SOCIAL SECURITY - Rent Assistance - Overpayment Debt - Departmental Administrative Error - Whether Payment Received in Good Faith - Special Circumstances - Waiver

Social Security Act 1991, ss 1223, 1236, 1237, 1237A, 1237AAD, Module E s1069 - E1

Beadle v Director-General of Social Security [1984] AATA 176; (1985) 7 ALD 670

Re Beadle v Director-General of Social Security (1984) 6 ALD 1

Haggerty v Department of Education, Training and Youth Affairs [2000] FCA 1287; (2000) 31 AAR 529

Secretary, Department of Education, Employment, Training and Youth Affairs v Prince [1997] FCA 1565; (1997) 50 ALD 186

Re Secretary, Department of Social Security and Neuendorf (AAT 13427, 4 November 1998)

Re Nehma and Secretary, Department of Family and Community Services (1999) 3(9) SSR 132

Re Chilcott and Secretary, Department of Social Security (AAT 13086, 13 July 1998)

Re Bestel and Secretary, Department of Family and Community Services [1999] AATA 867

Re Secretary, Department of Social Security and McAvoy (1996) 44 ALD 721

Re Secretary, Department of Family and Community Services and Jonauskas [2001] AATA 72

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

1. This is an application for a review by the Secretary, Department of Family and Community Services ("the Applicant"), of a decision made by the Social Security Appeals Tribunal ("SSAT") on 6 July 2000 (T2). The SSAT decided to set aside a decision of a delegate of the Secretary, Department of Family and Community Services ("the Department") made on 22 February 2000 (T13) and substitute its decision that a debt owed by the Respondent, Mrs Reardon, to the Commonwealth for the period 30 July 1998 to 21 July 1999, be waived in its entirety.

2. A hearing was held before the Tribunal in Coffs Harbour on 6 August 2001. Filed written submissions were received after the hearing on 22 August 2001. The Department was represented by Mr P Kanowski, Departmental Advocate and Mrs Reardon was represented by Ms F McMullin, solicitor from the Coffs Harbour office of the Legal Aid Commission of New South Wales. Mrs Reardon provided oral evidence as did her husband, Mr R J Reardon. Documents were lodged with the Tribunal pursuant to section 37 of the Administrative Appeals Act 1975 ("T documents", T1-T25) in addition to the following exhibits:

A1 Amended Statement of Facts and Contentions of the Applicant 21 June 2001

A2 Computer Printout - Payment Summary From 12 March 1998 to 26 November 1999

A3 Letter to Respondent from D Cahill, Centrelink Manager 27 April 1998

A4 On line document regarding the Respondent's Earnings Update 19 June 1998

A5 Computer Printout - Family Determination History of the Respondent 27 August 1998

A6 Letter to Respondent from Ms S Heise, Centrelink Manager 2 July 1999

A7 Summary of current payments to the Respondent and her husband From 8 June 2001 to 17 August 2001

A9 Letter to the Respondent from Centrelink 13 October 1998

R1 Respondent's Statement of Facts and Contentions 22 January 2001

R2 Respondent's Additional Statement of Facts and Contentions 10 August 2001

R4 Computer Printout recording interview with the Respondent's husband 10 August 2001

3. There is no issue in this matter that a debt in the amount of $2,264. 40 exists for the period 30 July 1998 to 21 July 1999 owed by Mrs Reardon to the Commonwealth, as she was incorrectly paid Rent Assistance during this period for which she had no entitlement. The debt was raised pursuant to subsection 1223(5) of the Social Security Act 1991.

4. The issues in this matter which must be determined are:

1. Whether or not the overpayment debt of Rent Assistance owed by Mrs Reardon to the Commonwealth arose out of administrative error by the Department; and, if so

2. Whether or not Mrs Reardon received the Rent Assistance in good faith.

3. Whether or not there are any special circumstances which will allow the debt to be waived in part or as a whole.

5. A determination in this matter requires consideration of the provisions of the Social Security Act 1991 ("the Act").

6. Section 1223 of the Act deals with debts arising under the Act and as relevant, subsection 1223(5) states:

(a) an amount (the received amount) has been paid to a person by way of social security payment on or after 1 October 1997; and

(b) because the received amount had not been correctly calculated using the relevant rate calculator, or for any other reason, the received amount is greater than the amount (the correct amount) of social security payment 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.

7. Section 1236 of the Act deals with the power of the Secretary of the Department to write off a debt in certain circumstances.

8. In relation to debt recovery, the Act contains provisions for debts not to be recovered in certain circumstances. As relevant, subsection 1237(1) of the Act states:

1237(1) On behalf of the Commonwealth, the Secretary may waive the Commonwealth's right to recover the whole or a part of a debt from a debtor only in the circumstances described in section 1237A, 1237AA, 1237AAA, 1237AAB, 1237AAC or 1237AAD.

9. Section 1237A of the Act deals with waiver of a debt arising from administrative error, and as relevant, states:

"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).

(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;

10. Section 1237AAD of the Act deals with the waiver of a debt in part or as a whole in the special circumstances of a case and as relevant states:

The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:

(a) the debt did not result wholly or partly from the debtor or another person knowingly:

(i) making a false statement or a false representation; or

(ii) failing or omitting to comply with a provision of this Act or the 1947 Act; and

(b) there are special circumstances (other than financial hardship alone) that 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.

11. The information contained herein is provided by way of background and is not disputed.

* Mrs Reardon was born in Mexico on 14 April 1965. Mrs Reardon migrated to Australia in 1992 with her husband. She and her husband were later divorced in 1994.

* On 27 September 1996, Mrs Reardon married Mr Raymond John Reardon (T3, p13). Mr and Mrs Reardon have three children, Guillermo (DOB 24 August 1989) from Mrs Reardon's previous marriage, Brittany Reardon (DOB 13 December 1997) (T3, p14) and Brendon aged two years.

* Early in 1998, the family moved to Frederickton, NSW, and purchased a home for which they continue to make mortgage repayments.

* Mrs Reardon was working until approximately April 1998 and during that time received the basic Family Allowance.

* On 10 September 1998, after moving to Frederickton, Mrs Reardon completed a Parenting Payment Claim Form (T3), indicating that she owned a home with her husband. She further indicated in Part E, Question 6, that she was paying $63.00 in "rent, board, lodgings or other fees" and at Question 9, that there was a mortgage (T3, pp18, 19).

* On 27 August 1998, Mrs Reardon was advised that she would receive Family Allowance for Guillermo and Brittany. On the reverse side of the letter, she was advised that her Family Allowance included Rent Assistance of $61.65 (T4). The letter stated:

"Please read the back of this letter. It will tell you about your future fortnightly payments and the income used to work out how much we can pay you. It will also tell you about your social security rights and when you have to contact us." (T4, p33)

* On 10 September 1998, Mr Reardon claimed Newstart Allowance (T5) and indicated that he jointly owned a home with Mrs Laura Reardon.

* On 6 October 1998, Mrs Reardon was advised by Centrelink that her payment details were made up of Family Allowance of $192.80 and Rent Assistance of $88.00 (T7). This letter also advised Mrs Reardon to read the reverse of the letter.

* On 13 October 1998, Mrs Reardon was sent a further letter from Centrelink advising her of Family Allowance of $192.80 and Rent Assistance of $88.00 (T8). This letter also advised Mrs Reardon to read the reverse of the letter.

* On 22 February 2000, the Department determined that Mrs Reardon was overpaid Rent Assistance of $2,264.40. Mrs Reardon sought a review of this decision by an Authorised Review Officer ("ARO"). On 11 May 2000, Mrs Reardon was advised by the ARO that an overpayment of Rent Assistance had been caused by administrative error (T21), but there were no grounds for the Department not to recover the debt.

