Hocking and Secretary, Department of Family and Community Services [2002] AATA 93 (15 February 2002)

Last Updated: 22 March 2002

DECISION AND REASONS FOR DECISION [2002] AATA 93

ADMINISTRATIVE APPEALS TRIBUNAL )

) No N2001/634

GENERAL APPEALS DIVISION )

Re Francis John Hocking

Applicant

And Secretary, Department of Family and Community Services

Respondent

DECISION

Tribunal Mr M J Sassella, Senior Member

Date 15 February 2002

Place Sydney

Decision The decision under review is set aside. The tribunal decides that there is a debt due to the Commonwealth of an indeterminate amount and that recovery of the debt is waived on the basis that the debt was attributable in full to error on the part of the Commonwealth.

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

M J Sassella

Senior Member

CATCHWORDS

SOCIAL SECURITY -Parenting Allowance - Parenting Payment (Partnered) - notification of changes in income - debt due to the Commonwealth - reliance placed on information from Centrelink - insufficient care by Centrelink to ensure advice understood - administrative error by Centrelink - right of recovery of debt waived - debt recovered in full to be refunded

Haldane-Stevenson v Director-General of Social Security (1985) 60 ALR 21

Secretary, Department of Social Security v Garvey (1989) 22 FCR 132

Social Security Act 1991 - ss 506D(1), (2), (3), (4), (5), 950(1), (2), (3), (4), (5), (8), 1075, 1223(5), 1224(1), 1237A(1), (1A), 1237AAD

REASONS FOR DECISION

XX February 2002 Mr M J Sassella

15 February 2002 Mr M J Sassella

History of application

1. On 27 June 1997 Mr Francis John Hocking ("the applicant") lodged with Centrelink a claim for Parenting Allowance (an incomplete copy of the claim form is at T4).

2. On 1 August 1997 the regional manager of the Wallsend Centrelink customer service centre wrote to the applicant on behalf of the Secretary of the then Department of Social Security (it would now be on behalf of the Secretary of the Department of Family and Community Services ("the respondent") (T5/16)). That letter informed the applicant that he would be paid Parenting Allowance at a certain fortnightly rate and that arrears had been credited to his account. The letter included additional information:

* The rate depended on the incomes of the applicant and his wife.

* The incomes taken into account were $65.62 a fortnight for the applicant and $597.63 for Mrs Hocking.

* He was told, "You should tell us within 14 days if either income changes".

3. The applicant received subsequent letters:

* On 28 January 1998 he received a letter (T5/19) notifying him that his Parenting Allowance had been increased and that this was based on his income of $60.00 a fortnight and his partner's income of $574.94 a fortnight. Again he was told to tell Centrelink if there was any increase in income.

* On 29 January 1998 he received another letter (T5/23) in virtually identical terms as the letter sent the day before.

* On 30 January 1998 he received another letter (T5/26) notifying him of an increased rate of Parenting Allowance based on income of $60.00 a fortnight for the applicant and $498.00 a fortnight for his partner. Again he was asked to notify Centrelink if any income was received in excess of these amounts.

* On 18 May 1998 he received another letter (T5/29). This related to Parenting Payment which replaced Parenting Allowance from 20 March 1998. This was paid at a rate based on the applicant's income of $60.00 a fortnight and his partner's income of $498.00 a fortnight. He was told to notify Centrelink if any income was received in excess of these figures.

4. On 27 August 1998 the NSW Department of Education and Training provided data to Centrelink concerning Mrs Hocking's earnings, apparently from 28 May 1998 to 7 August 1998 (T7). This also disclosed that Mrs Hocking had received workers' compensation payments from 3 June 1998 until 21 August 1998.

5. On 23 February 1999 the NSW Department of Education and Training again provided details of Mrs Hocking's earnings to Centrelink covering 14 July 1997 to 28 May 1998 and indicating that workers' compensation had continued on from August 1998 and was still continuing (T8).

6. On 27 May 1999 the NSW Department of Education and Training again provided details of Mrs Hocking's earnings to Centrelink covering 2 June 1998 to 24 May 1999 and indicating that workers' compensation had been paid from 3 June 1998 until 1 July 1999 (T9).

7. The applicant provided a summary of her income tax return for 1997-1998 on an uncertain date (T10).

8. On or about 9 June 1999 GIO Insurance advised (T11) that Mrs Hocking had received workers' compensation at the following rates:

2 to 30 June 1998 - $753.64 a week.

