Tribunal Associate Professor S D Hotop, Senior Member

Decision The Tribunal sets aside the decision under review and remits the matter to the Secretary to the Department of Family and Community Services for reconsideration in accordance with the direction that a debt in the amount of $4,148.70, by reason of overpayments of Family Payment made to Mrs Morgan during the period from 10 October 1996 to 10 April 1997, is due by Mrs Morgan to the Commonwealth, but that the Commonwealth's right to recover: (a) that part of the debt, equal to the amount of Parenting Allowance that would have been payable to Mrs Morgan or Mr Morgan during the overpayment period if the overpayments had not been made to Mrs Morgan and Mrs Morgan or Mr Morgan had lodged a claim for Parenting Allowance, is waived under s1237AAC(4) and (5) of the Social Security Act 1991; and (b) that part of the debt, consisting of the amount of overpayments of Family Payment made to Mrs Morgan during the period from 5 March 1997 to 10 April 1997, is waived under s1237AAD of the Social Security Act 1991.

SOCIAL SECURITY - Family Payment (FP) - customer in receipt of FP and provided estimate of income for 1996/97 financial year - customer received FP at rate calculated on basis of income estimate - customer's partner changed jobs and earned substantially higher income - customer failed to notify Department of change of circumstances within 14 days - customer subsequently notified Department of partner's change of job and provided higher income estimate for 1996/97 financial year - actual income for 1996/97 year more than 110% of original income estimate for that year - overpayment of FP - debt due by customer to Commonwealth - whether grounds to waive all or part of debt - whether administrative error by Commonwealth - whether payments received by customer in good faith - whether notional entitlement to Parenting Allowance during overpayment period - whether overpayment resulted from customer knowingly failing to comply with Social Security Act - whether special circumstances making it desirable to waive all or part of debt

Social Security Act 1991 ss 872(1), 877, 885(1), 886, 891, 1069-H6, 1223(3), 1236(1), (1A), 1237A(1), 1237AAC(4), (5), 1237 AAD

Social Security Legislation Amendment (Parenting and Other Measures) Act 1997, s3, Sched 3, Pt 1, item 23

Re Ivovic and Director-General of Social Services (1984) 3 ALN No 61

Secretary, Department of Education, Employment, Training and Youth Affairs v Prince [1997] FCA 1565; (1997) 152 ALR 127

Re Secretary, Department of Social Security and Blackberry (1998) 53 ALD 112

Secretary, Department of Social Security v Hales (1998) 153 ALR 259

8 June 1999 Associate Professor S D Hotop, Senior Member

1. On 10 February 1998 an Authorised Review Officer ("ARO") within Centrelink decided that an overpayment of Family Payment ("FP"), in the amount of $3,219.90, had been made to Nina Linnea Morgan ("Mrs Morgan") in the period from 21 November 1996 to 10 April 1997 and that that overpayment was a debt due by Mrs Morgan to the Commonwealth and should be recovered from her. On 16 March 1998 the ARO decided that an overpayment of FP, in the amount of $928.80, had been made to Mrs Morgan in the period from 10 October 1996 to 7 November 1996 and that that overpayment was a debt due by Mrs Morgan to the Commonwealth and should be recovered from her. On 7 April 1998 the Social Security Appeals Tribunal ("SSAT") decided that a debt in the total amount of $4,148.70, by way of overpayment of FP in the period from 10 October 1996 to 10 April 1997, was due by Mrs Morgan to the Commonwealth but that the right to recover part of that debt - being an amount equal to Mrs Morgan's notional entitlement to Parenting Allowance ("PA") during part of the overpayment period - must be waived pursuant to s1237AAC(4) and (5) of the Social Security Act 1991 ("the Act"). On 15 May 1998 the Secretary to the Department of Social Security ("the Secretary") lodged with the Tribunal an application for review of the decision of the SSAT (No W1998/192). On 19 May 1998 Mrs Morgan lodged with the Tribunal an application for review of the decision of the SSAT (No W1998/194).

2. At the hearing the Secretary (now the Secretary to the Department of Family and Community Services) was represented by Mr A Jones, an advocate from the Administrative Law Section of Centrelink, and Mrs Morgan appeared in person without representation. The Tribunal had before it the documents ("T documents") furnished by the Secretary pursuant to s37 of the Administrative Appeals Tribunal Act 1975 and the following documentary exhibits tendered by the parties:

* "Changes to your Income and Assets" form lodged by Mrs Morgan with the Department of Social Security on 5 March 1997 (A1)

* letter from Jo-Ann Humphrey, Senior Payroll Officer, John Holland Construction & Engineering Pty Ltd, dated 25 June 1998 (A2)

* letter from L A Lamb, Delegate of the Secretary, to Mrs Morgan, dated 20 February 1997 (R1)

* letter from Mrs Morgan to the Tribunal, dated 12 June 1998 (R2).

Mrs Morgan gave oral evidence. There were no other witnesses.

3. The background facts, as found by the Tribunal on the basis of the T documents and exhibits, and about which there is no dispute between the parties, are as follows.

4. On 10 October 1996, a "Family Payment/Childcare Assistance Request for Income and Asset Details" form, signed by Mrs Morgan and her partner ("Mr Morgan") and dated 10 October 1996, was lodged with the Albany office of the Department of Social Security ("DSS"). In that form the relevant questions and answers are as follows. In answer to Q.4, "What was your taxable income in 1994/95 as shown on your Tax Notice of Assessment?", it is stated that Mrs Morgan's income was "NIL" and Mr Morgan's income was $22,500. Question 5 asked: "Did, or will, any of these changes happen to you or your partner in the 1995/96 or 1996/97 financial years?" One of the listed changes was "started or recommenced work or changed jobs", the box opposite which is ticked and the "date of change" is stated to be "25/9/96". In answer to Q.6, "What do you estimate your taxable income for the financial year 1996/97 to be?", it is stated that Mrs Morgan's estimated income is "NIL" and Mr Morgan's estimated income is $25,700. Immediately below the income estimates stated in the form there appears a preprinted statement as follows:

"If your actual income is more than 10% higher than your estimate for 1996/97 you may have to repay any overpayment that results".