* Mrs Reardon appealed to the SSAT and on 6 July 2000, the SSAT decided that the debt should be waived under subsection 1237A(1) of the Act. The SSAT decided that the debt arose solely as a result of departmental administrative error and accepted that Mrs Reardon did not know that the amount of Family Allowance was incorrect. The SSAT further found that Mrs Reardon had received the Rent Assistance in good faith (T2).

* On 18 August 2000, the Department made an application for review to the Tribunal (T1), noting that the SSAT decision was wrong in finding that Mrs Reardon had received Rent Assistance in good faith. The withholding of payment which had been made from Mrs Reardon's Parenting Payment was ceased pending the outcome of the Tribunal's decision.

12. Mrs Reardon told the Tribunal that she generally understood English and knew what was meant by the term "rent". Mrs Reardon had not previously received Rent Assistance from the Department prior to the period under review.

13. Mrs Reardon explained that while Mr and Mrs Reardon had moved to Frederickton in early 1998, Mr Reardon would commute to Sydney where he continued to work for a short time. When Mr Reardon ceased his employment in Sydney, he received a termination payment which was deposited into his bank account.

14. When Mr and Mrs Reardon were living in Frederickton, Mrs Reardon further explained that she and Mr Reardon had a joint credit union account with the Coastline Credit Union. Her husband had a separate bank account. When the couple moved to Frederickton, they purchased a home for which mortgage repayments were made.

15. Mrs Reardon told the Tribunal that she completed a claim form for Parenting Payment in September 1998. In the "Accommodation" section Part E, Mrs Reardon had initially incorrectly completed Question 6, indicating that she was paying $63.00 per week in rent and at the end of Question 9, that she was paying a mortgage. Page 8 of the Parenting Payment Claim Form had been marked in handwriting "N/A", which Mrs Reardon indicated to the Tribunal had been done by the departmental officer who had clarified with Mrs Reardon that she was not in fact paying rent but was paying a mortgage (T3, p18). The section indicating that Mrs Reardon was paying rent was therefore crossed out by the departmental officer, she told the Tribunal.

16. From Mrs Reardon's Payment Summary (Exhibit A2), she agreed it was clear that from August 1998, her Family Allowance had increased. This was apparent from letters sent to her on 27 April 1998 (Exhibit A3) and 19 June 1998 (Exhibit A4). Mrs Reardon told the Tribunal that she supposed she knew that her Family Allowance had increased by also looking at her bank account.

17. Mrs Reardon told the Tribunal that when she received letters from Centrelink, she generally read the front of the letters but not the reverse side. Mrs Reardon acknowledged that she had noticed an increase in her payments from Centrelink but had not known that there was Rent Assistance being paid as part of her total payment. Mrs Reardon had told the Department that she was making repayments on the family home and had no reason to think that the Department believed that she was paying rent. Mrs Readon told the Tribunal that she in fact had no reason to think that anything was wrong in terms of her departmental payments. Mrs Reardon told the Tribunal that while she may have noticed an increase in her payments, she did not think to enquire about it with Centrelink or to discuss it with her husband.

18. The Tribunal was informed by Mrs Reardon that the format of Centrelink letters made it difficult for her to understand the content and while she acknowledged that she did not read the reverse of these letters, Mrs Reardon stated that even if she had read the reverse side, she still thought she would have had no idea that she was incorrectly receiving money related to Rent Assistance. Mrs Reardon told the Tribunal that if she had realised in 1998 that she was receiving payments from Centrelink to help with rent, she would have contacted Centrelink immediately to inform an officer that she was not paying rent. While Mrs Reardon acknowledged that she did understand the concept of "rent," she stated that she did not know or would not have known what "Rent Assistance" was. Mrs Reardon further acknowledged that when her husband had asked her, following his interview with a Centrelink officer, whether or not they received any assistance for payment of rent, she had not hesitated in answering "No".

19. Mrs Reardon was asked about her statement to the SSAT, detailed at paragraph 6 of the SSAT decision (T2, p3). The SSAT had noted:

"...She pointed out that the relevant information was on the back of each of the letters. She then said that she had just thought the rent assistance was part of her family allowance even though she knew she was not paying rent. She said that she had no idea the rate of family allowance was wrong and was not alerted by the letters. She had assumed that the reference to rent assistance was part of her family allowance. As she understood it the benefit she was receiving was family allowance. She did not think she was receiving a separate rent assistance benefit for which she had not applied. It never occurred to her that there was something wrong or that she was not getting the right amount. It was discovered when her husband was interviewed." (T2, p3)

20. Mrs Reardon told the Tribunal that she did not know what she had meant by that statement to the SSAT. Mrs Reardon also did not know what she had meant when she was reported at paragraph 24 of the SSAT decision as stating to the SSAT that she assumed that the Rent Assistance referred to in departmental letters was a component of a higher rate of the Family Allowance she was receiving. Mrs Reardon agreed that she had conceded to the SSAT that she might not have looked as closely at the letters as she should have done and also agreed in her evidence to the Tribunal that she did not recall the contents of those letters.

21. The first Mrs Reardon knew of being paid Rent Assistance, she told the Tribunal, was when her husband had returned from an interview for the purpose of a review of his Newstart Allowance. At that interview, it had been pointed out to Mr Reardon that his wife was receiving Rent Assistance and he had denied this. Upon returning home, Mr Reardon had asked his wife whether she knew anything about such Rent Assistance but she also denied that she had received it. Mrs Reardon told the Tribunal that she believed that a female departmental officer told Mr Reardon that she would resolve this Rent Assistance issue and let him know. Mrs Reardon stated that she waited approximately seven weeks and eventually she phoned Centrelink as no action had occurred in relation to this issue. Mrs Reardon thought that she had made more than one telephone call. She was told by a Centrelink officer that someone would call her back. Mrs Reardon further recalled that previously, she may have telephoned Centrelink once or twice in 1998/99 to check details regarding her Family Allowance.

22. Mrs Reardon was asked about a Centrelink letter dated 2 July 1999, which contained a "Centrelink Income Assets Statement" detailing the rate and types of payments she received from the Department. The document contained information about Mrs Reardon's Parenting Payment, and additional allowances which included details about the Family Allowance and Rent Assistance (Exhibit A6). Mrs Reardon stated that she had required this letter in order to support an application for a loan. Mrs Reardon further stated that she did not read the letter when she received it but just handed it, with other supporting documents, to the bank.

23. In relation to her financial situation Mrs Reardon told the Tribunal that when she left work she received a small amount of $800.00 as part of her termination payment. Mr Reardon had also received a termination payment. Mrs Reardon has been making debt repayments by way of Department withholdings from her Parenting Payment. Financially, she stated the family lives "day to day" trying to look after themselves and their three children. Mrs Reardon stated that her Centrelink payment is $404.00 per fortnight, from which $106.00 is withheld and the home mortgage repayments are $200.00 per fortnight. In terms of weekly expenditure, Mrs Reardon estimated that the family spends $200.00 in shopping, $160.00 for electricity every two months and on water rates $190.00. There is a $50.00 repayment arising out of repairs to her car following an accident. Further expenditure includes a telephone bill of approximately $100.00 per month and petrol costs for the car of $40.00 per week. Registration is $600.00. Mrs Reardon told the Tribunal that she has a credit card debt of $800.00 and money owed to "Target" of $250.00. Mrs Reardon stated that Mr Reardon earns $493.80 per week as a labourer at the Shire Council.

24. Mrs Reardon believes that she had obtained help from the St Vincent de Paul Society in 1999 to the amount of $20.00. The family also receives financial assistance from Mr Reardon's mother. In this regard Mrs Reardon's mother-in-law paid for the relocation expenses to Frederickton and also provides financial assistance from time to time. Mrs Reardon does not believe that her mother-in-law requires repayment of money given to the family. Mrs Reardon's mother-in-law also assists from time to time with the care of the children.

