FEDERAL COURT OF AUSTRALIA Secretary, Dept of Family & Community Services v Hocking [2002] FCA 1328 ADMINISTRATIVE LAW – judicial review of decision of Administrative Appeals Tribunal – decision under Social Security Act 1991 (Cth) – whether error of law in determination that debt "attributable solely to an administrative error" of the Commonwealth – whether error of law in determination that respondent had made "false statement" in reporting family income Social Security Act 1991 (Cth) ss 506D, 1075, 1223(5), 1224, 1237A Administrative Appeals Tribunal Act 1975 (Cth) s 44 Haldane-Stevenson v Director-General of Social Security (1985) 60 ALR 21 cited Secretary, Department of Social Security v Garvey (1989) 22 FCR 132 cited McAuliffe v Department of Social Security (1993) 23 ALD 284 cited Re Department of Social Security v Hoy (1998) 52 ALD 477 cited Hazim v Secretary, Department of Family and Community Services (2002) 34 AAR 458 cited SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES V FRANCIS JOHN HOCKING NO. N 211 OF 2002 BEAUMONT J 30 OCTOBER 2002 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 211 OF 2002 ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL BETWEEN: SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES APPLICANT AND: FRANCIS JOHN HOCKING RESPONDENT JUDGE: BEAUMONT J DATE OF ORDER: 30 OCTOBER 2002 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The decision of the Administrative Appeals Tribunal be set aside. 2. The matter be remitted to the Administrative Appeals Tribunal for reconsideration and determination according to law. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 211 OF 2002 ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL BETWEEN: SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES APPLICANT AND: FRANCIS JOHN HOCKING RESPONDENT JUDGE: BEAUMONT J DATE: 30 OCTOBER 2002 PLACE: SYDNEY REASONS FOR JUDGMENT BEAUMONT J: Introduction 1 Section 1237A(1) of the Social Security Act 1991 (Cth) ("the Act") provides, relevantly, that the Secretary "must waive ... 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 ... the debt". 2 This appeal from a decision of the Administrative Appeals Tribunal ("the AAT"), brought under s 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth) on a question of law, raised for determination, in essence, the question of law being the meaning and operation in the present circumstances of the phrase "attributable solely to an administrative error" in the statutory context of s 1237A(1) of the Act. Background 3 In order to understand how the present question arose, it will be necessary to describe its background, as follows. 4 On 27 June 1997, Francis John Hocking, the respondent, lodged with Centrelink a claim for a Parenting Allowance. 5 On 1 August 1997, Centrelink wrote to the respondent on behalf of the Secretary of the, then, Department of Social Security (now the Department of Family and Community Services), the applicant, informing the respondent that: he would be paid Parenting Allowance at a certain fortnightly rate; arrears had been credited to his account; the rate depended on the incomes of the respondent and his wife; and that the incomes taken into account were $65.62 a fortnight for the respondent and $597.63 for Mrs Hocking. The respondent was told, "You should tell us within 14 days if either income changes". 6 The respondent received subsequent letters. 7 On 28 January 1998, he received a letter notifying him that his Parenting Allowance had been increased and that this was based on his income of $60.00 a fortnight and his partner's income of $574.94 a fortnight. He was again required to tell Centrelink if there was any increase in income. 8 On 29 January 1998, he received another letter in virtually identical terms. 9 On 30 January 1998, he received another letter notifying him of an increased rate of Parenting Allowance, based on income of $60.00 a fortnight for the respondent, and $498.00 a fortnight for his partner. Again he was asked to notify Centrelink if any income was received in excess of these amounts. 10 On 18 May 1998, he received another letter relating to Parenting Payment, which replaced Parenting Allowance from 20 March 1998. This was paid at a rate based on the respondent's income of $60.00 a fortnight and his partner's income of $498.00 a fortnight. He was told to notify Centrelink if any income was received in excess of these figures. 