Item 11 in the form comprises a preprinted statement immediately above the signatures of Mrs Morgan and Mr Morgan, which includes the following:

"If I have provided an estimate of my/our income, I agree that my Family Payment and Childcare Assistance is to be recalculated if my/our actual income is more than 110% of my estimate and that I may have to repay any overpayment that results."

5. A letter, dated 10 October 1996, from the DSS to Mrs Morgan contained information regarding the amount of her FP and stated that the rate of her FP was calculated on the basis of her, and her partner's, combined income of $22,500.00 (for the 1994/95 financial year). It also contained a request that she read the back of the letter for information regarding various matters, including the circumstances when she was obliged to contact the DSS. Amongst those circumstances was:

start work or recommence work, change jobs ... ".

6. A letter, dated 21 November 1996, from the DSS to Mrs Morgan contained updated information regarding the amount of her FP and stated that the rate of her FP was calculated on the basis of her, and her partner's, combined income of $25,700.00. It also contained a request that she read the back of the letter for information regarding various matters, including the circumstances when she was obliged to contact the DSS. Amongst those circumstances was:

7. Mrs Morgan was paid FP at a rate calculated on the basis of her, and Mr Morgan's, combined income of $25,700.00, with effect from 10 October 1996.

8. On 18 November 1996 Mr Morgan commenced a new job with John Holland Construction & Engineering Pty Ltd in Port Hedland.

9. Mrs Morgan did not inform the DSS of Mr Morgan's new job with John Holland Construction & Engineering Pty Ltd until February 1997.

10. By letter dated 20 February 1997 an officer of the South Hedland office of the DSS thanked Mrs Morgan for advising of the change in her circumstances and requested her to complete and return an enclosed form within 14 days.

11. On 5 March 1997 Mrs Morgan lodged with the South Hedland office of the DSS a "Changes to your Income and Assets" form signed by her and Mr Morgan. Question 9 in the form asked: "Have any of these changes happened to you (or your partner) since 30 June 1996?" The list of changes included:

The form contained the following preprinted marginal note:

'Recommenced work' means that you have returned to the workforce with a new employer".

In answer to Q.9, it is indicated by a tick in the appropriate box in the form that Mr Morgan had "changed jobs" and the stated date of that change is "31/01/97". Item 11 in the form related to estimated income for the 1996/97 or 1997/98 financial year. In respect of Mr Morgan, an estimate of total taxable income in the amount of $45,980.00 for the 1996/97 financial year is stated. No estimate of income is stated in respect of Mrs Morgan, and the "total combined estimated taxable income" for the 1996/97 financial year is stated to be $45,980.00. At the bottom of Item 11 the following preprinted statement appears in the form:

"If your actual income is 10% more than your estimate, you may have to repay any overpayment of Family payment and/or Childcare Assistance".

Item 20 in the form comprises a preprinted statement, immediately above the signatures of Mrs Morgan and Mr Morgan, which includes the following:

"If I/we have provided an estimate of my/our income, I/we agree that my Childcare Assistance and/or Family Payment is to be recalculated if my/our actual income is more than 110% of my/our estimate and that I/we may have to repay any overpayment that results."

At item 13 in the form, details of Mr Morgan's gross wages for the previous 4 weeks are provided and his employer is stated to be "John Holland Construction".

12. Mrs Morgan continued to receive FP at the rate calculated on the basis of the estimate (provided by her to the DSS on 10 October 1996) of her, and Mr Morgan's, combined taxable income for the 1996/97 financial year in the amount of $25,700.00 until 10 April 1997. As from the payday of 24 April 1997, the rate of FP paid to Mrs Morgan was reduced on the basis of the estimate (provided by her to the DSS on 5 March 1997) of her, and Mr Morgan's, combined taxable income for the 1996/97 financial year in the amount of $45,980.00.

13. A Notice of Assessment issued by the Australian Taxation Office on 8 September 1997 indicated that Mr Morgan's taxable income for the 1996/97 financial year was $41,027.00. A copy of that Notice of Assessment was provided to the South Hedland office of Centrelink on 17 October 1997.

14. By letter dated 29 October 1997 an officer of Centrelink requested John Holland Construction & Engineering Pty Ltd to provide information regarding the employment of Mr Morgan. On 5 November 1997 Ms J Humphrey, Senior Payroll Officer with John Holland Construction & Engineering Pty Ltd, informed the South Hedland office of Centrelink that Mr Morgan's employment with that company commenced on 18 November 1996 and that that employment was on a full-time basis, had been "continuous", and was still ongoing.

15. Mrs Morgan told the Tribunal that Mr Morgan started work as a butcher in the town of Denmark at the end of September 1996 and his gross pay at that time was $500.00 per week. Subsequently, however, Mr Morgan obtained a job as a rigger with John Holland Construction in Port Hedland and he commenced working at that job on 18 November 1996. He was told that, because he had no previous experience as a rigger, his employment would be on a probationary basis until the Christmas break and he would then be informed whether his employment would be made permanent.

16. Mrs Morgan said that on 23 December 1996 Mr Morgan was informed that he had a permanent position with John Holland Construction and they then moved to Port Hedland on 31 December 1996.

17. Mrs Morgan told the Tribunal that Mr Morgan was due to return to work after the Christmas break on 4 January 1997 but that, on 2 January 1997, a strike was called by the Union. She said that they had no idea how long the strike would last. She added that they had just spent all their savings of $3,000.00 on moving to Port Hedland, their rent was $250.00 per week, their only income during the period of the strike was her FP, and they had to borrow money from her parents for living expenses.

