Fraser and Secretary, Department of Family and Community Services
[2003] AATA 704
•25 July 2003
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2003] AATA 704
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q2002/1038
GENERAL ADMINISTRATIVE DIVISION ) Re MALINDA FRASER Applicant
And
SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION
Tribunal Mr R G Kenny, Member Date25 July 2003
PlaceBrisbane
Decision The Tribunal sets aside the decision under review and substitutes it decision that:
(i) the debt referable to the period from 27 December 2000 to 26 December 2001 is recoverable and is a debt due to the Commonwealth; and
(ii) the debt referable to the period 27 December 2001 to 11 June 2002 be waived pursuant to section 1237A of the Social Security Act 1991.
The Tribunal directs that the matter be remitted to the respondent for reconsideration in accordance with the Tribunal’s reasons for decision.
(Sgd) R G Kenny
Member
CATCHWORDS
SOCIAL SECURITY – recovery of parenting payment partnered overpayment – waiver of debt- whether sole Commonwealth error – whether payments received in good faith
Social Security Act 1991 s 8, 500I, 1068B, 1223, 1237A
Haggerty v Department of Education Training and Youth Affairs [2000] FCA 1287
Jazazievska v Secretary, Department of Family and Community Services [2000] FCA 1484Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 26 AAR 385
Re Ward and Secretary, Department of Family and Community Services [2000] AATA 212
REASONS FOR DECISION
25 July 2003 Mr R G Kenny, Member Background
1. In the period from 10 October 2000 until 11 June 2002, Malinda Fraser (the applicant) was paid parenting payment (partnered) which is payable in accordance with the terms of the Social Security Act 1991 (the Act). On 2 August 2002, a delegate of Centrelink, on behalf of the Secretary, Department of Family and Community Services (the respondent) determined that the applicant had been overpaid an amount of $10,417.96 in respect of her parenting payment during that period (see T43/T45).
2. On 30 August 2002, an authorised review officer varied that decision by decreasing the period during which the overpayment occurred and by determining that the overpayment amounted to $8,835.96 but that most of the debt be waived leaving a residual debt of $3,817.53 (see T48). On 12 November 2002, the Social Security Appeals Tribunal (SSAT) set aside that decision and substituted its decision that the overpayment period ran from 27 December 2000 until 11 June 2002 and that the overpayment amount, which was a debt due to the Commonwealth, was $8,835.96 (See T2). On 28 November 2002, the applicant sought review of that decision by the Administrative Appeals Tribunal (the Tribunal) (see T1).
3. At the hearing, the applicant was represented by Mr J Bremhorst of Counsel and the respondent was represented by Mr T Ffrench from the Service Recovery Team.
4. In evidence were the following:
§exhibit 1 documents prepared in accordance with s 37 of the Administrative Appeals Tribunal Act 1975 (the T documents (T1-T50));
§exhibit 2 a summary of social security and family assistance payments made to the applicant;
§exhibit 3 a statement by the applicant dated 18 March 2003;
§exhibit 4 a statement, dated 27 May 2003, by Maree White; and
§exhibit 5 a statement by Shirley Coetzee (undated).
Issues and Legislation
5. Mr Bremhorst conceded that, from 27 December 2000 until 11 June 2002 as identified in the SSAT decision, the applicant was paid parenting payment (partnered) and that she was overpaid in the amount of $8,835.96 during that period. He conceded that this was on the basis of calculations for the payment being related to incorrect income levels of the applicant and her partner, Craig Chappel. He conceded that this constituted a debt owed by the applicant to the Commonwealth, but he submitted that, pursuant to the terms of subsection 1237A(1) of the Act, the whole of the debt should be waived on the basis that it arose solely through administrative error made by the Commonwealth and because the applicant had received the payments in good faith. He conceded that there was no other means by which the debt could be written off or waived under the Act.
6. Both Mr Bremhorst and Mr Ffrench agreed that the only issue for determination in this matter is whether or not the debt of $8,835.96 for the period from 27 December 2000 until 11 June 2002 should be waived in accordance with section 1237A of the Act which reads:
“1237A Waiver of debt arising from error
(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.
(1A) Subsection (1) only applies if:
(a) a 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.
(2) If:
(a)a debt arose because the debtor or the debtor’s partner underestimated the value of particular property of the debtor or partner; 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.
(3) For the purposes of this section, a proportion of a debt may be 100% of the debt.”
