FEDERAL COURT OF AUSTRALIA Haggerty v Department of Education Training & Youth Affairs [2000] FCA 1287 ADMINISTRATIVE LAW – social security – meaning of "received in good faith" – criteria – disbelief, doubt or suspicion as to entitlement – no basis for imputed want of good faith – successful student applicant for AUSTUDY – applicant's sister refused AUSTUDY – both applications on same family means test – concern, puzzlement, perception of unusual situation – no findings as to disbelief in entitlement – suspicion or doubt as to entitlement – error of law in construction of "good faith" criterion – Tribunal decision set aside. Student and Youth Assistance Act 1973 (Cth) s 43B Secretary, Department of Education, Employment Training and Youth Affairs v Prince (1998) 152 ALR 127 cited Brown v Repatriation Commission (1985) 7 FCR 302 cited Waterford v Commonwealth (1987) 163 CLR 54 cited Husband v Repatriation Commission (2000) 171 ALR 69 cited GRANT HAGGERTY v THE DEPARTMENT OF EDUCATION, TRAINING & YOUTH AFFAIRS W 150 of 1999 FRENCH J 8 SEPTEMBER 2000 PERTH IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY W150 OF 1999 ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL CONSTITUTED BY DEPUTY PRESIDENT TE BARNETT AND J McKNIGHT MEMBER BETWEEN: GRANT HAGGERTY APPLICANT AND: THE DEPARTMENT OF EDUCATION TRAINING & YOUTH AFFAIRS RESPONDENT JUDGE: FRENCH J DATE OF ORDER: 8 SEPTEMBER 2000 WHERE MADE: PERTH THE COURT ORDERS THAT: 1. The decision of the Administrative Appeals Tribunal be set aside. 2. The matter is remitted to the Tribunal to be dealt with according to law. 3. The Respondent is to pay the Applicant's costs of the application. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY W150 OF 1999 ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL CONSTITUTED BY DEPUTY PRESIDENT TE BARNETT AND J McKNIGHT MEMBER BETWEEN: GRANT HAGGERTY APPLICANT AND: THE DEPARTMENT OF EDUCATION TRAINING & YOUTH AFFAIRS RESPONDENT JUDGE: FRENCH J DATE: 8 SEPTEMBER 2000 PLACE: PERTH REASONS FOR JUDGMENT 1 Grant James Haggerty was born on 5 December 1975. His sister Joanna was born on 20 June 1978. Their parents Ian and Heather Haggerty are farmers at Kojonup. 2 On 11 February 1996, Mr Haggerty made an application for an Austudy allowance. At that time he had enrolled for a degree of Bachelor of Education at Edith Cowan University. The application form required details of his parents' income and family assets. At the same time his sister, Joanna, also made an application for an Austudy allowance. She was enrolled in the course for an Advanced Certificate in Travel and Tourism at Alexander College in Perth. Brother and sister were sharing flat accommodation in Claremont at the time. Their parents were residing at the farm in Kojonup. Each application gave the same details of family income and assets. 3 On 28 March 1996, a letter was sent to Mr Haggerty informing him that he was eligible for assistance under the Austudy scheme and that he had been granted the "away" rate. The letter included the statement: "This is a provisional assessment until actual details of your parent (s') 1994/95 financial year income are confirmed. You must arrange for your parent(s) to provide their Tax Assessment Notice(s) when available." He was advised at the same time that he was eligible for the AUSTUDY supplement, a loan scheme for fulltime and eligible parttime tertiary students. 4 On 2 April 1996, a letter was sent to his sister, Joanna, also at the Kojonup address advising that she was not eligible for a grant. The letter included the following statements: ". You cannot get AUSTUDY because the actual means available to your family exceed the Pay-As-You-Earn (PAYE) benchmark (Regulation 12k). Refer to page 7 of the AUSTUDY 1996 NUS GUIDE for further details on the PAYE benchmark. . This assessment is based on information provided in your AUSTUDY application. If you wish to appeal this decision, please complete an Actual Means Test form which is available from your local DEET office." She was also advised that she was not eligible to apply for the AUSTUDY supplement. 5 Mr Haggerty was told of the decision orally by his parents and, in particular, by his father. He said subsequently that he was unable to recall whether he saw the letter rejecting his sister's application and could not recall many details of the telephone discussion with his father. He also maintained that he did not know the actual reason for the rejection. He attributed the difference in their respective assessments as due to their age difference and their different courses of study. He also said he thought that with two applicants in one family, the family income and assets could be split and possibly only one family member could be eligible for Austudy. He knew that family means was a criterion in the assessment of eligibility for Austudy. He had accompanied his father to their family accountant to check that the details in the Austudy application form were correct. 6 Mr Haggerty Snr telephoned the Department to seek an explanation of the wording in their letter refusing his daughter's application and to find out why it had been refused whereas his son's had not. The officer he spoke to said he would need to find Joanna's Austudy application first and ring him back. The officer rang back to advise that the application could not be located and they would search for it. Mr Haggerty was subsequently told the application still couldn't be tracked down. He did not pursue the matter further. He and his wife decided that the different decisions could be due to the difference in age and course of study and that the Department must know what it was doing. He suggested this as a reason to the children. 