FEDERAL COURT OF AUSTRALIA

Jazazievska v Secretary Department of Family & Community Services [2000] FCA 1484

SOCIAL SECURITY - Overpayment of family payments - whether the error was attributable solely to an administrative error of the Commonwealth - whether evidence before the Administrative Appeals Tribunal had been given proper consideration.

SOCIAL SECURITY - Overpayment in basic family payment - whether the payment was “received in good faith” - consideration of when the payment is “received”.

Social Security Act 1991 (Cth) ss 1223(3), 1237A(1)

Administrative Appeals Tribunal Act 1975 (Cth)

Sinclair v Mining Warden at Maryborough (1975) 132 CLR 473 Cited

Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 Cited

Minister for Immigration & Ethnic Affairs v Teo (1995) 57 FCR 194 Cited

Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 Cited

Bruce v Cole (1998) 45 NSWLR 163 Cited

Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 50 ALD 186 Expl

Pilcher v Logan (1914) 15 SR (NSW) 24 Cited

Samuels v Warland (1977) 16 SASR 41 Cited

Jones v Gordon (1877) 2 App Cas 616 Appr

BOGICA JAZAZIEVSKA v SECRETARY DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

NO Q129 OF 1999

COOPER J

BRISBANE

20 OCTOBER 2000

ON APPEAL FROM THE GENERAL ADMINISTRATIVE DIVISION

OF THE ADMINISTRATIVE APPEALS TRIBUNAL

THE COURT ORDERS THAT:

1.         The appeal be allowed in part and that the decision of the Administrative Appeals Tribunal given 23 April 1999 in respect of an overpayment of $1,124.85 in additional family payments for the period 5 January 1995 to 17 August 1995 be set aside.

2.         Other than as provided in Order number 1, the appeal be dismissed.

3.         The matter be remitted to the Administrative Appeals Tribunal with respect to the overpayment of $1,124.85 for determination according to law and these reasons.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

ON APPEAL FROM THE GENERAL ADMINISTRATIVE DIVISION

OF THE ADMINISTRATIVE APPEALS TRIBUNAL

REASONS FOR JUDGMENT

background

1                     This is an appeal heard in the original jurisdiction of the Court from the Administrative Appeals Tribunal (“the AAT”).  The appeal is upon questions of law pursuant to s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) (“the AAT Act”).

2                     The appellant, Bogica Jazazievska, was referred for legal assistance by the Court in accordance with O 80 of the Federal Court Rules.  On the hearing of the appeal, the appellant refused to allow counsel and his instructing solicitor to act further for her in the prosecution of the appeal.  In those circumstances, the legal practitioners were given leave to cease to provide legal representation to the appellant and she conducted her appeal in person.

facts

3                     On 13 October 1998, Centrelink raised three separate debts against the appellant in respect of the payments to her of benefits under the Act.  The decision to raise and recover the debts related to :

(a)        an overpayment of $1,124.85 in additional family payments for the period 5 January 1995 to 17 August 1995;

(b)        an overpayment of $2,065.60 in basic family payment made on 27 March 1996 which duplicated basic family payments already paid during the period 3 April 1994 to 21 December 1995;

(c)        an overpayment of $2,039.90 in family payments for the period 17 July 1997 to 18 December 1997.

4                     The Centrelink decision was affirmed by the Social Security Appeals Tribunal (“the SSAT”) on 8 March 1999. The appellant sought a further review by the AAT.  The AAT varied the decision of the SSAT by determining that the right to recover the overpayment of $2,039.90 in family payments for the period 17 July 1997 to 18 December 1997 be waived.  Otherwise, the AAT affirmed the decision of the SSAT in respect of the other two overpayments.

5                     The appellant appealed to this Court from the refusal of the AAT to determine to waive the right of the respondent to recover the other debts.

the proceedings before the aat

6                     The AAT in respect of the additional family payment of $1,124.85 for the period 5 January 1995 to 17 August 1995, made the following findings.

“12.     On careful consideration of the evidence before the Tribunal today and all other material available to the Tribunal, the Tribunal affirms the following findings of fact made by the SSAT :

·        In late 1994 Mrs Jazazievska provided an estimate of her 1994/95 taxable income at $23,544.

·        Mrs Jazazievska was paid additional family payment in the debt period on the basis of this estimate.