18. Mrs Morgan told the Tribunal that, during the period of the strike, there were rumours circulating that none of those on strike would be getting their job back and that the company would be employing new staff and so she and Mr Morgan did not know whether they would be staying in Port Hedland or leaving. She added, however, that the strike ended on 30 January 1997 and Mr Morgan resumed work with John Holland Construction on 31 January 1997.

19. Mrs Morgan said that she then telephoned the local DSS office and told them that Mr Morgan had started a new job, that they were now living in South Hedland, and that their income was now "considerably higher" than it was in Denmark, having increased from about $25,000 pa to about $45,000 pa. She said that she was told by the DSS that a form would be sent to her for completion and return.

20. Mrs Morgan told the Tribunal that she made the abovementioned telephone call to the local DSS office on 13 February 1997. She tendered in evidence a letter to her, dated 20 February 1997, from the South Hedland office of the DSS acknowledging her advice of a change in her circumstances and requesting her to complete the enclosed form and return it within 14 days. (Exhibit R1) The Tribunal notes that that letter does not specify the date on which Mrs Morgan advised the DSS of her change in circumstances. Mr Jones (for the Secretary) referred the Tribunal to a computer printout of a DSS record of a contact between Mrs Morgan and the DSS, indicating that Mrs Morgan contacted the DSS at 3.21 pm on 20 February 1997 and advised of a change in circumstances, namely, that her partner had "started a new job". (T14)

21. Mrs Morgan confirmed that she completed the form - a "Changes to your Income and Assets" form - sent to her under cover of the DSS' letter of 20 February 1997 and lodged it with the South Hedland office of the DSS on 5 March 1997. (Exhibit A1) She acknowledged that, in response to Q.9 in the form, she indicated that Mr Morgan had "changed jobs" on 31 January 1997. She added that, on reflection, she should have indicated that he started work on 18 November 1996 and added a note that he ceased work on 23 December 1996 and did not resume work until 31 January 1997. As regards the new estimate of Mr Morgan's income for the 1996/97 financial year given by her at item 11 in the form, she said that the way she thought of it was that 31 January 1997 was the date when the new estimate of $45,980.00 "really began to take effect".

22. Mrs Morgan queried why it was that it took until 24 April 1997 for the DSS to reduce her rate of FP on the basis of the new estimate of income she provided to the DSS on 5 March 1997. Mr Jones (for the Secretary) confirmed that FP continued to be paid to Mrs Morgan, at a rate based on the income estimate of $25,700.00 she had formerly provided on 10 October 1996, up to and including the payday of 10 April 1997.

23. Mr Jones (for the Secretary) questioned Mrs Morgan regarding her failure to notify the DSS of the change in Mr Morgan's employment circumstances on 18 November 1996. Her evidence was as follows:

"Mrs Morgan, why didn't you advise the Department on 18 November 1996, of your husband's commencement of employment? --- Well, because he was also - he was on probation and also that I was living on my own at that time in Denmark. We weren't sure how much he was going to be getting and the amount of pay that he would have - that he actually did receive would not have made - if it had continued at that rate, he was bringing home between 6 and 700. It wouldn't have really made much difference to the initial estimate. I thought once we get up there, when his pay was due to go up, then I would put in a new estimate, because then his pay increase would actually affect the estimate that I had made on 10 October.

Were you aware that it was a requirement of the - to let us know if your husband started working? --- I am now, yes. I was not at the time, no.

Were you at that time is the question? --- No, I didn't read the back of the forms. I never do. I only look at what - what they based my pay on, what estimate and make sure it's gone into the right bank account, and the breakup of the amount. I didn't - I don't go through and read it all, because most of it didn't apply to me.

Were you aware that the more your husband learned the less Family Payment you were likely to be eligible for? Did you think that? --- Well, yes, because that's why I came in and - in the March - in the February, sorry, when I knew that his pay had gone up." (Transcript, p.24)

24. Mrs Morgan completed her evidence by providing details of her present financial circumstances. She told the Tribunal that she and Mr Morgan are both unemployed and in receipt of full social security benefits. They own a house valued at approximately $120,000.00, with an outstanding mortgage debt of about $102,000.00 which is being repaid at the rate of $338.00 per fortnight. They also own a 1996 model car which they are paying off at the rate of $325.00 per month. They have a bank overdraft of about $1,940.00 and have credit card debts totalling about $3,500.00. She described their overall financial situation as "pretty bleak", although she agreed that they were just about able to make ends meet or, as she put it, "only scraping by". She added that she expected the situation to improve because Mr Morgan was returning to butchering work and she is presently on call as a relief teacher. Finally, she told the Tribunal that the overpayment of FP was being recovered by way of fortnightly deductions from her social security payments.

25. The relevant provisions of the Act are as follows:

"872(1) The Secretary may give a recipient of family payment a notice that requires the recipient to inform the Department if:

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

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

(a) a recipient is given a notice under section 872; and

(b) the notice requires the recipient to inform the Department of the occurrence of an event or change in circumstances within a specified period (the "notification period"); and

(c) the event or change in circumstances occurs; and

(d) the recipient does not inform the Department of the occurrence of the event or change in circumstances within the notification period in accordance with the notice; and

(e) because of the occurrence of the event or change in circumstances, the recipient's rate of family payment is to be reduced;

family payment becomes payable to the recipient at the reduced rate immediately after the day on which the event or change in circumstances occurs.

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

(b) the income to which regard was had consisted of an amount estimated by the person; and

(c) the person's income for that tax year is more than 110% of the amount of the income on which the determination of the rate of family payment was based;

the person's rate of family payment is to be recalculated on the basis of that income.

(a) a notifiable event occurs in relation to a person; and

(b) the person fails to notify the notifiable event in accordance with section 872; and;

(d) the person's income for that year exceeds 110% of:

(i) the person's income for that tax year that is, when the event occurs, the person's base tax year; and

the person's family payment rate is to be recalculated on the basis that the person's appropriate tax year is the tax year in which the notifiable event occurred.

