Kaupe and Department of Family and Community Services - [2001] AATA 825

DECISION AND REASONS FOR DECISION [2001] AATA 825

ADMINISTRATIVE APPEALS TRIBUNAL )

) No N2000/1863

GENERAL ADMINISTRATIVE DIVISION       )
           Re      Jo Kaupe
  Applicant
           And    Secretary, Department of Family and Community Services
  Respondent

DECISION

Tribunal Ms S M Bullock, Senior Member

Date28 September 2001
PlaceSydney

Decision      The decision under review is set aside and in substitution therefor the Tribunal decides that pursuant to Section 1237AAD of the Social Security Act 1991 that an amount of $1,562.85 be waived from Ms Kaupe's Parenting Payment (Single) overpayment debt in the special circumstances of her case.
  ..............................................
  Ms S M Bullock
  Senior Member
CATCHWORDS
SOCIAL SECURITY - Parenting Payment - debt - debt recovery - administrative error - sole administrative error - receipt of payment in good faith - special circumstances.

LEGISLATION
Social Security Act 1991 ss 1223(5), 1237A, 1237AAD

AUTHORITIES
Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 50 ALD 186
Haggerty v Department of Education Training and Youth Affairs [2000] FCA 1287
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Re Ivovic and Director-General of Social Service (1981) 3 ALN N95
Ceresna and Secretary, Department of Family and Community Services [1999] AATA 346
Secretary, Department of Social Security v Hales (1998) 82 FCR 154

REASONS FOR DECISION

28 September 2001 Ms S M Bullock, Senior Member

This is an application for review to the Administrative Appeals Tribunal ("the Tribunal") made by Ms Jo Kaupe ("the Applicant") against a decision of the Social Security Appeals Tribunal ("the SSAT") made on 16 November 2000 (T2). The SSAT decided that Ms Kaupe did not receive Parenting Payment (Single) between 8 May 2000 and 10 August 2000 in good faith. Consequently, the decision to raise and recover an overpayment debt of $2,083.80 made by a delegate of the Secretary, Department of Family and Community Services ("the Department") on 10 August 2000 (T9), as affirmed by an Authorised Review Officer ("ARO") on 6 September 2000 (T12), should be affirmed.
A hearing was held before the Tribunal in Sydney on 6 July 2001. Ms Kaupe was self-represented and provided oral evidence. The Respondent, the Department, was represented by Ms A Smith, Departmental Advocate. Documents were lodged and taken into evidence pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 ("T documents", T1-T22) in addition to the following exhibits:
Exhibit Number     Description Date
A1      Applicant's submission and attachments provided by Ms S Koller, Solicitor, Welfare Rights Centre, Sydney.      4 July 2001
R1      Respondent's Statement of Facts and Contentions.     29 March 2001
R2      Statement by Mr G Lockwood, Manager, Maroubra Customer Service Centre, Centrelink.           11 May 2001
Issues
There is no dispute in this matter that an overpayment debt exists in the form of an overpayment of Parenting Payment (Single) in the amount of $2,083.80 paid to Ms Kaupe between 8 May 2000 and 10 August 2000. There is also no dispute that the debt arose solely as a result of the administrative error of the Department. In these circumstances, the issues are:
(i)Whether or not the overpayment debt of Parenting Payment (Single) should be waived pursuant to section 1237A of the Social SecurityAct 1991, which requires that there was sole administrative error on the Department's part and Ms Kaupe received the Parenting Payment in good faith; and if not,
(ii)Whether or not there are any special circumstances which would allow the debt to be waived in part or in whole in the special circumstances of the case pursuant to section 1237AAD of the Act.

Legislation

A decision in this matter requires consideration of the provisions of the Social Security Act 1991 ("the Act").
Section 1223 of the Act deals with debts arising under the Act. Specifically relevant in this case is subsection 1223(5) which states:
"Incorrectly paid amount

1223(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 or by way of fares allowance; and

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

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

Section 1237A of the Act deals with waiver of debts arising solely from administrative error and as relevant states:
"Waiver of debt arising from error

Administrative error

1237A(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).

1237A(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.
…"

Section 1237AAD deals with waiver of debts in special circumstances
"1237AAD 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 or the 1947 Act; and

(b) there are special circumstances (other than financial hardship alone) that make it desirable to waive; and
(c) it is more appropriate to waive than to write off the debt or part of the debt.

Note: Section 1236 allows the Secretary to write off a debt on behalf of the Commonwealth.
…"

BACKGROUND

The following information is provided by way of background and the material contained within is not in dispute.

