Sherwood; Department of Family and Community Services

[2000] AATA 1095

DECISION AND REASONS FOR DECISION [2000] AATA 1095

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2000/730

GENERAL ADMINISTRATIVE  DIVISION       )          
           Re      SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES        
  Applicant
           And    MATTHEW SHERWOOD
  Respondent

DECISION

Tribunal       Mr. D.W. Muller, Senior Member

Date1 December 2000

PlaceTownsville

Decision      The Tribunal sets aside the decision of the Social Security Appeals Tribunal dated 18 July 2000 and in substitution determines that there are no grounds to waive the right of the Commonwealth to recover a debt owed by Matthew Sherwood arising out of payments of Youth Allowance made to him between 1 July 1998 and 3 November 1998, during which period he was not entitled to receive Youth Allowance.           
  ...............(Signed).......................
  D.W. MULLER
  SENIOR MEMBER
CATCHWORDS
SOCIAL SECURITY – Youth Allowance  – payments received due to administrative error – whether payments received in good faith
Social Security Act 1991: s1237A(1)
Secretary, Department of Employment, Education, Training & Youth Affairs v Prince
26 AAR 385

REASONS FOR DECISION

1 December 2000   Mr. D.W. Muller, Senior Member             

1. This is an application by the Secretary, Department of Family and Community Services, to review a decision of the Social Security Appeals Tribunal, dated 18 July 2000, which waived the right of the Commonwealth to recover a debt owed by Matthew Sherwood arising out of payments of Youth Allowance made to him between 1 July 1998 and 3 November 1998, whilst he was not entitled to receive the payments.

2. The facts are not in dispute and I find as follows:

   (i)In the first half of 1998, Matthew Sherwood received Austudy whilst he studied at a recognised educational institution on a full-time basis.

   (ii)In June 1998, Matthew Sherwood ceased study and commenced employment.

   (iii)On 24 June 1998, Centrelink at Townsville received a letter from Mr. Sherwood in which he said, among other things, that he no longer required Austudy because he had started working.

   (iv)On 29 June 1998, an officer of Centrelink rang Mr. Sherwood's home telephone number and spoke to one of Mr. Sherwood's siblings.  The officer asked, "has Matthew quit school?".  The sibling replied, "Yes".

   (v)Also on 29 June 1998, the Centrelink officer telephoned Burdekin Agricultural College and was told that Mr. Sherwood's last day of attendance at the College was 3 June 1998.

   (vi)On 1 July 1998, Centrelink wrote to Mr. Sherwood to tell him that he was no longer entitled to Austudy.

   (vii)In July 1998, the administration of Austudy was changed from one area to another and the benefit had a name change from Austudy to "Youth Allowance".

   (viii)In July 1998, Mr. Sherwood received a form in the mail which invited him to transfer from Austudy to Youth Allowance.  He did not fill in the form.  He did not return it.

   (ix)For some reason, Youth Allowance was paid to Mr. Sherwood by way of deposits into the bank account which had previously received his Austudy payments.

   (x)Mr. Sherwood also had his pay from his new job paid into the same account.

   (xi)Mr. Sherwood regularly drew on the account for personal expenditure by using an automatic teller machine.

   (xii)In late October 1998, Mr. Sherwood realised that he had a higher balance in his account than he should have.  He contacted his bank and discovered that he was receiving Youth Allowance.  Until that time, Mr. Sherwood did not know and had no reason to know, that he had been receiving payments of Youth Allowance into his account.

   (xiii)On 30 October 1998, Mr. Sherwood went to the Centrelink office at Ayr to advise that he had ceased his studies on 8 June 1998 and that he was getting the Youth Allowance.

   (xiv)The Youth Allowance payments thereupon ceased.

1. There is no issue between the parties that Mr. Sherwood received $2,389.50 by way of Youth Allowance between 1 July 1998 and 3 November 1998, to which he was not entitled.  The sum represents a debt owing to the Commonwealth.

2. The issue for determination is whether or not the right of the Commonwealth to recover the debt should be waived pursuant to section 1237A(1) of the Social Security Act 1991, which provides:

   "1237A(1)  Administrative error.  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."

1. No other grounds for waiver were put before the Tribunal.

2. It was conceded by the representative of the applicant that:

   (i)Mr. Sherwood did everything he was required to do to notify Centrelink of his change in circumstances.

   (ii)The payments of Youth Allowance made to Mr. Sherwood between 1 July 1998 and 3 November 1998, were attributable solely to an administrative error made by the Commonwealth.

3. The matter for determination by the Tribunal is whether or not Mr. Sherwood received the Youth Allowance payments in good faith.  There is no suggestion that Mr. Sherwood acted dishonestly at any time in this matter.  However, there are two aspects which are important in determining the issue of "received in good faith".  It is clear beyond doubt that Mr. Sherwood knew that he was not entitled to receive the Youth Allowance.  It is also clear that he did not know that he was receiving it.  He was never in a position where he could have said, "I thought I was entitled to the money that was being paid into my account".

4. The question of how to interpret the words "received in good faith" in the context of the legislation relevant to the facts of a case like this, has been dealt with by Finn J in Secretary, Department of Employment, Education, Training and Youth Affairs v Prince 26 AAR 385, where he was considering the provisions of section 289 of the "Student and Youth Assistance Act 1973".Finn J said:

   "In these circumstances it is appropriate that I express a view on one matter that might otherwise be thought to be a possible cause of complication in making a decision under s 289.  It is this.  It is clear in the present case that at all relevant times after 22 December 1993 Mr Prince actually knew that he had no entitlement to receive AUSTUDY payments.  Is the consequence of this that he could never claim that any of the payments he received from DEETYA as AUSTUDY payments in 1994 were received in good faith even though at the time of receipt of the first three he was unaware that he had received the payment?  In other words, can a receipt be otherwise than in good faith when the recipient is unaware that the payment has been received?  The short answer to that in my view is "yes".  Knowing that, in the relevant period, he had no entitlement to receive an AUSTUDY payment, he was never in a position to be able to assert that any mistaken payment made to him was one to which he had an entitlement.  Thus while he may have received a payment of which he was ignorant, he could not, in the sense that I have explained, have received it in good faith."

1. I find that Mr. Sherwood did not receive the Youth Allowance payments in good faith within the meaning of that term in section 1237A(1) of the Social Security Act 1991. Consequently, there are no grounds to waive the right of the Commonwealth to recover the debt owed by Mr. Sherwood to the Commonwealth.

2. The decision under review is set aside.

   I certify that the 10 preceding paragraphs are a true copy of the reasons for the decision herein of Mr. D.W. Muller, Senior Member

   Signed:         .....................................................................................
              Robert Hayes, Associate

   Date of Hearing  1 December 2000
   Date of Decision  1 December 2000
   Applicant  Mr. J. Walsh, Departmental Advocate
   Respondent  Mr. Sherwood, by telephone