25. Mrs Reardon concluded her evidence by noting that while in hindsight she recognises that she should have read the reverse of the letters, she did not believe that it was important at the time because she believed she knew what information was contained there. Mrs Reardon reiterated that even if she had read the letters, because of the format and the use of the term "Rent Assistance", she did not think she would have known what this meant and in particular, that she was receiving departmental benefits for which she had no entitlement. Mrs Reardon urged the Tribunal to understand that she did not know she was receiving an incorrect Family Allowance and if she had, she would most certainly have contacted Centrelink. Mrs Reardon believed she was entitled to the Family Allowance in its entirety and even though she acknowledged that it had increased, she believed she had correctly provided the Department with all necessary information and it was the Department's responsibility to pay her correctly. Having given the Department all necessary and correct information, Mrs Reardon believed that she was entitled to conclude that whatever payment was made to her had been correctly assessed by the Department. She was not experienced in the administration of such payments, but the Department was.

26. Mr Reardon told the Tribunal he had attended Centrelink's Kempsey office to complete a review for Newstart Allowance after he had been receiving this allowance for about twelve months. At interview, Mr Reardon was asked standard questions but he noted that there was discussion to the effect that he and his wife were receiving Rent Assistance. Mr Reardon told the departmental officer Ms Dunn, that the family did not receive Rent Assistance. The officer checked this detail and it was confirmed to Mr Reardon that his wife was receiving Rent Assistance. Mr Reardon explained to that officer that he and his wife were paying off their home by regular mortgage repayments. Mr Reardon recalls that the officer stated that it was a Centrelink error that Rent Assistance had been paid and that he should not worry about it. Mr Reardon told the Tribunal that he immediately sought clarification from his wife on the issue of Rent Assistance and was told by her that they were not receiving Rent Assistance. Mr Reardon then put the Rent Assistance payment down to a Centrelink mistake and decided that there was nothing to worry about.

27. Mr Reardon confirmed that Mrs Reardon dealt with all Centrelink matters, which included the opening, reading and action on departmental correspondence. Mr Reardon told the Tribunal that he had no idea whatsoever about the components of departmental payments made to the family. He never looked at the Family Allowance documents. Mr Reardon stated that he considered his wife to be quite thorough in her dealings with the family's finances. In relation to Mrs Reardon's grasp of English, Mr Reardon noted that occasionally his wife might have difficulty with English, but he stated that Mrs Reardon would have known at the relevant time what was meant by "rent" and also "Rent Assistance".

28. Mr Reardon noted for the Tribunal that he continued working in Sydney for a short time after the family had moved to Frederickton. Before moving, he and his wife had separate bank accounts.

29. In April 2001, Mr Reardon commenced employment at the local Shire Council where he is a full-time labourer. Mr Reardon's current earning is $480.00 per week gross. The Tribunal noted this amount varied slightly to the earnings reported by Mrs Reardon. Mr Reardon is in a temporary/permanent position for three months and at the time of hearing was expecting that his contract would be extended.

30. Mr Reardon confirmed that his mother has regularly assisted the family financially. Mr Reardon did not know however whether the family had ever received any assistance from a charitable organisation such as the St Vincent de Paul Society.

31. Mr Kanowski submitted that there was an overpayment of Rent Assistance to Mrs Reardon between 30 July 1998 to 21 July 1999. Rent Assistance ceased at that time, although Mr Kanowski acknowledged that the Department had not documented very well what had occurred at that time. Prior to 30 July 1998, Mrs Reardon was receiving Family Allowance of $47.00 per fortnight. The rate of Family Allowance is calculated under Module E, section 1069 - E1 of the Act.

32. On 19 June 1998, Mrs Reardon contacted Centrelink to inform that she had commenced employment at Woolworths and then on 27 August 1998, there was an increase in Family Allowance which included Rent Assistance in the amount of S61.65 (Exhibit A5). A departmental letter to Mrs Reardon dated 27 August 1998, advised Mrs Reardon of the increase (T4) and also, Mr Kanowski submitted, clearly stated that there were certain circumstances under which Mrs Reardon should contact Centrelink, including changes in income and rental costs.

33. Mr Kanowski submitted that in September 1998, Mr and Mrs Reardon signed three Centrelink forms (T3, T5, T6), which indicated that they owned their own home and were making mortgage repayments. This indicated that Mr and Mrs Reardon were truthfully notifying the Department of their situation. Mr Kanowski acknowledged that the Department did not check this information against its records, leading to its incorrect detailing of Mr and Mrs Reardon's true situation. In these circumstances, Mr and Mrs Reardon continued to receive Rent Assistance with advice of these payments and associated information concerning Mrs Reardon's notification obligations (T7, T8). Mr Kanowski also noted that in October 1998, there was an increase in Family Allowance.

34. Mr Kanowski further noted Mrs Reardon's evidence that she did not know she was receiving Rent Assistance because she had not read the reverse side of departmental letters and therefore, in her submission, she was receiving Rent Assistance in good faith.

35. Mr Kanowski submitted however that Mrs Reardon had reason to know she was receiving Rent Assistance and referred the Tribunal to her statements to the SSAT and the ARO about that. Mr Kanowski asserted that on Mrs Reardon's own evidence she knew what "rent" was and even though she may not specifically have known what the term "Rent Assistance" entailed, she certainly would have known it was associated with paying rent, which she knew she was not paying. This was very clear from both Mr and Mrs Reardon's evidence.

36. Mr Kanowski contended that the Department had fulfilled its notification obligations to Mrs Reardon, but that Mrs Reardon also had the obligation and responsibility to read departmental correspondence in its entirety. If she did not understand the letters or found the contents daunting or confusing she should have sought clarification with the Department or her husband, Mr Kanowski submitted.

37. The fact that Mrs Reardon failed repeatedly to read crucial departmental correspondence precluded the Tribunal making a finding that Mrs Reardon received Rent Assistance in good faith, Mr Kanowski submitted. Noting the Respondent's submission that Mrs Reardon did not have an affirmative duty to read letters, Mr Kanowski contended that it was a reasonable expectation for the Department to have that customers would read letters sent to them about their benefits, including notification obligations and requirements. The Act contains provisions about the issuing of notices and response requirements, Mr Kanowski stated. Mr Kanowski further submitted that there was no evidence that Mrs Reardon did not receive the relevant departmental correspondence and Mrs Reardon should not be able to hide behind her persistent choice not to read departmental correspondence. Mr Kanowski rejected the Respondent's assertion that Mrs Reardon should be entitled to Rent Assistance unless something aroused her doubt or suspicion. Mr Kanowski submitted that the departmental letters were notification instruments and the Department should not pay the penalty for Mrs Reardon choosing not to read these letters. The letters clearly stated "Please read the back of this letter... "

38. Mr Kanowski submitted that the large increase in Family Allowance should have aroused Mrs Reardon's doubt or suspicion to at the very least, properly read the entire contents of departmental letters. Mrs Reardon had no difficulty in checking payslips to ensure she was receiving her correct remuneration. Mr Kanowski submitted that checking Centrelink letters was no different and indeed, Mrs Reardon was aware from her partial reading of such letters and checking her bank account balance that her Centrelink payments had increased.

39. Mr Kanowski referred the Tribunal to Secretary, Department of Education, Employment, Training and Youth Affairs v Prince [1997] FCA 1565; (1997) 50 ALD 186, in which Finn J noted:

"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 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."

40. Mr Kanowski submitted that Mrs Reardon had reason to know she was not entitled to Rent Assistance. While she asserted that she had not turned her mind to the issue of Rent Assistance, Mr Kanowski submitted that Mrs Reardon could never assert that she had an entitlement to that payment.

