Treloar and Secretary, Department of Social Services (Social services second review)
[2018] AATA 3203
•4 September 2018
Treloar and Secretary, Department of Social Services (Social services second review) [2018] AATA 3203 (4 September 2018)
Division:GENERAL DIVISION
File Number: 2017/4956
Re:Geoffrey Treloar
APPLICANT
AndSecretary, Department of Social Services
RESPONDENT
DECISION
Tribunal:Senior Member B J Illingworth
Date:4 September 2018
Place:Adelaide
The decision under review is set aside and is substituted with the decision that pursuant to s 1237A of the Social Security Act1991 the Applicant’s debt of $771.50 should be waived.
........................[Sgd]............................................
Senior Member B J Illingworth
CATCHWORDS
SOCIAL SECURITY – Disability Support Pension – Overpayment – Debt due to the Commonwealth – Whether attributable solely to administrative error – Whether payment received in good faith – Whether payment raised within the six week period – Decision set aside and substituted
LEGISLATION
Social Security Act 1991, ss 1223, 1237A, 1237A(1A), 1237AAD
Social Security (Administration) Act 1999, ss 68, 72
CASES
Secretary, Department of Family & Community Services v Sekhon [2003] FCA 76
Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190
Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1998) 152 ALR 127
Jazazievska v Secretary, Department of Family and Community Services (2002) 65 ALD 424
Haggerty v Department of Education, Training and Youth Affairs (2000) 31 AAR 529
Pledger v Secretary, Department of Family and Community Services [2002] FCA 1576Re Ward and Secretary, Department of Employment & Workplace Relations [2006] AATA 187; (2006) 90 ALD 111
REASONS FOR DECISION
Senior Member B J Illingworth
4 September 2018
INTRODUCTION
This is an application by Mr Geoffrey Treloar (“the Applicant”) to review a decision of the Social Services and Child Support Division (“SSCSD”) made on 14 July 2017 which affirmed an earlier decision of the Department of Human Services dated 17 February 2017, deciding namely that:
(a)The Applicant received a payment of Disability Support Pension (“DSP”) in the sum of $982.38 on 1 April 2015
(b)The Applicant was not entitled to the DSP payment and therefore incurred a debt in the sum of $982.38; pursuant to s 1223 of the Social Security Act 1991 (“the Act”);
(c)The debt was caused solely due to administrative error;
(d)The debt raised on 2 April 2015 ($210.88) cannot be waived as it was raised within 6 weeks of being paid pursuant to s 1237A of the Act;
(e)The remaining portion of the debt was not raised within 6 weeks of payment however the Applicant did not receive this payment in good faith, as such the waiver should not apply;
(f)The discretion to waive recovery of the debt pursuant to s 1237AAD of the Act should not be exercised, as no special circumstances exist.
At the hearing the Applicant represented himself and the Respondent was represented by Mr Nguyen from Sparke Helmore Lawyers.
The Respondent did not accept that the debt was caused solely by administrative error and said that the Applicant and Respondent both erred in causing the debt to be incurred.
The Applicant gave oral evidence in support of his application.
ISSUES FOR CONSIDERATION
It was agreed that the Applicant was not entitled to the DSP payment he received of $982.38. However, the Applicant did not accept that sum to be his indebtedness to the Respondent, at the time of the hearing of the application. The Applicant maintained that he had repaid $210.88 of that debt and should not be required to repay the remaining balance. Hence the following issues for consideration arose:
(a)What was the amount of the Applicant’s debt;
(b)When was notice of the debt given to the Applicant;
(c)Was the debt caused solely by administrative error or did the Applicant also err in causing or contributing to the debt;
(d)Was the money received by the Applicant in good faith; and
(e)Should the discretion to waive the debt be exercised, and if so, to what extent?
LEGISLATION
The following provisions of the Social Security Act 1991 (“the Act”) and the Social Security (Administration) Act 1999 (“Administration Act”) are relevant in this matter.
The Act
It is accepted by both parties that pursuant to s 1223(1) of the Act was not entitled to the social security payment of $938.38 and incurred a debt due to the Commonwealth:
1223 Debts arising from lack of qualification, overpayment etc.
(1)Subject to this section, if:
(a)a social security payment is made; and
(b)a person who obtains the benefit of the payment was not entitled for any reason to obtain that benefit;
the amount of the payment is a debt due to the Commonwealth by the person and the debt is taken to arise when the person obtains the benefit of the payment.”