1 July to 27 November 1998 - $776.24 a week.

30 November 1998 to 31 January 1999 - $601.50 a week.

1 February to 3 March 1999 - $525.50 a week.

1 April 1999 to date - $534.80 a week.

9. On 25 October 1999 the Wallsend Centrelink office calculated that the applicant had been overpaid $4,318.90 because of Mrs Hocking's receipt of income in excess of that recorded by Centrelink (T12). It is noted at T12/56 that a debt of $1,639.30 was owed in respect of Parenting Allowance and $2,679.60 in respect of Parenting Payment (Partnered).

10. On 22 December 1999 Centrelink sent letters to the applicant. In Ex A3 Centrelink sought to recover a debt of $1,639.30 in respect of Parenting Allowance for the period 31 July 1997 to 12 March 1998. Payment was due by 13 January 2000. The tribunal pauses to observe that this letter was omitted from the Section 37 Statement provided for the respondent by Centrelink. The Centrelink advocate appearing at the tribunal hearing was unable to provide a copy of any letter sent to the applicant in respect of the debt. Fortunately the applicant had a copy of this letter with him at the hearing. The tribunal expresses its misgivings that Centrelink appears unable to provide copies of correspondence directly related to the decision under review in a debt recovery case. The Centrelink advocate had no way to ascertain how and when the existence of the debt had been notified to the applicant. This is clearly not good enough. There should be a paper or electronic trail within Centrelink capturing all facets of the administration and decision-making revolving around debt recovery.

11. In Ex A4 Centrelink sought to recover a debt of $2,679.60 in respect of Parenting Payment for the period 26 March 1998 to 24 September 1999. Payment was due by 13 January 2000. The tribunal pauses to observe that this letter was also omitted from the Section 37 Statement provided for the respondent by Centrelink. The same comments apply in relation to this omission from the Section 37 Statement.

12. On 19 January 2000 Centrelink advised the applicant that his Parenting Payment was $66.20 a fortnight but that $62.89 would be deducted on each payday to result in a rate of only $3.31 being payable each fortnight (T14/69). That notice said that Mrs Hocking was receiving $30,361.24 a year as income.

13. On 28 January 2000 the applicant sent a facsimile to Centrelink (T14/68), having received T14 in the mail that day. He queried why this action was being taken before a review he had requested earlier in person had been concluded. He queried how Centrelink could maintain that Mrs Hocking was earning $30,361.24 a year. He queried also the amount maintained as the value of Mr and Mrs Hocking's assets. He sought to have the matter "properly reviewed". As part of T14 (71-72) the applicant provided further tax information for 1997-1998. Mrs Hocking had gross income of $21,252.00. Her taxable income was $19,389.00. The applicant's gross income was $1,479.00. His taxable income was $1,379.00.

14. On 7 August 2000 the debt owed by the applicant was recalculated to total $5,053.00 (T15). This consisted of $2,372.70 in respect of Parenting Allowance paid from 17 July 1997 to 12 March 1998 and $2,680.30 in respect of Parenting Payment (Partnered) paid from 26 March 1998 to 24 September 1998. It was noted that Mrs Hocking's income in 1998-1999 was $38,860.00 salary, plus $39.00 interest, plus $131.00 in shares. She had lost $8,891.00 in a separate business.

15. On 8 September 2000 the regional manager of the Wallsend Centrelink customer service centre notified the applicant that the applicant owed nil to Centrelink (T16).

16. On 19 October 2000 another Centrelink officer wrote to the applicant to say that the decision to recover a debt of Parenting Payment (Partnered) had been reviewed. The decision to reduce the debt to nil was incorrect. The nil figure was increased to $2,680.30. The earlier figure for overpaid Parenting Allowance of $1,639.30 was increased to $2,372.70. This was explained by stating that in calculating the applicant's partner's earnings the "amounts of salary per annum averaged over periods" had been used. At T20 is the background reasoning of the writer. She was in fact the original decision-maker who was reconsidering her decision. Salient sections from T20 are:

"Partner originally disputed 97/98 income as per employers report - case reviewed and taxable income used. Again reviewed and [Parenting Payment (Partnered)] debt zeroed (by mistake) - Reviewed and reinstated. ...

"Relevant facts: ... Failed to advise partner's compensation income for [Parenting Allowance/Parenting Payment (Partnered)] payments. See additional claim 12/1/98, original claim 27/6/97. Partner's earnings grossly understated. ...