Ms Kaupe was born on 27 January 1961 and has two sons aged five years and seven years.
Ms Kaupe became a sole parent in 1998 having separated from her partner in June 1998. She then became entitled to Parenting Payment (Single).
On 8 May 2000, Ms Kaupe commenced employment teaching at the Sydney Graphics College and notified Centrelink on 23 May 2000 (T7).
On 2 June 2000, Ms Kaupe contacted Centrelink advising that she would be working for 33 weeks and she estimated an income of $23,000.00 (T8).
On 10 August 2000, Ms Kaupe was advised through a telephone call from a Centrelink officer that she had been overpaid Parenting Payment in the amount of $2083.80 because Centrelink had not acted on her advice (T9). Ms Kaupe was advised of this in writing on 14 August 2000 by a departmental delegate (T10, p25).
Ms Kaupe requested a review of the departmental delegate's decision and on 6 September 2000, an ARO affirmed the original decision, noting that while the debt had arisen solely due to administrative error, he was not convinced that Ms Kaupe received the payment in good faith (T12).
On 10 October 2000, Ms Kaupe lodged an application for review to the SSAT.
On 16 November 2000, the SSAT affirmed the Department's decision of 10 August 2000 and noted:
"The tribunal concluded that she did possess the "knowledge and reason to know" that she was not entitled to the overpayment and that she was not entitled to use the moneys overpaid as her own. In so doing the tribunal considered Ms Kaupe's evidence regarding her state of mind before, during and after the receipt of the erroneous payments and finds that good faith within the meaning of the section, was absent…" (T2, p7).
On 11 December 2000, Ms Kaupe lodged an application for review to the Tribunal noting that she did not believe she should have been held responsible for the Department's error, particularly as she had informed Centrelink on three occasions that she had recommenced work and also had provided details of her earnings. Ms Kaupe concluded:
"…I am a single parent with two children to support, I acted as the guidelines in keeping the Maroubra office informed as to my working status. It is not my incompetence that caused this error, but theirs and I feel for this reason the debt should be waivered (sic)…" (T1, p1)
Ms Kaupe also noted that contrary to the Department's belief, although she had been receiving departmental benefits for some time, she did not know the basis on which payments were calculated and was unaware how her income would affect her benefit or if indeed it would.