Even if a debt is owed, the Secretary may write off a debt in certain circumstances set out in s 1236 of the Act which provides:
1236 Secretary may write off debt
(1)Subject to subsection (1A), the Secretary may, on behalf of the Commonwealth, decide to write off a debt, for a stated period or otherwise.
(1A)The Secretary may decide to write off a debt under subsection (1) if, and only if:
(a)the debt is irrecoverable at law; or
(b)the debtor has no capacity to repay the debt; or
(c)the debtor's whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or
(d)it is not cost effective for the Commonwealth to take action to recover the debt.
Further, s 1237A(1) of the Act provides that 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:
1237A Waiver of debt arising from error
(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.
If the debt is found to have arisen solely as a result of administrative error, s 1237A(1A) of the Act must then apply:
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.
Further, the Secretary may exercise its discretion to waive the right to recover all or part of the debt if satisfied that pursuant to s 1237AAD of the Act:
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, the Administration 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.
The Administration Act
Section 68(2) provides:
68 Person receiving social security payment or holding concession card
(2)The Secretary may give a person to whom this subsection applies a notice that requires the person to do any or all of the following:
(a)inform the Department if:
(i) a specified event or change of circumstances occurs; or
(ii) the person becomes aware that a specified event or change of circumstances is likely to occur;
(b)give the Department one or more statements about a matter that might affect the payment to the person of the social security payment;
(c)give the Department one or more statements about a matter that might affect the operation, or prospective operation, of Part 3B in relation to the person…
Section 72(1) provides:
72 Provisions relating to notice
(1)A notice under this Subdivision:
(a)must be given in writing; and
(b)may be given personally or by post or in any other manner approved by the Secretary; and
(c)must specify how the person is to give the information or statement to the Department; and
(d)must specify:
(i) in the case of a notice under section 68 that requires the giving of more than one statement, each relating to the payment of the social security payment in respect of a period--the date by which the person is to give each statement to the Department; or
(ii) in any other case--the period within which the person is to give the information or statement to the Department; and
(e)must specify that the notice is an information notice given under the social security law.
BACKGROUND
The Applicant had an extensive history with the Respondent including matters previously before the Administrative Appeals Tribunal (“the Tribunal”). That history is relevant only to put in context the various factors that were impacting upon the circumstances in which the subject debt was incurred, the amount of the debt, when notice of the debt was given and whether the payment was received by the Applicant in good faith.
The fact of that history is not relevant to the Applicant’s credibility and it would be improper to use it in that way.
In addition to the T Documents received into evidence the Applicant also tendered a bundle of documents (3 pages of Centrelink records) that were not before the previous decision makers. I will refer to those and their relevance later in these reasons.
On 16 March 2015, the Respondent sent a letter titled “Your Centrelink Payment” to the Applicant advising him of his future DSP entitlements, and enclosed in that letter was a document headed “Your Reporting Statement For Disability Support Pension” (“the Reporting Statement”).[1]
[1] Exhibit R1, T9 pp 38-41.
The letter said under heading “Information about your Disability Support Pension” the following:
·At least one of your reporting days is different due to a public holiday. Report on the days shown on your reporting statement or your payment(s) may be delayed.
·…If you earned more or less than you estimated, please call us on 132 717 within 14 days of reporting your estimate to tell us the correct gross amount of earnings.
The Reporting Statement relevantly provided:
You must report every 2 weeks for each Reporting Period on the dates below. Once your reporting requirements have been met, your payment will be issued for each Reporting Period
For this Centrelink Reporting Period
Report on this day
10 Mar 2015
to
20 Mar 2015
Friday
20 Mar 2015
21 Mar 2015
to
3 Apr 2015
Wednesday
1 Apr 2015
4 Apr 2015
to
17 Apr 2015
Friday
17 Apr 2015
18 Apr 2015
to
1 May 2015
Friday
1 May 2015
2 May 2015
to
15 May 2015
Friday
15 May 2015
16 May 2015
to
29 May 2015
Friday
29 May 2015
What you must report for each Centrelink Reporting Period
· If any circumstances have changed (see the list on the back of this page for details)
· If you were employed:
× The business where you worked.