11 On 27 August 1998, the NSW Department of Education and Training provided data to Centrelink concerning Mrs Hocking's earnings, apparently from 28 May 1998 to 7 August 1998. This also disclosed that Mrs Hocking had received workers' compensation payments from 3 June 1998 until 21 August 1998. 12 On 23 February 1999, the NSW Department of Education and Training again provided details of Mrs Hocking's earnings to Centrelink covering 14 July 1997 to 28 May 1998, indicating that workers' compensation had continued from 21 August 1998 and was still continuing. 13 On 27 May 1999, the NSW Department of Education and Training again provided details of Mrs Hocking's earnings to Centrelink from 2 June 1998 to 24 May 1999, indicating that workers' compensation had been paid from 3 June 1998 until 1 July 1999. 14 Mrs Hocking provided Centrelink (on an uncertain date) with a summary of her income tax return for 1997 – 1998. 15 On or about 9 June 1999, GIO Insurance informed Centrelink that Mrs Hocking had received workers' compensation at the following rates: · 2 June to 30 June 1998 - $753.64 a week. · 1 July to 27 November 1998 - $776.24 a week. · 30 November 1998 to 31 January 1999 - $601.50 a week. · 1 February to 3 March 1999 - $525.50 a week. · 1 April 1999 to date - $534.80 a week. 16 On 25 October 1999, Centrelink calculated that the respondent had been overpaid $4,318.90 because of Mrs Hocking's receipt of income in excess of that recorded by Centrelink; an amount of $1,639.30 was owed in respect of Parenting Allowance and $2,679.60 in respect of Parenting Payment (Partnered). 17 On 22 December 1999, Centrelink wrote to the respondent, claiming recovery of a debt of $1,639.30 in respect of Parenting Allowance for the period 31 July 1997 to 12 March 1998. Payment was demanded by 13 January 2000. Centrelink also sought to recover a debt of $2,679.60 in respect of Parenting Payment for the period 26 March 1998 to 24 September 1999, due by 13 January 2000. 18 On 19 January 2000, Centrelink informed the respondent that his Parenting Payment was $66.20 a fortnight, but that $62.89 would be deducted on each payday to result in a rate of only $3.31 being payable each fortnight. (That notice stated that Mrs Hocking was receiving $30,361.24 a year as income.) 19 On 28 January 2000, the respondent sent a facsimile to Centrelink, asking why this action was being taken before a review he had requested earlier had been concluded; and questioning how Centrelink could maintain that Mrs Hocking was earning $30,361.24 a year. He queried also the amount maintained as the value of his and Mrs Hocking's assets. He sought to have the matter "properly reviewed". The respondent also provided further income tax information for 1997 – 1998, showing that Mrs Hocking had gross income of $21,252.00 and her taxable income was $19,389.00; and that the respondent's gross income was $1,479.00 and his taxable income was $1,379.00. 20 On 7 August 2000, the debt owed by the respondent was recalculated by Centrelink so as to total $5,053.00. This consisted of $2,372.70 in respect of Parenting Allowance paid from 17 July 1997 to 12 March 1998 and $2,680.30 in respect of Parenting Payment (Partnered) paid from 26 March 1998 to 24 September 1998. It was noted that Mrs Hocking's income in 1998 – 1999 was $38,860.00 salary, plus $39.00 interest, plus $131.00 in shares; and that she had lost $8,891.00 in a separate business. 21 On 8 September 2000, Centrelink informed the respondent that he owed "nil" to Centrelink. 22 On 19 October 2000, Centrelink informed the respondent that the decision to recover a debt of Parenting Payment (Partnered) had been "reviewed"; the decision to reduce the debt to "nil" was incorrect; the "nil" figure was increased to $2,680.30; and the earlier figure for overpaid Parenting Allowance of $1,639.30 was increased to $2,372.70. This was explained by stating that in calculating the respondent's partner's earnings the "amounts of salary per annum averaged over periods" had been used. The reasons of the decision-maker stated: "Partner originally disputed 97/98 income as per employers report - case reviewed and taxable income used. Again reviewed