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

(b) in making the determination, the Secretary had regard to the person's income for a tax year; and

(c) the income to which regard was had included an amount or amounts estimated by the person; and

(d) the person's income for the tax year is more than 110% of the amount of the income on which the determination referred to in paragraph (a) was based; and

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

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

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

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

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

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

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

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

1236(1) Subject to subsection (1A), the Secretary may, on behalf of the Commonwealth, decide to write off a debt, for a stated period or otherwise.

1236(1A) The Secretary may decide to write off a debt under subsection (1) if, and only if:

(b) the debtor has no capacity to repay the debt; or

(c) the debtor's whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or

(d) the debtor is not receiving a social security payment under this Act and it is not cost effective for the Commonwealth to take action to recover the debt.

1237 A(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.

(a) a debt arises from overpayments to the debtor; and

(b) the Secretary is satisfied that the overpayments 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

(c) the debtor or the debtor's partner did not claim parenting allowance or parenting payment for the period (the overpayment period) when the overpayments were made; and

(d) an amount of parenting allowance or parenting payment would have been payable for that period if the debtor or the debtor's partner had lodged a claim;

the Secretary must waive the right to recover the debt to the extent set out in subsection (5).

1237AAC(5) The Secretary must waive under subsection (4) the right to recover the amount of debt equal to the amount of parenting allowance or parenting payment (as the case requires) that would have been payable to the debtor or the debtor's partner during so much of the overpayment period as was not earlier than 3 years before the day on which the overpayment is stopped if:

(a) the overpayments had not been made to the debtor; and

(b) the debtor or the debtor's partner had lodged a claim for the allowance or payment (as the case requires).

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 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."

26. The principal issues in this case are whether a debt, by reason of an overpayment of FP, is due by Mrs Morgan to the Commonwealth, and, if so, whether the Commonwealth's right to recover all or part of such debt must or should be waived.

27. Mr Jones (for the Secretary) submitted that a debt in the amount of $4,148.70 was due by Mrs Morgan to the Commonwealth pursuant to s1223(3) of the Act. He said that that debt comprised two components in respect of two separate periods. The first component was the sum of $928.80 which, he submitted, represented an overpayment of FP for the period from 10 October 1996 to 7 November 1996, as a result of an underestimate of income by Mrs Morgan on 10 October 1996, and constituted a debt due to the Commonwealth pursuant to ss885(1) and 1223(3) of the Act. The second component was the sum of $3,219.90 which, he submitted, represented an overpayment of FP for the period from 21 November 1996 to 10 April 1997, as a result of a failure by Mrs Morgan to notify the DSS of a "notifiable event" (namely, Mr Morgan's change of job on 18 November 1996) within 14 days, and constituted a debt due to the Commonwealth pursuant to ss886 and 1223(3) of the Act. Mr Jones finally submitted that none of the debt waiver provisions of the Act - in particular, ss1237A(1), 1237AAC(4) and 1237AAD - was applicable in this case; nor was it appropriate that the debt be written off pursuant to s1236(1) of the Act.

28. Mrs Morgan acknowledged that she had not complied with the requirement to notify the DSS of Mr Morgan's change of job on 18 November 1996 within the prescribed period of 14 days. She explained that she did not notify the DSS until 31 January 1997 because until that date she did not know whether Mr Morgan's new job with John Holland Construction was secure and that, in any event, until that date his average earnings were lower than the income estimate of $25,700.00 per annum which she had given to the DSS on 10 October 1996. She said that, when she became aware on 31 January 1997 that Mr Morgan's job was secure, she notified the DSS on 13 February 1997 - that is, within 14 days thereafter. She said that she was willing to repay to the DSS the amount of overpayment of FP for the period from 18 November 1996 to 31 December 1996. She submitted that she should not have to repay the amount of overpayment of FP for the month of January 1997 because Mr Morgan had received no income during that month and she had been entitled to be paid PA during that month but, because she was unaware of this, she had not lodged a claim for PA. As regards the amount of overpayment of FP for the period from 1 February 1997 to 10 April 1997, Mrs Morgan submitted that, as she had notified the DSS of Mr Morgan's new job and the appropriate amount of his new annual income on 13 February 1997, she should not have to repay any overpayment of FP made to her after that date. She said, however, that she was willing to repay the amount of overpayment made in the first 2 weeks of February 1997.

Findings on material Questions of Fact and Consideration of Issues

29. There is no dispute that on 10 October 1996 Mrs Morgan, pursuant to a request by the DSS for details of her, and Mr Morgan's, income for the purpose of reassessing the rate of FP payable to her, provided to the DSS an estimate of their combined taxable income for the 1996/97 financial year in the amount of $25,700.00. There is also no dispute that Mrs Morgan was paid FP, at a rate calculated on the basis of that estimate of income, with effect from 10 October 1996 until 10 April 1997. It is likewise common ground that Mr and Mrs Morgan's combined taxable income for the 1996/97 financial year was in fact $41,027.00.

30. Because Mr and Mrs Morgan's combined taxable income of $41,027.00 for the 1996/97 financial year was more than 110% of the income amount on which the determination of the rate of Mrs Morgan's FP was based - namely, the estimate of $25,700.00 provided by Mrs Morgan to the DSS on 10 October 1996 - the rate of her FP was, by s885(1) of the Act, required to be recalculated on the basis of that income. According to recalculations carried out by the DSS, the total amount of FP that Mrs Morgan was entitled, under the Act, to be paid for the period from 10 October 1996 to 10 April 1997, on the basis of a combined taxable income of $41,027.00 for the 1996/97 financial year, was $1,039.50, whereas the total amount of FP that was in fact paid to Mrs Morgan for that period, on the basis of the income estimate of $25,700.00 for the 1996/97 financial year provided by her to the DSS on 10 October 1996, was $5,188.20 (see W1998/194, T29, p74; W1998/192, T24). The Tribunal accepts the accuracy of those calculations by the DSS and finds, on the basis of those recalculations, that there was an overpayment of FP to Mrs Morgan, for the period from 10 October 1996 to 10 April 1997, in the amount of $4,148.70.