× The amount you earned for work done in the Centrelink Reporting Period that relates to the day you need to report. The amount reported must be the amount earned before tax and other deductions such as salary sacrifice. You must report even if you have not received some or all of the pay yet.
× The number of hours you worked.
The Applicant said, and I accept, that he did not receive the letter and enclosure until after the first reporting date of 20 March 2015. He believed he received the correspondence on or about 23 March 2015.
The Applicant did not contact the Respondent immediately upon receipt of the letter and enclosure. He first contacted the Respondent on 2 April 2015 the day after the second report date of 1 April 2015.
The Applicant said that he did not appreciate the need to immediately contact the Respondent for a number of reasons including:
(a)The Applicant had not been receiving DSP for many months and possibly years prior to the Reporting Period 10 March 2015 to 20 March 2015. He said that for approximately 54 months he received no DSP.
(b)Further the Applicant had been for some time in debt to the Respondent. That debt was originally of or about $44,000 reduced to $23,000 which he was then paying off at the rate of $20 per fortnight.
(c)In early March 2015 the Applicant was communicating with his nominated contact person (the contact person) at the Department in relation to a number of matters, including to advise that he commenced employment on 5 March 2015.
(d)On 6 March 2015 when speaking to his contact person they discussed:
(i)an update on a reimbursement of the Applicant’s DSP entitlement for the period 23 August 2011 to 31 July 2012 in relation to which period the Secretary had reversed an earlier decision to cancel the Applicant’s DSP payment;
(ii)The total amount of that reimbursement and when it would be paid;
(iii)When his pensioner concession card (“PCC”) was to be issued which he was advised would occur when his DSP payment was current;
(iv)When a decision would be made with respect to his SSAT debt which was a separate issue between the Applicant and the Respondent at the relevant time; and issues relating to a privacy dispute he then had with the Department.[2]
[2] Exhibit R1, T11 p 46.
The Applicant said in evidence that he was required to have a PCC before he received any DSP payment and he did not have a PCC at the time he received the letter and enclosure. The records reflect this belief. There was no evidence to the contrary and I accept that was his understanding.
On 18 March 2015, the Applicant was again in communication with the Department. The Departmental records[3] record amongst other things the following.
[3] Exhibit R1, T11 pp 47-48.
Txt: Customer contacted SYSTEMS SUPPORT GR ON 18 MAR 2015 regarding Immediate/Urgent Payment for Disability Support Pension. Information was obtained via Counter Statement using Personal – In Office.
Document created by IN8 on 18 MAR 2015.
Re/issue of $44,478.39 for DSP Reason: REI Payment Method: Direct Cred IM501325
Txt:Customer contacted VICTOR HARBOR on 18 MAR 2015 regarding General Enquiry for Disability Support Pension. Information was obtained via Phone Call. Document created by HKE on 19 MAR 2015.
1. When will cust receive backpayment? Happening now at approx. $9500 per day, will take 5 days, first payt in account 200315.
2. When will PCC be issued? Complicated answer as to pay arrears, payt is restored and cancelled each day to allow limited arrears to go out. As such, PCC won’t auto issue or work. Should issue once final arrears payt made mid-next week. If cust needs the card for something in the meantime, let me know and we’ll issue one manually.
3. Is Centrelink delaying payt given debt and SSAT decision re needing to recalculate/reduce debt? No.
4. Is Centrelink considering waiver of the debt given SSAT decision or has Centrelink appealed to AAT? No, Centrelink not appealing to AAT but it will take time to implement this.
On 19 March 2015 the Applicant spoke with the contact person again seeking an update on his DSP. The Respondents record of the conversation[4] included the following:
Txt:…I phoned the customer today to advise of arrears payments being issued over the coming 5 days. I detailed each payment amount and the reason for paying in instalments. I explained that once all arrears have been issued over the coming days I would contact him again with details of his ongoing entitlement and reporting days. Customer queried a pensioner concession card. I advised that once all arrears payments were sent I would check to ensure a card was issued.
[4] Exhibit R1, T11 p 49.