Applicant’s Evidence
7. The applicant gave the following evidence.
8. Mr Chappel had been trading under the business name of Chappel Quality Homes in which he was a sole trader. He was injured at work on 10 October 2000 and made a claim under an accident insurance policy with Mercantile Mutual. The policy had been taken out by the business and premiums were paid by the business although the policy was in the name of Mr Chappel. The policy made provision for monthly payments by way of income substitution and these were first received on 15 December 2000 for the period commencing 10 November 2000 although, subsequently, an additional payment was made for the period commencing on 10 October 2000, the date that Mr Chappel was injured.
9. The applicant said that, on 19 December 2000 and shortly after receiving the first payment, the applicant made contact with Centrelink to advise that monthly payments were being received under the accident insurance policy. She said that this was done by making a telephone call to a Centrelink number. She said that she used the term “income protection insurance” when speaking with the Centrelink officer rather than “compensation payments” and that she advised the officer that Mr Chappel would not be receiving a lump sum by way of compensation. She said that she then requested information on how she would incorporate that into the information she provided to Centrelink about her income. She said that, in the past, she had done this on the basis of the lodgment of profit and loss statements and that she was advised by the officer that she should continue to do this by incorporating the income into that document with the monthly payment constituting income and the premium for the policy being a business expense.
10. The applicant recalled other elements of the conversation with the officer which were concerned with the health of her children. She said that she told the officer that her two children had recently undergone medical treatment but that this would not affect her or Mr Chappel financially because the children’s grandparents had met the medical costs. She said that she had been told by the officer that, in the event that a lump sum payment had been received, it would have affected her present entitlement but she said that she confirmed with the officer that the monies were not by way of lump sum compensation but, rather, by way of monthly payments of income protection.
11. The applicant said that, on 21 December 2000, she made another phone call to Centrelink in response to a parenting payment review form that had been sent to her. She said there was a short conversation with the officer whom she advised that the 1999/2000 financial year taxation form had not been completed and it was agreed with the officer that she would provide a further profit and loss statement. This was done on the same day and related to the period from 1 July 2000 to 27 December 2000. The applicant said that she asked what the likely effect of the statement would be and was told that it might result in a reduction of parenting payment in the order of $75.
12. The applicant said her next contact with Centrelink was in December 2001. On 4 December 2001, she telephoned Centrelink in response to a parenting payment review form that had been sent to her and was given advice about how to treat a bank overdraft of $10,000 for income purposes. She said that, on the following day, she lodged a profit and loss statement for the period from 1 September 2001 to 30 November 2001. She said that, on 27 December 2001, she made a series of phone calls after she discovered that she had not received her usual amount of income support payments from Centrelink. The reduction that she had noted in her bank account was from the previous fortnight of $330 to an amount of $15 per fortnight. She was told that the reduction in the amount of payment had been as a result of the contents of a profit and loss statement that the applicant had lodged on 5 December 2001. She was also told that a letter had been sent out by Centrelink on 21 December 2001 and the applicant said she did not receive this letter until 28 December 2001. The letter was in relation to information on the profit and loss statement. The applicant was told that there had been a mathematical error in the calculation on the profit and loss statement and this was why there was a reduction and it was also the reason for the sending of the letter on 21 December 2001. The applicant said that she could not understand why there had been such a dramatic reduction. She said that she was told by the Centrelink officer they would review her profit and loss statement to see if there had been any errors in the calculations.
13. The applicant said that Mr Chappel had also phoned Centrelink on 27 December 2001 to find out what was happening with the payments and he was advised that he would be contacted in due course. The applicant said that, in another phone call on the same day, she spoke to an officer at Browns Plains and was advised of a possible overpayment of $16,000. This was because she was told that she may not be able to offset business expenses against the insurance payments. She said that she advised the officer that she had not been receiving compensation payments but, rather, income protection payments by way of the insurance policy. The applicant said that, as a result of her conversation with that officer, she had contacted the Australian Taxation Office and her accountant and had been led to understand from those enquiries that she was able to offset her business deductions against the income received. She said that this was because the business had continued to trade despite Mr Chappel’s injuries.