·        Mrs Jazazievska’s actual combined taxable income for 1994/95 was $35,784.

·        Mrs Jazazievska received notices dated 20 January 1995, 28 April 1995 and 2 June 1995 requiring her to notify the Department if her combined taxable income was likely to be more than $27,905.

13.       The Tribunal finds that this overpayment cannot be waived for administrative error because the error has not been solely caused by Centrelink.  Mrs Jazazievska has contributed to the error which has led to the overpayment.  I accept that Mrs Jazazievska had an honestly-held belief that she was not obliged to notify the Department of these changes.  However, the social security legislation makes this obligation quite clear for social security recipients.

14.       The Tribunal finds that this overpayment cannot be waived for ‘special circumstances’ because there is no evidence to suggest that there are ‘circumstances’ associated with this overpayment which could be described as ‘uncommon’, ‘unusual’ or ‘exceptional’ and so come within the legal meaning of ‘special circumstances’:  Re Beadle and Director-General of Social Security (1985) 6 ALD 1.

15.       Redundancy payments are a common feature of employment in Australia today and can, and do, create significant problems for social security recipients.  Mrs Jazazievska is not alone in this regard as there are a great number of cases decided by this Tribunal which consistently find that redundancy packages form part of taxable income.  In her circumstances, the Tribunal agrees with the SSAT that it would not have been unreasonable for Mrs Jazazievska to raise a query with Centrelink as to the effects of her redundancy package on her social security entitlements.  However, she did not do so.  Her evidence before the Tribunal today was that she saw no reason to query it with Centrelink and so the question was never raised.  As a consequence, Mrs Jazazievska has contributed to the administrative error which led to the overpayment.”

7                     The AAT, in respect of the basic family payment of $2,065.60 paid on 27 March 1996, made the following findings :

“16.     On careful consideration of all the oral evidence and information before the Tribunal, the Tribunal agrees with the following findings of fact made by the SSAT :

·        On 27 March 1996, Mrs Jazazievska’s account was credited with a payment of $2,650.60 [sic] in error by Centrelink.

·        The payment represented the amount of basic family payments Mrs Jazazievska received between 3 April 1994 and 21 December 1995.

·        No letter of explanation regard the payment was issued.

·        Mrs Jazazievska queried the payment with her bank but not Centrelink.

17.       The Tribunal concludes that the amount in question was a duplicate amount, not arrears, and that it was credited to her account due solely to an error on the part of Centrelink.

18.       The Tribunal concludes that the duplicate payment cannot be waived for administrative error because it was not received in good faith in terms of what ‘good faith’ means according to law - not the perception that Mrs Jazazievska provided in her oral evidence.

19.       The Tribunal emphasises that such a finding in no way adversely reflects Mrs Jazazievska’s honesty - or that she acted in defiance of the law.  The Tribunal finds her to be an honest, truthful witness in her account given to the Tribunal.

20.       However, ‘good faith’, according to the law in Secretary, Department of Education, Employment, Training and Youth Affairs and Prince (NG 338 of 1997, delivered 21 November 1997) means (per Finn J):

            ‘It’s concern is with the state of mind concerning the receipt:  if that person knows or has reason to know they are not entitled to the money.’

21.       In Mrs Jazazievska’s case, the Tribunal concludes that the receipt of a large sum of $2,650.60 [sic], without any explanation, would justify some query, on her part, to Centrelink.  However, this was not the case.  A query was raised by Mrs Jazazievska, but with the Bank only.  Any uncertainty Mrs Jazazievska had on this payment for social security purposes could only have been answered by Centrelink.  As a social security recipient, such a query, in the Tribunal’s view, would not have been unreasonable for her to make.

22.       The Tribunal further finds that there are no circumstances relating to this debt which could be described as ‘special circumstances’ to justify waiver of the duplicate overpayments”.

the issues on appeal

8                     The appellant by her amended notice of appeal pleaded the following questions of law as arising on the appeal:

“2.       THE QUESTIONS OF LAW raised on the appeal are :

(A)       incorrect application in law in Section 1237A(1) of the Social Security Act, 1991 as there was a failure in law to take account of all relevant information indicating the alleged overpayments were solely the result of admin [sic] error and the applicant had acted in good faith within the meaning of the DEETYA -v- PRINCE.