31. By reason of s1223(3) of the Act, the amount of the abovementioned overpayment of FP to Mrs Morgan - namely, $4,148.70 - is a debt due to the Commonwealth, and the Tribunal so finds.

32. As stated in paragraph 27 (above), however, Mr Jones (for the Secretary) relied on both s885(1) and s886 of the Act as collectively establishing the entire overpayment of FP to Mrs Morgan and the consequent debt due to the Commonwealth under s1223(3) of the Act. He relied on s885(1) only in respect of the period from 10 October 1996 to 7 November 1996, and on s886 in respect of the remainder of the overpayment period, that is, from the next payday, namely, 21 November 1996, to the final payday which included an overpayment of FP, namely, 10 April 1997.

33. Although the Tribunal has already found that, pursuant to ss885(1) and 1223(3) of the Act, a debt is due to the Commonwealth comprising the total amount of the overpayment of FP to Mrs Morgan for the entire overpayment period from 10 October 1996 to 10 April 1997, it will, in deference to Mr Jones' submission, briefly consider whether s886 of the Act is also applicable in this case.

34. The preconditions which must be satisfied before s886 applies include the occurrence of a "notifiable event" in relation to a person (para (a)) and the failure by that person "to notify the notifiable event in accordance with section 872" of the Act (para (b)). The phrase "notifiable event" was not, at the relevant time, defined in the Act (see, now, s6(1) of the Act into which the following exhaustive definition of "notifiable event" was inserted by the Social Security Legislation Amendment (Parenting and Other Measures) Act 1997, s3, Sched 3, Pt 1, item 23, with effect from 1 April 1998:

"notifiable event means an event referred to in a determination in force under point 1069-H6 of the Family Allowance Rate Calculator").

Point 1069-H6 of the Act, at the relevant time, provided:

"If the Secretary gives a person a notice under subsection 872(1) relating to the payment of family payment to the person, the Secretary may state in the notice that an event described in the notice is a notifiable event for the purposes of this Module."

(Compare point 1069-H6 of the Act, as presently in force, which provides:

"An event is a notifiable event for the purposes of the application of this Module in respect of a person if a notice given to the person under subsection 872(1) states that the event is a notifiable event for the purposes of this Module").

Had the present definition of "notifiable event" and the present point 1069-H6 of the Act been in force at the relevant time, the Tribunal would have been inclined to the view that s886 of the Act would not have been applicable in this case because the relevant notice given to Mrs Morgan under s872(1) of the Act did not expressly state that each of the events or changes in circumstances referred to therein (including, relevantly, a change of job) was a notifiable event for the purposes of Module H of the Family Payment Rate Calculator. Having regard, however, to the provisions of the Act in force at the relevant time, in which there was no definition of the phrase "notifiable event" and the wording of point 1069-H6 was permissive, rather than mandatory, in relation to a s872(1) notice stating that an event described therein is a notifiable event for the purposes of the abovementioned Module, the Tribunal is prepared to adopt a flexible approach and accept that the events or changes in circumstances referred to in the relevant notice given to Mrs Morgan under s872(1) of the Act should be regarded as "notifiable events" for the purposes of the application of s886 of the Act in this case. The Tribunal notes that a contrary holding was made by the Tribunal (Deputy President Blow) in Re Secretary, Department of Social Security and Blackberry (1998) 53 ALD 112 in relation to the same former provisions of the Act. The Tribunal respectfully disagrees with Deputy President Blow's approach in relation to the former ss886 and 1069-H6 of the Act but, as indicated above, would support that approach in relation to ss886 and 1069-H6 of the Act as presently in force.

35. Accordingly, the Tribunal finds that Mr Morgan's change of job on 18 November 1996 was a notifiable event, within the meaning of para (a) of s886 of the Act. The Tribunal also finds that Mrs Morgan failed to notify the DSS of that notifiable event in accordance with s872 of the Act because she did not inform the DSS of Mr Morgan's change of job within 14 days thereafter, as required by the notice given to her under s872(1) of the Act by letter dated 10 October 1996 - instead, she first informed the DSS of that event in February 1997. Accordingly, para (b) of s886 of the Act is also satisfied. There being no dispute that the remaining provisions of s886 are also satisfied in this case, it follows that Mrs Morgan's FP rate is to be recalculated on the basis that her "appropriate tax year" is the tax year in which the relevant notifiable event occurred - namely, the 1996/97 tax year. There is no dispute that such a recalculation would produce the same result as the abovementioned recalculation pursuant to s885(1) of the Act in relation to the amount of overpayment of FP to Mrs Morgan for the remainder of the overpayment period - namely, from 19 November 1996 until 10 April 1997. The amount of the overpayment in that period is, by reason of s886 and s1223(3) of the Act, a debt due to the Commonwealth. The amount of the debt, pursuant to s886 and s1223(3) of the Act, for that period is, however, the same as the amount of the debt, pursuant to s885(1) and s1223(3) of the Act, for that period.

36. The next issue that arises is whether the Commonwealth's right to recover all or part of Mrs Morgan's debt of $4,148.70 must or should be waived.

37. Section 1237A(1) of the Act provides that "the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth" must be waived provided that "the debtor received in good faith the payment or payments that gave rise to that proportion of the debt". In order properly to apply the provisions of that subsection to the present case, it is necessary to consider separately the following two periods within the overpayment period - namely, the period from 10 October 1996 to 30 January 1997, and the period from 31 January 1997 to 10 April 1997.