41. Referring to Haggerty v Department of Education, Training and Youth Affairs [2000] FCA 1287; (2000) 31 AAR 529, Mr Kanowski submitted that the facts in that case were very different to those present in Mrs Reardon's case, particularly as there was nothing in the departmental correspondence to Mr Haggerty which might have aroused his suspicion or make him doubt his entitlement. At paragraph 16 in Haggerty v Department of Education, Training and Youth Affairs (supra) French J noted:

"16. Consistently with what his Honour said in the Prince case, want of good faith will arise where there is a positive belief that the payment has been made by mistake. It will also arise where there is a suspicion held by the recipient that he or she may not be entitled to the payment made or a doubt as to the entitlement coupled with some objective basis for such suspicion or doubt. The provision does not, however, authorise the imputation of want of good faith in any of the senses above described simply because there are in existence objective facts which would raise a belief or a doubt or a suspicion of non-entitlement in the mind of some imaginary recipient. That proposition is quite consistent with the view that the existence of such facts may support an inference that the recipient disbelieved or doubted or was suspicious about his or her entitlement. "Reason to know" as Finn J used that term in Prince does not necessarily import a criterion of imputed as distinct from actual want of good faith as I have described.

17. ... Concern, puzzlement, upset and a perception of unusual circumstances, coupled with absence of further inquiry, are not enough themselves to constitute want of good faith. ..."

42. In Mr Haggerty's case, Mr Kanowski submitted that it was not a matter of his choosing not to read departmental correspondence. Mrs Reardon, on the other hand, prevented herself from being informed. Mr Kanowski contended that Mrs Reardon was turning a blind eye to crucial information and in fact, choosing not to inform herself.

43. Mr Kanowski further referred the Tribunal to Jazazievska v Secretary, Department of Family and Community Services [2000] FCA 1484, where at paragraph 40 Cooper J concluded:

"40. ... 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. ...

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. Mr Kanowski submitted that Mrs Reardon's continued failure to take notice of the Department's communications could not be used to support a finding that she had received the Rent Assistance in good faith. Therefore, relying on Jazazievska v Secretary, Department of Family and Community Services (supra), Mr Kanowski submitted that Mrs Reardon should not be placed in a better position than someone who had read the departmental correspondence.

45. Of the Federal court decisions dealing with the issue of receipt of a payment on good faith, Mr Kanowski submitted that none dealt directly with a social security recipient not reading departmental correspondence. Mr Kanowski further submitted that there is no question that by continuing to receive Rent Assistance without further enquiry, Mrs Reardon had exercised control over it. The fact that this payment had been made due to administrative error, and that Mrs Reardon did not deliberately set out to defraud the Department by making false statements, is irrelevant, Mr Kanowski submitted. The test merely requires a retention of the payment without an honest belief to its entitlement. Mrs Reardon had turned a blind eye to the receipt of the payment which would or should have raised sufficient doubt in her mind to query her right to that payment.

46. Referring to various Tribunal cases, Mr Kanowski noted the decision in Re Chilcott and Secretary, Department of Social Security (AAT 13086, 13 July 1998), which dealt with the circumstances of Barbara Chilcott not receiving a departmental letter and therefore being in a position of not knowing or being able to calculate Rent Assistance payments.

47. In Re Secretary, Department of Social Security and Neuendorf (AAT 13427, 4 November 1998), the Respondent continued to receive rental payments after advising the Department she was not renting accommodation. The Respondent in that case genuinely believed that rent was being paid to cover the mortgage. These are different circumstances than that found in Mrs Reardon's case. In any event, Mr Kanowski submitted that each case must be decided on the facts of the particular case and its merits.

48. Mr Kanowski then turned to consider whether or not Mrs Reardon's circumstances meet section 1237AAD of the Act as to whether or not there are special circumstances in her case which could allow for waiver of the debt in part or as a whole.

49. Mr Kanowski submitted that the Respondent accepted that Mrs Reardon did not knowingly make a false statement or knowingly omit to comply with the provision of the Act. However, considering her circumstances, Mr Kanowski contended that they were not special in the legislative sense. Specifically, Mr Kanowski submitted that there are no health problems experienced by either Mrs Reardon or other members of her family. In relation to the family's financial situation, although it is no doubt difficult at times, noting Mr Reardon's evidence, the Respondent submitted that the family is coping. While Mr and Mrs Reardon have been assisted financially by Mr Reardon's mother, it is the Respondent's submission that the family is certainly in a better position than the majority of other social security recipients. Mr Kanowski also noted that while Mrs Reardon had accepted charitable help from the St Vincent de Paul Society, this occurred prior to the debt owed to the Commonwealth being raised.

50. Referring to the case law, Mr Kanowski submitted that in _R_e Bestel and Secretary, Department of Family and Community Services [1999] AATA 867, the Tribunal found that despite departmental error, the money had not been received in good faith and therefore there were no special circumstances which would enable the debt to be waived. The Tribunal was also referred by Mr Kanowski to Re Nehma and Secretary, Department of Family and Community Services (1999) 3(9) SSR 132, and while the Tribunal in that case waived the debt entirely, the factual circumstances were very different in that case.

51. In response to the Respondent's submission that Mrs Reardon had no reason to know about Rent Assistance or that the amount of Family Allowance was too much, Mr Kanowski submitted that this submission might be sustainable if Centrelink had issued no advice letters about Family Allowance payments. There was however a number of letters issued which showed that Rent Assistance was being paid. Mrs Reardon seems, on the Respondent's submission, to have treated such letters as "irrelevant pieces of paper" with which Mrs Reardon did not need to concern herself. The letters were clearly issued to Mrs Reardon to advise her about her payments and to impose an obligation on her to notify Centrelink about any circumstances which might effect her rate of Family Allowance payment. Mr Kanowski further submitted that if a customer chose not to read such letters, then surely that same customer could not complain she was not notified about her payment. While Ms McMullin urged the Tribunal to consider that information about Rent Assistance was on the reverse of the letter amongst a large amount of other information "in small inconspicuous print", it should not be overlooked, Mr Kanowski submitted, that the front of the letter urged Mrs Reardon to read the back and stated a variety of reasons for doing so. Mrs Reardon could not use her own failure to read the reverse of the letters to hide behind the fact that she did not read such information. Mr Kanowski contended that the inclusion in these letters of a large quantity of information is unavoidable, given the myriad of changes of circumstances which can occur in a customer's life which may effect his or her entitlement to social security payments. As was shown in Mrs Reardon's original letter (T8, Exhibit A9), the information about Rent Assistance is contained in the top left-hand corner. That section of the letter is well spaced and easy to read, Mr Kanowski submitted.

52. In relation to Ms McMullin's submission concerning Mrs Reardon's lack of facility with English, Mr Kanowski submitted that the SSAT's conclusion that Mrs Reardon understood English very well (T2, p4), is justified. As at 1998, Mr Kanowski submitted that although Mrs Reardon might not have encountered the term "Rent Assistance" before, the term is straightforward. Mr Kanowski submitted that when Mrs Reardon had any uncertainty about the meaning of an expression she was in the habit of consulting her husband. In such circumstances, had Mrs Reardon read the letters and been confused or mystified by the expression "Rent Assistance", she would surely have consulted her husband. On the Applicant's submission, Mr Reardon clearly understood the expression when it was raised in his 1999 Centrelink interview and he had told the Tribunal that Mrs Reardon understood when he came and told her about it.

53. Referring specifically to Mrs Reardon's circumstances, such as moving house and bearing children, these circumstances were not particularly unusual in relation to many recipients of Family Allowance who also had fluctuating life circumstances. Further, in relation to Ms McMullin's submission concerning Mrs Reardon's lack of experience and familiarity with social security entitlements, this surely was a reason for her, even more than with experienced customers, to carefully read Centrelink correspondence explaining those entitlements, especially at a time when the payments had considerably increased.

54. Mr Kanowski submitted that the Respondent's concern about the lack of specificity on the back of Centrelink letters could not withstand scrutiny when one examined Exhibit A9 and its declared reference to Rent Assistance.