(B)       an error of law in failing to apply Section 1237A(2) of the Social Security Act 1991 and by considering the receipt of a redundancy package as income rather than property, and further the value of which was underestimated in good faith in circumstances where the value of the value of the [sic] property was not easily estimated.”

9                     The grounds pleaded were :

“GROUNDS:

(a)       failure of decision to take to [sic] into account relevant facts;  and

(b)       failure to look at all the facts mis-application of Section 1237A(1) of the Social Security Act, 1991 to the facts;  and

(c)        failure to apply Section 1237A(2) of the Social Security Act, 1991.”

the relevant legislation

10                  The following sections of the Social Security Act 1991 (Cth) (“the Act”) are relevant to the issues raised on this appeal;  ss 860, 885, 891, 1223(3) and 1237A(1), (2) and (3). 

11                  Sections 860, 885 and 891 as at 1 January 1996 provided :

“860.   If the rate of the family payment payable to a person in a calendar year has been worked out in accordance with the Family Payment Rate Calculator in section 1069, the rate of family payment payable to the person only has to be worked out again during that calendar year if :

(a)       the person notifies the Department or an officer that a notifiable event has occurred in relation to the person;  or

(b)       a notifiable event has occurred in relation to the person and the person fails to notify the Department that it has occurred;  or

(c)        additional family payment becomes payable to the person during that calendar year;  or

(ca)      family payment advance is or is not payable for a particular period;  or

(d)       the person revises an estimate of his or her taxable income;  or

(e)        the person has underestimated his or her taxable income;  or

(f)        the Commissioner of Taxation changes an assessment of the person’s taxable income.

.....

885.     If:

(a)       in working out the rate of family payment payable to a person, regard is had to the person’s taxable income for a tax year;  and

(b)       that taxable income is an amount estimated by the person;  and

(c)        the Commissioner of Taxation subsequently makes an assessment of that taxable income;  and

(d)       the estimated amount is less than 75% of the amount assessed by the Commissioner;

the person’s rate of family payment is to be recalculated on the basis of that taxable income as assessed by the Commissioner.

.....

891.     If:

(a)       the Secretary makes a determination of a person’s rate of family payment;  and

(b)       in making the determination , the Secretary had regard to:

(i)        the person’s taxable income for a tax year; or

(ii)       the person’s partner’s taxable income for a tax year;  and

(c)        that taxable income is an amount estimated by the person;  and

(d)       the Commissioner of Taxation subsequently makes an assessment of that taxable income;  and

(e)        the estimated amount is less than 75% of the amount assessed by the Commissioner;  and

(f)        the Secretary makes a determination varying the person’s rate of family payment, or cancelling family payment, to give effect to the recalculation required by section 885;

the later determination takes effect on the day on which the earlier determination took effect.”

12                  Sections 1223 and 1237A relevantly provided :

“1223(3)         Subject to subsection (4), If:

(a)        an amount (the ‘received amount’) has been paid to a person by way of family payment;  and

(b)        the person’s rate of family payment is recalculated under :

(i)         section 884 (amendment of assessable income);  or

(ii)        section 885 (underestimate of income);  or

(iii)       section 886 (failure to notify notifiable event);  and

(c)        the received amount is more than the amount (the ‘correct amount’) of the family payment payable to the person;

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

.....

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.

.....

1237A(2)         If:

(a)        a debt arose because the debtor or the debtor’s partner underestimated the value of particular property of the debtor or partner;  and

(b)        the estimate was made in good faith;  and

(c)        the value of the property was not able to be easily determined when the estimate was made;

the Secretary must waive the right to recover the proportion of the debt attributable to the underestimate.

1237A(3)         For the purposes of this section, a proportion of a debt may be 100% of the debt.”

conclusion on the appeal

13                  The error which led to the overpayment of the sum of $1,124.85 in additional family payments for the period 5 January 1995 to 17 August 1995 was the failure in February 1995 to recalculate the appellant’s entitlement consequent upon the changed circumstances of the appellant brought about by receipt of the redundancy package.  The AAT found that the appellant contributed to that error by failing to disclose to Centrelink the fact that she had received the payment.

14                  The AAT found that the appellant did not advise Centrelink of her changed circumstances because :

(a)        she had an honestly held belief that she was not obliged to notify Centrelink of the changes;  and

(b)        she saw no reason to query the effect of the redundancy package on her social security entitlements and thus did not raise the issue with Centrelink.

