Andaya and Department of Education, Training and Youth Affairs [2000] AATA 439 (5 June 2000)

Last Updated: 15 June 2000

DECISION AND REASONS FOR DECISION [2000] AATA 439

ADMINISTRATIVE APPEALS TRIBUNAL )

) No N1999/1081

GENERAL ADMINISTRATIVE DIVISION )

Re ARCHIE ANDAYA

Applicant

And SECRETARY, DEPARTMENT OF EDUCATION TRAINING AND YOUTH AFFAIRS

Respondent

DECISION

Tribunal Dr J D Campbell, Member

Date 5 June 2000

Place Sydney

Decision The Tribunal sets aside the decision under review and in substitution therefore determines that the debt of $806.34 owed by the Applicant to the Commonwealth should be waived.

.............................................

J D Campbell

Member

CATCHWORDS

AUSTUDY Allowance - Parental Income - Change in Income - Parental Actions - Student knowledge - Overpayment - Administrative error - Good faith.

AUSTUDY Regulations (1997) 12C, 12E, 86, 109(1)(d)

Student Youth Assistance Act (1973), sections 43(1)(a), 287 and 290C

Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 152 ALR 127.

REASONS FOR DECISION

Dr J D Campbell, Member

1. Mr Archie Andaya ("The Applicant") in this matter seeks a review of the decision of the Social Security Appeals Tribunal dated 14 May 1999 which affirmed the decision of the Authorised Review Officer ("ARO") of Centrelink dated 23 March 1999. This latter decision affirmed the earlier decision of an ARO of the Secretary, Department of Education, Training and Youth Affairs ("the Respondent") not to waive the Applicant's AUSTUDY debt on the grounds of administrative error.

2. A hearing was held before the Tribunal on 10 February 2000 at which the Applicant was assisted in his representations by his father Mr Armando Andaya. The Respondent was represented by Ms S Fraser, a solicitor from the Australian Government Solicitor.

3. The following material was placed in evidence before the Tribunal:

Documents prepared pursuant to Section 37 of the Administrative Appeals Tribunal Act 1975 Respondent Statement of Facts and Contentions dated 4 February 2000 T1 - T22 pp1 - 53 Exhibit R1

issues

4. The issue in contention between the parties is whether an overpayment of AUSTUDY allowance can be waived because of administrative error, provided any resulting payments were received in good faith.

legislation

5. The relevant legislation in this matter is:

Student and Youth Assistance Act 1973 ("the Act') and, in particular, ss43(1)(a), 280 and 290C; and

AUSTUDY Regulations (1997) 12C, 12E, 86 and 109(1)(d).

background

6. The Applicant lodged a 1997 AUSTUDY Continuing Application form for payment of AUSTUDY Allowance in February 1997 (T3). The Applicant was paid AUSTUDY during 1997 on the basis that his parent's taxable income for financial year 1995/96 was $12095.00 (T3, p15). A Reverse Current Income form for 1997 was forwarded in September 1997 after completion by the Applicant's parents. This form demonstrated a combined taxable income for the parents of the Applicant for financial year 1996/97 of $43445.00 (T8, p28). A notice of overpayment of $806.34 of AUSTUDY Allowance was forwarded by the Respondent to the Applicant on 12 June 1998. This overpayment was raised as a result of information provided by the Australian Taxation Office to the Respondent (T9, p29). The overpayment related to the period 1 October 1997 - 31 December 1997. The Applicant requested an internal review on 1 July 1998 (T10) and the decision to not waive the debt was taken by an ARO on 10 November 1998 (T13). This decision was notified to the Applicant on 11 November 1998 (T14). This decision was further affirmed by an ARO on 23 March 1999 (T21) and by the Social Security Appeals Tribunal on 14 May 1999 (T2).

agreed facts

7. The parties agree that the overpayment of $806.34 has been correctly calculated and a debt of that amount has been correctly raised and was due and owing. It is further agreed that the amount has been repaid in full as a consequence of actions taken by the Respondent. The issue that remains between the parties is whether the debt should have been recovered.