"Reconsideration outcome ...:...Affirmed - debt for [Parenting Payment (Partnered)] reinstated - debt for [Parenting Allowance] increased as per 97/98 taxable income details provided after partner disputed employers report".

17. The tribunal observes that the "additional claim 12/1/98" is not included in the T documents.

18. On 14 December 2000 a Centrelink authorised review officer ("ARO") wrote to the original decision-maker (T19). She said that she had decided "that the debts in this case should be based on actual fortnightly income (rather than taxable income) because this is more beneficial to the customer". She had commenced the Parenting Allowance debt from 14 August 1997, not 31 July 1997 as was notified in Ex A3. This was because the grant letter (T5/16) was dated 1 August 1997. Any excess payment prior to 1 August 1997 was not to be recovered. The recoverable amounts were $1,486.90 in respect of Parenting Allowance (14 August 1997 - 12 March 1998) and $2,679.60 in respect of Parenting Payment (Partnered) (26 March to 24 September 1998). This totalled $4,165.50.

19. On the same date the ARO wrote to the applicant with her decision. The central paragraph giving the reasons for the recoverable debt reads:

"Information now available shows that your partner's income (originally from casual earnings and subsequently from compensation) exceeded the limits specified in the above letters [ie those in T5], but there is no record of advice from you about this within the relevant notification periods. As a result you received amounts of Parenting Allowance in excess of your correct entitlement from payday 14 August 1997, and amounts of Parenting Payment in excess of your correct entitlement from payday 26 March 1998".

20. The ARO also decided that the debt(s) could not be waived.

21. On 14 March 2001 the applicant lodged with the Social Security Appeals Tribunal ("the SSAT") an application for review of the decision of the ARO (T2). On 21 February 2001 the applicant signed a letter to the SSAT setting out certain of his arguments. The main points raised were:

* The applicant and his wife kept Centrelink "completely up-to-date with [their] changing circumstances" during the period of Centrelink assistance.

* The applicant and his wife were guided by and relied on Centrelink staff in fulfilling obligations.

* The quantum of the debt continues to change. At one stage it was reduced to nil but then he was told that an amount was owing and that amount was different from what had been quoted earlier.

* Mrs Hocking's taxable income in 1997-1998 had been only $19,389. They had four dependent children at that time. It seemed that Centrelink considered that a family of six could live on an income of only that level.

* In 1997-1998 Mr Hocking was paid only $1,168, as evidenced on the Centrelink group certificate at T6. However, Centrelink was seeking to recover $1,486 plus a part of $2,679 pertaining to that financial year.

Decision under review

22. The SSAT affirmed the decision of the ARO (T2). The SSAT found that Mr and Mrs Hocking had not notified Centrelink at all times of their income position. Mrs Hocking's income was at all relevant times on average in excess of the figure above which the applicant was required to notify Centrelink. The SSAT accepted the figures regarding Mrs Hocking's income provided by the NSW Department of Education and Training.

23. On 16 May 2001 the applicant lodged with the Administrative Appeals Tribunal ("the tribunal") an application for review of the SSAT decision (T1).

Relevant legislation

24. The following provisions in the Social Security Act 1991 ("the Act") are relevant: sections 506D(1), (2), (3), (4), (5), 950(1), (2), (3), (4), (5), (8), 1075, 1223(5), 1224(1), 1237A(1), (1A), 1237AAD.

Social Security Act 1991

Division 1A - Business income

...

506D Secretary may require notice of the happening of an event or a change in circumstances

(1) The Secretary may give a person to whom parenting payment is being paid a notice that requires the person to inform the Department if:

(a) a specified event or change of circumstances occurs; or

(b) the person becomes aware that a specified event or change of circumstances is likely to occur.

(2) An event or change of circumstances is not to be specified in a notice under subsection (1) unless the occurrence of the event or change of circumstances may affect the payment of parenting payment.

(3) Subject to subsection (4), a notice under subsection (1):

(a) must be in writing; and

(b) may be given personally or by post; and

(c) must specify how the person is to give the information to the Department; and

(d) must specify the period within which the person is to give the information to the Department; and

(e) must specify that the notice is a recipient notification notice given under this Act.

Note: For recipient notification notice see subsection 23(1).

(4) A notice under subsection (1) is not invalid merely because it fails to comply with paragraph (3)(c) or (e).