15                  The AAT made these findings on the basis of the evidence given by the appellant to the AAT.  The findings were crucial to the finding of the AAT that s 1237A(1) of the Act could have no relevant operation because the debt was not attributable “solely to an administrative error made by the Commonwealth ...”  It was the contribution of the appellant’s conduct to the error which rendered the section inapplicable.

16                  The appellant has challenged these findings on the basis that there was no evidence which would allow the making of the findings or allow them to be drawn as inferences from other facts which could be supported on the evidence.  Consequently, the appellant contends that to make the findings in the absence of evidence was a reviewable error of law:  Sinclair v Mining Warden at Maryborough (1975) 132 CLR 473 at 480, 483;  Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 355 - 356;  Minister for Immigration & Ethnic Affairs v Teo (1995) 57 FCR 194 (FC) at 199.

17                  Further, the appellant contends that the AAT failed to take into account material which was relevant to the issue of whether she contributed to the error which led to the overpayment, which it was obliged to take into account, and, failed to give the whole of that material proper consideration:  Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 39 - 42;  Bruce v Cole (1998) 45 NSWLR 163 at 186;  Aronson & Dyer “Judicial Review of Administrative Action” (2nd Ed LBC (2000)) at 207 - 208. 

18                  The material which she contends the AAT failed to take into account, as it was obliged to do, was her oral evidence that she in fact made disclosure of the redundancy payment to Centrelink at or about the time she received it in February 1995, and the contents of certain documents.  The documents she swore she disclosed to Centrelink at the time she made the disclosure.  She also gave evidence that copies of the documents were taken and retained by Centrelink.  Those documents were part of the bundle Exhibit 2 tendered by her on the AAT hearing.  They were a letter dated 10 January 1995 from QBuild Property Management offering the appellant Voluntary Early Retirement on the terms contained in the letter;  a letter dated 23 January 1995 advising her that her employment would be terminated on 3 February 1995 and that she would be contacted in the following week with payment details;  and a Queensland Government Pay Advice showing details of her employment for the period ending 3 February 1995.  The Queensland Government Pay Advice showed that she had total earnings of $22,923.21 from which tax deductions of $2,429.20 had been taken.  The remaining balance of $20,494.01 was paid by the accompanying cheque number 449233.  Importantly, the notice records that the appellant’s taxable earnings for the year 1994/1995 were $14,210.31 from which had been deducted $3,559.30 in tax instalments.  This documentation constituted a full disclosure of the redundancy payment the appellant received and her actual income for the relevant year after taking into effect the redundancy payment.

19                  The appellant did in fact give evidence that she took the documents relating to her redundancy package to Centrelink where they were copied and a copy retained by Centrelink.  She gave the following evidence to the AAT when questioned by the Member :

“That’s the income.  That’s the $6076?---Yes.  And if you take that out - there are some more copies on the back - there’s some copies on the back.  When I received them there was something going on in Government, they’d been losing contracts with buildings so I was on maternity leave and somehow I find out from the ladies talking around it will be redundancy.  And I still have a big problem with myself walking.  I left home, I called the office - is George Street Mineral House.

Have a glass of water?---No, I’m just - is time passing and I’m not involved with those things so I’m losing myself.  Mineral House, that’s where the main office is of cleaning staff so I called there, the lady’s name is Donna.  She is Croatian.  So she was there at the time and I tell her what information she can give me about redundancy.  I like to have redundancy.  She said, ‘I don’t think they will give you that’.  And I said, ‘please give me the letter what everyone receives so I will try to get it’ because I couldn’t work.  It was very critical.  If I sit I can’t stand, if I stand I need time to move my legs.  So I thought I would be disabled so why being left with nothing when I can have something what is mine.  So she told me she will bring the letter downstairs and I will arrive on the time she will come out and give me the letters because if I park I need time to walk so I would lose hours to get there.  She give me them, I apply and I receive first letter back on 10 January.

Yes?---That’s not final letter so I can give the Centrelink how much money I would receive in that cessation year.  So is another letter, the first one they send me was they refuse, they won’t give me and I apply again.  So it’s the second letter on 23 January still goes behind them, their dates and their letters and then comes the payment.  They told me they would give me payment on that date and I have to contact the office.  I call pay office and I ask them is it true I’m going to receive that.  They send me a letter like this one, it was wrong.  They took it back and they send me another one.  One was 24 and this one is 20.  So when it was finalised they will send me - I knew they will send me that.  I went and I make arrangement to buy land for my oldest girl.

