Trio; Secretary, Department of Family and Community Services
[2002] AATA 865
•30 September 2002
ADMINISTRATIVE APPEALS TRIBUNAL
CATCHWORDS – SOCIAL SECURITY – Parenting Payment Partnered – recovery of overpayment – waiver of debt – whether respondent knowingly failed or omitted to comply with notice requiring the department to be informed of changed circumstances – whether overpayment received in good faith – decision set aside.
PRACTICE AND PROCEDURE – whether Tribunal limited to review only part of decision sought by the applicant to be reviewed – whole of decision subject to review.
Social Security Act 1991 ss. 23(1), 500I, 1068B, 1223(5), 1237(1), 1237A, 1237AA, 1237AAA, 1237AAB, 1237AAC, 1237AAD and 1224(1); Part 2.10, Part 3.6A and Part 5.2,
Family and Community Services and Veterans' Affairs Legislation Amendment (Debt Recovery) Act 2001
Social Security (Administration) Act 1999 ss. 68 and 179(1)
Student and Youth Assistance Act 1973 s. 289(2)(b)
Student Assistance Act 1973 s. 43B(1)
Re Callaghan and Secretary, Department of Social Security (1996-97) 45 ALD 435
Secretary, Department of Employment, Education, Training and Youth Affairs v Prince ((1997) 50 ALD 186
Haggerty v Department of Education, Training and Youth Affairs (2000) 31 AAR 529
Jazazievska v Secretary, Department of Family and Community Services [2000] FCA 1484
DECISION AND REASONS FOR DECISION [2002] AATA 865
ADMINISTRATIVE APPEALS TRIBUNAL )
) S2001/402
GENERAL ADMINISTRATIVE DIVISION )
ReSECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Applicant
AndLEANNE TRIO
Respondent
DECISION
Tribunal: Miss S A Forgie (Deputy President)
Date: 30 September, 2002
Place: Adelaide
Decision:The Tribunal:
1.sets aside the decision of the Social Security Appeals Tribunal dated 14 September, 2001; and
2.substitutes a decision that the decision of the delegate of the applicant dated 8 May, 2001 to raise and recover from the respondent an overpayment of parenting payment partnered in the sum of $3,451.35 for the period 27 May, 2000 to 20 March, 2001 is affirmed.
S A FORGIE
Deputy President
REASONS FOR DECISION
On 23 October, 2001, the applicant, the Secretary of the Department of Family and Community Services ("Secretary"), applied for review of a decision of the Social Security Appeals Tribunal ("SSAT") dated 14 September, 2001. In its decision, the SSAT had set aside a decision of a delegate of the Secretary dated 8 May, 2001 to raise and recover from the respondent, Mrs Leanne Kaye Trio, an overpayment of Parenting Payment Partnered ("PPP") in the sum of $3,451.35 for the period 27 May, 2000 to 20 March, 2001. In its place, the SSAT substituted a decision that Mrs Trio owed a debt of $3,451.35 for the period 27 May, 2000 to 20 March, 2001 but that the debt arising from the period 9 August, 2000 until 20 March, 2001 be waived because it was caused solely by administrative error and Mrs Trio received the amount in good faith.
At the hearing, the Secretary was represented by Mr Kilderry, an advocate with Centrelink, and Mrs Trio represented herself. The documents lodged pursuant to s. 37 of the Administrative Appeals Tribunal Act 1975 ("T documents") were admitted in evidence together with a further decision of the SSAT dated 14 September, 2001 amending its previous decision of the same date. Mrs Trio submitted a document setting out a statement of events with her submissions.
THE ISSUES
The issue in this case is whether a debt arising from the overpayment of PPP may be waived under the Social Security Act 1991 ("the Act"). That requires a consideration of whether Mrs Trio knowingly omitted to comply with a requirement of the Secretary. It also requires a consideration of whether, in relation to part of the amount, Mrs Trio received it in good faith.
