Tucker and Secretary, Department of Family and Community Services
[2003] AATA 630
•3 July 2003
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2003] AATA 630
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q2002/708
GENERAL ADMINISTRATIVE DIVISION ) Re REGINALD TUCKER Applicant
And
SECRETARY, DEPARTMENT OF FAMILY & COMMUNITY SERVICES
Respondent
DECISION
Tribunal Deputy President Don Muller Date3 July 2003
PlaceBrisbane
Decision The Tribunal sets aside the decision under review and in substitution determines that the right to recover a debt of $2,156.83 from Reginald Tucker is waived.
...............(Signed)................................
D.W. MULLER
DEPUTY PRESIDENT
CATCHWORDS
SOCIAL SECURITY – overpayment – received in good faith – waiver
Social Security Act 1991: s.1237A(1)
Juzazievska v Secretary, Department of Family and Community Services (unreported) [2000] FCA 1484, 20 October 2000
Secretary, Department of Education, Employment, Training and Youth Affairs v Prince 26 AAR 385
REASONS FOR DECISION
Deputy President Don Muller 1.This is an application by Reginald Tucker for review of a decision to raise and recover a debt relating to an overpayment of parenting payment in the sum of $2,158.16 for the period 27 January 2001 to 8 May 2001.
2.At the hearing the Applicant was self-represented and the Respondent was represented by Ms. Wallis-Dunn.
3.The evidence before the Tribunal consisted of the section 37 statement plus oral evidence from the Applicant. The Respondent did not call any oral evidence.
4.The Tribunal accepts the Applicant as an honest and reliable witness and finds the background factual situation to have been as follows:
(i)Prior to July 2000, Reginald Tucker and his wife Debra were receiving social security benefits. They had been long term unemployed people.
(ii)On 17 July 2000, they obtained employment at Grafton Nursing Home.
(iii)On 27 July 2000, Debra Tucker went to the Grafton Centrelink Office to notify the office that she and her husband had started work but they did not know how much they would earn. She was told by a Centrelink officer to make an estimate of earnings for the purpose of putting in the information on her continuation form.
(iv)On 28 July 2000, Debra Tucker filed a continuation form with Centrelink which stated that she had worked 60 hours and Reginald Tucker had worked 32 hours at the rate of $12.00 per hour.
(v)On 1 August 2000, Reginald Tucker received a letter from Centrelink stating that he would receive $22.22 for the period 15 July 2000 to 28 July 2000 and that thereafter he would receive a regular payment of $311.10.
(vi)The combined wages of Reginald Tucker and his wife varied from fortnight to fortnight because they were employed on a casual on call basis. Debra Tucker tried, as best she could, to estimate for the purposes of the continuation forms, their incomes for each period.
(vii)On 31 August 2000, Reginald Tucker received a letter from Centrelink to tell him that his parenting payment would be $55.10. Reginald and Debra Tucker assumed that the reduction from $311.10 was due to their increased income.
(viii)From that time until December 2000, Debra Tucker filled in the continuation forms. The Tuckers received letters from Centrelink from time to time to tell them what their payments would be for the various periods. The amounts varied widely. The amounts actually paid into their bank account also varied widely in accordance with the amounts stated in the letters. The amounts could be as low as $2.11 per fortnight, or as high as $312.94 per fortnight. Reginald and Debra Tucker did not know how the amounts were actually calculated but they had a rough idea that the higher their earnings, the lower the social security benefit. They also knew that if their estimates of their incomes proved to be too low, they would have to repay some of their benefits.
(ix)On 17 November 2000, continuation forms were lodged. No social security payments were received by the Tuckers for that period, nor did they receive a letter from Centrelink.
(x)On 1 December 2000, continuation forms were lodged. No payments and no letters from Centrelink were received by the Tuckers for that period.
(xi)The Tuckers assumed that their incomes were such that they were precluded from receiving social security benefits.
(xii)On 15 December 2000, Debra Tucker went to the Centrelink office to ask what was happening. She had apparently been sent a letter dated 4 December 2000, which she claims she did not receive, to tell her that her payments had been cancelled. At any event, she was told on 15 December 2000, that she and her husband had been earning too much to receive benefits for a continuous period of twelve weeks and that therefore their benefits had been automatically cut off.
(xiii)In December 2000, the Tuckers celebrated the fact that they had finally got off the dole and onto their own feet.
(xiv)In fact, on 19 December 2000, Centrelink deposited $271.20 to their joint account which happened to also be the day on which their wages of $1418 were deposited in the same account.
(xv)In January 2001, the Tuckers each received a letter dated 9 January 2001, signed by SE Cordie to ask them to contact the Toowoomba Office of Centrelink to make sure that they were receiving the correct rate of Family Tax Benefit.