Albeit the conversations between the Applicant and the contact person occurred on the 18 and 19 March 2015, which was during the Centrelink Reporting Period 10 March 2015 to 20 March 2015, there is no record of the Applicant being advised of the reinstatement of his DSP payments; nor is there any record advising him of the fact of a letter dated 16 March 2015 and attached reporting statement having been sent to him.
The Applicant said, and I accept, that during the conversation with the contact person he did not know he was about to receive the DSP payment that is now the subject of the debt. That is consistent with the Respondent’s record of conversation dated 19 March 2015 referred to in paragraph 25 above.
At this time the Applicant said, and I accept, that he also believed he was eligible for a pension education supplement which was also the subject of discussion with the Respondent and in relation to which he was seeking clarification.
The Applicant returned to full time employment on 5 March 2015. The Departmental records do not show any discussion about the return to work albeit the Applicant said he had informed the Department and earlier offered to produce his pay slips to the Department in relation to that employment.
The Department records[5] show that on 1 April 2015, eleven days after the first reporting period, the gross sum of $982.38 ($848.38 net) was paid into the Applicant’s bank account. The sum of the payment was made up of the following:
DSP basic: $777.09
DSP Pnsup: $63.53
DSP Rent: $127.66
DSP CES: $14.10
Whold: $134.00
[5] Exhibit R1, T8 p 34.
The Respondent advised, and it was not disputed that the sum of $134.00 was withheld from the payment to the Applicant and was applied towards discharging the Applicant’s existing debt. Hence the Respondent said that the $134.00 formed part of the total sum paid as it was a benefit received by the Applicant to which he was not entitled and therefor remained part of the debt sum.
On 2 April 2015 the Applicant telephoned the contact person. He said in evidence and I accept that at that time he did not know that a DSP sum had been credited to his bank account. The Department’s records detail a number of communications made that day and indicate the following:[6]
[6] Exhibit R1, T11 pp 50-51.
(a)The Respondent advised the Applicant that an error had occurred, in respect of monies deposited into the Applicant’s bank account and that the Applicant had now incurred a debt, but it was only $210.88. A notation also reads “should it be the whole amount”;
(b)The Respondent advised the Applicant that he would follow up in respect of that debt; the notation includes “explained admin error but applied within 6 weeks = no waiver”;
(c)The Applicant asked his DSP be suspended, because he was in full time employment. The Applicant and Respondent discussed an SSAT decision recently finalised and back payment of PES which was still being resolved.
(d)The Applicant enquired whether he was to receive his PCC. He was advised it had been sent but a temporary card would be posted just in case.
(e)In a later telephone call the Applicant enquired about how the debt ($210.88 or such part thereof) was to be paid and whether a waiver might be considered.
(f)Further questions were raised and noted as follows namely;
1“How was the debt reduced?” Are there calculations available? Should it be in half if it was direct deduction and is now treated as income? I noted this was unlikely due to taper rates and income free area but this could be confirmed via actual debt calculations.
2SSAT asked DHS to consider waiver\write off given how long its taken and the complexity that has resulted. Was this applied? Based on the below notes, I assume the answer is no but has this been communicated to Mr Treloar by/for the SSAT?
3Why did he receive a Debt Recovery letter saying no arrangement was in place when he is in fact repaying [his debt at the rate] of $20 pf? I phoned DRU and resolved this – they will follow up with recoveries corp as customer is not on a payment.
(g)The records note that the Respondent emailed “legals” to clarify the best response to questions referred to in paragraph 32(f)(1) and (2) above.
The Applicant said that there was no mention in the communications on 2 April 2015 of a debt of $982.88. He said the only sum referred to was $210.88 and the words “should it be the whole amount” endorsed in the Department’s notes referred to the Applicant’s inquiry whether the total sum of $210.88 was to be his indebtedness or something less.
The absence of any reference in the Department’s records to the $982.88 supports the Applicant’s evidence about the conversation, which I accept. The Applicant in evidence said that he told the contact person that he would give him a number of weeks to respond and if he heard nothing further he would repay the $210.88. He said he did not want that sum added to his overall indebtedness.
On 2 April 2015 the Respondent issued to the Applicant an “Account payable” letter with an amount payable of $210.88 with a due date of 1 May 2015. Within that document under heading “Why is this amount payable” it reads as follows:
For the period 18 March 2015 to 20 March 2015 you were overpaid disability support pension
The correct amount of earnings from employment was not taken into account in the payment made to you. This means you have been overpaid. We are required to recover this amount.[7]
[7] Exhibit R1, T10 p 42-43 & PT20 p 109 - 110.