BACKGROUND
There was no disagreement between the parties regarding many of the facts leading to this application. In view of that and on the basis of the evidence in the T documents, I have made the following findings of fact.
Mrs Trio is married to Mr Benny Peter Trio and they have two dependent children: Rachel and Blake. In early 1999, the family moved to Adelaide. Mr and Mrs Trio had a term deposit upon which Centrelink deemed that Mr and Mrs Trio each received income of $732.16. Mrs Trio was in receipt of PPP at the beginning of the year 2000. Mr Trio, who suffers from a condition that has limited his ability to work from time to time, was engaged in contract work from home. His employment and his income both fluctuated according to the availability of work and his ability to undertake it. The sum deposited in the term deposit was spent in maintaining the family and Mrs Trio advised Centrelink of that fact.
On 29 March, 2000, Mrs Trio telephoned Centrelink to enquire about the rate of payment to her of the PPP. She was told that, provided her husband's annual income did not exceed $24,242.00 in that financial year, she could continue to claim PPP and was entitled to be paid it at her then current rate. No mention was made that her and her husband's income could not exceed a set fortnightly figure.
In a letter dated 30 March, 2000, Centrelink wrote to Mrs Trio setting out the information used to calculate her PPP of $299.10 per fortnight. It showed $732.16 as the amount of her husband's annual income and also as the amount of her annual income. Her fortnightly earned income was shown as a zero figure. The letter advised her that her payment was worked out using both her income and that of her husband and she was told that she needed to contact Centrelink if any one of a number of listed events occurred. She was told:
"You must tell us about events or changes in circumstances affecting your payment within the 14 day period which starts on the day after the day on which they happen or are likely to happen. You can tell us by writing to us, by phoning or you can come in and talk to us at any Centrelink office. This is an information notice given under the social security law.
You must tell us if any of these things happen or are likely to happen:
…
you or your partner start work or recommence work, change jobs, or start any form of business or self employment;
you or your partner receive, or become entitled to receive, unused leave payments because you have ceased employment;
you or your partner lend money to someone (other than to each other); your total personal income goes over $60.00 a fortnight;
your partner's total personal income goes over $511.00 a fortnight; or your and your partner's combined assets goes over $178,500 (if you or your partner is a homeowner) or $268,500 (if neither you nor your partner is a home owner).
you or your partner receive a lump sum amount of money or one-off payment from any source." (T documents, pages 62-63)
Mrs Trio noted that the figure of $732.16 had been used as her annual income and that of her husband and thought it strange in view of the fact that they had both given Centrelink up to date estimates of their income not including that figure. She assumed that it was an error and a "computer glitch". It did not concern her as she thought the discrepancy to be of no consequence as their income did not exceed $24,242.00.
On 15 May, 2000, Mr Trio went to Centrelink to ask whether they would exceed the income limits for PPP and Family Allowance. He advised that his income to date had been $16,000,00 and was told that his income was recorded as $27,000.00 per annum and his wife's as $12,000.00. Mr Trio was also advised that they were well within the limits for the payment they were then receiving (T documents, page 54).
On 3 July, 2000, Centrelink again wrote to Mrs Trio setting out her rate of PPP payment of $311.10 and the information on which her payment had been calculated. It was in the same terms as its earlier letter dated 30 March, 2000 but required her to notify Centrelink if her personal income exceeded $62.00 per fortnight and her husband's income exceeded $530.00 per fortnight (T documents, pages 65-66).
On 9 August, 2000, Mrs Trio wrote to Centrelink regarding Family Assistance and PPP and in order to advise of changes in income. She advised that her husband was employed on a contract basis and that, although he was then full-time, his workload could be reduced or stopped at any time. Mrs Trio also advised that she would soon commence work on a relief basis and would be engaged for the following two months for 2.5 days each week. She asked that Centrelink cancel the PPP and reduce the Family Assistance to the minimum payment for two dependent children (T documents, page 27).
