36Cancellation of units — error by the DAA

36 Cancellation of units — error by the DAA

(a) the DAA makes an error in relation to the grant of a payment right; and

(b) section 35 does not apply; and

(c) the payment right would not have been granted if the DAA had not made the error.

(2) If this subsection applies, the DAA may cancel all of the units in the payment right.

(a) the DAA makes an error in relation to the grant of a payment right; and

(b) section 35 does not apply; and

(c) as a result of the error, the face value of the payment right exceeds the amount that would have been the amount of the face value if the DAA had not made the error.

(4) If this subsection applies, the DAA may cancel the number of units in the payment right worked out by:

(a) dividing the number of whole dollars in the amount of the excess by 32; and

(b) if the result of the division is not a whole number — rounding down to the nearest whole number (treating zero as a whole number).

(5) However, the DAA must not cancel a unit in a payment right under this section if:

(a) 1 or more DSAP payments in respect of the unit are made before the DAA becomes aware of the error; and

(b) the DAA is satisfied that the entity, or each of the entities, that received the payment, or payments, acted in good faith.

Note If a unit is cancelled under this section, Schedule 2 to the Act and the scheme have effect as if the unit had never existed: see subclause 51 (3) of Schedule 2 to the Act.

(6) Subsection (5) does not apply in respect of a unit if each of the following agrees in writing to the cancellation of the unit:

(a) the entity who is the registered owner of the unit;

(b) if a charge is registered in respect of the unit — the entity in whose favour the charge has been granted.

The agreement may be on terms the DAA thinks proper.