14. The applicant said that she then rang Centrelink on 7 January 2002 to determine what was happening and was advised by the operator that there would be no debt and, thereafter, she noted that her payments had been reinstated and this was on the basis of continuing lodgement of profit and loss statements. She said that she believed that an evaluation had been taken of her circumstances and that Centrelink had now correctly reinstated her into her original position. She believed that the suggestion that there had been an overpayment had been removed by this process and that Centrelink had made an error which had then been corrected. The applicant said that she lodged further profit and loss statements in May 2002 and received no information until June 2002 to indicate that there was any problem with her payments. She was finally told on 8 June 2002 that there had been an overpayment and that she was being investigated.
15. The applicant identified a blank profit and loss form which had been provided to her and which she had then completed and lodged on 7 June 2002 (see T33).
16. The applicant said that, between December 2000 and December 2001, she had made several calls to Centrelink and had received various notices from Centrelink and that all of these were in relation to family assistance but that there were no such contacts in relation to parenting payment. She said that, since June 2002, she has been paid parenting payment (single) because, as a result of all the tensions and stresses generated by the overpayment against her, she and her partner had separated. The applicant said that she was unaware of any waiver provisions under the Act until she had read the letter of the authorised review officer.
17. In relation to her dealings with the bank, the applicant said that, in the whole of the period during which a debt has been raised, it was her usual practice to contact her bank every fortnight and to obtain the account balance. However, she said that there was no distinction made between the types of payments that went into the account and, therefore, the advice that she received was always in relation to a gross amount of the combined family assistance payment and the parenting payment.
18. The applicant said that the usual practice for the business was for the taxation documents to be prepared in March and the only information she had at her disposal was that which was provided for her to prepare the profit and loss statements. She said that Mr Chappel had never really told her whether or not he would get increases or deductions in income. She said that he did the calculations in relation to income levels and GST payments and provided them to her and that she then entered these on to a profit and loss statement.
19. The applicant was cross-examined by Mr Ffrench. She said that she had a clear recollection of the conversations that she had with the Centrelink officer on 19 December 2000. She said that there was only one contact on that day and that it was definitely by telephone. She denied that she had visited a Centrelink agency on that day. The applicant was shown a file note purporting to record the conversation with the officer and she conceded that the note made reference to her partner receiving a compensation payment but she reiterated that she had not used that term but had described the monies that he received as an income protection payment. She was also referred to the minute of the conversation that she had with an officer on 21 December 2000 and, again, conceded that there was no reference therein to insurance protection payments.
20. The applicant also said that it was not possible that she had lodged profit and loss statements without being specifically asked to do so.
21. The applicant was referred to the last entry in the file note of 19 December 2000 which states that the customer will contact Centrelink as soon as possible to discuss the matter of her finances. She said that she could not understand this entry because she was already in contact with the call centre.
22. When asked by Mr Ffrench if she believed that the income support payments would affect her parenting payments, she said that she only believed that it would do so to the extent that it was included in the profit and loss statements.
23. The applicant was referred to various passages which appear in the decision of the SSAT. There, she is recorded as telling the SSAT that the Centrelink officer had advised her that, once her partner started receiving his insurance payments, her payments from Centrelink would be affected. She denied that this was a correct interpretation of what had been said by her in her evidence at the SSAT. She was also referred to paragraph 17 of the reasons where she is referred to as stating that she had noticed a drop in her family tax benefit of about $10 to $11 and that she assumed that her parenting payment would also be reduced. Again, she said that she had not said that to the SSAT. She said that she had contacted her bank to obtain information about her account balance but that, on each occasion, she had only been given a gross amount rather than the components which went to make up that amount.
24. The applicant agreed with Mr Ffrench that the profit and loss statement represented a snapshot of their financial circumstances and that this could vary from time to time depending on the work of the business. She said that she had not specifically advised Centrelink of variations except by way of further profit and loss statements. She recalled receiving a letter in September 2000 (see T5) which required her to advise if her partner’s income went above $530 per fortnight. She conceded that the income levels were close to those thresholds but that she had not made any contact with Centrelink. She also agreed that, on reading the terms of the letter from Centrelink, it was clear that she was required to tell them within fourteen days of any change in the level of income.
25. The applicant was referred to a file note (T17-77) where it is suggested that it was explained to her that income for the period from 1 September 2001 to 30 November 2001 was incorrectly calculated on net income. The file note indicates that the applicant understood the error and accepted the new parenting payment (partnered) rate of $15 per fortnight based on business income. However, she said that she believed that the error referred to there was not one associated with, in principle, utilising profit and loss statements as opposed to income, but rather, because of a mathematical error in the profit and loss statement lodged on 5 December 2001.