(xvi)On 27 January 2001, Debra Tucker rang Mr. Cordie and asked him what was required to determine whether or not they were getting their correct entitlements. Mr. Cordie said that he required confirmation from their employers about their earnings. Debra Tucker told Mr. Cordie who their employer was.
(xvii)From January 2001 until 8 May 2001, Centrelink erroneously paid excessive periodic parenting payments into the Tucker account. The Tuckers were initially unaware that these payments were being made. Reginald Tucker was entitled to some parenting payment but not to the extent of the payments being made.
(xviii)In March 2001, the Tuckers decided to move from where they lived, about 27 kms west of Grafton, to Grafton. They approached a bank for a loan. The bank manager arranged for an interview and asked them to take their bank statements to the interview. At the interview the bank manager noticed the regular payments of parenting payment which were being paid into the Tucker account. The Tuckers had not noticed the payments before. They assumed that calculations made as a result of the telephone call to the Toowoomba Centrelink officer in January 2001, had resulted in an assessment that they were entitled to the payments deposited in the account. The bank manager acted on the strength of their income, including the parenting payments and approved a loan for just over $100,000.
(xix)In May 2001, Reginald Tucker received a letter from Centrelink, informing him that he had been overpaid benefits for the period from July 2000 to January 2001 in the sum of $1800, due to the discrepancies between the estimates of income and the actual incomes. The Tuckers accepted the bill and roughly understood the theory behind the calculation. There is no issue about the $1800.
(xx)Reginald Tucker rang Centrelink and spoke to a man called “Tim”.. He said he wanted to talk about the account. Tim then informed Reginald Tucker that upon checking the Tucker file he discovered that Reginald Tucker was receiving certain payments to which he was not entitled. Mr. Tucker asked Tim to make sure the payments were stopped. Reginald Tucker received a further $92.23 on 8 May 2001 but thereafter the excessive payments ceased.. Ironically, Reginald Tucker was entitled to $90.90 out of the $92.23 paid into the Tucker account on 8 May 2001.
(xxi)A decision to raise and recover the debt due to the overpayments was made in November 2001.
5.The documents show that Reginald Tucker was entitled to some parenting payment but not as much as he received. He was overpaid the following amounts during the period under review.
Amt Recd Amt Entitled Amt Overpaid
9 February 2001 $316.40 $ 0.00 $316.40
23 February 2001 $316.40 $ 0.00 $316.40
9 March 2001 $316.40 $ 0.00 $316.40
23 March 2001 $318.23 $11.00 $307.23
6 April 2001 $322.80 $68.00 $254.80
20 April 2001 $322.80 $ 0.00 $322.80
4 May 2001 $322.80 $ 0.00 $322.80
8 May 2001 $ 92.23 $90.90 $ 1.33
$2,328.06 $169.90 $2,158.16
6.It is clear from the evidence that the Tuckers did not know they had received the first four payments listed above until the payments were pointed out by the bank manager in April 2001. However, at that stage they thought they were entitled to the payments and kept them. They adjusted their financial affairs on the basis of that belief, to their eventual detriment. It was not until he spoke to Tim of Centrelink in early May 2001, that Reginald Tucker realised he was not entitled to as much as he was getting.
7.Mr. Tucker was confused about the payment of $92.23 on 8 May 2001. He was not sure whether, he was not entitled to any of it, or whether there had been an adjustment to the correct figure. There is some doubt about whether he received the overpayment of $1.33 in good faith.
8.The Respondent concedes that the payments made to Reginald Tucker in early 2001 were due solely to an administrative error and that there is no suggestion of dishonesty or failure to do anything under the Social Security Act 1991, on the part of Reginald Tucker.
9.The question that arises for consideration in this case is whether the right to recover the debt should be waived pursuant to section 1237A of the Act, which provides:
“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.”
10.The only live issue is whether or not Reginald Tucker received the payments in early 2001 in good faith.
11.The case of Reginald Tucker is different to that of Secretary, DEETYA v Prince 26 AAR 385, where Mr. Prince unknowingly received further payments into his account after he had been told that he was not entitled to the payments. If Mr. Prince had been paid the amounts directly into his hand instead of into his account, he would have known straight away that he was not entitled to them.
12.The case of Reginald Tucker is also different to that of Jazazievska v Secretary, DFACS (unreported) [2002] FCA 1484, 20 October 2000. Ms. Jazazievska had overpayments paid into her account which were initially unknown to her, but when she discovered the payments she had some suspicions that she was not entitled to them. The Tribunal adopts the following observations made by Cooper J in Ms. Jazazievska’s case:
“[38] The phrase ‘received in good faith the payment or payments’ is a composite term, the meaning of which is to be determined by its context in s 1237A of the Act and the statutory purpose which the section seeks to give effect to. The statutory purpose is to relieve a payee of the statutory liability to repay as a debt due to the Commonwealth a payment or payments made to the payee which the payee was not entitled to receive where the payment was attributable solely to an administrative error on the part of the Commonwealth and the payment was received in good faith.