So that was your redundancy pay-out?  That cheque there?---Yes, yes.  So when I get that I spend the money before I get the money.  You know what I’m saying?

I understand, yes.  You knew it was coming and you committed yourself?---Because - yes, my ex-husband was using me so much so I got remarried and I didn’t want to be on the street again because I’d been left on the streets.  So when the money comes they been spend already and I took this back to Centrelink and I will [sic] out all the forms they ask me for.  They’ve got that - all those copies, all those letters from them and they ignore them.  They just say here - it was very difficult to work out what portion of the final amount received was taxable income.  They should - - -

Yes, Mrs Jazazievska, just before you go on on that point?  What you’re reading is actually how they summarised your evidence.  It’s not the Department’s findings?---There are some - - -

They are summarising what you have said?--- - - - amount has already been taxed.  Yes, okay, if you go in my way they told me some of the money there had been taxed.  You don’t understand?  That’s what they told me.  You don’t understand how much tax was and you can see for yourself there more than two and a half thousand dollars tax on that money but when the - it is mine I will go on with my story.  The Centrelink ask me which one is which, they shouldn’t ask me because I don’t know.  I was told what is inside and they can see - if it’s not enough evidence for them they can contact Taxation Office because now they contact everyone.  They dig - they touch my son’s private properties and they shouldn’t touch - go in them - my son’s files.

Yes, just keep to the problem that you’ve got now?---Yes, but everything is in here, even my son’s - what I wanted to say.  I told them some of that is taxable, some of it isn’t taxable.  That’s what I was told.  So they took a copy, nothing happened.  Okay, they’ve been sending me letters, I can’t give them proper income.  They should take whatever it says on the paper and work out - if it’s not good enough then on the end of the year when I get the - the tax return they can take that.  ...”

(Emphasis added)

20                  Under cross-examination she said :

“Yes, I appreciate that?---So when my redundancy start you have few letters asking for that and I’m showing you because I didn’t know nothing before 20 January.  So I didn’t have the money or I wasn’t sure until I received the cheque.

Right, okay?---And I took it there.  They’re supposed to have copies from the cheque.

Right.  So at the time you provided the estimate you didn’t know about - - -?---No.

- - - the redundancy?---You can see for yourself.

So you did you best with the information that you had to estimate what your income would be for that financial year?---Did you think like two months or - - -

DR CHRISTIE:  Just answer the question, Mrs Jazazievska.  Just don’t get - - -?---That’s what they’re asking me.  What do you think next year?  Are you going to receive lottery - win lottery or die?

Yes, but everyone is asked in that same situation as you did?---But that’ s what I give them.  That’s what I told.  I - and they’re asking, ‘when you commence work give us notice for 14 days.  And when you receive any income give us notice for 14 days’.  I didn’t know I would receive those money.  I wasn’t sure if I’m going to get the money because there have been two of those.  One comes and I took it back.  And they send me another one less.

MRS GUTHRIE:  Okay, all right?---So I don’t - I don’t see myself doing any damage or anything wrong.

Because at the time you didn’t know about your redundancy?---Not knowing - but - excuse me.  In that time you have to have this - the copy from the cheque because I was doing all the paperwork for my baby.  And before the end of the - on July - June/July you always send when you estimate forms to the people, so I don’t know how you didn’t have my copy from the taxation.  And that’s how my husband’s tax got lost and - to have another thing done I have to pay to get it copied, just to satisfy the needs of Centrelink or Social Security.  I did copies, pay $40 for that copy.

.....

Yes, so it’s just so - all I’m asking you is just listen to the question carefully and just answer it without having - drifting away from other things which don’t really affect the answer?---So many letters, as you said, the four letters come in the same month or one after another so I must be coming in the office and bringing those things with me so here if it was that you have to check over there and see if anyone has any copy of anything of that - this, because they have to have all those papers in there.

MRS GUTHRIE:  But if sometimes you don’t read the back of the letter how can you be sure that you went in with any information after receiving these - - -?---Because there are so many letters coming - and so many letters coming and my husband get upset.