26. The applicant, in re-examination, said that, when preparing a profit and loss statement, she did not do so on the basis of an observation of previous documents. Rather, she treated each document as a new one based on information given to her by Mr Chappel.
Respondent’s Evidence
Shirley Coetzee
27. Ms Coetzee attended and gave evidence at the hearing. She identified her statement (exhibit 5) which reads:
“I, Shirley Coetzee of Beenleigh Centrelink customer service centre make the following statement:
§ I have been employed by the Department of Social Security and Centrelink for six Years.
§ I have performed the following roles: customer service officer in Family Assistance Section
§ My Centrelink log-on is FPO and I recorded the file note on Miss Fraser’s Centrelink record on 19 December 2000.
§ I recall that I was working at the reception point of the Beenleigh customer service centre and I have received Miss Fraser’s Parenting Payment review form on that date.
§ As the file note indicates, Miss Fraser advised that the payments for her husband had not yet commenced. I gave advice that Centrelink payments are generally affected by any income and that she should declare the details as soon as they were known.”
28. She also identified the file note that she had completed (T6-55) and said it was a document generated after a counter contact at reception with a person. She could not recall the applicant or the details but confirmed that it was not a telephone contact. She said that this had to be so because the document made reference to the lodgment of a form and to its being “bretted”.. She said that if it had been a telephone conversation there would have been no lodgment and that the notion of a document being “bretted” meant that it was entered into the system and acknowledged as having been received. She said that the note that she made was longer than usual because she believed that the applicant was concerned about her payments. She noted that the file note made reference to a “compo payout” and also that this was prospective in nature in that it had not yet occurred. She said that, these would have been the words that the person who appeared at the counter used rather than her own.. She said that persons who used Centrelink services often confused compensation payments for other forms of payments.
29. Ms Coetzee said that the file note reflected the standard procedure that she adopted. This was that, if a person appeared to be concerned about payments and income matters, she would advise the person to contact a call centre to clarify any concerns. She noted the use in the file note of the word “alarmed” about payments and said that this was why she had advised the person to contact the customer service centre. In cross-examination, Ms Coetzee conceded that she was relying upon her use of the word “alarmed” in the file note to indicate that was how she understood, now, that there was concern by the person about payments. She said that it was standard practice in that situation to advise the person to contact the customer service centre and that was what she did.
30. Ms Coetzee denied that the conversation as recorded in the file note was one which took place by telephone or that it was some documentation that she had received by mail. She confirmed that she had received the document and had “bretted” it.
31. In re-examination, she said that it was never the case that a file note was a verbatim account of what happened but rather one which made reference to the main points. She said that the file note made reference to a form of payment which had not occurred at that stage and that the person was concerned about and it was for that reason that she advised the person to contact the customer service centre.
Maree White
32. Ms White gave her evidence by telephone and Mr Ffrench tendered her written statement (exhibit 4). It reads:
“I, Maree White of Gosford Centrelink call centre make the following statement:
§ I have been employed by Centrelink since September 1997. Previously I worked for the Australian Taxation Office in the Child Support Agency as a caseworker.
§ My role in Centrelink is a customer service officer in the Family Payments area.
§ My Centrelink log-on is HEB and I recorded the file note on Miss Fraser’s Centrelink record on 21 December 2000.
§ As the file note indicates, the discussion involved the documentation Miss Fraser needed to provide to respond to the Parenting Payment review form she had received.
§ If Miss Fraser had advised of payments from an income protection policy, I would have recorded that fact. My advice would have been that the customer service centre would need to make an assessment of the income and for Miss Fraser to provide as many details as possible about the payment.
§ I would not have advised that payments from an income protection policy could be included in a profit and loss statement. My initial response would be that it would seem to be a compensation payment which would need to be assessed.”
33. In her evidence, she said that she had worked in the call centre as a customer service officer since September 1997. She also said that she did not recall the specific circumstances of the conversation that she had with the applicant on 21 December 2000. She said that she recorded what occurred and that, if there was no notation of insurance protection payments, it was because there was no reference to that during her conversation with the applicant.
Applicant’s Contentions
34. Mr Bremhorst referred to the contact between the applicant and the Centrelink officer on 19 December 2000 and submitted that the applicant’s evidence should be preferred and that this meant that there was a telephone conversation rather than a face to face contact over the counter with Ms Coetzee. In relation to Ms White’s evidence, he submitted that she could not recall the circumstances precisely and had not answered with the same degree of forthrightness as had the applicant.