By the words “The correct amount of earnings from employment was not taken into account”, it suggests that the Respondent knew the Applicant was employed.
The Department’s Statement of Account dated 16 May 2016[8] which includes record of the regular payment of $20 per fortnight also shows amongst other things the following:
(h)At 16 NOV 14 an opening debt balance of $33,099.71;
(i)Various repayments including $20 per fortnight;
(j)Other transactions including:
×27 MAR 15 $183.10 credit;
×2 APR 15 $210.88 debit;
×8 APR 15 $771.50 debit;
×1 MAY 15 $210.88 credit.
[8] Exhibit R1, T20 p135-136.
The Applicant, in referencing the Departments Statement of Account, said that he had paid on 1 May 2015 the $210.88 which he believed to be the total debt he owed for the overpayment in relation to the DSP and that his debt had then been discharged.
There is no evidence before me identifying when the Applicant was advised that the total amount of his debt was $982.88 and not $210.88. However it is not said by the Respondent that notice was given within six weeks of the debt having been incurred, except to the extent that he was advised about the $210.88.
At the hearing the Applicant tendered (Exhibit 2) as a bundle, comprising two further documents recently found by him namely:[9]
[9] Exhibit 2.
(a)A letter dated 25 March 2015 which records as follows:
Your Disability Support Pension
Immediate payment 06/09/2014 to 20/03/2015 due on 27/03/2015
$848.38
Regular Payment from payment date 07/04/2015
Disability Support Pension $782.20 Plus Energy Supplement + $14.10 Plus Pension Supplement + $63.90 Plus Rent Assistance + $128.40 Less Dept Repayment - $134.80 Total $853.80 Information used for calculating your regular payment
Annual Income $2.22
Important Information
o Your Disability Support Pension will start again from 6 September 2014.
o As at 25 March 2015 you have 62 working credits.
(b)An Employment Income Detail (EAN) screen indicating amongst other things the Applicant’s “financial year total earnings” for 2013-14 of $18760.53, and “current” 2014-15 financial year earnings of $14226.71.
It is noteworthy that in relation to the payment actually received by the Applicant, the abovementioned letter referenced a payment for the period 06/09/2014 to 20/03/2015 and does not appear to be relevant to a DSP payment for a two week period ending 20/03/2015 to which the debt relates. Nonetheless the Applicant does not now recall if he had this document in his possession at the time of the conversation of 2 April 2015. In any event the letter is of little value in accurately informing the Applicant about the true circumstances of the payment received. This communication cannot in those circumstances be said to negate the Applicant’s receipt of payment in good faith.
Plainly however, by the date of the EAN screen of 17 March 2015, the Department knew of the Applicant’s income in the 2014-15 financial year, and impliedly this had been taken into account in determining the Centrelink payment. This also corroborated the Applicant’s evidence that he endeavoured to keep the Department fully informed about his financial circumstances and was in constant contact with the Department, in relation to a wide range of issues relating to a potential number of entitlements.
In any event, the Applicant was expecting back payment for DSP together with Pensioner Education Supplement payments. He said he relied on the information provided by his contact person and the Account Payable[10] in the sum of $210.88 as detailing his indebtedness which he said he was willing to pay in full and he did so.
[10] Exhibit R1 T10 p 42-43.
The Applicant said that if he was advised that his debt was in fact $982.38, he would have repaid that sum upon request, however given the complexity of the issues he was involved in with the Department he relied on their advice as to his debt.
CONCLUSION
I will first consider the application of s 1237A of the Act. This involves a consideration of three elements;
(a)The debt must be attributable solely to an administrative error (s 1237A(1));
(b)The debt must be received in good faith (s 1237A(1)); and
(c)The debt must not be raised within a six week period of the first payment (s 1237A(1A)).
Was the debt attributable solely to an administrative error or did the Applicant also err in causing or contributing to the debt?
In considering whether the debt was “attributable solely" to administrative error, the Court in SDFCS v Sekhon[11] held:
It is not enough that, in the absence of administrative error, the debt would not have arisen. Administrative error must be the sole cause, not merely one of multiple causes.”