55. Mr Kanowski further submitted that in relation to the Respondent's argument at paragraph 13 of her written submissions that the error on the computer screen would have appeared at Mr Reardon's earlier Centrelink interview in September 1998, the Applicant submitted that this is not necessarily the case. It would have depended on whether or not the interviewing officer had reason to access the accommodation screen on the computer. Ms McMullin's further contention at paragraph 20 of her submission that the Department "did not advise the Respondent either by letter or telephone that she...was being paid rent assistance" is incorrect, Mr Kanowski submitted, in view of the letters contained at T4, T7 and T8.

56. With respect to Re Secretary, Department of Social Security and Neuendorf (supra), Mr Kanowski noted that Mrs Neuendorf came to assume that she was entitled to Rent Assistance after having told the Department she was paying off her unit and having done so emphatically in her consultation with a few officers. Mrs Neuendorf's incorrect assumption was apparently fortified by her misunderstanding of a departmental publication about government assistance for mortgage repayments. Mr Kanowski contended that the facts in these cases must be considered in relation to the individual case and that the circumstances in Re Secretary, Department and Social Security and Neuendorf (supra) were very different. In Mrs Reardon's case, there is no basis, Mr Kanowski submitted, for speculating that she would have misunderstood the nature of Rent Assistance or believed that she was entitled to it. On the contrary, both Mrs Reardon and her husband were surprised when they learned that it was being paid and their initial reaction was to say they were not entitled to receive it. That was the sort of reaction which one would have expected from persons who own their own home when they were informed they had been paid Rent Assistance. Such a person should contact the Department to query the payment at the very least, Mr Kanowski submitted.

57. In relation to the family's financial circumstances, Mr Kanowski submitted that Mr Reardon is working full-time and that Mrs Reardon has the capacity to repay the debt by instalments. Should her circumstances deteriorate, the amount of withholdings can be adjusted by Centrelink and consideration could be given to writing off the debt pursuant to section1236 of the Act.

58. Referring to Re Nehma and Secretary, Department of Family and Community Services (supra) and Re Secretary, Department of Social Security and McAvoy (1996) 44 ALD 721, Mr Kanowski submitted that in those cases, departmental officers provided incorrect advice to the customers. The customers then relied on this advice in arranging their affairs. Had they been given accurate advice, they could have acted differently and avoided their debts. In this regard, Mr Kanowski noted that Mrs Nehma could have taken steps to provide for Mrs Andreeva herself. Mr McAvoy could have changed his enrolment or discontinued his studies, in order to gain entitlement to Newstart Allowance. The departmental errors in those cases were to the customer's "ultimate financial detriment". In Mrs Reardon's case however, though the departmental error was not the giving of incorrect advice but of mistakenly paying her more than the correct entitlement, she has had the benefit of money which should not have been paid. Recovery of the debt would serve merely to restore her to the position she would have been in if no error had been made, Mr Kanowski submitted.

59. Mr Kanowski submitted that Mrs Reardon had been paid public money in excess of her entitlement and such money should ordinarily be repaid. Waiver can only be considered if there were circumstances which are unusual, uncommon, or exceptional and recovery would be unfair or otherwise inappropriate. In Mrs Reardon's case, Mr Kanowski concluded that there are no such circumstances and it would be reasonable to require Mrs Reardon to repay the money. Finally, as referred to by Ms McMullin in paragraph 38 of her written submissions, the date of effect of any waiver considered appropriate by the Tribunal should be considered with care. Exhibit A8 shows the history of the recovery of the debt. Should the Tribunal find that the Commonwealth's right to recover all or a part of the debt is to be waived, Mr Kanowski submitted that in these circumstances, and if it were the Tribunal's intention that there should be refunded money recovered prior to the SSAT's decision, then attention must be paid to section 1237 of the Act. In the Respondent's view, the SSAT's decision, if implemented, would bar further recovery on and from 18 July and that would not permit any refund of money earlier recovered as no earlier date of effect was specified. In such circumstances, for example, Mr Kanowski submitted that if it were the Tribunal's intention that Mrs Reardon be refunded money which had been recovered, the date of effect of the waiver prior to the commencement of recovery should be specified under section 1237 of the Act.

60. Ms McMullin submitted for the Respondent that Mrs Reardon did everything in her power to ensure her correct Family Allowance entitlement. The Department was notified at least twice that Mr and Mrs Reardon were not paying rent. Mrs Reardon had not received Rent Assistance previously and therefore had no experience of such matters. In these circumstances there was even less reason for her to believe that she was receiving Rent Assistance.

61. Ms McMullin submitted that Mrs Reardon's evidence had been consistent to the SSAT and the Tribunal in that she was unaware of receiving Rent Assistance. This payment is not an independent social security payment as is a payment of Family Allowance. Mrs Reardon was entitled to Family Allowance and it was therefore reasonable for her to assume that the amount calculated by Centrelink and revealed to her on the front of the various departmental letters was correct.

62. In relation to Mrs Reardon's statement to the SSAT that she thought the Rent Assistance component given to her was part of Family Allowance, Ms McMullin submitted that Mrs Reardon did not mean to imply by such a statement that she was aware of being paid Rent Assistance, but rather, she assumed that the total of the Family Allowance paid to her was her entitlement. This misunderstanding was accounted for by the fact that English is not Mrs Reardon's first language. There are situations, Ms McMullin submitted, in which Mrs Reardon sometimes misunderstands the meaning of questions put to her and she may provide an answer which conveys a meaning which she does not intend to convey. When Mrs Reardon arrived in Australia in 1992, she could speak little English. Mrs Reardon still does not understand complex questions and discussions, Ms McMullin submitted, as was apparent in her evidence to the Tribunal. An example of Mrs Reardon's lack of understanding of complex notions of English was provided to the Tribunal when discussing the receiving of letters and her awareness about her bank account details. Mrs Reardon did not understand the concepts of "higher rate of payment" and the relationship between that and "lower earnings".

63. In relation to Mr Reardon's evidence to the Tribunal, Ms McMullin submitted that he was not necessarily aware of Mrs Reardon's familiarity with English, particularly in relation to complex issues as raised at the Tribunal.

64. Ms McMullin submitted that the Tribunal should consider Mrs Reardon's circumstances in the context of her family experiencing upheaval and leaving Sydney, having another child and now attempting to provide evidence about events which had happened two or three years earlier.

65. Ms McMuliin further contended that the Tribunal should distinguish the circumstances between Mrs Reardon's reaction and understanding of written communication as compared with her communication with her husband when he actually spoke to her directly about whether they were receiving Rent Assistance. Ms McMullin submitted that the Tribunal must take into account Mrs Reardon's evidence that even if she had read the reverse of departmental letters, she might not necessarily have realised that she was receiving a payment for which she had no entitlement. In Mrs Reardon's circumstances it would be entirely different to read about Rent Assistance as compared to her husband's oral questioning her about receiving Rent Assistance.

66. Ms McMullin submitted that Mrs Reardon was unshaken in her evidence that she believed that she was entitled to the Family Allowance being paid to her. Referring specifically to the departmental letter of 27 August 1998 (T4, p33), Ms McMullin submitted that there was nothing in that letter to arouse Mrs Reardon's suspicion. Further, the letter dated 6 October 1998 (T7, p61), contained nothing on the front of the letter about Rent Assistance. The front of the letter in fact conveyed all the details necessary. The further departmental letter of 13 October 1998 again conveyed all the important information on the front (T8). Ms McMullin contended that the Department should change the format of such letters to ensure that customers are aware of the serious consequences of failure to read the reverse of the letters. The use of the language "Please read the back of the letter", is not strong enough to ensure that customers do read the reverse side. Ms McMullin contended that there must be more explanatory detail on the front of a letter as to the serious consequences which may flow from failure to read the entire letter, such as the liability to incur a debt. Ms McMullin further referred to the language and the details contained in such letters, noting that a possible suggestion to avoid such a situation as experienced by Mrs Reardon would be to in future have any announcement regarding the details contained on the reverse of a letter printed in a different format, such as under a heading.