35. Mr Bremhorst submitted that it was unlikely that the applicant would have full knowledge of the income of Mr Chappel because she had no role in the running of the business and relied upon him for providing information to her. She simply communicated that to Centrelink via a profit and loss statement. For that reason, she would not be in a position to know if income was increasing or decreasing on a regular basis because there would always be a delay given the period over which the profit and loss statement operated.
36. Mr Bremhorst submitted that Centrelink promoted the use of the profit and loss documentation by her because they issued her with profit and loss forms for completion. He submitted that the profit and loss statements lodged by the applicant were very comprehensive and that Centrelink could have utilised the information contained therein by analysing it and determining what the proper situation was. He submitted that the applicant had, on 19 December 2000, provided all the information which was necessary in order for Centrelink to be fully aware of what the arrangements were in relation to the income protection insurance. He submitted that she was requested to lodge a document on 19 December 2000 and had done so then and periodically thereafter, that she relied on Centrelink to calculate properly what her entitlements were and to advise her by mail if any information was needed and that she had no capacity to calculate the amounts because of the complexities inherent in the social security legislation.
37. Mr Bremhorst submitted that the applicant had exercised due diligence throughout and had frequently called Centrelink to provide them with information and to obtain guidance. He referred to an occasion when she had contacted Centrelink to obtain information as to what should be done in her profit and loss statements concerning a bank overdraft of $10,000 (see T11/60). He said that this indicated that she had always attempted to obtain the correct information and to supply the correct information to Centrelink. Mr Bremhorst submitted that all of the monies received by the applicant had been received in good faith in that she had honestly applied herself in her dealings with Centrelink. He submitted that, on 27 December 2001, there was some suggestion that she may have been overpaid but that this had been overturned during January the following year and that, thereafter, as Centrelink had returned to the making of full payments, she was entitled to believe that this was on the basis of correct information and a correct analysis by Centrelink. He submitted that there had been no attempt by her to hide any information and that she had been fair minded in the making of enquiries and providing information to Centrelink.
Respondent’s Submission
38. Mr Ffrench referred to the terms of subsection 1237A(1) of the Act and to a threshold requirement that, before a debt could be waived, it had to have been incurred because of an error solely by the Commonwealth. Mr Ffrench submitted that this was not the case in this matter. He referred to events up to 27 December 2001 during which the applicant was under an obligation to provide information because of the letter that had been sent to her in September 2000. She had been made aware of her obligation to advise Centrelink if her partner’s income exceeded $530 per fortnight. There had been no attempt by her to comply with that obligation.
39. In relation to the events of 19 December 2000, he submitted that the evidence of Ms Coetzee should be adopted and that it should be accepted that there was not a telephone conversation but, rather, a face to face conversation at the Beenleigh Centrelink Office. He referred to the file note completed by Ms Coetzee (T6-55) and to the indication therein that the applicant was to contact the customer service centre to further discuss the matter so that finality could be reached in relation to her arrangements with Centrelink. He submitted that the file note did not indicate that the applicant was requested to provide further profit and loss statements and he submitted that there was nothing to indicate that these had been requested from the applicant after that date. He submitted that the reason for the lodgment of a profit and loss statement on 21 December 2000 was not because of the conversation of 19 December 2000 but because the applicant, on that date, completed a parenting payment (partnered) review form in which she was requested to provide information about the income of herself and her partner. He submitted that the applicant’s and her partner’s taxation notices of assessment did not accurately reflect what their income had been during the period prior to that lodgment and that, therefore, she had provided a profit and loss statement.
40. In respect of the file note completed by Ms Coetzee, he submitted that, if the applicant had made reference to insurance protection payments, then Ms Coetzee would have recorded that rather than make a reference to compensation. He submitted that the applicant had not provided that information to Ms Coetzee.
41. Mr Ffrench submitted that, in her dealings with the officers on 19 December 2000 and 21 December 2000, the applicant had not provided the information about the insurance protection payments and that the lodgement of a profit and loss statement with her documents on 21 December 2000 constituted a failure by her to comply with the specific notification provision. He conceded that Centrelink was, to some extent, at fault for not questioning the applicant further in relation to her income levels but said that this was not the sole reason for the establishment of the debt. He submitted that the monies received clearly did not constitute business income or business expenditure. He also referred to Mr Chappel’s 2000/2001 tax return (at T29-95) where the insurance payments are specifically identified as income protection insurance. He submitted that there was a failure by the applicant to enquire into the circumstances of Mr Chappel’s income and a failure by her to advise of that income through the lodgement of incorrect profit and loss statements.