(5) Subject to subsections (6) and (7), the period specified under paragraph (3)(d) must end at least 14 days after:

(a) the day on which the event or change of circumstances occurs; or

(b) the day on which the person becomes aware that the event or change of circumstances is likely to occur.

...

Waiver of debt arising from error

950(1) - (5), (8) Repealed in 1997

...

1075 Permissible reductions of business income

(1) Subject to subsection (2), if a person carries on a business, the person's ordinary income from the business is to be reduced by:

(a) losses and outgoings that relate to the business and are allowable deductions for the purposes of section 51 of the Income Tax Assessment Act 1936 or section 8-1 of the Income Tax Assessment Act 1997, as appropriate; and

(b) depreciation that relates to the business and is an allowable deduction for the purposes of subsection 54(1) of the Income Tax Assessment Act 1936 or Division 42 of the Income Tax Assessment Act 1997; and

(ba) amounts that relate to the business and can be deducted for the decline in value of depreciating assets under Subdivision 40-B of the Income Tax Assessment Act 1997; and

(c) amounts that relate to the business and are allowable deductions under subsection 82AAC(1) of the Income Tax Assessment Act 1936.

Note: Different provisions apply when working out a person's ordinary income from a farm to find whether the person satisfies the farmers' income test for the purposes of Part 3.14A (see subparagraph 1185K(3)(a)(ii) and paragraph 1185K(3)(c)).

1075(2) If, under Division 1B, a person is taken to receive ordinary income on a financial investment, that ordinary income is not to be reduced by the amount of any expenses incurred by the person because of that investment.

Note: For financial investment see subsection 9(1).

1075 (3) If a person's ordinary income for a period includes rental income from a property that is not business income, the person's ordinary income from that property is to be reduced by losses and outgoings that relate to the property and are allowable deductions for the purposes of section 51 of the Income Tax Assessment Act 1936 or section 8-1 of the Income Tax Assessment Act 1997, as appropriate, for that period.

1075 (4) If the amount of the allowable deductions relating to a property for a period under section 51 of the Income Tax Assessment Act 1936 or section 8-1 of the Income Tax Assessment Act 1997, as appropriate, exceeds the amount of the rental income from the property for that period, the amount of the ordinary income from the property for that period is taken to be nil.

...

1223.(5) 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.

Debts arising from recipient's contravention of law

1224.(1) 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.

Note: If the person does not pay the debt or enter into an agreement to pay the debt within a certain time, interest may become payable on the debt (see section 1229). If the person enters into an agreement to pay the debt and breaches the agreement, interest may become payable on the debt (see section 1229A).

...

Administrative error

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.

Note: Subsection (1) does not allow waiver of a part of a debt that was caused partly by administrative error and partly by one or more other factors (such as error by the debtor).

1237A (1A) Subsection (1) only applies if:

(a) the debt is not raised within a period of 6 weeks from the first payment that caused the debt; or

(b) if the debt arose because a person has complied with a notification obligation, the debt is not raised within a period of 6 weeks from the end of the notification period;

whichever is the later.

...

Waiver in special circumstances

1237AAD 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 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 make it desirable to waive; and

(c) it is more appropriate to waive than to write off the debt or part of the debt.

Note: Section 1236 allows the Secretary to write off a debt on behalf of the Commonwealth.

...

Hearing and appearances

25. The tribunal convened a hearing in this matter in Newcastle on 24 January 2002. The applicant, assisted by Mrs Hocking, represented himself. Ms S Fahey of Centrelink represented the respondent.

26. The tribunal had access to the following documentary evidence:

* Exhibit TD1 - Section 37 Statement and associated T documents provided by Centrelink, 1 June 2001.

* Exhibit A1 - Material provided by applicant to the tribunal, 29 August 2001.

* Exhibit A2 - Letter dated 22 September 1998 from Centrelink customer service centre manager at Wallsend to the applicant.

* Exhibit A3 - Account payable relating to debt of $1,639.30 addressed by Centrelink to the applicant, 22 December 1999.

* Exhibit A4 - Account payable relating to debt of $2,679.60 addressed by Centrelink to the applicant, 22 December 1999.

* Exhibit R1 - Respondent's statement of facts and contentions, 5 October 2001.

27. At the hearing the applicant presented the following evidence. He had been made redundant after 30 years in the one job when he visited Centrelink in 1997 to see whether he might qualify for any payment. He was granted Parenting Allowance. There were no difficulties until a time when Centrelink ceased making deposits into his bank account. The applicant asked why this had occurred. Centrelink told him that he had failed to notify it of changes in the family's income.