Some time after Centrelink received this letter on 10 August, 2000, an officer telephoned Mrs Trio to ask her to estimate her income and that of her husband. She estimated $3,500.00 and $40,000.00 respectively (T documents, page 50).
On 3 October, 2000, Centrelink again wrote to Mrs Trio setting out her rate of PPP payment of $87.93 and the information on which her payment had been calculated. It was in the same terms as its earlier letters dated 30 March, 2000 and 3 July, 2000 and showed that the basis of the calculation of her PPP was an annual income of $732.16 for each of them and $412.50 as her earned fortnightly income. She was again required to advise if her income changed but the amounts above which she was required to notify of a change had been varied to $440.66 per fortnight in relation to her own income and $537.00 in relation to her husband's income (T documents, pages 68-70).
On 17 October, 2000, Centrelink sent an account to Mrs Trio in the sum of $709.13, which was the amount of PPP paid to her in the period from 1 September, 2000 to 2 October, 2000. The account noted that she had received payments in excess of the maximum payment rate as set in s. 1068B of the Act (T documents, page 52).
On 20 October, 2000, Centrelink wrote to Mrs Trio setting out her rate of PPP payment and the information on which her payment had been calculated. It was in the same terms as its earlier letters dated 30 March, 2000 and 3 July, 2000 but this time it showed that it had based the calculation of her payment of PPP on her fortnightly earned income of $536.25 rather than a zero figure as before. She and her husband were both shown as continuing to earn $732.16 as other earned income on an annual basis. The rate of payment of PPP was $1.31 each fortnight (T documents, pages 71-73).
Although she did not receive any subsequent letter advising her that the rate of her payment had changed from $1.31 per fortnight, Mrs Trio was subsequently paid various amounts of PPP: $61.12 (16 November, 2000); $140.87 (30 November, 2000 to 8 February, 2001); $165.70 (8 March, 2001); and $166.16 (22 March, 2001).
On 18 January, 2001, Mrs Trio wrote to Centrelink enclosing two copies of her pay slips. She again advised that her husband was employed on a contract basis. On the basis that he maintained his hours of employment, Mrs Trio estimated that his annual income would be $40,000. She then asked Centrelink: "Please review our payments to ensure that we are receiving our correct level of family allowance." (T documents, page 28)
On 16 February, 2001, Centrelink sent Mrs Trio a document entitled "Parenting Payment (partnered) review" and asked her to return it by 6 March, 2001 (T documents, pages 29-33). She did so and, as requested, showed her income and that of her husband for the previous 13 weeks. In her case, it was $1,987.00 and in his it was $8,965. Also as requested, Mrs Trio showed her husband's income as a self-employed person undertaking contract work as $13,462.00 for the previous financial year. She also estimated his "business income" for the financial year as $42,000.00. On 26 March, 2001, Centrelink sent a notice to the firm to which Mr Trio was contracted to obtain details of his fortnightly income since his contract commenced (T documents, pages 38-41).
On 8 May, 2001, Centrelink sent an account to Mrs Trio advising that she owed a debt in the amount of $3,451.35 that had been paid to her as PPP. It noted that, in the period 27 May, 2000 to 20 March, 2001, she had received $4,328.48 and had been entitled to $877.13. In explaining why the amount was payable, Centrelink wrote:
"The correct amount of your partner's earnings from Robert Williams Architects from 270500 was not taken into account in the Parenting Payments made to you. As his income was over the allowable limit, you were not entitled to the payments made to you until 200301. The overpayment is a recoverable overpayment under Social Security Law." (T documents, page 51)
On 9 May, 2001, the Family Assistance Office of Centrelink wrote to Mr Trio asking for copies of the Income Tax Assessments that he and his wife received for the financial years 1998/99 and 1999/2000. Mrs Trio wrote to Centrelink on 11 May, 2001 advising that her husband's taxable income for the year ending 30 June, 2000 had been $14,353.00 and that his estimated income for the year ending 30 June, 2001 was "around $42,000" (T documents, page 49).