42. He also submitted that the lodgment of a single profit and loss statement did not relieve the applicant of the obligation cast upon her in the letter of September 2000. He submitted that this was an ongoing obligation. He referred to the letter of the authorised review officer and noted that the parties’ income had increased and that, by the end of the financial year, expenses had decreased.
43. Mr Ffrench referred to the profit and loss statement lodged on 21 December 2000 with a reference to a weekly income of $262.62 which was only marginally below the fortnightly threshold of $530 referred to in the letter of September 2000. Despite that, he submitted that the applicant made no enquiry to see whether or not the income had exceeded that threshold. He submitted that the income level during each month was in the order of $2,300 because of the insurance payments (see T40-149) and that this information was not provided to Centrelink.
44. Mr Ffrench submitted that, prior to 27 December 2001, the overpayments were not due solely to error of the Commonwealth. After that period, when taxation returns had been lodged, Centrelink was in a position where they may well have known what those income payments were. Mr Ffrench also submitted that, even if there were error on the part of the Commonwealth in that period, the monies were not received by the applicant in good faith. He referred to the evidence that she was recorded as having given to the SSAT and submitted that these should be considered to be an accurate record as there was no reason for the SSAT to record the information incorrectly. It indicates that the applicant was aware of incorrect payments being made. He also referred to the SSAT’s reasons, at paragraph 13, where the applicant is recorded as stating that she first became aware on 27 December 2001 that offsetting of business expenses against insurance payments could not be made in determining her rate of payments. He submitted that this should also be accepted as an accurate record and one which showed that the applicant did not receive her payments in good faith after that time.
Consideration
45. The calculation of parenting payment is made in accordance with the terms of section 1068B of the Act and the associated rate calculators. The rate is dependant on levels of income of, in this case, the applicant and Mr Chappel. The definition of the term income in section 8 of the Act is in terms broad enough to include the insurance payments made to Mr Chappel. This was not business income and the applicant’s parenting payment should have been calculated with that amount being taken fully into account rather than as a business income which is subject to reduction through the allocation of business expenses. The respondent’s calculations show that the applicant was paid $8,835.96 in the period from 27 December 2000 until 11 June 2002 and that her entitlement during that period was nil. Under section 500I of the Act, parenting payment is not payable if the rate is nil and, pursuant to section 1223 of the Act in both its present form and as it read before 1 July 2001, the overpayment amount of $8,835.96 is a debt due to the Commonwealth. This has been conceded by the applicant and by the respondent and I am satisfied that these concessions have been properly made. The only issue for determination in this matter is whether or not the debt of $8,835.96 for the period from 27 December 2000 until 11 June 2002 should be waived in accordance with subsection 1237A(1) of the Act. Other bases for waiver of a debt arise under the Act but it was conceded by Mr Bremhorst that these are not applicable.
46. Mr Ffrench referred to the obligation that the applicant had to provide information about the income details of herself and Mr Chappel because of the terms of the notice, dated 11 September 2000, which was sent to her. In a sense, she was in compliance with that obligation when she contacted Centrelink on 19 December 2000. While I am satisfied that she made contact on that date, I do not accept her evidence that it was by way of a telephone contact to a call centre. In that regard, I accept the evidence of Ms Coetzee who identified the file note (see T6) as one which could only have been made at a reception desk in a personal contact. I also accept the evidence of Ms Coetzee that the applicant did not make reference to insurance payments but, rather, to some form of compensation which she described as being payable in the near future.
47. Ms Coetzee said that the file note reflected the standard procedure that she adopted when a person appeared to be concerned about income matters and that, in the applicant’s case, she advised her to contact a call centre to clarify any concerns because she seemed to be “alarmed” about this. That is recorded in the file note completed by Ms Coetzee and I accept that as an accurate record. That record also reveals that the applicant did not lodge a current taxation notice of assessment and that, for that reason, a profit and loss statement had been lodged. The file note dated 21 December 2001 (see T7) also refers to outdated taxation information and the prospect of lodging a profit and loss statement. Ms White, who completed that file note, gave evidence that, if the applicant had made reference to insurance payments as part of her income, this would have been recorded. Again, I accept her evidence in that regard.