28. Since he was notified that he owed a debt he has been given 15 different figures as regards the amount owing. The applicant is totally confused as to what he owes.

29. The applicant has told Centrelink everything that Centrelink has required in its notices. He and Mrs Hocking have repeatedly provided payslips. The applicant did not keep copies of all of the notifications he and Mrs Hocking made because at first they did not realise it was an issue. He pointed out that even some of Centrelink's own letters refer to notifications from the applicant. One of these is the letter of 28 January 1998 (T5/19) in which the Centrelink writer says, "Thank you for telling us your and your partner's new income details." The applicant produced Ex A2, a letter from Centrelink dated 22 September 1998, in which the writer says, "Thank you for telling us your and your partner's new income details". The January letter had been sent following a fall in Mrs Hocking's income. The September letter followed a rise in her income.

30. The applicant's written material (Ex A1) raises another issue put to the tribunal by Mr and Mrs Hocking. A Centrelink publication from 1998-1999 dealt with Parenting Payment for partnered parents such as the applicant. It stated that Parenting Payment had two components. "Basic" Parenting Payment (Partnered) was a non-taxable income supplement for a parent who is the main carer of a child. It was payable to the parent who stayed substantially out of the workforce, irrespective of the partner's income and of the family's assets. It reduced on a dollar for dollar basis the Dependent Spouse Rebate otherwise payable to the working partner under the tax system. "Additional" Parenting Payment (Partnered) provided taxable income support to the parent who was the main carer for the children where the other partner receives a Centrelink payment or the total family income is low. In the applicant's case it was payable because of low family income. The booklet said that it was "subject to the income and assets tests applied to other Centrelink allowances". Mrs Hocking understood this to refer to the income test for Family Allowance. In the booklet maximum Family Allowance was payable in a family with four children where the total family income was $25,422 or less. As Mrs Hocking's taxable income in 1997-1998 was only around $20,000, and Mr Hocking's only around $1,000, she considered that the applicant qualified for maximum Parenting Payment (Partnered).

31. The applicant and Mrs Hocking told the tribunal that they had left their discussions, from the outset, with Centrelink advisers under the impression that losses incurred by Mrs Hocking from a business in which she was involved could be used to offset her income from casual teaching.

32. Mrs Hocking took the tribunal to certain of the salary figures reported by the Department of Education to Centrelink in T7 and demonstrated that they could not realistically be correct.

33. In cross-examination the applicant agreed that he was aware of the need to notify increases in income within 14 days, although at first he was unaware because he did not receive the letter dated 1 August 1997 (T5/16). He considered that he had noted the income figures quoted in the letters. He considered that he would contact Centrelink if a letter was unclear. He believed that he had contacted Centrelink between August 1998 and September 1999 but he had no record and could not recall dates and times. The contacts were to advise of changes in foster children placed with Mr and Mrs Hocking and Mrs Hocking's earnings. In the early stages they communicated with Centrelink by telephone. They later preferred to visit Centrelink.

34. In cross-examination Mrs Hocking said that she made many of the contacts with Centrelink. She thought that business losses were deductible generally from gross income received and that was why her income quotations were low. Mrs Hocking said that she had lodged with Centrelink profit and loss statements related to her business.

35. Mrs Hocking said that in 1997-1998 she earned $160 a day when working for the Department of Education. At first she was earning about $320 a fortnight but this grew to about $640 a week in August to November 1997 because of the absence from duty of another teacher. The Department's income always caused difficulties in reporting because it was paid and accounted for irregularly.

Findings on material questions of fact with reference to the evidence and other materials in support of those findings

36. The tribunal noted that Mr and Mrs Hocking were notably annoyed with Centrelink because of its handling of their case. From the tribunal's perspective it has to be said that the administration of Mr and Mrs Hocking's alleged debt has not been felicitous. It is understandable that the applicant has little faith that the quantum arrived at is correct. The tribunal is also not impressed with the lack of completeness of the Section 37 Statement. Despite the emotions affecting them, the tribunal accepts that Mr and Mrs Hocking were witnesses who did their best to provide truthful answers to questions asked of them.