Evidence of Ms Kaupe

Ms Kaupe told the Tribunal that she commenced working as a part-time lecturer at the Sydney Graphics College in May 2000 after a period of absence. She undertook this work accepting term-long contracts, earning on average $23,000.00 per annum. Ms Kaupe informed Centrelink of her recommencement of employment and her estimated earnings later in May 2000. Ms Kaupe stated that she made a further two telephone calls, three in total to Centrelink, advising of the commencement of her work. About one week later after her initial phone call she informed Centrelink of her annual earnings estimate. The third call involved speaking to a female officer, who, Ms Kaupe believed, checked her details and confirmed Ms Kaupe's projected earnings. Ms Kaupe believed that the information would be passed on to the relevant officers for processing, but noted that she did not receive any further contact or written confirmation of her calls. Nothing in fact happened until Ms Kaupe learned of the overpayment debt in August 2000.
Ms Kaupe told the Tribunal that she knew she had an obligation to inform the Department of any change in circumstances. She notified the Department of her income from employment because this was a change of circumstances. Ms Kaupe could not recall whether her Parenting Payment went down as a result of this advice. She also could not recall when previously in receipt of departmental income in December 1999 and April 2000, whether her payments reduced with increased employment income. Ms Kaupe explained that while she understood that there might be a change or reduction of her income support payments if her employment income increased, she did not specifically know what the consequences of her employment income would be on her Parenting Payment.
Ms Kaupe informed the Tribunal the she was shocked when she learnt she had incurred a debt as a result of being overpaid Parenting Payment (Single). Ms Kaupe stated that she could not understand how she incurred a debt, particularly as she had fulfilled all her obligations to inform the Department of her change in circumstances. She saw herself as a customer who had fulfilled her obligations. Ms Kaupe also could not understand the length of time taken by the Department to discover the overpayment. She had not previously had any problems with departmental payments and had never incurred a debt before.
The Tribunal was informed by Ms Kaupe that contrary to the conclusions of the SSAT and the statement by Mr Lockwood, Manager, Maroubra Customer Service Centre, Centrelink, that she knew her Parenting Payment would go down with increased employment income, Ms Kaupe stated that she had not assumed this at all. What she had assumed was that following her advice to Centrelink of her estimated income, everything was fine and she did not know that she was receiving money that she was not entitled to. Ms Kaupe stated that in a telephone conversation with Mr Lockwood on 10 August 2000, the issue of the debt was discussed and her only recall was that she possibly said to him that she may have been aware that as a result of her increased employment income, the Parenting Payment "may have reduced". Ms Kaupe stated however, that she had trusted the Department to administer its own benefits and she was not aware of the guidelines or the rate of calculation used for a customer's entitlement. Ms Kaupe stated that she had never had any problems with her payments before, nor had she ever incurred a debt. Ms Kaupe had trusted the Department to administer its own Parenting Payment scheme and she did not know she was receiving money that she was not entitled to have.
In relation to her Parenting Payment history, Ms Kaupe later acknowledged from departmental documents that when her partner obtained employment in 1996, the rate of Parenting Payment reduced (T14, p31), although she did not specifically recall this in May 2000. The "T documents" also revealed that in November 1996, Parenting Payment reduced with no family payment being paid and in October 1998, Ms Kaupe filled out a change of circumstances form advising Centrelink that she was now a single parent. Ms Kaupe also had wanted at that time to ascertain if she was entitled to any Parenting Payment (Single). She was so advised on 20 October 1998 (T6) of the definition of income and her obligations to advise the Department of any change in circumstances which included change in income, marital status or employment.
Ms Kaupe also acknowledged that on 20 April 1999, Centrelink advised her that her rate of Parenting Payment (Single) was assessed by taking into account her advice that she was commencing employment. The Parenting Payment was then reduced from $366.80 per fortnight as at 15 April 1999, to $210.00 on 29 April 1999. Ms Kaupe told the Tribunal that while she could see that her Parenting Payment reduced with an increase in her employment income, she did not actually recall this at the time of receipt of Parenting Payment from May 2000. This assertion was made despite further evidence that Ms Kaupe had advised on 18 November 1999 that she had ceased work because her contract had expired but that she had expected to return to work in February 2000 (T20).
Ms Kaupe did not specifically remember receiving a departmental letter of 18 November 1999 advising of an increase in her Parenting Payment following the cessation of her employment contract at the end of 1999 (T21). The Department's letter was obviously in response, she acknowledged, to her call to her Centrelink Office that her work had ceased at that time. When referred by Ms Smith to the "Payment Summary" of Parenting Payment (T16), Ms Kaupe acknowledged that she probably would have noticed a reduction of Parenting Payment and a subsequent increase following the commencement and subsequent cessation of her employment contract. Ms Kaupe stated that she was aware that her Parenting Payment had changed in the past, but she was unaware of what the threshold was for any change in Parenting Payment. Ms Kaupe further acknowledged that changes in the rate of Parent Payment had occurred fairly promptly to any changes notified by her. Ms Kaupe also told the Tribunal that she was unaware of the guidelines used by the Department in determining the rate of her Parenting Payment from time to time.
In relation to various departmental notices and letters, Ms Kaupe noted that there was often writing on the front and the back of such letters and notices. Initially, Ms Kaupe read both sides of the document but with later letters, she would scan the letter for relevant information and then would file them. Departmental letters and notices she cleared out on an annual basis, Ms Kaupe stated.
Ms Kaupe stated that, for example, she would have looked at the departmental letter of 18 November 1999 (T21) and checked the amount of Parenting Payment and if there were any other relevant matters. Ms Kaupe told the Tribunal that she was fairly thorough in her attention to such matters. If a departmental letter looked like a statement or if there were changes she would notice these. Further, if Ms Kaupe did not understand the letter, she would have read the reverse side to seek clarification. Ms Kaupe further informed the Tribunal that she was obviously aware of some information on the reverse of these letters such as that contained in the letter at T21, p54. Ms Kaupe reiterated that she knew that she had to advise the Department of any changes in circumstances such as changes in income and employment status. This was also the case for other letters such as that of 20 October 1998 (T6) but again, Ms Kaupe could not specifically recall whether she had read the reverse of this letter.
Ms Smith questioned Ms Kaupe as to why she did not pursue the possibility of reducing the withholdings taken from her departmental benefits once the Parenting Payment overpayment debt of May 2000 was raised. Ms Kaupe stated that she did not do so because she was unaware that this possibility was available to her.
In relation to the continuance of Parenting Payment (Single) at the same rate, following Ms Kaupe's advice to the Department of her recommencement of employment in May 2000, Ms Kaupe stated firmly that she did not consider she had received a bonus when her Parenting Payment did not reduce. Ms Kaupe stated that she believed the Parenting Payment she was receiving was correct. She did not question this and just got on with raising her children and working. Ms Kaupe told the Tribunal that from time to time she checked the balance of her bank account through an Automatic Teller Machine ("ATM") or through a telephone banking service. Ms Kaupe denied saying to Mr Lockwood that she knew her Parenting Payment would change or reduce following her recommencement of employment.
Currently, Ms Kaupe referred to her life as difficult in being a single parent, trying to work and raise two young children. Ms Kaupe stated that it is always difficult trying to get the balance right in these matters. Her former partner has since remarried in April 2000 and he and his new partner are expecting a baby. Ms Kaupe further informed the Tribunal that all of her family is overseas and therefore she has no relations in Australia to assist her. Ms Kaupe described the Parenting Payment debt as having a very detrimental effect on her. Ms Kaupe stated that she requires the Parenting Payment to support herself and her children. Ms Kaupe currently receives $350.00 per fortnight in Family Payment. Her cashflow is affected by the $20.00 per fortnight withholding and she constantly struggles to make ends meet each week. Often, Ms Kaupe does not meet all her financial commitments and she has to borrow money. Since the withholdings from her benefits have commenced, she has borrowed money on at least three occasions. Ms Kaupe pays a monthly rental on her accommodation of $1,580.00 and has a weekly grocery bill of $80.00. She owns an old BMW motor vehicle which was the family car before her partner left and it costs her approximately $50.00 per week for petrol, in addition to $2,000.00 per year for service requirements, including $800.00 for insurance. Ms Kaupe pays electricity charges of $150.00 per quarter and gas fees of $80.00 per quarter. She also is required to pay Day-Care charges of $360.00 per month which covers the cost of one of her children attending Day-Care three days per week. Further expenses include tax at $400.00 per month; home contents' insurance of $35.00 per month; and, telephone charges including rental of a land line and use of a mobile phone at $220.00 per month. Ms Kaupe told the Tribunal that she has a mobile phone because she is not allowed to take personal calls at work, but she is required to have a telephone so that the Child-Care Centre is able to contact her quickly in an emergency if her child is ill or indeed if the other son's school needs to contact her. Ms Kaupe has NRMA shares to the value of $200.00. She has two bank accounts and has no other properties or assets either in Australia or in the United Kingdom. Ms Kaupe stated that at the time of hearing she had $500.00 in one bank account and $300.00 in another.