67. Ms McMullin further noted that the reverse of the departmental letters sent to Mrs Reardon referred to the situation of telling the department, if the customer is paying rent, when there are changes. As Mrs Reardon was not paying rent, she was entitled to believe that the sentences detailing this information did not apply to her and therefore she was entitled to disregard such information, believing that she had no duty to inform Centrelink about anything.

68. Ms McMullin submitted that Mrs Reardon's failure to read the reverse of Centrelink letters did not amount to turning a blind eye to circumstances which would have raised her guard as to her entitlement to receive Rent Assistance. Further, failure to read the reverse of the departmental letters did not amount to refusing to make a reasonable enquiry over unknown circumstances which might have raised a doubt.

69. Referring to Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (supra) and Haggerty v Department of Education, Training and Youth Affairs (supra), Ms McMullin contended that contrary to the Applicant's submissions that these cases supported the Applicant's contention, those cases in fact supported Mrs Reardon's case. In this regard, Ms McMullin submitted that Mrs Reardon had not known nor did she have reason to know that she was not entitled to Family Allowance which contained a component of Rent Assistance. Mrs Reardon always contended that she had not known that she was paid Rent Assistance. Using the language in Haggerty v Department of Education, Training and Youth Affairs (supra), Mrs Reardon had no reason or suspicion or doubt as to whether she was entitled to payment for Rent Assistance. Mrs Reardon only ever applied for Family Allowance and to her understanding, this was what she was being paid. Ms McMullin rejected the Applicant's submission that there was an affirmative duty on Mrs Reardon to read the reverse of Centrelink letters. Further, the Respondent rejected the assumption that if Mrs Reardon had read the reverse of the letters, she would have discovered that the Department had made a mistake. Ms McMullin contended that a client such as Mrs Reardon is entitled to assume that a payment made by Centrelink is correct unless there is something present which would arouse doubt or suspicion in her mind. Mrs Reardon has always notified Centrelink of any changes in her circumstances including her employment and later cessation of employment. Mrs Reardon is a truthful customer, Ms McMullin contended and there were no objective facts present to raise Mrs Reardon's doubts about her Family Allowance entitlement. On Mrs Reardon's evidence, it is clear, Ms McMullin submitted, that she had no subjective consideration of doubt or suspicion or wilful blindness in relation to her entitlement for Family Allowance, including its component of Rent Assistance.

70. With respect to Re Chilcott and Secretary, Department of Social Security (supra), Ms McMullin submitted that this case can be distinguished as it considered very different circumstances. The Tribunal was referred to paragraph 28 of that decision which noted the unreasonable expectation that customers of the Department have a responsibility and legal obligation to ensure at all times that no departmental error has been made.

71. Ms McMullin concluded that the Department had not clearly expressed a warning in the letters to Mrs Reardon in bold and as a major heading and in those circumstances, Mrs Reardon should not have to pay for the Department's omission and mistake. The letters, in the form they were sent to Mrs Reardon, are not sufficient to raise as an objective fact any doubt in Mrs Reardon's mind as to her entitlement.

72. In relation to the payments of the Family Allowance into her bank account, Ms McMullin submitted that there was a great deal happening in Mrs Reardon's life at the time and she was not aware of what money was being received. The Tribunal should accept this explanation as perfectly reasonable.

73. In relation to the Applicant's submissions that Mrs Reardon should not be placed in any more advantageous a situation than a recipient who had read the reverse of departmental letters, Ms McMullin submitted that this is not what the issue of receipt in good faith is all about.

74. If the Tribunal did not accept that a waiver is possible under section 1237A of the Act, then Ms McMullin submitted that there were circumstances in Mrs Reardon's situation which under section 1237AAD of the Act could be considered as special.

75. Ms McMullin submitted that there was departmental error in this case which the Applicant had agreed solely caused the debt. In Re Nehma and Department of Family and Community Services (supra), it was found that the departmental error and misadvice was sufficient to amount to a special circumstance causing a debt to be waived in its entirety. Ms McMullin submitted that there were similar circumstances in Mrs Reardon's case in that Mr and Mrs Reardon had advised the Department on several occasions that they were not renting but had bought their own home. The first occasion was before Mrs Reardon moved from Sydney to Frederickton in April 1998. In April 1998, Mrs Reardon received confirmation by letter from the Department (Exhibit A3) that the Department had updated its records and recorded Mrs Reardon's move to Frederickton. Mrs Reardon was not advised that at that time she had become eligible for or that she was being paid Rent Assistance and she was not paid Rent Assistance at that time. Mrs Reardon then notified the Department of a change in her circumstances when she obtained employment at Woolworths (Exhibit A4). In June 1998, Mrs Reardon again informed the Department that she was not paying rent. There was a further clear indication that Mrs Reardon and her husband were not paying rent when they claimed Parenting Payment on 10 September 1998. There were no rent receipts provided either by Mr or Mrs Reardon which would have been necessary for the repayment of Rent Assistance. Furthermore, at about the same time, Mr Reardon had completed a Newstart Allowance Claim in which he had indicated that he owned his home jointly with Mrs Reardon (T5, p45). Therefore the Department was given several opportunities to update its database and did not do so. Ms McMullin submitted that in 1999, the departmental error was discovered by a Review Officer. The same error could also have been apparent due to Mr Reardon's initial interview for Newstart Allowance in September 1998.

76. A further special circumstance, Ms McMullin submitted, was the changing circumstances experienced by Mrs Reardon during the relevant period. In early April 1998 she had moved to Frederickton with her two children. The family had moved into a house they had just built. Mr Reardon was continuing to work in Sydney and most of the family responsibilities were left to Mrs Reardon who was once again pregnant. In such circumstances, Mrs McMullin submitted that it was reasonable at that time for Mrs Reardon not to read the reverse of Centrelink letters too closely and to accept that the amount she was being paid was correct. Mrs Reardon never applied for Rent Assistance and therefore was not familiar with such matters as detailed in the departmental letters.

77. Ms McMullin further submitted that a special circumstance in this case is Mrs Reardon's lack of facility with English. Mrs Reardon is not a native English speaker and her evidence to the Tribunal shows the difficulty she has with the language even when she was asked questions by her own lawyer. This circumstance was special because it made it more likely and more reasonable that there was a misunderstanding, especially as she was the one who dealt with the family's finances. Ms McMullin submitted that Mrs Reardon is not inclined to read a large amount of small print from a government agency, unless a good reason is given for the need to do so. The crucial fact for the purposes of the special circumstances in this case is that the most important information was on the front of the letter and on the reverse side in small print, there was a large amount of other information. In these circumstances at the relevant time, it was a reasonable course of action, Ms McMullin submitted, for Mrs Reardon not to closely read the letters.

78. Ms McMullin urged the Tribunal to consider that Mrs Reardon had never received social security payments before except for "a child allowance" and that she was not familiar with her entitlements. Mrs Reardon assumed that she was being paid the correct amount. Mrs Reardon did not question the increase in her Family Allowance despite her working, due to her unfamiliarity with social security entitlements. Ms McMullin submitted that when Mrs Reardon received a much higher rate of Family Allowance, paid to her in error, the Department did not advise Mrs Reardon either by letter or telephone that she had become eligible for or was being paid Rent Assistance.