[11] Secretary, Department of Family & Community Services v Sekhon [2003] FCA 76, per Wilcox J (at [41]) and on appeal to the Full Federal Court Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190
The notation at the end of s 1237A of the Act reproduces this principle. It clarifies that s 1237A does not apply where a part of a debt was caused partly by administrative error and partly by one or more other factors (such as error by the debtor).
The Applicant was engaged in a number of issues with the Department during the period in which he incurred the subject debt. Those issues included, amongst other things,
(a)the repayment to the Applicant of a lump sum entitlement following a decision by the Secretary reversing the cancellation of DSP for the period 23 August 2011 to 31 July 2012; the amount payable and the method of payment including by instalment.
(b)The discharging of a pre-existing debt to the Department and the balance owing.
(c)When a decision would be made about a separate SSAT debt which was payable and the amount.
(d)The issuing and receipt of the Applicant’s PCC which would occur when his DSP payment was current.
(e)The fact of, and amount of the over payment and resultant debt which was confirmed to be $210.88; the referral of the question of payment of the debt to the legal department for advice on re-payment in part or in whole, the decision not to waive the debt noting that the Applicant was advised of the debt within 6 weeks of that debt being incurred.
(f)The receipt of confirmation of the debt by written notice dated 2 April 2015 and a due date for payment of 1 May 2015; and the Applicant’s repayment of that debt.
(g)Other issues including allegations of breach of privacy.
The Applicant at the time he incurred the subject debt had not for months and perhaps years been in receipt of DSP and had not expected he had an entitlement to DSP at that time, particularly because he had an existing debt which he was repaying at the rate of $20.00 per fortnight, and because he had not yet received his PCC.
The Applicant also had issues with the Department’s record keeping and accuracy of those records. By example he received a debt recovery letter saying no arrangement was in place for repayment of his debt, when he was, by arrangement, repaying the debt at $20.00 per fortnight.
The Applicant relied on the information received from the Department when advised about the fact of his debt because of an overpayment into his bank account, and the amount of the debt namely $210.88. The Applicant allowed the Department time to check their records and confirm the amount of the debt which they did, and whether any portion of it might be waived, which they declined to do.
The Applicant was entitled to rely on and accept the information received from the Department.
The debt arose solely from administrative error of the Department. I do not find the Applicant contributed partly to the error.
Did the Applicant receive the monies in good faith?
The starting point in considering the application of the requirement of ‘good faith’ is the decision of Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 152 ALR 127 at 129-130:
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.
The Federal Court in Haggerty v Department of Education, Training and Youth Affairs (2000) 31 AAR 529 at [16] further refined the principle:
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.
Prince and Haggerty provide useful guidance with respect to the principal of ‘good faith’, however the preceding cases of Jazazievska[12] and Pledger[13] provide specific guidance on s 1237A of the Act.
[12] Jazazievska v Secretary, Department of Family and Community Services (2000) 65 ALD 424.
[13] Pledger v Secretary, Department of Family & Community Services [2002] FCA 1576.
In Jazazievska v Secretary, Department of Family and Community Services (2000) 65 ALD 424, the Court held at [40]-[41]:
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 he or she receives the payment and decides to exercise control over it by retaining it.
A person does not act in good faith where the person turns a blind eye to circumstances which raise a doubt as to the entitlement of the person to receive and retain the payment or refuses to make reasonable inquires where doubt exists…
In Pledger v Secretary, Department of Family & Community Services [2002] FCA 1576, at [59]:
What seems to emerge from these authorities is that whether a payment has been received in good faith can only be determined after a careful consideration of the actual state of mind of the recipient of that payment. In that sense the test is entirely subjective, and not objective.
In considering the Applicant’s state of mind and circumstances surrounding the subject DSP payment, I find at the time the Applicant received the DSP, he did so in good faith.
For a period of time the Applicant was unaware he had received the subject DSP payment into his bank account. It is understandable that the increase in money to his bank account did not raise any suspicions since he was expecting various payments from Centrelink with respect to his other matters with them described in paragraph 48.