Ms Kaupe noted that when both children are at school which will be next year, the children's father will stop paying any maintenance and then her financial situation will be even more precarious. She stated that she believed she would be able to manage financially this year if no emergencies or out- of-the-ordinary expenses occurred, though the situation can often suddenly change as has occurred when she had to borrow money.
In relation to her other circumstances, Ms Kaupe stated that she and her children are in good health.
Evidence of Mr G Lockwood
Mr Glenn Lockwood informed the Tribunal that he is the Manager of Centrelink's Maroubra Customer Service Centre and has been employed there for five years. He has been employed by Centrelink for a total of eight years during which time he has dealt with a large number of cases involving the raising of debts.
In August 2000, Mr Lockwood held the position of Team Leader in charge of quality improvement at the Customer Service Centre. This position involved his ensuring that Centrelink officers' duties were performed correctly and efficiently. For example, if a manager had any concerns about certain issues or areas of work, then Mr Lockwood would investigate the matter. Specifically in relation to Ms Kaupe's matter, the officer dealing with this had gone on leave, having done so without completing all of his or her work. This situation had been noticed and the matter given to Mr Lockwood as part of his role to check that officer's backlog and incomplete work. There had also been calls from other customers in relation to that officer's other matters. Mr Lockwood's evidence was that the officer was meant to have called Ms Kaupe back within three hours of Ms Kaupe's call concerning her recommencement of employment, but did not do so. In the course of his investigating Ms Kaupe's matter, it came to Mr Lockwood's attention that Ms Kaupe had advised Centrelink that she had secured some employment but that Centrelink had failed to act on this information.
Mr Lockwood recalled that he telephoned Ms Kaupe on 10 August 2000. He indicated to her that the reason for his call was the Department's failure to process Ms Kaupe's information about her recommencement of employment and to apologise to her for the Department's oversight. In his years of working on such matters, Mr Lockwood commented that it was best to ring customers to alert them to any problems before they received written advice of the Department's action and in Ms Kaupe's case, before the raising of an overpayment debt. Mr Lockwood thought it best to do this so that Ms Kaupe did not learn of the debt from a letter, without any personal contact from the Department. Mr Lockwood told the Tribunal that Ms Kaupe was understandably upset that Centrelink had not acted on her advice. She expressed the view that it was unfair that she be expected to repay money to the Department when the reason for the debt's occurrence lay at the Department's feet.
Mr Lockwood told the Tribunal that he had asked Ms Kaupe whether she had expected her rate of Parenting Payment to stay the same when she was earning $23,000.00 per annum. Mr Lockwood further recalled that Ms Kaupe stated she did not know what her rate of payment was and that she thought the Department would pay her what she was entitled to receive. Mr Lockwood further stated that Ms Kaupe had replied to him that she expected that the rate would reduce with her increased employment income, but she had stated that she did not know exactly what the rate would be. Ms Kaupe had told Mr Lockwood during the telephone conversation that it was the Department's job to tell her what the correct Parenting Payment (Single) rate should be. Mr Lockwood did not agree with Ms Kaupe's memory of the conversation, in which she recalled that she told him that she was aware that her Parenting Payment "may" have changed as a result of her increase in employment income. Mr Lockwood stated that his clear recollection was that Ms Kaupe had stated that she would have expected her Parenting Payment to reduce with increased income. Mr Lockwood further stated to the Tribunal that the fact that Ms Kaupe had contacted the Department to advise of her recommencement of employment indicated to him that she knew of the connection between increased employment income and reduced Parenting Payment.
Mr Lockwood stated that the telephone conversation with Ms Kaupe ended abruptly and he could understand why she was so distressed.
Mr Lockwood made hand written notes of his telephone conversation with Ms Kaupe on 10 August 2000 and later that day, he created a computer record of the discussion (T9, p21) noting particularly, that it was important to record this, particularly as Ms Kaupe was most unhappy about the raising of the debt. Mr Lockwood further noted that he explained Ms Kaupe's appeal rights to her in relation to an ARO and the Administrative Appeals Tribunal, but he did not discuss with her the details concerning withholding rates from her current departmental benefits.
The Tribunal was informed that Mr Lockwood did discuss with Ms Kaupe the provisions contained within section 1237A of the Act, particularly as it related to the issue of receipt of departmental benefits in good faith.
Submissions
Ms Kaupe submitted that she had acted as required by the Centrelink guidelines and had informed the Department of her change in employment status and hence increase in income. In so doing, Ms Kaupe submitted that she had acted in good faith.
In relation to the telephone conversation with Mr Lockwood on 10 August 2000, Ms Kaupe noted that he was very understanding and clearly explained the Department's position particularly as it related to the issue of receiving Parenting Payment (Single) in good faith. Ms Kaupe submitted that she did not recall stating to Mr Lockwood that she knew her increase in employment income would result in decreased Parenting Payment. She believed that there may have been a relationship between the two, but submitted that she did not know that this would occur, did not understand how the Parenting Payment rate was calculated nor did she have knowledge of the Department's guidelines on such matters.
Ms Kaupe submitted that she had acted in good faith and trusted the Department to assess the information she had provided and then to assess her correct entitlement. Ms Kaupe contended that she had not made any mistakes previously in relation to such matters, nor had the Department in its assessment of her entitlement based on information she had provided. Ms Kaupe reiterated that she had trusted the Department and was entitled to do so. Ms Kaupe stated that she did not at any stage know that anything was remiss until the telephone call on 10 August 2000 from Mr Lockwood.
Ms Kaupe concluded that she did not believe that she should have to pay for the Department's mistake.
In support of Ms Kaupe's case, Ms S Koller, Solicitor of the Welfare Rights Centre City provided a written submission dated 4 July 2001 (Exhibit A1).
Ms Koller referred the Tribunal to Haggerty v Department of Education, Training and Youth Affairs [2000] FCA 1287 in which the Federal Court discussed the issue of receipt in good faith as provided in section 1237A of the Act. In Haggerty v Department of Education, Training and Youth Affairs (supra), French J quoted Finn J in Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 50 ALD 186:
"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…"

