the payment made or a doubt as to the entitlement coupled with some objective basis for such suspicion or doubt. The provision does not, however, authorise the imputation of want of good faith in any of the senses above described simply because there are in existence objective facts which would raise a belief or a doubt or a suspicion of non-entitlement in the mind of some imaginary recipient. That proposition is quite consistent with the view that the existence of such facts may support an inference that the recipient disbelieved or doubted or was suspicious about his or her entitlement. "Reason to know" as Finn J used that term in Prince does not necessarily import a criterion of imputed as distinct from actual want of good faith as I have described it."

In the present case, there is no evidence of a positive belief by the Applicant that the payment of ABSTUDY living allowance to her had been made by mistake. The question is, therefore, whether she held a suspicion that she might not be entitled to the payment or a doubt as to the entitlement coupled with some objective basis for the suspicion or doubt. The Tribunal also notes French J's discussion of the Tribunal's findings of fact in Haggerty (supra), at paragraph 17:
"None of these findings go to the state of mind [of the applicant] and whether he had a belief, doubt or suspicion as to entitlement which would require a recipient acting in good faith to make an inquiry. Concern, puzzlement, upset and a perception of unusual circumstances, coupled with absence of further inquiry, are not enough themselves to constitute want of good faith."

The Tribunal finds that the Applicant had been in receipt of Social Security benefits for many years. The Tribunal accepts her evidence that she had been taught to accept the Department's decisions about her Social Security entitlements. She said "you applied for an allowance or benefit and if your application was accepted that was your correct entitlement". The Applicant applied for ABSTUDY in 1999 on the ABSTUDY continuing form 1999 (Exhibit A3) sent to her by Centrelink. In answer to question 4 of the form, she stated she was receiving DSP and gave her client reference number. She gave the title of the course she was going to study at Macquarie University in 1999 – a Masters in Commercial Law – and the undergraduate courses she had completed since 1995. When reading the form, she noted that question 14 stated "You are being paid the Pensioner Rate", which she thought referred to her being paid DSP.
The Tribunal accepts the Applicant's evidence that she read the ABSTUDY Information Book 1999 (T3) before completing the ABSTUDY continuing form (Exhibit A3), and that she formed the belief that she was entitled to ABSTUDY in addition to her DSP. In evidence, she referred to the statement on page 3 of the book: "You cannot receive other government payments while you receive ABSTUDY, except if you are a pensioner".
There is also a statement on page 19 of the book: "If you are eligible for PES, you cannot receive ABSTUDY living allowance". The Applicant had received PES, in addition to her DSP, since she commenced her study at Nowra TAFE in 1995. When questioned about this statement, she said she thought this did not apply to her because she was undertaking a Masters degree in 1999 and PES only applied to undergraduate courses. Mr Peek suggested that an intelligent, literate person such as the Applicant, with high academic achievements, could not possibly have arrived at such an understanding of ABSTUDY.
The Tribunal is mindful that its findings must go to the state of mind of the Applicant and not some notional reasonable person. In particular, the other circumstances of the Applicant's situation at that time must be considered. The Tribunal accepts the Applicant's evidence as to her family responsibilities in 1998/1999. Her mother had been diagnosed with cancer in March 1998 and the Applicant, as the oldest child, had a special responsibility for her care. Her mother lived in Bateman's Bay. Fulfilling this responsibility therefore necessitated significant travel between the Applicant's home in Nowra and Bateman's Bay. This family situation was exacerbated when the Applicant's sister, who lived with her mother, suffered two heart attacks in December 1998. The Applicant also had other family responsibilities with respect of her children and grandchildren.
The Applicant was, through this period, maintaining her study. Attendance at the University of NSW Indigenous Pre-Law Program from 4 to 23 January 1999 necessitated her staying on Campus in Sydney.
All these factors must be taken into account when considering the Applicant's unquestioning acceptance of a significant increase in the benefit she received as a result of the payment of ABSTUDY living allowance from January 1999. She received a total of $985.38 per fortnight in DSP and ABSTUDY living allowance in the period January to June 1999 which was more than double the combined DSP and PES payments she received while studying in 1998. The Tribunal also notes that the Applicant spent the additional ABSTUDY she received in purchasing furniture and electrical goods for her home as well as providing assistance for members of her family.
Nevertheless, the Tribunal is not satisfied in the light of the other facts, that the Applicant held a suspicion or doubt as to her entitlement. The Tribunal accords particular weight to her evidence that she had been taught to accept the correctness of departmental decisions about her Social Security entitlements. This must be considered in the context of the Applicant having notified the Respondent of her receiving DSP and her stated belief, from reading the ABSTUDY Information Book (T3), that as a Masters student she was entitled to greater ABSTUDY benefits than as an undergraduate student.
Thus, the Tribunal concludes that the Applicant's evidence that she received the overpayment of ABSTUDY living allowance in good faith should be accepted, and recovery of the debt must be waived under section 43B of the Act. It was therefore not necessary for the Tribunal to consider whether there are special circumstances to justify exercise of the power of waiver under section 43F.
The decision of the SSAT is set aside and the Tribunal substitutes a new decision that recovery of the debt must be waived under section 43 B of the Act.
I certify that the 46 preceding paragraphs are a true copy of the reasons for the decision herein of R P HANDLEY, SENIOR MEMBER
Signed:         .....................................................................................
  Associate
Date of Hearing  12 January 2001
Date of Decision  6 March 2001
Solicitor for the Applicant         Peter Christensen
Solicitor for the Respondent    Greg Peek

[2001] AATA 168

6 March 2001

Key Legal Topics

Areas of Law

Administrative Law

Legal Concepts

Administrative Error

Waiver of Debt

Good Faith

Statutory Interpretation

Jurisdiction