LEGISLATIVE FRAMEWORK
Recovery of overpayment of Parenting Payment as a debt
Parenting Payment is the subject of Part 2.10 of the Act. There is no question that Mrs Trio qualified for its payment to her during the period from period 27 May, 2000 to 20 March, 2001. Equally, there is no question that, had Mr and Mrs Trio's income been taken into account in calculating the rate of PPP payable to Mrs Trio pursuant to the Benefit PP (Partnered) Rate Calculator in s. 1068B in Part 3.6A of the Act, the sum of $3,451.35 was not payable to her and would not have been paid. That is the effect of s. 500I.
Since the decision was made by the delegate of the Secretary to raise and recover the debt on 8 May, 2001, the provisions of Part 5.2 have been amended by the Family and Community Services and Veterans' Affairs Legislation Amendment (Debt Recovery) Act 2001 with effect from 1 July, 2001. As the amendments apply only to social security payments made on or after 1 July, 2001, its repeal does not affect the payments made to Mrs Trio before that date and s. 1223(5) continues to be relevant.
With respect to the debt arising from 27 May, 2000 until 8 August, 2001, the delegate of the Secretary raised a debt pursuant to s. 1224(1) which provides:
"If:
(a)an amount has been paid to a recipient by way of social security payment or fares allowance; and
(b)the amount was paid because the recipient or another person:
(i)made a false statement or a false representation; or
(ii)failed or omitted to comply with a provision of the social security law or this Act as in force immediately before 20 March 2000, the 1947 Act or the Social Security (Fares Allowance) Rules 1998;
the amount so paid is a debt due by the recipient to the Commonwealth."
With respect to the debt arising from 9 August, 2000 until 20 March, 2001, the delegate of the Secretary raised the debt pursuant to s. 1223(5), which provides:
"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."
As the sum of $3,451.35 was not payable to her, that amount is a debt owed to the Commonwealth.
Power to waive recovery of debt
The Secretary may waive the Commonwealth's right to recover the whole or part of a debt from a person only in the circumstances set out in ss. 1237A 1237AA, 1237AAA, 1237AAB, 1237AAC or 1237AAD of the Act (s. 1237(1)). Only two sections are relevant in this case. The first is s. 1237AAD, which provides:
"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 makes it desirable to waive; and
(c)it is more appropriate to waive than to write off the debt or part of the debt."
Section 68 of the Social Security (Administration) Act 1999 ("Administration Act") provides that:
"(1) Subsection (2) applies to a person to whom a social security payment is being paid.
(2)The Secretary may give a person to whom this subsection applies a notice that requires the person to do either or both 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 a statement about a matter that might affect the payment to the person of the social security payment.
(3)…
(4)…
(4)An event or change of circumstances is not to be specified in a notice under this section unless the occurrence of the event or change of circumstances might affect the payment of the social security payment or the person's qualification for the concession card, as the case requires."
A "social security payment" includes a Parenting Payment (s. 23(1)).
The second provision relating to waiver that is relevant in this case is s. 1237A(1) which provides that:
"(1) Subject to subsection (1A), the Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt.
(1A) Subsection (1) only applies if:(a)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."
CONSIDERATION
The period from 27 May, 2000 to 8 August 2000
Mr Kilderry did not take issue with the SSAT's decision with regard to this issue but Mrs Trio did. Although the Secretary sought review only of the SSAT's decision "… to waive the right to recover part of a parenting payment debt" that was in fact only one aspect of the SSAT's decision. As s. 179(1) of the Administration Act provides that an application may be made to this Tribunal for review of "the decision of the SSAT" where "a decision has been reviewed by the SSAT" and it has been affirmed, varied or set aside (emphasis added). The effect of the SSAT's decision was to vary the Secretary's decision. It seems to me that once an application has been made to this Tribunal to review a decision of the SSAT, it need not be limited to an aspect of that decision. The whole of the decision is subject to review.