In Haggerty v Department of Education, Training and Youth Affairs (supra) French J noted:
"I do not take what his Honour [Finn J in Prince] 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.
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.
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 rise 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…"

Ms Koller submitted that in order to deny Ms Kaupe waiver under section 1237A of the Act, it would be necessary for the Tribunal to make a finding of actual want of good faith and a want of good faith cannot simply be inferred due to the existence of facts which might have put another person on notice of the problem. The Tribunal must find, Ms Koller contended, that Ms Kaupe herself was aware or held a suspicion that the payments were incorrect and she chose not to pursue the matter further. Ms Koller further submitted that it might be argued in this case that Ms Kaupe had material available to her from which an "imaginary recipient" might have been able to deduce that an incorrect payment was being made. However, it is not sufficient that Ms Kaupe had such an awareness. In Ms Koller's view, it was more probable than not that Ms Kaupe simple failed to consider the matter one way or the other after making her second call to the Department and providing the details of her income and the length of the working period. Ms Koller submitted that Ms Kaupe was clearly operating under a belief that some type of income spreading arrangement would occur, as on both calls she mentioned the duration of her employment. Ms Koller asserted that Ms Kaupe had no clear belief concerning exactly what would happen to her Parenting Payment. She had an expectation that whatever assessment Centrelink made, the assessment would be undertaken correctly and she would obtain her due entitlement. Ms Koller contended therefore that it could not be said that there was an absence of good faith in Ms Kaupe's case.
If the Tribunal did not accept Ms Koller's submissions in relation to section 1237A of the Act, then in the alternative, it was submitted that the Tribunal consider waiver of a part or all of the debt under the provisions of section 1237AAD of the Act in the special circumstances of Ms Kaupe's case. In this regard, Ms Koller submitted that Ms Kaupe made no knowingly false statements or omissions and now faces the difficulty of repaying the overpayment debt as a sole parent.
Ms Koller submitted that Ms Kaupe has a number of special circumstances. Firstly, the degree of administrative error which gave rise to the overpayment, in particular that Centrelink failed to act on two advices from Ms Kaupe, is a special circumstance. A further special circumstance is that Ms Kaupe is a sole parent with no family in Australia to fall back on for support in caring for her children while she attempts to maintain her contact with the workforce.
Ms Koller submitted that administrative error can operate as a special circumstance where the mandatory waiver provision contained within section 1237A of the Act does not apply. The Tribunal was referred to Ceresna and Secretary, Department of Family and Community Services [1999] AATA 346. In that case, Ms Koller submitted that the applicant was clearly aware that the departmental benefit was not payable after a change in circumstances.
Ms Koller concluded that in Ms Kaupe's case, it would be "unjust, unreasonable or otherwise inappropriate" not to consider her circumstances as special, pursuant to the decision of the Federal Court in Secretary, Department of Social Security v Hales (1998) 82 FCR 154.
Ms Smith, representing the Department, submitted that Ms Kaupe commenced employment on 8 May 2000 and advised Centrelink that her annual earnings would be $23,000.00. The Department failed to process this information and Ms Kaupe continued to be paid at an unchanged rate of Parenting Payment (Single) until 17 August 2000. The Department had not taken Ms Kaupe's earnings into account and she was therefore paid at a rate which was higher than her correct entitlement. The excess payment constitutes a debt due to the Commonwealth pursuant to subsection 1223(5) of the Act. Ms Smith conceded that the debt arose solely because of departmental administrative error.
Ms Smith referred the Tribunal to Section 1237A of the Act which allows for the waiver of a debt in circumstances where there has been sole administrative error and the departmental benefit was received in good faith. While the first element of section 1237A is satisfied in that the debt arose solely because of departmental administrative error, Ms Smith contended that the second element of section 1237A was not met because Ms Kaupe did not receive the Parenting Payment in good faith.
Ms Smith referred the Tribunal to the term "received in good faith" as having a particular meaning which was enunciated in Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (supra). In that case, Ms Smith noted that a student had cancelled his entitlement to AUSTUDY in December but payments continued to be paid for several months thereafter. After six weeks, the student became aware of the continuing payment and contacted the Department of Education, Employment, Training and Youth Affairs repeatedly to have the payments stopped. Payment was finally cancelled after the student's Member of Parliament contacted the Department of Education, Employment, Training and Youth Affairs on his behalf. The Federal Court held that the money was not received by Mr Prince in good faith at any time, even before he became aware of the payments, because he knew he had no entitlement to AUSTUDY. Finn J noted:
"…The section [289] 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…"