Well, the letters we were talking about are in January, March, April, June?---You’re making a big mess in my family just sending those letters.  Some of them, as you said, they have this - they’re repeating exactly the same back.  So they don’t change for so many months.  You can see for four - four letters, four months.  So they’re just arriving, sometimes you can say, ‘oh, is exactly the same letter’.

Well, subsequently - - -?---Some front, some back.

After you got the redundancy payment - - -?---Yes.

- - - did you make a revised estimate of your 1994/1995 income?---Maybe, I don’t remember.  I know I brought the papers in, they’ve been copied, all three of those.

So you think you just brought those papers in but you wouldn’t have made another estimate?---I don’t remember.  I can’t remember - I know I brought those things in and when I was called to return the money on the end of the taxation year when I start another job, I come back again with all the same papers and I said, ‘I’m sorry’.  I was told they will register me with Centrelink but I will register myself.  And I had to give them those moneys or they think I owe them.  I didn’t complain, maybe it was my fault for not contacting them for four weeks.”

(Emphasis added)

21                  In her final submission to the AAT, the appellant said :

“DR CHRISTIE:  Yes.  What I’m asking you do though, Mrs - I know it is hard because you are not a lawyer.

MRS JAZAZIEVSKA:  Yes.

DR CHRISTIE:  But what I’m asking you to - - -

MRS JAZAZIEVSKA:  No, that is okay, you want it short and clear.

DR CHRISTIE:  Yes.

MRS JAZAZIEVSKA:  I will say I didn’t make any forgery.  For number three everything is done in the way of the law.  Number two, I didn’t steal nothing because the computer doesn’t make his own mistakes, it has to be someone operating the computer.  And Number one - I don’t owe them nothing for number one accusation, because I can’t tell them in which way the taxation works, I just give them whatever evidence I’ve got.  And I was returning them the money.  In the same year they cut my family allowance twice, that means they count my income twice, and now they’re blaming me for more.  So that is my way b

DR CHRISTIE:  Yes, I understand.  That is very clear in how you expressed those three points.”

(Emphasis added)

22                  The AAT does not deal with this evidence at all in its reasons.  It was not rejected because the AAT did not believe the appellant.  In fact it found that she was an honest and truthful witness.  It is totally inconsistent with the findings made by the AAT of conduct on the part of the appellant which contributed to an error which led to the overpayment.  A careful perusal of the evidence discloses nothing which would sustain a finding that the appellant did not advise Centrelink of her changed circumstances because she honestly believed that she was not obliged to do so and because she saw no reason to query the effect of her redundancy package on her social security entitlements.

23                  The appellant was paid beyond her proper entitlement because the original estimate of combined income used to calculate the family allowance entitlement was rendered obsolete by the receipt of the redundancy payment.  Sections 885 and 891 operated to cause the entitlement of the appellant be recalculated effective from 5 January 1993 because there was no recalculation in February 1993 when the redundancy payment was received.  The relevant question for the purpose of s 1237A(1) is not whether the appellant failed to provide a revised estimate of her combined income in and after February 1996.  The relevant questions are whether any portion of the debt is attributable solely to an administrative error made by the Commonwealth, and if so, what portion of the debt is so attributable.

24                  In the present case, if the appellant provided the information and documents to Centrelink which she swore she did, the issue to be determined was whether the disclosure was sufficient to have required Centrelink pursuant to s 860 of the Act to recalculate the appellant’s entitlement in the light of the information contained in the documents.  If so, whether such a failure was “administrative error” for the purposes of s 1237A(1), and if it was, to what extent, if at all, was family allowance paid thereafter in a sum greater than it would have been had a timely recalculation have taken place.

25                  The AAT did not consider the evidence given by the appellant as to the circumstances of her disclosure of the redundancy payment to Centrelink for the purposes of s 1237AAD (waiver in special circumstances).  It excluded the operation of s 1237AAD on the basis of findings of fact which were insupportable on the evidence.

26                  The reliance upon s 1237A(2) by the appellant is misconceived on a number of bases.  There was no evidence that the original estimate was an underestimate of value. There is no evidence of any other estimate being made of the value of the redundancy package.  The evidence is that full details of the value of the package as set out in the Queensland Government Pay Slip were provided to Centrelink.  Finally, I express no view as to whether a redundancy package is “property” for the purposes of s 1237A(2) of the Act.