79. Ms McMullin further contended that another special circumstance lay in the format and wording of the departmental letters to Mrs Reardon. Not only had it not been made explicit to Mrs Reardon that she was entitled to or was being paid Rent Assistance, but the letters did not clearly outline in a suitable format that there might be serious consequences in not reading the reverse of departmental letters. The front of the letters which Mrs Reardon read gave her no reason to doubt or be suspicious about the payment of Rent Assistance. While Mrs Reardon recalled noticing an increase in the payment from Centrelink at the time, Ms McMullin submitted that it was also reasonable for her to have a vague memory of other events some three years ago, when her life was changing significantly. In this regard, Ms McMullin noted that Mrs Reardon's financial circumstances were fluctuating generally, her husband was working in Sydney and then when he relocated, was relying on a small amount of savings. In such circumstances, Mrs Reardon did notice an increase in her social security payments, but she was entitled to think it normal given the changes in her other circumstances. Mrs Reardon's Family Allowance increased dramatically twice, once in August-September 1998 and again in October 1998. On the first occasion, there was an increase from $47.00 to approximately $211.00 per fortnight and on the second occasion, to an excess of $315.00 per fortnight. Most of that increase was due to eligibility for a higher rate of Family Allowance with only $27.00 of a second increase attributable to Rent Assistance. This did not give any reason for Mrs Reardon to be suspicious or doubt her entitlements, Ms McMullin submitted.

80. Ms McMullin reiterated her very firm submission that Mrs Reardon was entitled to assume that the most important departmental information was provided on the front of a departmental letter and that even if there are responsibilities imposed upon her, the Department should notify her of that on the front of that letter in very clear terms. Ms McMullin contended that the Department should not hold a customer responsible for its errors, as it bears a duty to warn of the possible consequences of failing to read the reverse of such a departmental letter. Many customers are not from an English speaking background, may not be well educated and many of them are disabled. In such circumstances it is imperative, Ms McMullin submitted, that the Department makes its warnings much clearer and more compelling. Further, Ms McMullin noted that the reverse of departmental letters do not advise that customers must notify the Department if they do not understand the wording of their entitlements or if they suspect there has been a mistake. The only duty to notify the relevant officers in this case relates to the requirement that Mrs Reardon tell the Department that if she were receiving Rent Assistance, the amount of rent she paid had changed. Such a situation, in the Respondent's submission, did not apply to Mrs Reardon because she was not paying rent. The letter did not advise Mrs Reardon to contact the Department if she was receiving Rent Assistance for which she had no entitlement.

81. Ms McMullin submitted that even if the Tribunal found that Mrs Reardon did know or had reason to know that she was receiving Rent Assistance, the evidence is that she would have thought, just as Mrs Neuendorf thought in Re Secretary, Department of Social Security and Neuendorf (supra), that she was receiving a rental benefit for which she was entitled. Therefore, even if Mrs Reardon had read the reverse of the departmental letters, this would not necessarily have raised a doubt or suspicion in her mind.

82. Ms McMullin concluded that in Re Secretary, Department of Social Security and McAvoy (supra), the Tribunal decided in that case that the large debt of $37,000.00 should be waived largely because of incorrect advice given to the Respondent repeatedly by departmental officers. In Ms McMullin's submission, the facts in Mrs Reardon's case amount to a similar failing by the Department which repeatedly advised Mrs Reardon that she was entitled to a benefit to which she was in fact not entitled. In Re Secretary, Department of Social Security and McAvoy (supra), the Tribunal concluded at page 729 that:

"...Any failure to regard the seriousness of the consequences of the giving of wrong advice as not being a circumstance special to the person or persons who have suffered as a result of that advice would be cruel. Citizens are entitled to act upon the advice given to them by representatives of government through its departments and agencies. Citizens also are entitled to have confidence in the advice that they are given by persons in authority and who represent government departments and agencies. Citizens should be entitled to expect nothing less.... The responsibility for efficient and effective administration of departmental practice and policy must carry with it a responsibility for any error or mistake which is made by the departmental officers alone."

83. In conclusion, Ms McMullin submitted that taking all the special circumstances together, it would be unreasonable to require Mrs Reardon and her family to pay back what the Department had paid to her in error. Mrs Reardon has three young children, a mortgage and a husband with "a part-time job". It would impose an unreasonable hardship upon Mrs Reardon to have to require her to repay the debt. Ms McMullin contended therefore that the Tribunal should order that the debt be waived in its entirety and the date of the waiver should be the first date on which a payment of Rent Assistance was made to the Respondent.

84. The Tribunal has reached a decision in this matter taking into account the oral and documentary evidence, the submissions, the legislation and case law.

85. The Tribunal finds that Mr and Mrs Reardon provided truthful evidence and their credibility is not in doubt.

86. The Tribunal finds on all the evidence, that departmental administrative error was made in that Rent Assistance was incorrectly paid to Mrs Reardon as a component of her Family Allowance from 30 July 1998 to 21 July 1999. The Applicant conceded that this is correct. A debt was then raised under the provision of subsection 1223(5) of the Act. The Tribunal finds that debt, in the amount of $2,264.40, was correctly raised pursuant to subsection 1223(5) of the Act.

87. The issue then to be determined in this matter relates to whether the debt should be recovered pursuant to either section 1237A of the Act which deals with departmental administrative error or in the alternative, pursuant to section 1237AAD of the Act, which deals with waiver in part or whole of the debt in the special circumstances of the case.

88. Section 1237A can only be invoked if the debtor receives in good faith the payment which gave rise to the debt. During the relevant period in this case, Mrs Reardon received several letters from the Department detailing her Family Allowance and how it was composed. The letters contained details on both the front and reverse sides. The front of the letter has no indication of Rent Assistance for which Mrs Reardon had no entitlement. The letters did state on the front, however, in plain English, that Mrs Reardon should read the reverse of the letters. This request to read the reverse of the letter was justified in that the information on the reverse would tell Mrs Reardon about her future family payments, the income used to work out the Family Allowance, Mrs Reardon's rights and when she must contact the Department.

89. The Respondent argued that nothing in that front section of the letters would compel Mrs Reardon to look at the reverse side. There was no serious consequence mentioned for not reading the reverse and no mention of the possibility of having a debt raised because of departmental error.

90. The Tribunal further notes the Respondent's submissions about Mrs Reardon's English. It is true that English is not Mrs Reardon's first language and she has some difficulty with complex discussion. That may be so; however, the Tribunal does not consider that it is too complex for Mrs Reardon to have understood at the time the plain English notation on departmental letters that she should read the reverse of the letters. In the Tribunal's view, the instruction provided in the letter is quite clear and Mrs Reardon would have had no difficulty in understanding that the letter urged her to read the reverse. If Mrs Reardon had read the back of the letter, she would have noticed her payment details which included an amount being paid for Rent Assistance. These details were contained in a number of departmental letters to her.

91. A further argument put to the Tribunal is that even if Mrs Reardon had read the reverse of the letters, she would not have understood what was meant by the term "Rent Assistance" and accordingly, would not have realised that she was not entitled to this payment. Given the nature of Mrs Reardon's evidence to the Tribunal and also taking into account her husband's evidence, the Tribunal does not consider in all the circumstances, that if Mrs Reardon had read the letters, she would not have been aware of what was meant by Rent Assistance. The Tribunal does not accept Ms McMullin's submission that there was, in these circumstances, a difference between the direct spoken communication between Mrs Reardon and her husband concerning Rent Assistance, as compared with her reading about that in departmental correspondence. Mrs Reardon had no hesitation in telling her husband that they were not receiving Rent Assistance. The Tribunal takes from this that Mrs Reardon would have understood, if she had read the departmental letters on the reverse side, that she was receiving assistance for rent. Clearly, from the evidence, Mrs Reardon at all times knew what "rent " was and was capable also at the time, in the Tribunal's finding, of knowing what was meant by the term "Rent Assistance". The Tribunal is confirmed in this view by reference to the statements made by Mrs Reardon to the SSAT as contained in the SSAT decision at paragraphs 6 and 24.