In view of that conclusion, I have considered Mrs Trio's submission in relation to the period from 27 May, 2000 to 8 August, 2000. The SSAT had affirmed that part of the Secretary's decision to raise a debt in relation to that period on the basis that she had knowingly omitted to comply with an obligation to notify Centrelink that her income exceeded $60 per fortnight or her husband's income exceeded $511 per fortnight.
Mrs Trio had such an obligation as she had been sent a letter and required to do so according to s. 68 of the Administration Act. I accept that Mrs Trio had previously been advised and believed that she only had to notify Centrelink if her income and that of her husband exceeded $24,242 per annum. She notified Centrelink of changes in her income but, despite that, she omitted to comply with the requirement of its letter of 30 March, 2000 that she advise it when her income exceeded $60 per fortnight or her husband's income exceeded $511 per fortnight. At all times, she acted honestly and with integrity and in the belief that she was only required to notify Centrelink if their combined income exceeded $24,242. She knew that the letter showed their income as $732.16 and she knew that the amount was incorrect. In the sense in which the word "knowingly" is used in s. 1237AAD (Re Callaghan and Secretary, Department of Social Security (1996-97) 45 ALD 435 at 445, Deputy President Forgie), I find that Mrs Trio had actual knowledge that their income was incorrectly shown on the letter and that she omitted to comply with the requirement of the letter that she do so. Therefore, as I find that she knowingly omitted to comply with the requirements of Centrelink's letter dated 30 March, 2000, I am unable to waive the debt pursuant to s. 1237AAD of the Act.
The period from 9 August 2000 to 20 March, 2001
It was conceded by Mr Kilderry that the debt raised in relation to the period 9 August, 2000 until 20 March, 2001 was attributable to administrative error. He submitted that the debt could not be waived pursuant to s. 1237A, however, because Mrs Trio did not receive it in good faith. Mr Kilderry was at pains to point out that he did not question Mrs Trio's personal integrity but that he was using the term "good faith" in the sense in which it was used in the Act and had been interpreted by the Federal Court in Secretary, Department of Employment, Education, Training and Youth Affairs v Prince ((1997) 50 ALD 186 (Finn J), Haggerty v Department of Education, Training and Youth Affairs (2000) 31 AAR 529 (French J) and Jazazievska v Secretary, Department of Family and Community Services [2000] FCA 1484 (Cooper J).
In the case of Prince, Finn J was concerned with the provisions of s. 289(2)(b) of the Student and Youth Assistance Act 1973 but, in substantive terms, the provisions relating to good faith in the context of waiver are identical. His Honour said of its requirements:
" 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.
Given the conventional liability of a mistaken payee of money from consolidated revenue to repay that money irrespective of his or her belief as to an entitlement to it (ie the 'rule' in Auckland Harbour Board v R [1924] AC 318), the concession made to the mistaken payee by s 289 of the SYA Act does seem in all probability to be directed to a payee who receives the money (to put the matter positively) in the good faith belief that he or she is entitled to receive it. In other words the frame of the section is to exclude from the right to a waiver, a person who knows or has reason to know that he or she is not entitled to receive the payment. It would be surprising to find that the parliament intended otherwise." (page 189)
Mr Prince cancelled his Austudy payments on 22 December, 1993 but, due to an administrative error, the Department of Employment, Education, Training and Youth Affairs ("Department") continued to pay him by making deposits in his bank account. Until 7 February, 1994, Mr Prince was oblivious to those deposits being made by the Department. Finn J considered whether Mr Prince could have received the payments made prior to 7 February, 1994 otherwise than in good faith when he was unaware that he had received them:
"… 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." (page 189)
In Haggerty, French J considered the case of a student who received Austudy supplement during 1996 over a period during which his sister had been informed that she was ineligible due to the means of her family. In 1997, the Department raised a debt of $5,402.88 and sought to recover it from Mr Haggerty. Section 43B(1) of the Student Assistance Act 1973 is in substantively the same terms as s. 1237A of the Act. French J referred to the passage from the judgement in Prince to which I have referred and continued:
" 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 arise where there is a suspicion held by the recipient that he or she may not be entitled to the payment made or a doubt as to the entitlement coupled with some objective basis for such suspicion or doubt. The provision does not, however, authorise the imputation of want of good faith in any of the senses above described simply because there are in existence objective facts which would raise a belief or a doubt or a suspicion of non-entitlement in the mind of some imaginary recipient. That proposition is quite consistent with the view that the existence of such facts may support an inference that the recipient disbelieved or doubted or was suspicious about his or her entitlement. 'Reason to know' as Finn J used that term in Prince does not necessarily import a criterion of imputed as distinct from actual want of good faith as I have described it." (page 534)
After reviewing the Tribunal's findings and reasons for deciding that Mr Haggerty had not received the payments in good faith, French J observed:
"None of these findings go to the state of mind and whether he had a belief, doubt or suspicion as to entitlement which would require a recipient acting in good faith to make an inquiry. Concern, puzzlement, upset and a perception of unusual circumstances, coupled with the absence of further inquiry, are not enough themselves to constitute want of good faith. …" (page 535)
Section 1237A of the Act was considered by Cooper J in Jazazievska in the context of the recovery of an overpayment of family payment. The overpayment arose as Mrs Jazazievska had underestimated her taxable income for the year. As in the case of Mrs Trio, there was no question that Mrs Jazazievska had acted in any way other than honestly. She had not acted in defiance of the law and had been a truthful witness.
The facts in Jazazievska were, in summary:
"34 In the instant case the sum of $2,065.60 was paid into the appellant's savings deposit account with the Commonwealth Bank on 29 March 1996. In evidence the appellant said she became aware that money had gone into her bank account when it went into her account but said she did not know what date she became aware of that fact. She tendered into evidence a bankbook which disclosed an entry dated 28 March 1996 relating to the deposit of $45.40 family payment to the account. That payment resulted in an overall credit balance of $77.39 for the account. The next entry is dated 29 March 1996 with the particulars of the payment shown as 'PENSION' in an amount of $2,065.60. This payment brought the credit balance to $2,142.99. The next entry is a withdrawal of $100.00 made on 4 April 1996 which reduced the account balance to $2,042.99. In order to make this withdrawal, recourse to the $2,065.60 deposit was necessary. On 9 April 1996 the passbook shows a further withdrawal of $2,000.00."
Mrs Jazazievska said that she queried the deposit with her bank when she became aware of it. She then left it for ten days before using it. She submitted that she did not know on 29 March, 1996 that she was not entitled to receive the sum of $2,065.60 and submitted that her conduct after that date was irrelevant.
Cooper J held that the recipient of a payment to which he or she is not entitled cannot be in any better position for the purposes of s. 1237A(1) by virtue of the payment being made to a third party, such as a bank, rather than being made to him or her directly. His or her good faith is determined at the time that he or she commences to exercise control over the payment by retaining it. It is at this time, Cooper J said, that the recipient must act with the requisite good faith. "A lack of good faith", his Honour said:
"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." (paragraph 40)
It seems to me that the cases of Prince, Haggerty and Jazazievska are consistent with each other and the following principles may be drawn from them:
Good faith must be determined by reference to the state of mind of the recipient of the payment.
Where the recipient knows that he or she is not entitled to the payment, he or she cannot have received it in good faith.
Where the recipient suspects that he or she is not entitled to the payment and has an objective basis for that suspicion, he or she cannot have received it in good faith.