38. As regards the period from 10 October 1996 to 30 January 1997, there is no evidence that any proportion of the abovementioned debt that arose during that period was attributable solely (or even partly) to an administrative error made by the Commonwealth (in this case, the DSS). For the entirety of that period, Mrs Morgan was paid FP at a rate correctly calculated by the DSS on the basis of the income estimate she had provided to the DSS on 10 October 1996. Accordingly, the Tribunal finds that the proportion of the abovementioned debt that arose during the period from 10 October 1996 to 30 January 1997 was in no way attributable to an administrative error made by the Commonwealth and that, therefore, there is no basis to waive, under s1237A(1) of the Act, the Commonwealth's right to recover that proportion of the debt.

39. As regards the period from 31 January 1997 to 10 April 1997, however, different considerations arise. Under s1237A(1) of the Act the Commonwealth's right to recover a debt, or a proportion thereof, can be waived only if the debtor "received in good faith" the payment or payments that gave rise to the debt, or proportion thereof, as the case may be. In Secretary, Department of Education, Employment, Training and Youth Affairs v Prince [1997] FCA 1565; (1997) 152 ALR 127, the Federal Court of Australia (Finn J), in relation to the corresponding provision in the Student and Youth Assistance Act 1973, said (at p.130):

"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 - i.e. 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. According to Mrs Morgan's own evidence, she was aware, as from 31 January 1997 when Mr Morgan's employment with John Holland Construction was confirmed and his income had substantially increased, that she was no longer entitled to the high rate of FP that she had been receiving and, for that reason, she contacted the DSS in February 1997. On the basis of that evidence from Mrs Morgan as to her state of mind when she received FP as from 31 January 1997 the Tribunal finds that, for the period from 31 January 1997 to 10 April 1997, Mrs Morgan did not receive in good faith any of the payments of FP that were made to her because she knew, or had reason to know, that she was not entitled to receive FP at the rate at which it was paid to her during that period. It follows from that finding that, even if all or part of the debt arising from the overpayment of FP made to Mrs Morgan during that period was attributable solely to an administrative error made by the Commonwealth, there can be no waiver, under s1237A(1) of the Act, of the Commonwealth's right to recover that proportion of the total debt due by Mrs Morgan to the Commonwealth.

41. Section 1237AAC(4) of the Act provides for the mandatory waiver of the right to recover a debt in the event of an unclaimed entitlement to PA provided that the conditions specified in paras (a) - (d) of that subsection are satisfied. Mrs Morgan submitted that, during the period in which Mr Morgan was not working because of the strike, namely, from 4 January 1997 until 30 January 1997 (see paras 17 and 18 above), Mr Morgan received no income and PA would have been payable to her or to Mr Morgan for that period had either of them claimed it, but that neither of them made a claim for PA. Mr Jones (for the Secretary) did not dispute those matters but submitted that the condition specified in para (b)(ii) of s1237AAC(4) was not satisfied in this case. He submitted that Mrs Morgan had knowingly failed to comply with a provision of the Act by deciding not to inform the DSS of Mr Morgan's change of job within 14 days of that event, as required by the notice given to her under s872 of the Act by letter dated 10 October 1996.

42. Mrs Morgan's oral evidence was somewhat inconsistent in relation to the matter of her failure to notify the DSS until February 1997 of Mr Morgan's employment with John Holland Construction which in fact commenced on 18 November 1996. During cross-examination she said that at the relevant time she was not aware of the requirement to notify the DSS if Mr Morgan started working. She added that she never read the back of DSS letters (where the various notification obligations are set out) but only checked the details concerning the income amount on which her FP rate was based, the bank account into which her FP was paid, and the "break up" of the amount of FP. On the other hand, Mrs Morgan, in her submissions to the Tribunal, explained why she had not complied with the requirement to notify the DSS of Mr Morgan's change of job on 18 November 1996 within the prescribed period of 14 days. Her explanation was not that she was unaware of that requirement. On the contrary, her explanation suggested that she was well aware of that requirement but that she chose not to inform the DSS at that stage for two main reasons - first, because at that stage Mr Morgan's new job was on a trial basis and she did not know whether that new job would become permanent, and, secondly, because at that stage Mr Morgan's average earnings were not in excess of the estimate of $25,700.00 pa that she had given to the DSS on 10 October 1996. She also said that when she became aware of the permanency of Mr Morgan's new job on 31 January 1997, she then notified the DSS that he had changed jobs. In the form which she subsequently lodged with the DSS on 5 March 1997, she indicated that Mr Morgan had changed jobs on 31 January 1997 and she provided a new income estimate of $45,980.00 for the 1996/97 financial year (see Exhibit A1).

43. Having regard to the whole of the abovementioned evidence, the Tribunal is inclined to find that Mrs Morgan did knowingly fail to comply with a provision of the Act in that, although she was aware of her obligation under the Act to comply with the DSS notice, given to her by letter dated 10 October 1996, under s872 of the Act requiring her to notify the DSS within 14 days of certain changes of circumstances, including a change of job by her or her partner, she consciously and deliberately chose not to comply with that notice. Instead of notifying the DSS of Mr Morgan's change of job on 18 November 1996 within 14 days of that date, she consciously and deliberately chose, for her own reasons, to delay notifying the DSS of that change until she thought it was appropriate to do so. That, in the Tribunal's opinion, constituted a cavalier attitude by Mrs Morgan towards her obligation under the Act to comply with the notification requirement of the abovementioned DSS notice and would justify a finding by the Tribunal that Mrs Morgan did knowingly fail to comply with a provision of the Act, within the meaning of para (b)(ii) of s1237AAC(4) of the Act.

44. It does not necessarily follow from such a finding, however, that the condition specified in para (b) of s1237AAC(4) of the Act is not satisfied in this case. The question also arises, for the purposes of that paragraph, whether the overpayments of FP made to Mrs Morgan did or did not result wholly or partly from her knowingly failing to comply with a provision of the Act.