48. I am satisfied that the applicant made contact with Centrelink officers on 19 and 21 December 2000 and that she did not advise Centrelink that the income that Mr Chappel was receiving at that time was in the form of income protection insurance. The applicant lodged a profit and loss statement on 21 December 2000 which recorded business income of $16,850 and business expenses of $10,286. This was in relation to the period 1 July 2000 to 27 December 2000 and showed an average of $262.56 per week income (see T8-57). The income level identified as business income in that document included the income protection insurance payments received by Mr Chappel. That was also the case with another profit and loss statement lodged for the periods 1 September 2001 until 30 November 2001 (see T12). The information in those statements was incorrect in that the insurance payments were not business income. That incorrect information was relied on by Centrelink to calculate the parenting payments and I am satisfied that this was because of an absence of current taxation notices of assessment. I also note a later profit and loss statement for the period 1 December 2001 to 31 May 2002 and, therein, the amount of insurance income is specifically identified as such (see T33).
49. In Re Ward and Secretary, Department of Family and Community Services [2000] AATA 212, the Tribunal determined that the word “solely” as used in the waiver provision in relation to Commonwealth error means “exclusively”, “only” or “to the exclusion of all else”.. I adopt that interpretation and am satisfied that, on the facts of this case, there was contribution by the applicant to the incorrect calculation of her parenting payments so that that calculation was not due exclusively or only to officers of the Commonwealth.
50. I am also satisfied that, in December 2001, Centrelink officers were made aware of the nature of the income of Mr Chappel. File notes, dated 27 December 2001, make reference to the income protection insurance payments (see T17–T19). These were written in the context of telephone calls from the applicant on her discovering that her parenting payment had been reduced. In the period from 27 December 2000 until 27 December 2001, the debt did not arise solely due to error by the Commonwealth and, therefore, I am satisfied that the portion of the debt referable to that period can not be waived under subsection 1237A(1)(D) of the Act.
51. In the period from 27 December 2001, Centrelink officers were aware of the nature of the income of Mr Chappel but continued to rely on profit and loss statements completed by the applicant. From that date, I am satisfied that there was no contribution by the applicant to the overpayments and that these arose solely through error on the part of Commonwealth. The debts can be waived under subsection 1237A(1) of the Act if the applicant received the parenting payments in good faith.
52. In the Federal Court, Cooper J considered the matter of the time at which good faith must be shown in Jazazievska v Secretary, Department of Family and Community Services [2000] FCA 1484. His Honour said:
“40. Prima facie, s 1237A(1) is concerned with actual personal receipt by the debtor of the payment or payments which give rise to the debt. The issue of good faith is, for the purpose of the section, to be determined when the debtor commences to exercise control over the payment by retaining it. It is at this time that the recipient must act with the requisite good faith. A lack of good faith does not mean that the recipient of the payment must be acting fraudulently when the payment is received and retained. It means that for whatever reason, the recipient acts without an honest belief that he or she was entitled to receive and retain the payment when or she receives the payment and decides to exercise control over it by retaining it.”
53. His Honour then stated that, where the payment is made to a financial institution and a person is unaware of the time of its actual receipt, he or she cannot avoid the requirement of good faith on the basis that a person to whom payment is made through a third party can be in no better position than a person to whom payment is made directly (paragraphs 42 and 43). Accordingly, the relevant time for assessing the applicant’s state of mind is when she became aware of the amount in her bank account. I am satisfied that she became aware of this each fortnight and that she did so by obtaining the overall balance without distinguishing between or identifying the components of any fortnightly deposit.
54. The meaning of the expression “good faith” was considered by the Federal Court in Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 26 AAR 385 in the context of paragraph 289(2)(b) (as it then was) of the Student and Youth Assistance Act 1973.. There is no difference of consequence between the terms of that paragraph and those of sub-section 1237A(1) of the Act. In that case, Mr Prince had taken appropriate steps to cancel his AUSTUDY payments on 22 December 1993 but the Department of Employment, Education and Youth Training continued to pay him. The Tribunal found that Mr Prince acted honestly and diligently in attempting to clarify the situation and to give the Department further information to encourage it to cancel the payments. Finn J said:
“… 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 - that is, 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 (that is, the ‘rule’ in Auckland Harbour Board v The King [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 Parliament intended otherwise.” (at 387-388)
55. In Haggerty v Department of Education, Training and Youth Affairs [2000] FCA 1287, Weinberg J also considered the matter of good faith in the context of paragraph section 43B of the Student and Youth Assistance Act 1973.. His Honour noted the comments of Finn J and said:
“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 to the money 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. This 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.”