Ms Smith submitted that a consideration of good faith involves an examination of a person's state of mind at the time the relevant payments were received, not what an imaginary income support recipient ought to have known.
Ms Smith further referred the Tribunal to the decision in Haggerty v the Department of Education, Training and Youth Affairs (supra) where the facts in that situation were quite different from Ms Kaupe's. Ms Smith concurred with Finn J's comments in that case that want of good faith will arise when there is a positive belief that a payment has been made by mistake, or where there is a suspicion held by the recipient that he or she may not be entitled to a payment, or there is a doubt as to entitlement in addition to some objective basis for such suspicion or doubt.
Ms Smith contended that Ms Kaupe did not receive the relevant Parenting Payment in good faith. In this regard, Ms Smith submitted that Ms Kaupe was aware that her employment income would affect her rate of payment. She had been informed of this by letters, for example dated 20 April 1999 and 18 November 1999, in addition to her actual annual income amounts which had been used to assess her Parenting Payment rate. In addition, Ms Smith submitted that Ms Kaupe was advised separately of how her earnings would affect her rate of payment as part of a "pro-active debt prevention debt strategy" on the part of Centrelink.
Referring to Ms Kaupe's discussion of the debt with Mr Lockwood on 10 August 2000 (T9), Ms Smith submitted that the contents of this telephone discussion clearly demonstrated that Ms Kaupe had no expectation that her fortnightly earnings from May 2000 would allow her rate of Parenting Payment to remain unchanged. Ms Kaupe had previously experienced a substantial reduction in her Parenting Payment between April 1999 when she had advised the Department of the commencement of earnings which were only half the level of the earnings she had advised on June 2000. A further example of Ms Kaupe's experience of the relationship between her earnings and Parenting Payment occurred when her earnings ceased in November 1999, causing her rate of Parenting Payment to again increase substantially.
In the Respondent's written Statement of Facts and Contentions (Exhibit R1), it was contended that the Respondent does not accept any of Ms Kaupe's assertions that she was unaware that her earnings affected her rate of Parenting Payment. It was contended that Ms Kaupe is an articulate and intelligent person and that at the time the relevant payments were received, she knew that there was a causal link between the reporting of earnings and the reduction in the rate of Parenting Payment. Further, Ms Kaupe had this knowledge from her experience of having been given information in departmental letters and from her previous experience after reporting changes in her earnings.
Ms Smith contended that the fact that Ms Kaupe was not familiar with the actual formula for calculating the rate changes is irrelevant to the issue of receiving the payment in good faith. Previous changes to Ms Kaupe's rate of payment were substantial enough that her expectation of a rate change after reporting earnings of $23,000.00 per annum would be activated.
Ms Smith further contended that the Tribunal should prefer Mr Lockwood's evidence in relation to the telephone conversation between himself and Ms Kaupe as he is an experienced officer who provided objective evidence to the Tribunal. He had also prepared a contemporaneous file note of his telephone discussion with Ms Kaupe on 10 August 2000. Ms Smith submitted that Ms Kaupe had not made any notes of this conversation. Ms Kaupe knew her earlier Parenting Payment rate had been affected by her earnings and the circumstances between May and August 2000 were similar. This knowledge must be inferred in relation to the earnings arising out of Ms Kaupe's recommencement of employment in May 2000. Ms Smith concluded in relation to section 1237A of the Act, that while Ms Kaupe had received additional Parenting Payment as a result of the Department's error in this matter, the existence of the departmental error did not relieve Ms Kaupe of her obligation to repay the debt.