7 Grant Haggerty was paid Austudy for the period 30 March 1996 to 30 December 1996 being a total sum of $5,402.88. In October 1997, he and his parents were informed that the Austudy entitlement from 1 October 1996 would be reviewed as data matching indicated that parental income had increased by more than twenty five per cent between the tax years 1994/95 and 1995/96. On 10 October 1997, a letter was sent to Grant Haggerty from Centrelink advising that he was no longer entitled to a grant. The letter said, inter alia: ". You cannot get AUSTUDY because the actual means available to your family exceed the Pay-As-You-Earn (PAYE) benchmark (Regulation 12k)." He was told he had been assessed from 1 October 1996 on the basis of his parental income for the 1995/1996 financial year as it exceeded the 1994/95 income by at least twenty five per cent. The letter went on: ". As a result of this reassessment a grant amount of $5402.88 has been overpaid. . This amount must be repaid." In a memorandum of 20 October 1997 a Departmental officer recommended waiver of a portion of the amount allegedly overpaid in the following terms: "Actual Means Test (AMT) trigger questions were ticked on initial application form, and Key Expenditure Item (KEI) values given, but although triggers and (KEI) values were data entered at initial assessment, ESAS did not apply Actual Means Test and maximum payments commenced based on parental incomes vs. AMT values. Clients sister was assessed at around the same time and using the same values, client's sister was found to be "X" on AMT, however ESAS still shows client as "S" on AMT screen but made him ineligible overall when Reverse Current Income was applied. System raised an overpayment for the whole year. Correct entitlement for period 19/2-30/9/96 was $NIL per fortnight. Reverse CI would have made student ineligible for the period 1/10/96 to 31/12/96. Therefore waiver recommended for the period 19/2/96 to 30/9/96 (paid $5,402.88 divided by 316 days x 92 days (period 1/10/96 to 31/12/96) = $1572.99. Payment of $5,402.88 – period attributable to student $1572.99 = waiver of $3829.89" Notwithstanding the officer's recommendation for waiver it was not approved on the basis that the senior officer concerned did not believe the overpayment was received in good faith. The stated reason was that Grant Haggerty lived with his sister at a unit in Perth and that the letter of advice to her clearly stated that she was ineligible due to the actual means test. The decision to recover the full amount of the overpayment was challenged in the Social Security Appeals Tribunal. The Tribunal affirmed the decision to recover the debt. Mr Haggerty then sought review in the Administrative Appeals Tribunal. The Tribunal, however, affirmed the decision under review. It is that decision which is the subject of this application for judicial review. The Tribunal's Decision 8 After referring to the factual background already outlined, the Tribunal identified as the issue before it whether Grant Haggerty had received the payments in good faith. It referred to the discussion of that term in Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1998) 152 ALR 127. It relied upon the criterion of want of good faith enunciated in Prince namely that the recipient of the relevant payment "knows or has reason to know that he or she is not entitled to a payment received". 9 The Tribunal was satisfied that there was reason for Mr Grant Haggerty to know that he was not eligible for Austudy payments as well as reason for him to make further inquiries. At the time his application was accepted and his sister's rejected, they were living together. He was then a twenty year old student and had already completed a two year TAFE course. He was aware that the means test was a criterion for eligibility. He had accompanied his father to the family accountant to check the correctness of the details on the application. The letters of assessment had been sent to the family farm but he and his sister were both informed of the outcome by their parents. Although the letter rejecting Joanna's application contained some departmental jargon, there was specific reference to the reason being "…because the actual means available to your family exceed the Pay-As-You Earn (PAYE) benchmark". There was also reference to completing an "actual means test form" to appeal the decision. The Tribunal found it unlikely that there had been no discussion at all about the matter between Mr Grant Haggerty and his sister. It noted that his father had said that it struck all four family members as odd. Grant Haggerty said that was his father's view, he himself did not find it odd. The Tribunal concluded there were concerns within the family and that the situation was sufficiently unusual that Ian Haggerty contacted the Department seeking to know why one application was accepted and the other rejected. The Tribunal concluded its reasons thus, at par 42: "The Tribunal finds that the circumstances were such that the applicant had reason for concern and reason to make further inquiry, either directly or through his father. The applicant had theories about the possible reasons for the decisions, and had put his mind to the discrepancy. It was an unusual situation, and his sister was unhappy and upset about the outcome and his parents were puzzled. Even in the highly unlikely event that there was no family discussion or communication about this matter, the Tribunal is satisfied that there was sufficient reason for the applicant to have made an inquiry to clarify the situation. The Tribunal is not satisfied that the applicant in good faith received the payments." Statutory Framework 10 Section 43B of the Student and Youth Assistance Act 1973 (Cth) provides: "Waiver of debt arising from error Administrative Error Subject to subsection (2), 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 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). … Subsection (1) only applies if: The debt is not raised within a period of 6 weeks from the first payment which caused the debt; or If the debt arose because a person has complied with an obligation to provide information or documents to the Department under the Act, the debt is not raised within a period of 6 weeks from the end of the period within which the person was required to comply with that obligation; whichever is the later." Grounds of Review 11 The question of law said to be raised on this application is the extent of the duty of a recipient of an Austudy grant to make inquiries as to his entitlement to receive and continue to receive Austudy. The Tribunal is said to have erred in: (a) Finding that