45. In the present case, the Tribunal finds that the overpayment of FP made to Mrs Morgan resulted wholly from the fact that she gave an estimate of Mr Morgan's income of $25,700.00 for the 1996/97 financial year to the DSS on 10 October 1996 - on the basis of which the rate of FP payable to her from that date was calculated - which estimate ultimately proved to be substantially lower than Mr Morgan's actual income for that financial year (namely, $41,027.00), thereby requiring, pursuant to s885(1) of the Act, a recalculation of her FP rate on the basis of Mr Morgan's actual income. The Tribunal also finds that when Mrs Morgan provided that income estimate to the DSS, she did so in good faith on the basis of Mr Morgan's actual earnings at that time and she did not thereby knowingly make a false statement or a false representation (the Secretary did not contend otherwise). Even if, however, Mrs Morgan did knowingly fail to comply with a provision of the Act, by consciously and deliberately choosing not to inform the DSS within 14 days of Mr Morgan's change of job on 18 November 1996, that in no way broke, or even affected, the chain of causation between Mrs Morgan's giving the income estimate (which proved to be a substantial underestimate) on 10 October 1996 and the overpayments of FP made to her, on the basis of that estimate, from that date until 10 April 1997. Accordingly, the Tribunal is satisfied that the overpayments of FP made to Mrs Morgan from 10 October 1996 to 10 April 1997 did not result wholly or partly from her or another person knowingly making a false statement or false representation or knowingly failing or omitting to comply with a provision of the Act. The Tribunal finds, therefore, that the condition specified in para (b) of s1237AAC(4) of the Act is satisfied in this case. There was no dispute that paras (a), (c) and (d) of s1237AAC(4) of the Act are also satisfied in this case, and the Tribunal so finds.

46. It follows from the abovementioned findings that the Tribunal must, pursuant to s1237AAC(4) of the Act, waive the right to recover Mrs Morgan's debt to the extent set out in subs (5) of s1237AAC.

47. Finally, under s1237AAD of the Act the Secretary (and, on review, the Tribunal) has a discretionary power to waive the Commonwealth's right to recover all or part of a debt if satisfied that the conditions specified in paras (a), (b) and (c) of that section have been met.

48. The condition specified in para (a) of s1237AAD of the Act is that the debt must not have resulted wholly or partly from the debtor or another person knowingly making a false statement or a false representation or knowingly failing or omitting to comply with a provision of the Act. That paragraph is in similar terms to para (b) of s1237AAC(4) of the Act which was considered above and which the Tribunal has found is satisfied in the present case. Consistently with that finding, the Tribunal finds that the condition specified in para (a) of s1237AAD of the Act is met in the present case because Mrs Morgan's debt did not result wholly or partly from her or another person knowingly making a false statement or a false representation or knowingly failing or omitting to comply with a provision of the Act. Rather, Mrs Morgan's debt resulted wholly from her providing to the DSS in good faith on 10 October 1996 an estimate of Mr Morgan's income for the 1996/97 financial year, for the purpose of determining her FP rate, which estimate ultimately proved to be substantially lower than Mr Morgan's actual income for that financial year, thereby necessitating a recalculation of Mrs Morgan's FP rate which revealed an overpayment of FP for the period from 10 October 1996 to 10 April 1997 which constituted the relevant debt.

49. Paragraph (b) of s1237AAD of the Act requires that there be "special circumstances (other than financial hardship alone) that make it desirable to waive" the right to recover all or part of the debt. In Secretary, Department of Social Security v Hales (1998) 153 ALR 259 the Federal Court of Australia (French J) said (at p.267):

"The concept of special circumstances is broad. A constellation of factors, including financial circumstances, may fall within it. ...

The evident purpose of s1237AAD is to enable a flexible response to the wide range of situations which could give rise to hardship or unfairness in the event of a rigid application of a requirement for recovery of debt."

Before exercising the power conferred by s1237AAD in the present case the Tribunal must be satisfied that there are special circumstances (other than financial hardship alone) by reason of which recovery of the debt due by Mrs Morgan to the Commonwealth would be "unjust, unreasonable or otherwise inappropriate": Re Ivovic and Director-General of Social Services (1984) 3 ALN No.61 at p.N97.

50. As regards the period from 10 October 1996 until the date on which Mrs Morgan provided to the DSS a new estimate of Mr Morgan's income for the 1996/97 financial year (namely, $45,980.00), there are no special circumstances which, in the Tribunal's opinion, would make it desirable to waive, pursuant to s1237AAD of the Act, the right to recover the proportion of Mrs Morgan's debt that arose during that period. The Tribunal bases that opinion on the fact that, during that period, Mrs Morgan was paid FP at a rate correctly calculated on the basis of the most recent income estimate for the 1996/97 financial year (namely, $25,700.00) which she had provided to the DSS on 10 October 1996.

51. Different considerations arise, however, as regards that part of the overpayment period after Mrs Morgan provided to the DSS a new estimate of Mr Morgan's income for the 1996/97 financial year (namely, $45,980.00).

52. The precise date on which Mrs Morgan provided the abovementioned new income estimate to the DSS is not entirely clear on the evidence before the Tribunal. In her oral evidence Mrs Morgan said that she telephoned the local DSS Office on 13 February 1997 and informed them that Mr Morgan had started a new job and that their income had increased from about $25,000 pa to about $45,000 pa. A DSS record, however, stated that Mrs Morgan had contacted the DSS on 20 February 1997 and advised that her partner had "started a new job". (See paras 19-20 above.) A letter from Mrs Morgan to the Tribunal, dated 12 June 1998 (Exhibit R2), stated:

"Once known of the job stability I informed Social Security on 20th February and I filled in forms, which showed a change in our circumstances and I gave a new estimate, being $45,980."

The form in which the new income estimate of $45,980.00 was provided was lodged by Mrs Morgan with the DSS on 5 March 1997.