92. The Tribunal is further convinced of its finding on this point in that Mrs Reardon was entrusted with the management of all the family's finances and in particular, those dealing with the Department. Mr Reardon considered her to be responsible and competent in these matters. The Tribunal is also not convinced that Mrs Reardon did not look at the statement of incoming assets provided to her by the Department when she was attempting to obtain a loan. If indeed she did not look at that statement, the Tribunal maintains its view that Mrs Reardon should have looked at this information, particularly as she was seeking to maximise her ability to obtain a loan and it would have been necessary for her to be familiar with all of her financial circumstances. In all these circumstances, the Tribunal does not accept that Mrs Reardon had no reason to look at the reverse of the letters and she should have properly informed herself of the contents of the entire departmental letter. By omitting to fully read the letters, Mrs Reardon was exercising some persistent choice and causing herself to not be fully informed of all the information relating to her Family Allowance. The Tribunal does not think that it is good enough for Mrs Reardon to assert that given her wilful choice in not reading the reverse of letters, that she should then be able to avail herself of the benefit of section 1237A to have a debt waived because of departmental administrative error. Mrs Reardon bears some responsibility for informing herself about entitlements. That she did not do so is to her detriment.

93. The Tribunal is of the view, that in all the circumstances discussed above, Mrs Reardon had reason to know that she was receiving Rent Assistance when in fact she was not paying rent. She turned a blind eye to information which would have properly informed her of her circumstances and alerted her to her being paid Rent Assistance for which she had no entitlement. The Tribunal also notes Mrs Reardon's evidence that she did notice the increase in her payment and while her further evidence was that she did not doubt this or do anything to inform herself by contacting the Department or seeking assistance from her husband, if Mrs Reardon had read the reverse of the letters, then she would have, in the Tribunal's view, been alerted to the fact that there was a departmental error for which she should seek some clarification.

94. It is the Tribunal's finding that there was objective information available to Mrs Reardon in the form of the departmental correspondence and in particular, the information contained on the reverse of the letters which, if read, would have alerted her to some error. Further, in relation to subjective considerations, Mrs Reardon was aware of a large increase in her Family Allowance, but she did nothing to satisfy herself as to why this occurred. While it may have been sufficient, in the absence of correspondence from the Department, for Mrs Reardon not to clarify such an increase, the Tribunal is dealing with all the circumstances of this case, where very clearly Mrs Reardon was being informed by the Department of the Rent Assistance, yet she was failing to read this information which would then have alerted her to the error. Mrs Reardon has a responsibility to read correspondence sent to her by the Department. It contains important information and that is why it is sent. The Tribunal asked itself whether Mrs Reardon's failure to read the reverse of the notices, in addition to her doing nothing in relation to her clear evidence that she was aware of there being an increase in Family Allowance, can be excused as indicating that she received the Rent Assistance in good faith. The answer, in the Tribunal's view, must be "No". While Mrs Reardon asserts that if she had read the notices in their entirety she would not have been in any better position to understand she was in receipt of a payment she was not entitled to, this is not compelling in the light of other evidence both from Mrs Reardon and her husband and evidence to the SSAT. The Tribunal does not consider that the case law on such matters would excuse Mrs Reardon from her own omissions. Accordingly, the Tribunal finds there is an absence of good faith and section 1237A of the Act cannot be applied in Mrs Reardon's case.

95. Having so found, the Tribunal turns next to consider whether or not section 1237AAD of the Act applies to Mrs Reardon's circumstances. The Tribunal must consider what is meant by the special circumstances of the case, taking into account circumstances which are unusual, exceptional or out of the ordinary and which, if ignored, would produce an unjust or unfair result.

96. The Tribunal considers that in relation to the application of section 1237AAD of the Act, section 1236 of the Act concerning a "write off" does not apply and therefore it would be more appropriate, if special circumstances do exist, to waive the debt under section 1237AAD.

97. In dealing with the issue of special circumstances, the Tribunal is of the view that it must take into account the manner in which the debt arose. It is common ground that the incorrect payment of Rent Assistance arose solely out of departmental administrative error. This circumstance is significant and in the Tribunal's view, is a special circumstance.

98. The Tribunal considers that while Mrs Reardon's financial circumstances are tight, they are not exceptional, particularly when taking account of the circumstances of the majority of social security recipients. At the time of the hearing, Mr Reardon was in employment and expected his contract to be extended. The family is in the process of paying off its own home and is coping financially, even though from time to time, Mrs Reardon's mother-in-law provides financial assistance.

99. The Tribunal also finds on all the evidence that there are no health problems either with Mrs Reardon or other family members which could be considered as a special circumstance.

100. In relation to the changing circumstances occurring in Mrs Reardon's life, such as the family moving to Frederickton, her pregnancy and her husband's short term absence while he remained working in Sydney, the Tribunal accepts that such circumstances combined could be stressful and hence special, causing Mrs Reardon to pay less than the required attention to detail in departmental matters.

101. The Tribunal has previously found that at the relevant time, Mrs Reardon's lack of facility with the English language did not impact upon this matter. The Tribunal makes this finding noting that Mrs Reardon was in charge of the family finances which included not only dealing with Centrelink but also a lending institution, specifically in Mrs Reardon's application during the relevant time for a loan. While the Tribunal noted Mrs Reardon's seeking of clarification in relation to some complex matters being discussed during the Tribunal hearing, the Tribunal did not consider that these difficulties indicated her lack of facility with English in relation to her being able to understand at the relevant time what was meant by the terms "rent" or "Rent Assistance". From all the evidence, the Tribunal is of the view that if Mrs Reardon had read the reverse of the letters and their details about Rent Assistance, she would have been sufficiently alerted to there being an issue for her to, at the very least, seek clarification with her husband or attempt to seek clarification through departmental officers.

102. While the Tribunal finds there are special circumstances which must be taken into account in terms of departmental administrative error causing the debt to arise, and the stress occasioned by a number of changing life circumstances, the Tribunal does not consider that Mrs Reardon can be absolved from her responsibility obligations in her dealings with the Department.

103. Therefore, in all of these circumstances, the Tribunal finds that pursuant to section 1237AAD of the Act, the debt owed by Mrs Reardon to the Commonwealth should be waived by half. The Tribunal has made this determination taking into account the responsibility borne by the Department for causing the overpayment, but further, by recognising Mrs Reardon's responsibility in continuing the debt by her failure to read the departmental letters and to clarify the situation concerning an increase in Family Allowance.

104. In so finding, the Tribunal is very much aware of the intention of Parliament to provide a discretion to decision-makers to allow waiver of the debt in part or as a whole in the special circumstances of a case. The Tribunal does not consider that its application of section 1237AAD of the Act frustrates the intention of the Parliament in framing this provision, because it is the Tribunal's view, in this case, that not to exercise that discretion would produce an unfair and unjust result. In so finding, the Tribunal also notes the decision in Re Secretary, Department of Family and Community Services and Jonauskas [2001] AATA 72, in which the Respondent in that matter was careless in failing to read the reverse of notices sent to him by Centrelink. The Tribunal distinguishes that case from Mrs Reardon's circumstances in that her circumstances taken in their totality lead this Tribunal to a different conclusion.

105. Accordingly, considering all of the evidence and for the reasons set out above, pursuant to section 43 of the Administrative Appeals Tribunal Act 1975, the Tribunal sets aside the decision under review and substitutes its decision that the debt owed to the Commonwealth by Mrs Reardon should be waived by half in light of the special circumstances of her case, as dealt with under the provisions of section 1237AAD of the Act. The Tribunal remits the matter to the Department to determine what amount, if any, is to be repaid to Mrs Reardon as a result of this decision.

I certify that the 105 preceding paragraphs are a true copy of the reasons for the decision herein of Ms S M Bullock

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

Representative for the Applicant Mr P Kanowski, Departmental Advocate

Representative for the Respondent Ms F McMullin, Solicitor, Legal Aid Commission