I find the Applicant had no reason to believe that the funds that he accessed in his account were the result of wrongful payment by Centrelink. At the relevant time, he had not yet received his PCC and understood that to mean he could not be receiving DSP payments. I accept he only became aware of the payment when speaking to his contact person within the Department. In Re Ward and Secretary, Department of Employment & Workplace Relations [2006] AATA 187; (2006) 90 ALD 111, in considering the Prince and Haggerty principle, the Tribunal held that the amounts were received in good faith and said at [37]:
I consider that what distinguishes the present case from Prince is that at the time of receipt of what turned out to be payments of disability support pension (to which Mr Ward had no entitlement) he was expecting to receive payments from the university to which he had an undoubted entitlement. The payments that he received matched his expectation and, consequently, at the time of receipt, he had no reason to suspect that what he had received was other than the payment from the university to which he had a plain entitlement.
I do not find the Applicant turned a blind eye to the circumstances once he became aware of the payment. When the Applicant was advised of the overpayment he made all reasonable effort to confirm the debt, and made prompt arrangements to re-pay that sum to avoid any increase in his current debt which he was repaying at $20.00 per fortnight. The Applicant’s case is distinguishable from Jazazievska.[14]
[14] (2000) 65 ALD 424; when the applicant later became aware of an additional instalment of basic family payment, she queried the payment at her bank but did not contact Centrelink, choosing instead to withdraw the amount after waiting 10 days. The Court held that the payment had not been received in good faith.
By repayment of the sum of $210.88 the Applicant believed he had repaid in full the debt arising from overpayment. He had no reason to suspect that, even after Centrelink confirmed in writing the debt of $210.88 and it was repaid, he would not be entitled to the remaining balance of $771.50. Insofar as the balance sum is concerned, including that portion of monies withheld from the DSP and applied towards the discharge of the Applicant’s outstanding debt, the Applicant received those monies in good faith.
The Department records corroborate the Applicant’s evidence. The Department records in particular confirm that when dealing with the Applicant during the period the subject DSP payment was made, they failed to advise the Applicant that his DSP had been reinstated and the first payment had been made. Given the conversations that were occurring at that time, this failure by the Department is difficult to understand. Whatever the reason the Applicant was not at fault; the payment was wholly the result of administrative error by the Department and the payment was received in good faith.
Was the debt raised within 6 weeks?
Knowing of the fact of the overpayment, the Department still got it wrong when advising and later confirming the amount of the debt was $210.88 and not $982.38. The Department cannot identify from the available evidence when the Applicant was advised of the correct debt, but does not suggest that the remaining debt of $771.50 was raised within 6 weeks of the first payment that caused the debt. The Applicant says, and I accept, that he was not advised within 6 weeks regarding the remaining $771.50 of the debt.
I do find the debt in the amount of $210.88 was raised on 2 April 2015 which was within the six week period and therefore cannot be waived pursuant to s 1237(1) of the Act.
Given the ongoing failures of the Department including, to correctly advise the Applicant of the reinstatement of his DSP, the failure of the Department to issue the Applicant his PCC prior to payment of the DSP, which I accept the Applicant believed must be issued before he was entitled to receive DSP payment, the failure of the Department to advise the Applicant of the fact of the payment, the failure of the Department to advise the Applicant of the correct debt including the confirmation of the incorrect amount owed, I am satisfied that the administrative error lies solely with the Department.
Pursuant to s 1237A(1) of the Act, the remaining debt being the total DSP payment of $982.38 less the $288.10 already paid by the Applicant totalling $771.50, must be waived.
Since the provisions of s 1237A are satisfied, there is no reason for me to consider whether the discretion to waive the debt pursuant to s 1236 of the Act is enlivened, or whether any special circumstances exist pursuant to s 1237AAD of the Act.
DECISION
The decision under review is set aside and is substituted with the decision that pursuant to s 1237A of the Social Security Act1991 the Applicant’s debt of $771.50 should be waived.
I certify that the preceding 70 (seventy) paragraphs are a true copy of the reasons for the decision herein of Senior Member B J Illingworth
...........................[Sgd].........................................
Administrative Assistant - Legal
Dated: 4 September 2018
Date of hearing: 19 April 2018 Date final submissions received: 22 May 2018 Applicant: In person Advocate for the Respondent: Nam Nguyen Solicitors for the Respondent: Sparke Helmore
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