Good faith is not determined by reference to the state of mind of "an imaginary recipient". Finn J in Prince speaks of a recipient's not receiving a payment in good faith if he or she "… has reason to know that he or she is not entitled to the payment received …". (page 189) That could suggest that the state of mind of an imaginary recipient is relevant but his words must be read in their context. That context is that the concern of the statutory provision is "… with the state of mind of a person concerning his or her receipt of the payment received …". (page 189) French J expressly rejects the relevance of the state of mind of an imaginary recipient (Haggerty, page 534) and it is implicit in Cooper J's judgement in Jazazievska when he focuses on the "recipient's honest belief" (paragraph 40)
What an imaginary recipient may have thought or done when receiving the payment in the circumstances of the recipient may be relevant. So, for example, what an imaginary recipient acting in good faith would have done if he or she had the state of mind of the recipient including his or her knowledge, beliefs, doubts and suspicions may be relevant. Would he or she have made a further enquiry? If so, the recipient who does not make that enquiry cannot be said to have received the payment in good faith. Although not addressed in any of the cases, it would seem that the imaginary recipient would be a person with the recipient's attributes and abilities.
Where payments are made not directly to the recipient but to a third person, such as a bank, on behalf of the recipient, the time at which the recipient's good faith is to be considered at the time that he or she is aware that the payment has been made and commences to exercise control over the payment by retaining it.
That brings me back to Mrs Trio's circumstances. She said, and I find, that she had no access to bank statements as her husband routinely transfers money by telephone from their line of credit mortgage to what she described as their Centrelink/cash account without telling her that he has done so. She and her husband only ever check "the bottom line" of the account.
Mrs Trio said in her submission that:
"3. There had been recent communication with Centrelink which I believed had resulted in cancellation of my Parenting Payment.
4.…
5.Our earned income had increased by about threefold so it was logical to assume that this was why we had improved financial circumstances. I had no suspicion whatsoever that Centrelink was continuing to make PPP to me. …"
I accept that Mrs Trio thought the family's improved financial circumstances were due entirely to their increased earnings. I find that she has acted honestly, openly and without guile or attempt to deceive at all times. Her honesty is reflected in the submission she made and it is her very honesty that compels me to conclude that she did not receive the PPP in good faith as that term is used in the Act and interpreted by the Federal Court. In stating that she had asked Centrelink to cancel her PPP, it follows that she did not consider that she had any entitlement to receive PPP. Indeed, Mrs Trio effectively confirms that she had no suspicion that she was continuing to receive PPP from 9 August, 2000. Had she had grounds for any suspicion at all, it would have been that she was receiving $1.31 per fortnight as set out in Centrelink's letter dated 20 October, 2000.
I accept that she did not know that she continued to receive the PPP for the very reasons she gave i.e. in effect, her husband managed the account into which the payments were made. She was concerned only with the bottom line of the account. Unlike Mr Prince and unlike Ms Jazazievska, she did not subsequently become aware that she had received the PPP by looking at the payments into the account. Unlike Mr Haggerty, she was not confused or perplexed about the payments made into her account for she simply did not know that they had been made. They were dealt with by her husband and presumably spent as part of the money that was in the account from time to time. Like Mr Prince and like Mr Haggerty, however, Mrs Trio was never in a position to be able to assert that any mistaken payment made to her was one to which she had an entitlement. The fact that the PPP was paid into a bank account cannot put her in a better position than if it had been paid directly to her, she could never assert an entitlement to them even though she did not know that it had been paid to her. As she could not assert that entitlement, she could not, after 9 August, 2000, have received the PPP in good faith as that expression is used in s. 1237A(1) and as it has been explained by the Federal Court.
For the reasons I have given, I:
1.set aside the decision of the Social Security Appeals Tribunal dated 14 September, 2001; and
2.substitute a decision that the decision of the delegate of the applicant dated 8 May, 2001 to raise and recover from the respondent an overpayment of parenting payment partnered in the sum of $3,451.35 for the period 27 May, 2000 to 20 March, 2001 is affirmed.
I certify that the forty-three preceding paragraphs are a true copy of the reasons for the decision herein of
Miss S A Forgie (Deputy President)Signed: ...............................................................
P. Paczkowski AssociateDate/s of Hearing 24 July, 2002
Date of Decision 30 September, 2002
Counsel for the Applicant Mr Kilderry, departmental advocate
For the Respondent self
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