In relation to the application of section 1237AAD of the Act which allows for a total or partial waiver of a debt in the special circumstances of a case, Ms Smith referred the Tribunal to various Tribunal and Federal Court decisions. Specifically, she referred to Re Beadle and Director-General of Social Security (1984) 6 ALD 1 in which Toohey J stated:
"An expression such as "special circumstances" is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special…"

The Tribunal was further referred to Re Ivovic and Director-General of Social Services (1981) 3 ALN N95. That Tribunal noted:
"The reference to special circumstances 'by reason of which' a person liable 'should be released' requires, in our view, that there must exist in the circumstances of the case, a factor or factors which justify the making of an exception in whole or in part to the principle of liability which the Act otherwise establishes… Thus whilst keeping the dominant principle of [recovery of a debt] in mind [the decision-maker] must nevertheless be prepared to respond to the special circumstances of any particular case by reason of which strict enforcement of the liability created by the sections would be unjust, unreasonable, or otherwise inappropriate…"

Ms Smith noted that Ms Kaupe is a single parent with two dependent children. Her Centrelink computer records indicate that her current rate of Parenting Payment is $112.63 per fortnight. This rate takes into account her other earnings of $23,000.00 per annum gross. Ms Smith noted that Ms Kaupe also receives a net family tax payment of $415.26 per fortnight which includes an amount for rent assistance. Ms Kaupe's records further indicate that she pays $340.00 per week in rent. The Department's debt is currently being reduced by withholdings from Ms Kaupe's family tax benefit of $20.00 per fortnight. Ms Smith submitted that Ms Kaupe's circumstances are like any other recipient of income support. Ms Smith further noted that neither Ms Kaupe nor her children had any health problems or any other matter which could be considered a special circumstance. Accordingly, Ms Smith contended that Ms Kaupe's circumstances do not indicate any degree of "unusualness" so as to permit them to be described as special for the purposes of section 1237AAD of the Act.
While Ms Smith noted the Welfare Rights Centre's submission on Ms Kaupe's behalf that administrative error is a special circumstance, Ms Smith submitted that human error exists from time to time within the Department. The Respondent submitted that administrative error of itself should not be used as a special circumstance under section 1237AAD of the Act so as to frustrate the intention of section 1237A of the Act or to substitute for that section.
Findings
The Tribunal has reached a decision in this matter taking into account the oral and documentary evidence, the legislation and case law.
The Tribunal finds that Ms Kaupe was truthful in her evidence and was a frank and credible witness.
There is no dispute in this matter and the Tribunal so finds that there is an overpayment debt due to the Commonwealth in the amount of $2,083.80, which occurred when Ms Kaupe was overpaid Parenting Payment (Single) between 8 May 2000 and 10 August 2000.
There is also no dispute in this matter and the Tribunal so finds that the overpayment arose solely because of departmental administrative error when the Department failed to act on Ms Kaupe's advice of her increase in earnings.
The issue for the Tribunal to determine relates to debt recovery and specifically the application of either section 1237A or section 1237AAD of the Act.
As detailed earlier, section 1237A of the Act involves the waiver of a debt in circumstances where there is sole administrative error and the payment has been received in good faith. The Tribunal has already determined that the Parenting Payment debt incurred by Ms Kaupe arose solely because of departmental administrative error. Therefore the Tribunal must now consider whether the payment was received by Ms Kaupe in good faith.
Ms Kaupe's evidence was that she had previously experienced the reduction of Parenting Payment when her income from employment had increased. This had occurred on more than one occasion. It was also Ms Kaupe's evidence that she knew that her Parenting Payment had not decreased after she had informed the Department of her recommencement of work in May 2000.
The Tribunal notes Ms Kaupe's evidence and accepts that in her telephone conversation with Mr Lockwood on 10 August 2000, she was not saying that she knew that her earnings would have caused a decrease in her Parenting Payment. Rather, Ms Kaupe had stated that she had discussed this matter in terms that an increase in her earnings "may" have caused a decrease in Parenting Payment. Ms Kaupe was very firm that she had no idea of the departmental guidelines in relation to the calculation of Parenting Payment rate and further, that she had no problem in the past with her Parenting Payment. The Tribunal understands Ms Kaupe had trusted the Department that having advised the Department of her recommencement of employment and hence increased earnings, the Department would work out her entitlement.
The Tribunal has considered the principle of receipt in good faith as discussed in Department of Education, Employment, Training and Youth Affairs v Prince (supra) and also in the later decision, Haggerty v Department of Education, Training and Youth Affairs (supra). In this later case, French J, noting the decision in Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (supra), concluded that the criterion of receipt in good faith may be characterised as a positive one. French J noted that there is no onus to be met by the recipient who claims the benefit of the mandatory waiver. French J concluded that waiver can only be declined where there has been receipt without good faith of moneys mistakenly paid as was the general approach taken by Finn J in Prince. Consistent with what was concluded in the Prince case, French J further noted that the lack of good faith arises where there is a positive belief that payment has been made by mistake or when there is a suspicion by a recipient that he or she may not be entitled to a payment made or has some doubt as to the entitlement, coupled with some objective basis for this suspicion or doubt. French J further concluded that an imputation of want of good faith should not be made simply because there are in existence objective facts which could raise a belief or doubt or suspicion of non-entitlement in the mind of a recipient. Further, "reason to know" as Finn J used that term in Prince (supra) does not necessarily import a criterion of imputed as distinct from actual want of good faith.