27                  The appellant has made out an error of law which undermines the critical findings of fact which led the AAT to affirm the decision under review in respect of the recovery of the overpayment of family allowance.  The decision must, to that extent, be set aside and remitted for reconsideration by the AAT according to law and these reasons.

28                  I turn now to the payment on 27 March 1996 of $2,065.60.  The AAT found that that payment was a duplication of basic family payments already paid during the period 3 April 1994 to 21 December 1995.

29                  The AAT found that no letter of explanation as to the payment was issued by Centrelink.  It also found that the appellant queried the payment with her bank but not Centrelink.  The AAT held that the meaning of “good faith” was to be found in the decision of Finn J in Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 50 ALD 186 at 189, where his Honour said :

“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.

30                  Applying this test, the AAT concluded :

“21.     In Mrs Jazazievska’s case, the Tribunal concludes that the receipt of a large sum of $2,650.60 [sic], without any explanation, would justify some query, on her part, to Centrelink.  However, this was not the case.  A query was raised by Mrs Jazazievska, but with the Bank only.  Any uncertainty Mrs Jazazievska had on this payment for social security purposes could only have been answered by Centrelink.  As a social security recipient, such a query, in the Tribunal’s view, would not have been unreasonable for her to make.”

31                  The appellant contends that the AAT incorrectly applied the ratio of Prince because it failed to apply the test of good faith at the time the payment was made into the appellant’s bank account and sought to apply it when the appellant first became aware of the money in the bank account.  It was submitted that when the payment was credited to the bank account, it was “received” within the meaning of s 1237A(1), irrespective of whether the welfare beneficiary had knowledge of the payment.  In this case it was submitted that the appellant was unaware of the payment at the time that it was received into the account and therefore she could not at that point in time know or have knowledge that she was not entitled to use the monies received as her own.

32                  In support of her contention, the applicant relies on the following statement of Finn J in Prince (at 188) :

“... It [the AAT] correctly concluded that payments were ‘received’ where they were available for Mr Prince’s use and that occurred when they were deposited in his bank account. ...

.....

The section asks that a quite specific question be addressed:  was the payment received in good faith?  It is quite unconcerned, for example, with whether, after 22 December, Mr Prince acted in good faith towards DEETYA.  Its sole concern is with whether a particular state of affairs exists at the time a payment (or payments) is received.”

His Honour made the additional observation (at 189) :

“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.”

33                  In Prince’s case, Mr Prince took appropriate steps to cancel his entitlement to Austudy on 22 December 1993.  Payments of Austudy continued to be made to his bank account notwithstanding his having taken steps to terminate the payments.  It was found that between 22 December 1993 and 7 February 1994 he was quite unaware that he was continuing to receive Austudy.

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.

35                  The appellant said in evidence that she queried the deposit with her bank when she became aware of it and left it there for ten days before using the money.  She gave the following evidence :

“And I think earlier you said that you left the money in the bank for 10 days - - -?---Yes.

- - - before you spent it?---Yes, before I take them out.

And why did you leave it in there for 10 days?---Because that’s what I’ve done after that.  I did the same thing with - whatever money, I’m not sure, coming in the bank, I don’t pick them up straight away.  So I would wait and - because no one said:  bring the money back. That’s what happened.  A long time ago when I was living at the ‘Gabba, I think, when the bank put some money in my book and asked for the money back, so that was some type of warning.”

36                  From this material the latest date upon which the appellant became aware of the money being paid into her account was 4 April 1996.  She submits that unlike Mr Prince, she did not know on 29 March 1996 that she was not entitled to receive the sum of $2,065.60.  As she was ignorant of the payment on 29 March 1996 and, as she submits, her conduct after that date is irrelevant, she submits the receipt in ignorance was a “receipt in good faith”.

37                  In my view the submission is misconceived.

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 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 (1990) at 1760;  see to the same effect Collins English Dictionary (Australian Edition) (1979) at 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 Cas 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 $2,065.60 in good faith.  This follows because she did not then have an honest belief that she was entitled to receive and retain the payment.

45                  There was no error of law on the part of the AAT in finding an absence of good faith for the purposes of s 1237A(1) in respect of this payment of $2,065.60.

46                  Each of the parties has been successful on an issue.  The just course is that no order be made as to costs.

Associate:

Dated:              20 October 2000