applicant's evidence

8. Mr Andaya senior told the Tribunal that he arrived with his family, of a wife, four children and mother-in-law, from Manila to settle in Australia in September 1995. At the time of the hearing three of the children, aged 16, 14 and six were at school, with Archie (aged 21) at University. Mr Andaya senior told the Tribunal that he was unemployed for the first few months after his arrival in Australia, but in January 1996, he obtained employment as a factory worker with his wife obtaining employment in August 1996. Mr Andaya stated that the combined income for him and his wife in financial year 1995/96 was of the order of $12000, and in the following year there was a substantial increase in income, reflecting a full year employment activity by himself and employment for most of the year by his wife. The combined income for financial year 1996/97 was of the order of $44,000 and Mr Andaya senior did not consider that this was significantly greater or lesser than the average income for an Australian family with two working parents as he had read in the papers that the average annual family income was of the order of $35000 - $40000.

9. Mr Andaya stated that he undertook all correspondence in relation to family affairs and particularly those relating to education and government activities. In relation to such activities, Mr Andaya would supervise the form completion and, where particular information was not required from the children, sign and return the form to the appropriate authority.

10. In relation to the AUSTUDY issue with regard to Archie, a letter was received from the Respondent on 29 August 1997. Mr Andaya said the letter was addressed to his son but he gave it to his father unopened. The form in question was the Reverse Current Income form for 1997 which he completed, and which was signed by he and his wife, before he personally delivered the completed form to the office at Blacktown on 16 September 1997. Mr Andaya was aware that the form was concerned with the provision of information which would be used to calculate Archie's entitlement to AUSTUDY for the months of October through December 1997. Mr Andaya stated that he did not inform his son of the information contained within the reverse amount income form, and further noted that the form only required the signature of the two parties for completion.

11. In late February 1998, a further application for AUSTUDY payment for Archie was made for 1998. This application was denied because of the level of family income.

12. In June 1998 Mr Andaya senior became aware that Archie had been overpaid AUSTUDY for the last three months of 1997. Mr Andaya senior stated that the AUSTUDY payments were paid directly into a personal bank account operated by his son, as he (the father) believed it to be the son's money.

mr archie andaya

13. The Applicant, aged 21, stated that he was working and studying nursing at the University of West Sydney. He stated that he completed year 11 at Doonside Technical High School and year 12 at Access Nepean, which required higher fees. The Applicant stated that he opened a bank account with St George in 1995/96 and undertook part time work at McDonalds and at Koala factories.

14. In relation to the AUSTUDY forms, the Applicant stated that a letter such as this went straight to his father. Any signature that he would have to apply was always done before his father completed the form. Specifically in relation to the letter concerning the Reverse Current Income form, the Applicant stated that he had only become aware of this form as the various proceedings have progressed. The Applicant stated that while he was not aware of what was in the form, he was aware that economic circumstances within the household had picked up around the time that the form was completed. Further, when unsuccessful in an application for AUSTUDY in 1997, the Applicant had to make up the income loss by undertaking more work.

15. In response to questions from the Respondent, the Applicant confirmed that the Reverse Current Income form was received in late August 1997, that this was a routine letter which he handed to his father unopened and that the form was filled in by his parents and delivered to the Blacktown office by his father. When questioned about his statements made to the Social Security Appeals Tribunal by telephone on 14 May 1999, the Applicant stated that he was called to the phone and was unaware that there had been a hearing in progress, and that statements made at that time were as a result of a misunderstanding.

submissions

16. The Applicant contended that he had provided the necessary information as requested by the Respondent and that the Respondent had not acted on the information when provided. This, in the Applicants' review, constituted an administrative error committed by the Respondent and, while not contesting that an overpayment had occurred, this was due solely to the administrative error.

17. Further the Applicant contended that he had received all such payments of AUSTUDY in October through December 1997 in good faith, as he had no knowledge of the contents of the Reverse Current Income form delivered by his father to the Respondent in September 1997 and further, while acknowledging that the economic circumstances in the family were improving at the time, he had no understanding as to at what levels of parental income his AUSTUDY payments would cease to be made. This lack of knowledge was corrected when his application for AUSTUDY in 1998 was rejected because of the combined family income for financial year 1996/97. Nevertheless it is the Applicant's contention that during the relevant period he was unaware as to the question of his parents' income and what effect particular income increases would have upon his entitlements such, any receipt of payments was in good faith.