37. The tribunal must first ascertain whether there is a debt due to the Commonwealth in this case. The tribunal finds that there is. It is clear that the applicant and Mrs Hocking were under several misapprehensions in their dealings with Centrelink. One was their belief that business losses can be deducted from gross income earned by way of wages or salary in calculating fortnightly income. It is well established in cases such as Haldane-Stevenson v Director-General of Social Security (1985) 60 ALR 21 (full Federal Court) and Secretary, Department of Social Security v Garvey (1989) 22 FCR 132 (full Federal Court) that losses and expenses are quarantined and can be deducted only from any particular income item to which they attach. This is confirmed by s 1075 of the Act. The tribunal accepts the evidence of Mrs Hocking that this issue was discussed in the pre-grant interview at Centrelink, an interview of which there no record, and she was left with the impression that losses from her business were not quarantined. In short, a business loss can be applied to reduce only the income taken to be derived from that business. However, the correct situation is that, if the losses exceed the income from the business, the excess losses cannot be used to reduce the other income items.

38. The tribunal finds also that Mrs Hocking misunderstood the Centrelink payments advice book. The reference to "income and assets tests applied to other Centrelink allowances" was ambiguous. Consideration of the rate calculator in s 1068B of the Act, which applies to recipients of Parenting Payment (Partnered), demonstrates that the "other Centrelink allowances" referred to are not Family Allowance and Maternity Allowance, as Mrs Hocking understood. It refers to the income support payments such as Newstart Allowance and Sickness Allowance. Mrs Hocking's belief that at all times in the relevant period the family income was low enough to generate a maximum rate was ill-founded.

39. The tribunal could affirmatively find that there is a debt due to the Commonwealth in the amount found by the SSAT. However, the tribunal was impressed by Mrs Hocking's evidence that there were errors in the income reported by the Department of Education as received by her. This argument has not been picked up and addressed by Centrelink and the SSAT in the past and, in the tribunal's view, it should be. The tribunal, therefore, finds that there is a debt due to the Commonwealth of an indeterminate amount.

40. The tribunal finds that this is a debt under s 1224(1) of the Act. Mrs Hocking gave evidence that she had under-reported her income because of her understanding that she could reduce her earnings by taking account of business losses. This has the effect that she or her husband made false statements in reporting the family income.

41. The tribunal finds that Mr and Mrs Hocking did report variations in income as required by Centrelink, albeit quoting incorrect figures on some or all occasions. The tribunal accepts their oral evidence on this point.

42. The tribunal has considered whether recovery of the debt due to the Commonwealth can be waived under the Act. Subject to s 1237A(1A), s 1237A of the Act compels a decision-maker to waive the right to recover that part of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment(s) that gave rise to that proportion of the debt.

43. The tribunal accepts Mrs Hocking's evidence that she was left with the wrong impression by Centrelink that losses from her business could be applied to reduce her income from earnings. The tribunal finds that it is more likely than not that the correct advice was given by Centrelink but that insufficient care was taken to ensure that it was understood by the applicant and Mrs Hocking. The tribunal finds that this constitutes administrative error by the Commonwealth.

44. The tribunal finds that the overpaid amount was attributable solely to the administrative error. The applicant has apparently under-reported his wife's income to an unascertained degree because of this incorrect belief about the disposition of business losses.

45. The tribunal further finds that the applicant and Mrs Hocking received the relevant payments in good faith. They had no independent means of knowing what rate of payment they should have been receiving. The tribunal has accepted their evidence that they notified changes in income and provided payslips. The tribunal has found that, because of an ambiguity in a Centrelink publication, they believed that, because they had four children, they were entitled to maximum rate Parenting Payment.

46. The tribunal finds that s1237A(1A) does not prevent the waiver of the right to recover. Centrelink was made aware of a possible debt in August 1998, and in February and May 1999, but did not communicate with the applicant until 22 December 1999 about the accrued debt.

47. The tribunal therefore decides that recovery of the debt due to the Commonwealth is to be waived in accordance with s 1237A of the Act.

Conclusion

48. The tribunal was informed at the hearing that the debt has been recovered in full. The tribunal's decision means that the amount recovered is to be refunded to the applicant.

Decision

49. The decision under review is set aside. The tribunal decides that there is a debt due to the Commonwealth of an indeterminate amount and that recovery of the debt is waived on the basis that the debt was attributable in full to error on the part of the Commonwealth.

I certify that the 49 preceding paragraphs are a true copy of the reasons for the decision herein of

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

Associate

Date/s of Hearing 24 January 2002

Date of Decision 15 February 2002

Counsel for the Applicant Self Represented

Counsel for the Respondent Ms S Fahey, Centrelink