The Tribunal asks itself whether or not Ms Kaupe had a belief, doubt or suspicion as to her continued entitlement to the higher rate of Parenting Payment (Single), when her income from employment had increased. Ms Kaupe's evidence was that she had noted in the past the relationship between her increased employment income and a decreased Parenting Payment. Ms Kaupe had acknowledged to Mr Lockwood that her Parenting Payment may have decreased hence indicating a suspicion that Parenting Payment might reduce, but Ms Kaupe's evidence was that she was not sure.
The Tribunal finds that on the available evidence, Ms Kaupe had a suspicion as to the possibility of a reduction of her Parenting Payment as a result of her increased earnings. This suspicion or doubt was based on her previous experience in such matters. In these circumstances, the Tribunal must find that Ms Kaupe did not receive the Parenting Payment (Single) in good faith and accordingly, a decision to waive the Parenting Payment overpayment debt cannot be made pursuant to section 1237A of the Act.
The Tribunal turns to consider section 1237AAD of the Act as to whether or not a part or whole of the debt can be waived in the special circumstances of the case. The Tribunal is satisfied that the debt did not result wholly or partly from a debtor or another person knowingly making a false declaration or omitting or failing to comply with a provision of the Act. Therefore the Tribunal finds that the requirements of subsections 1237AAD(a)(i) and (ii) are satisfied.
In relation to subsection 1237AAD(b) of the Act, the Tribunal has also found that the debt arose solely because of departmental administrative error. Through no fault of Ms Kaupe, this debt arose, and if the Department had acted upon the advice provided to it by Ms Kaupe on at least two occasions, then the debt would not have existed.
The Tribunal notes the decision in Ceresna and Department of Family and Community Services [1999] AATA 346 in which that Tribunal found that there was a special circumstance in the administrative error of the Department which had caused the creation of a debt. The Tribunal finds that in Ms Kaupe's case, the way in which the Parenting Payment debt arose through the Department's administrative error must be considered as a special circumstance.
The Tribunal also considers that Ms Kaupe's financial situation is a special circumstance. Ms Kaupe is repaying the debt by way of withholdings. She finds this onerous and to the point where she has had to borrow money from friends on a number of occasions. Ms Kaupe has no family in Australia and therefore relies on her own ability to earn income in addition to departmental benefits, to continue the financial management of her family.
The Tribunal finds that there are no health problems in Ms Kaupe's case which can be considered special.
The Tribunal considers that the circumstances described above are sufficiently special as to make it unjust and unreasonable not to have regard to them. In so finding, the Tribunal notes the Respondent's submission concerning the utilisation of section 1237AAD to frustrate the intention of section 1237A or to in some way use the special circumstances discretion as a back door approach to allow waiver. The Tribunal is of the view however, that not to have regard to the circumstances of how the Parenting Payment debt arose and the impact of this debt financially on Ms Kaupe's circumstances cannot be disregarded. It is precisely these types of circumstances which the Tribunal considers are appropriate to invoke the exercise of the discretion contained within section 1237AAD of the Act.
The Tribunal determines therefore that there are special circumstances present in Ms Kaupe's case and it is more desirable than not to waive the debt in part or as a whole. The Tribunal further considers that it is more desirable to waive a part or whole of the debt rather than write it off.
Thus having determined that section 1237AAD of the Act applies in Ms Kaupe's circumstances and that the debt should be waived, it remains for the Tribunal to further determine the extent of waiver. The Tribunal determines that an amount of $1,562.85 should be waived in this matter. This represents a waiver of 75 per cent of the debt and reflects that the major responsibility for the debt's occurrence lies with the Department. Ms Kaupe, however, by not acting on her suspicion or her belief of the possibility that the Parenting Payment would reduce, bears some responsibility for not causing the debt to be discovered earlier, with the consequence that the amount of Parenting Payment overpaid to her might have been reduced.
Accordingly, for all the reasons set out above and in the circumstances of this case, the Tribunal decides, pursuant to section 43 of the Administrative Appeals Tribunal Act 1975, that the decision under review is set aside and in substitution therefor the Tribunal decides that pursuant to section 1237AAD of the Act, an amount of $1562.85 is waived from the debt in the special circumstances of the case.
I certify that the 75 preceding paragraphs are a true copy of the reasons for the decision herein of Ms S M Bullock, Senior Member
Signed:         .....................................................................................
  Stella Vaughan, Associate
Date of Hearing  6 July 2001
Date of Decision  28 September 2001
Representative for the Applicant              Self-Represented
Representative for the Respondent          Ms A Smith, Departmental Advocate