18. The Respondent submitted that the Applicant had reason to know that he was not entitled to the payments he received during the months October through December 1997. In so stating, the Respondent relied upon the Applicant's submission to the Social Security Appeals Tribunal that his father was earning $350-$400 per week. The Respondent further confirmed that the Applicant had reason to know that his AUSTUDY payments should have been reduced as a consequence of the advice rendered by the Respondent in their letter to the Applicant on 29 August 1997, where it stated that if the parental income had increased substantially for the 1996/97 financial year, the allowance you are receiving may need to be adjusted from 1 October 1997.

considerations and findings

19. The Tribunal acknowledges that both parties agree that there was an administrative error on the part of the Commonwealth in this matter; that this error arose as result of a failure by the Respondent to act upon information sought from and provided by the Applicant to the Respondent in September 1997 and that this failure resulted in an overpayment of AUSTUDY to the Applicant of $806.34. The Tribunal finds that this overpayment arose solely as a result of an administrative error on the part of the Commonwealth. This overpayment error was corrected in June 1998, when data matching with the Australian Taxation Office revealed a significantly increased parental income for financial year 1996/97. The Tribunal further acknowledges that advice of this significantly increased parental income was made known to the Respondent, when they declined the Applicant's claim for AUSTUDY in February 1998.

20. In considering the facts of this matter, the Tribunal makes the following finding of facts, which it believes are relevant to the disposition of this matter:

(a) the Andaya family, comprising parents, mother-in-law and four children arrived from Manila to settle in Australia in September 1995; and

(b) the combined parental income for financial year 1995/96 was $12095.00; and

(c) the Applicant made a claim for AUSTUDY in 1997 in which he declared the combined parental taxable income for financial year 1995/96 was $12095.00; and

(d) the Respondent sought further information from the Applicant regarding the combined parental taxable income for financial year 1996/97 on 29 August 1997; and

(e) the Applicant's father completed the Reverse Current Income form for 1997 indicating that the combined taxable parental income for financial year 1996/97 was $43,445, and delivered it to the Respondent at Blacktown on 16 September 1997; and

(f) the business affairs of the family, and in particular dealings with government and education were undertaken by the Applicant's father; and

(g) the Applicant did provide the letter and the included Reverse Current Income form of 29 August 1997 to his father for analysis, completion and delivery; and

(h) the father and the Applicant did have discussions as to what effect, if any, the increase in the combined parental taxable income would have on the Applicants AUSTUDY payments for the remaining three months of calender year 1997; and

(i) the Applicant had some knowledge of his father's earnings at the time of completion of the requested information form, in that he stated that the father was earning some $350 to $400 for a five day week; and

(j) the reverse current income form was completed and forwarded with both father and Applicant concerned that it may possibly have some effect on the Applicant's AUSTUDY payments, but neither father nor Applicant were seemingly aware of income ceilings; and

(k) the Applicant and his father, while having the concerns already expressed, did complete and deliver the completed information requirements as requested, with the AUSTUDY payments continuing to be paid at the same level to the Applicant for the remainder of 1997; and

(l) by virtue of the payments at the same level after the information had been submitted both the Applicant and his father concluded that such continuum of payments were correct; and

(m) the Applicant made a further application for AUSTUDY in February 1998 detailing the combined parental income for 1996/97 as earlier provided to the Respondent and this application was denied because of parental income levels.

21. The Tribunal, in acknowledging the earlier findings of fact, moves to a consideration of the facts against the relevant legislative framework. Subsection 289(1) of the Act provides

"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."

22. The issue as regards this subsection and, in the Tribunal's view, the central issue in this matter is whether the Applicant received the payments in good faith.

23. The Tribunal notes that this particular subsection, and in particular the good faith issue, has been canvassed extensively in Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 152 ALR 127, where at p130 Finn J states

"The burden of the formula can vary significantly given the purpose it is intended to serve in a given setting. In one context it can focus inquiry upon a person's reason for action (eg as with the good faith duty of company directors); in another, to a person's state of knowledge when a particular event occurs.