[39] The ordinary meaning of the verb ‘to receive’ is ‘to take into one’s hand or into one’s possession something held out or offered by another’: Shorter Oxford Dictionary, 3rd ed, Oxford University Press, Oxford, 1990, at p 1760; see to the same effect Collins English Dictionary, Australian ed, 1979, at p 1218. The meaning involves the notion of the acquisition of possession of the thing received and of a mental element to exercise control over the thing received by retaining it irrespective of the ultimate period of retention. The ordinary meaning of ‘received’ is that the thing has actually been taken into one’s hand or possession: Pilcher v Logan (1914) 15 SR (NSW) 24; at 27; where a payment of money is involved as a matter of ordinary meaning, ‘payment’ and ‘receipt’ are correlative terms: Samuels v Warland (1977) 16 SASR 41; at 46.
[40] Prima facie, s 1237A(1) is concerned with actual personal receipt by the debtor of the payment or payments which give rise to the debt. The issue of good faith is, for the purpose of the section, to be determined when the debtor commences to exercise control over the payment by retaining it. It is at this time that the recipient must act with the requisite good faith. A lack of good faith does not mean that the recipient of the payment must be acting fraudulently when the payment is received and retained. It means that for whatever reason, the recipient acts without an honest belief that he or she was entitled to receive and retain the payment when he or she receives the payment and decides to exercise control over it by retaining it.
[41] A person does not act in good faith where the person turns a blind eye to circumstances which raise doubt as to the entitlement of the person to receive and retain the payment or refuses to make reasonable inquiries where doubt exists. Although said in a different context, the observations of Lord Blackburn in Jones v Gordon (1877) 2 App Cs 616; at 629 are apposite. His Lordship said:
…If he was (if I may use the phrase) honestly blundering and careless, and so took a bill of exchange or a bank-note when he ought not to have taken it, still he would be entitled to recover. But if the facts and circumstances are such that the jury, or whoever has to try the question, came to the conclusion that he was not honestly blundering and careless, but that he must have had a suspicion that there was something wrong, and that he refrained from asking questions, not because he was an honest blunderer or a stupid man, but because he thought in his own secret mind -–I suspect there is something wrong, and if I ask questions and make farther inquiry, it will no longer be my suspecting it, but my knowing it, and then I shall not be able to recover – I think that is dishonesty. I think, my Lords, that that is established, not only by good sense and reason, but by the authority of the cases themselves.
[42] A recipient of a payment to which he or she is not entitled, cannot avoid the requirement of good faith in s 1237A(1) by the mere circumstance that the person arranges for direct payment to an account of that person with a financial institution and in consequence is unaware of the fact of the payment at the time of its actual receipt.
[43] For the purposes of s 1237A (1), the debtor can be in no better position than he or she would have been had the payment been made directly to the debtor at the time it was in fact made to a third party. It was in this sense that Finn J stated that Mr Prince could never assert an entitlement to the Austudy payments, notwithstanding that he was ignorant of their receipt by the bank. This was because if direct payment had been made to him after he terminated his entitlement, he could not have held an honest belief that he was entitled to receive and retain the payment.
[44] In the present case, the appellant, if payment had been made directly to her on 29 March 1996, would have been in no different position than she was when she became aware of the passbook entry some time between 29 March 1996 and 4 April 1996. The fact that she had sufficient doubt as to her entitlement to ask her bank about it, and additionally to refrain from asking Centrelink directly, meant that she did not receive and retain the payment of the sum of $2065.60 in good faith. This follows because she did not then have an honest belief that she was entitled to receive and retain the payment.”
13.The Tribunal is satisfied that when Reginald Tucker discovered the overpayments in April 2001, kept the overpayments and arranged his financial affairs on the basis that the payments would continue, he did so in good faith.
14.The only amount about which Mr. Tucker may have had some doubts was the overpayment of $1.33 on 8 May 2001. That is because he was not sure by then whether he was entitled to anything.
15.Consequently, the Tribunal finds that overpayments totalling $2,156.83 ($2,158.16 - $1.33) made to Reginald Tucker for the period 27 January 2001 to 8 May 2001, were attributable solely to administrative errors made by the Commonwealth and that Reginald Tucker received the payments in good faith.
16.The decision under review is set aside and in substitution the right to recover a debt of $2,156.83 is waived.
I certify that the 16 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President Don Muller
Signed: .......................................................................................
C. O’Donovan, AssociateDate/s of Hearing 11 February 2003
Date of Decision 3 July 2003
Applicant Mr. Tucker, himself
Respondent Ms. H. Wallis-Dunn, departmental advocate
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