53. The Tribunal regards the DSS record and Mrs Morgan's own letter of 12 June 1998 as more reliable than her oral evidence regarding the date on which she contacted the DSS, and the Tribunal finds that such contact was made on 20 February 1997. As regards the information given to the DSS by Mrs Morgan during that contact, the Tribunal is not satisfied, on the evidence before it, that Mrs Morgan provided the DSS with specific information regarding Mr Morgan's new income at that time. The abovementioned DSS record refers only to Mr Morgan's starting a new job and does not mention his new income. The above-quoted extract from Mrs Morgan's letter of 12 June 1998 does not state that she informed the DSS of Mr Morgan's new income on 20 February 1997 and, instead, suggests that she provided the new income estimate of $45,980.00 in the form which she lodged with the DSS on 5 March 1997. The Tribunal again regards the abovementioned documentary evidence as more reliable than Mrs Morgan's oral evidence on this matter and finds that Mrs Morgan did not provide a specific new estimate of Mr Morgan's income - namely, $45,980.00 for the 1996/97 financial year - until 5 March 1997.

54. Although the new income estimate of $45,980.00 was provided to the DSS on 5 March 1997, the appropriate reduction in Mrs Morgan's FP rate was not effected by the DSS until the FP payday of 24 April 1997 - in other words, the overpayment of FP continued to be paid to Mrs Morgan for the next three paydays, namely, 13 March, 27 March and 10 April 1997 (see W1998/192, T17; W1998/194, T22).

55. Mr Jones (for the Secretary) submitted that the DSS had not delayed unreasonably in reducing the rate of Mrs Morgan's FP and cited s1237A(1A) of the Act - which provides that waiver under s1237A(1) can occur only if the relevant debt is not raised within a period of 6 weeks from the first payment that caused the debt - as an indication that the legislature regarded the period of 6 weeks as a reasonable time for the raising of a debt. The Tribunal acknowledges that, in the event of an overpayment of social security, a reasonable period of time must be allowed for Centrelink (formerly DSS) staff to calculate the amount of the overpayment and raise the appropriate debt against the recipient. But calculating the amount of an overpayment debt and raising that debt are one thing; effecting a social security rate reduction is quite another. There seems to the Tribunal no good reason why the DSS in the present case, upon receipt of the new income estimate from Mrs Morgan on 5 March 1997, did not take immediate steps to effect the appropriate FP rate reduction on the basis of that information or, if that was not practicable, at least to notify Mrs Morgan that her present state of FP was higher than she was entitled to and that action would be taken as soon as possible to calculate her appropriate FP rate and recover from her the amount of the overpayment. Mr Jones informed the Tribunal that it is common practice at Centrelink that when certain customer information is entered into the computer system, a letter to the customer is "automatically generated". Indeed the DSS letter to Mrs Morgan, dated 20 February 1997 (Exhibit R1), is an example of such a letter for it was "generated" in response to the telephone contact made by Mrs Morgan on that very day. Mr Jones' comment and that example serve only to reinforce the Tribunal's view that, upon receipt of the new income information from Mrs Morgan on 5 March 1997, a reduction of her FP rate should have been effected on the next FP payday of 13 March 1997 or, at the very least, a standard form letter should have been immediately "generated" notifying her of an impending FP rate reduction and of associated matters regarding overpayment of FP and debt recovery. Such a letter would have served to put Mrs Morgan on notice and given her some opportunity to plan financially for the eventuality of her having to repay an overpayment of FP to the DSS.

56. In the abovementioned circumstances - namely, the failure by the DSS to act on the information provided by Mrs Morgan on 5 March 1997 and stop the overpayment of FP to her by effecting the appropriate reduction in her FP rate until the FP payday of 24 April 1997 or at least to notify her of her overpayment situation and the consequences thereof as regards debt recovery - the Tribunal is satisfied that it would be unreasonable or inappropriate for the Secretary now to seek to recover that part of Mrs Morgan's debt that arose during the period from 5 March 1997 to 10 April 1997. In other words, the Tribunal finds that those circumstances constitute special circumstances that make it desirable to waive the right to recover that part of Mrs Morgan's debt, within the meaning of para (b) of s1237AAD of the Act.

57. Paragraph (c) of s1237AAD of the Act requires that it be "more appropriate to waive than to write off the debt or part of the debt". The Tribunal finds that Mrs Morgan's financial circumstances, although difficult, are not so straitened that she has no capacity to repay her overpayment debt. Furthermore, she continues, as far as the Tribunal is aware, to be in receipt of social security payments. Accordingly, there are no grounds to write off Mrs Morgan's debt pursuant to s1236(1) of the Act and waiver is more appropriate than write off in this case, within the meaning of s1237AAD(c) of the Act.

58. Accordingly, the Tribunal is satisfied that the conditions specified in paras (a), (b) and (c) of s1237AAD of the Act have been met in this case and that, in all the circumstances of this case, it is appropriate to waive, pursuant to that section, the Commonwealth's right to recover that part of Mrs Morgan's debt comprising the amount of overpayments of FP made to her during the period from 5 March 1997 to 10 April 1997.

59. For the above reasons the Tribunal sets aside the decision under review and remits the matter to the Secretary for reconsideration in accordance with the direction that a debt in the amount of $4,148.70, by reason of overpayments of FP made to Mrs Morgan during the period from 10 October 1996 to 10 April 1997, is due by Mrs Morgan to the Commonwealth, but that the Commonwealth's right to recover:

(a) that part of the debt, equal to the amount of PA that would have been payable to Mrs Morgan or Mr Morgan during the overpayment period if the overpayments had not been made to Mrs Morgan and Mrs Morgan or Mr Morgan had lodged a claim for PA, is waived under s1237AAC(4) and (5) of the Act; and

(b) that part of the debt, consisting of the amount of overpayments of FP made to Mrs Morgan during the period from 5 March 1997 to 10 April 1997, is waived under s1237AAD of the Act.

I certify that the 59 preceding paragraphs are a true copy of the reasons for the decision herein of ASSOCIATE PROFESSOR S D HOTOP, SENIOR MEMBER

Signed: Catherine Osborn .....................................................................................

Counsel for the Secretary Alan Jones, Department of Family and Community Services