For my own part, I consider the burden of the formula in the s289 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 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."

24. The Tribunal, in noting the particular facts of Prince's case (supra) that led to the overpayment to Mr Prince, concludes that Mr Prince did not receive such payments in good faith, as he had knowledge or should have had such knowledge that the payments were being made in error, as he, not a first time recipient of AUSTUDY, should have known or did know that such payments ceased with the end of the calender year.

25. In applying this test to the Applicant, the Tribunal in the light of the established facts readily acknowledges that the Applicant did entertain concern over the effect of the increase in parental income on his AUSTUDY payments when the reverse current income form was completed and submitted in September 1997. That the combined family income had increased was not in question, and that it had increased significantly would not have been surprising in view of the facts that financial year 1995/96 saw the father working for half the year and financial year 1996/97 involved both parents working. The issue, in the Tribunal's opinion, is not the Applicant's concerns at the time of form completion and submission in September 1997, although such concerns could be seen to be relevant if they continued to exist during the period in which payments were received, but more importantly by the Applicant's state of mind when he received the payments. It is the Tribunal's conclusion, that while the Applicant did have concerns as to the effect of increased parental income at the time the form was completed and submitted, both the Applicant and his father did rely upon the form completion and submission and an expected analysis by the Respondent to determine his level of AUSTUDY payments for the remaining three months of calender year 1997. That continuing payments were made at the same level was seen by the Applicant as confirming that the information provided had no effect on his level of continuing payment for the remainder of the year. The Applicant, in the Tribunal's view, had no knowledge nor should he have reason to know that the Respondent had failed to deal with the information provided in any other but the correct manner. The Tribunal considers the Applicant's response and the subsequent allaying of any concerns that he may have entertained at the time of submitting the information as a rational and reasonable response to the detailed circumstances.

26. The Tribunal notes that the Respondent has made much of the size of the combined parental taxable income increase for financial year 1996/97 and that this should have put the Applicant on notice that his payments were likely to be reduced. The Tribunal, in considering such a submission, concludes that, while the Applicant may have been put on notice, he did what was asked of him and returned the completed claim form. The Tribunal finds that at this point there has been no evidence adduced which points to the Applicant doing things and providing information other than in the utmost good faith. Further the Tribunal, having already dealt with the issue of the Respondent failing to deal correctly with the information received and that rational and reasonable consequences of the Applicant receiving a continued level of AUSTUDY payments, finds much difficulty in the suggestion that there exists an onus on the Applicant to continue to explore an issue, where he has indeed no logical reason to do so.

27. Further the Tribunal is mindful that the Applicant and his family arrived in Australia in September 1995. Both the Applicant and his father gave evidence in relation to their understanding of family incomes and the Tribunal, in accepting their statements as to the understanding, concludes that the Applicant and his father were doing what they thought was the right thing. More importantly, the Tribunal does not find that any inference as to absence of good faith could be drawn from any actions taken or failed to be taken by the Applicant in the circumstances of this matter. This is further reinforced by the fact that the Applicant submitted a further claim for AUSTUDY in 1998 containing the same parental income figures as previously submitted in September 1997, and the denial of the claim is in the Tribunal's view the first knowledge that the Applicant had that the parental incomes were too high.

28. In summary the Tribunal finds that the Applicant did receive the AUSTUDY payments in October, November and December in good faith, in that at the time of receiving such payments he had done all that was requested of him by the Respondent, that the failure of the Respondent to diligently discharge his duties does not create a continuing extra onus on the Applicant to undertake further investigatory tasks more than that which a reasonable person would undertake in like circumstances and finally that at no stage during the period of payment did the Applicant know or have reason to know that he was not entitled to the payments.

determination

29. The Tribunal sets aside the decision under review and in substitution therefore determines that the debt of $806.34 owed by the Applicant to the Commonwealth should be waived.

I certify that the 29 preceding paragraphs are a true copy of the reasons for the decision herein of:

Dr J D Campbell, Member

Signed: .....................................................................................

Associate

Date of Hearing 10 February 2000

Date of Decision 5 June 2000

Solicitor for the Applicant Applicant self represented

Solicitor for the Respondent Ms S Fraser,

Australian Government Solicitor's Office