the applicant had reason to know that he was not eligible for Austudy when such assertion was not supported by the evidence. (b) Finding that the applicant had reason for concern or reason to make further inquiry was sufficient in law to amount to a lack of good faith. (c) Finding that the applicant did not receive the payments in good faith by reason that "there was sufficient reason for the applicant to have made an inquiry to clarify the situation" which was contrary to the evidence and unreasonable in that the father of the applicant had indeed sought to make inquiry in relation to the applications made by his two children. (d) Failing to make any or any sufficient findings as to the actual state of mind of the applicant. (e) Placing undue weight on the view of his family members in reaching a conclusion adverse to the applicant. Limitations on Review of Decisions of the Administrative Appeals Tribunal 12 Section 44 of the Administrative Appeals Tribunal Act 1975 limits the rights of appeal to the Federal Court against decisions of the Tribunal to questions of law. Those questions alone are the subject matter of the appeal and the ambit of the appeal is confined to them: Brown v Repatriation Commission (1985) 7 FCR 302 at 304. A finding by the Tribunal on a matter of fact cannot be reviewed on appeal unless it is vitiated by an error of law: Waterford v Commonwealth (1987) 163 CLR 54 at 77. As I observed in Husband v Repatriation Commission (2000) 171 ALR 69: "Assertions that a decision is against the evidence or the weight of the evidence will be given short shrift. They are arguments that may apply on appeals from courts of law but have no place where the appeal is from an administrative tribunal that is not bound by the rules of evidence: Collins v Minister for Immigration and Ethnic Affairs (1981) 36 ALR 598." It is against this background and subject to those constraints that the grounds of review must be considered. The Good Faith Criterion 13 As Finn J observed in Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (supra) at 130, the section, then s 289 of the Act, asks that a quite specific question be addressed, namely was the payout received in good faith. Its sole concern is with whether a particular state of affairs exists at the time that the payment is received. Accepting correctly, in my respectful view, the protean character of the term "good faith", his Honour identified it as "an essentially knowledge or notice idea in both statutory and common law contexts involving property dealings…". Nevertheless it can vary significantly given the purpose it is intended to serve. In one context it may focus inquiry upon a person's reasons for acting and in another, to a person's state of knowledge when a particular event occurs. His Honour said, at 130: "For my own part, I consider the burden of the formula in the section 289 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." 14 I do not take what his Honour said in that case as supporting the proposition that a person can be found to be receiving payments other than in good faith simply by reason of the fact that there are facts in existence which are known to the recipient sufficient to negative the recipient's entitlement. In my opinion that is not a sufficient criterion. Knowledge of relevant facts is not enough to generate reason to know of the lack of entitlement. 15 The criterion of receipt in good faith may be characterised as a positive one as counsel for the respondent submitted. That is not to say that a recipient of a mistaken payment must prove that he or she has considered the entitlement to the money and positively concluded that there is an entitlement. There is no question of an onus here to be met by the recipient who claims benefit of the mandatory waiver. Nor is there some twilight zone between good faith and want of good faith. A waiver can only, in my opinion, be declined where there has been a receipt, without good faith, of moneys mistakenly paid. This accords with the general approach taken by Finn J whose construction of the provision is related to the criteria for want of good faith. 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 it. 17 In this case the question is whether the reasoning of the Tribunal indicates an erroneous construction or application of the good faith requirement. In my opinion it does. The Tribunal's reasons as expressed in pars 41 and 42 find want of good faith on the basis of the conservative conclusions that: 1. There were concerns within the family. 2. The situation was so unusual that Mr Haggerty Senior contacted the Department seeking to know why one application was accepted and the other rejected. 3. The circumstances were such that the applicant had reasons for concerns. 4. The applicant had theories about the possible reasons for the decisions and had put his mind to the discrepancy. 5. The situation was unusual, his sister was upset and his parents were puzzled. 6. Assuming no family discussion (as to the existence and content of which there was no positive finding), there was sufficient reason for the applicant to have made an inquiry to clarify the situation. None of these findings go to the state of mind and whether he had a belief, doubt or suspicion as to entitlement which would require a recipient acting in good faith to make an inquiry. 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. The Tribunal may well have been able to make the necessary findings to support a conclusion of want of good faith on the evidence before it. It did not do so and proceeded upon a view of the section which raised the bar of good faith higher than the law requires. For these reasons the application will succeed, the decision of the Tribunal will be set aside and the matter remitted to the Tribunal to be dealt with according to law. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French. Associate: Dated: September 2000 Counsel for the Applicant: Ms AG Braddock Solicitor for the Applicant: Michael Rogers & Associates Counsel for the Respondent: Mr MT Ritter Solicitor for the Respondent: Australian Government Solicitor Date of Hearing: 8 September 2000 Date of Judgment: 8 September 2000