56. Cooper J considered the notion of “good faith” in the context of sub-section 1237A(1) of the Act in Jazazievska v Secretary, Department of Family and Community Services (supra), saying:
“41. A person does not act in good faith where the person turns a blind eye to circumstances which raise doubt as to the entitlement of the person to receive and retain the payment or refuses to make reasonable inquiries where doubt exists. Although said in a different context, the observations of Lord Blackburn in Jones v Gordon (1877) 2 App Cas 616 at 629 are apposite. His Lordship said:
‘…If he was (if I may use the phrase) honestly blundering and careless, and so took a bill of exchange or a bank-note when he ought not to have taken it, still he would be entitled to recover. But if the facts and circumstances are such that the jury, or whoever has to try the question, came to the conclusion that he was not honestly blundering and careless, but that he must have had a suspicion that there was something wrong, and that he refrained from asking questions, not because he was an honest blunderer or a stupid man, but because he thought in his own secret mind – I suspect there is something wrong, and if I ask questions and make farther inquiry, it will no longer be my suspecting it, but my knowing it, and then I shall not be able to recover – I think that is dishonesty. I think, my Lords, that that is established, not only by good sense and reason, but the authority of the cases themselves’.”
57. A file note, dated 27 December 2001, records that the applicant was made aware that her parenting payment had been incorrectly calculated and it also indicates that this was explained to her and that she accepted that the correct rate was only $15 per fortnight (see T17). There are also file notes, dated 27 December 2001 (see T20), 28 December 2001 (see T21) and 2 January 2002 (see T21) which make reference to possible overpayments being raised against her. A further file note, dated 7 January 2001, records a telephone conversation with the applicant in which she was advised that there were no arrears of parenting payment due and that she was to be paid a “new rate as per PS screen” (see T23). The applicant was sent a letter on 16 January 2002 which suspended her payments because of Centrelink’s belief that income information had not been supplied by the applicant (see T24). On 21 January, 2002, the applicant contacted Centrelink and advised that the information had been provided and, on the same day, a letter was sent to her advising her that her parenting payment had been restored (see T27).
58. In her evidence, the applicant said that she had been aware in late December 2001 and in early January 2002 of the prospect that she had been overpaid and that she may have to repay monies to Centrelink. However, she relied on the letter of 21 January 2002 as being evidence that Centrelink were no longer intending to pursue this.
59. The Centrelink payment records show the amounts paid to the applicant by way of parenting payment. From December 2000 until 11 December 2001, the amount was in excess of $310 per fortnight (see T43). The payment on 25 December 2001 was $15 and all subsequent payments were between $58 and $68 per fortnight. Clearly, there was a significant change to the parenting payment from December 2001. That is reflected in the letter dated 21 January 2002 which restored the parenting payment. It nominated the payment as being $58.94 per fortnight. The applicant had been made aware that the insurance payments would make a difference to her level of parenting payment and that change certainly happened. However, the payment rate should have been nil. Nevertheless, I am satisfied that the applicant was placing reliance on the information that she was given by Centrelink officers about her payments and that she had not been advised that she was not entitled to any parenting payment. She expected the parenting payment to decrease and that is what happened. I accept her evidence that she believed that Centrelink had made the appropriate adjustments and that she believed that she was being paid the correct amount of parenting payment after 27 December 2001.
60. This is not a case where the applicant turned a blind eye to what her payments were or one where she knew or had reason to know that the payments were not correctly calculated. In that sense, I am satisfied that the applicant received the payments in good faith as that term is explained in the Federal Court authorities noted above. It follows that the debt must be waived in accordance with subsection 1237A(1) of the Act in respect of payments received by the applicant from 27 December 2001 until 11 June 2002.
Decision
61. The Tribunal sets aside the decision under review and substitutes it decision that the debt referable to the period from 27 December 2000 until 26 December 2001 is recoverable but that the debt referable to the period thereafter be waived.
I certify that the 61 preceding paragraphs are a true copy of the reasons for the decision herein of Mr RG Kenny, Member
Signed: Sarah Oliver
AssociateDate of Hearing 7 July 2003
Date of Decision 25 July 2003Counsel for the Applicant Mr J Bremhorst
Solicitor for the Applicant Welfare Rights Centre
Solicitor for the Respondent Mr T Ffrench, Departmental Advocate
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