and [Parenting Payment (Partnered)] debt zeroed (by mistake) - Reviewed and reinstated. ... Relevant facts: ... Failed to advise partner's compensation income for [Parenting Allowance/Parenting Payment (Partnered)] payments. See additional claim 12/1/98, original claim 27/6/97. Partner's earnings grossly understated. ... Reconsideration outcome ... Affirmed - debt for [Parenting Payment (Partnered)] reinstated - debt for [Parenting Allowance] increased as per 97/98 taxable income details provided after partner disputed employers report." (The "additional claim 12/1/98" was not included in the documents before the AAT.) 23 On 14 December 2000, a Centrelink authorised review officer ("the ARO") wrote to the original decision-maker. She said that she had decided "that the debts in this case should be based on actual fortnightly income (rather than taxable income) because this is more beneficial to the customer". She had commenced the Parenting Allowance debt from 14 August 1997, not 31 July 1997 (as had been notified). This was because the grant letter was dated 1 August 1997. Any excess payment prior to 1 August 1997 was not to be recovered. The recoverable amounts were $1,486.90 in respect of Parenting Allowance (14 August 1997 to 12 March 1998) and $2,679.60 in respect of Parenting Payment (Partnered) (26 March 1998 to 24 September 1998). This totalled $4,165.50. 24 On the same date, the ARO wrote to the respondent with her decision, stating: "Information now available shows that your partner's income (originally from casual earnings and subsequently from compensation) exceeded the limits specified in the above letters, but there is no record of advice from you about this within the relevant notification periods. As a result you received amounts of Parenting Allowance in excess of your correct entitlement from payday 14 August 1997, and amounts of Parenting Payment in excess of your correct entitlement from payday 26 March 1998." 25 The ARO also decided that the debts could not be waived. 26 On 14 March 2001, the respondent lodged with the Social Security Appeals Tribunal ("the SSAT") an application for review of the decision of the ARO. On 21 February 2001 the respondent wrote to the SSAT, arguing: · The respondent and his wife kept Centrelink "completely up-to-date with [their] changing circumstances" during the period of Centrelink assistance. · The respondent and his wife were guided by and relied on Centrelink staff in fulfilling obligations. · The quantum of the debt continued to change. At one stage it was reduced to nil, but then the respondent was told that an amount was owing and that amount was different from what had been quoted earlier. · Mrs Hocking's taxable income in 1997 – 1998 had been only $19,389.00. They had four dependent children at that time. · In 1997 – 1998 the respondent was paid only $1,168.00, as evidenced on the relevant Centrelink group certificate. However, Centrelink was seeking to recover $1,486.00 plus a part of $2,679.00 pertaining to that financial year. 27 The SSAT affirmed the decision of the ARO. 28 On 16 May 2001, the respondent lodged with the AAT an application for review of the SSAT decision. The Legislative Scheme 29 Division 7 of Part 2.10 (Parenting Payment) of the Act provides (s 506D(1)) that the Secretary may require notice of the happening of an event or a change in certain circumstances: "(1) The Secretary may give a person to whom parenting payment is being paid a notice that requires the person to inform the Department if: (a) a specified event or change of circumstances occurs; or (b) the person becomes aware that a specified event or change of circumstances is likely to occur." 30 Part 3.10 enacts general provisions relating to "the ordinary income test". Section 1075 provides for "permissible reductions" of business income: "1075 Permissible reductions of business income (1) Subject to subsection (2), if a person carries on a business, the person's ordinary income from the business is to be reduced by: (a) losses and outgoings that relate to the business and are allowable deductions for the purposes of section 51 of the Income Tax Assessment Act 1936 or section 8-1 of the Income Tax Assessment Act 1997, as appropriate; and (b) depreciation that relates to the business and is an allowable deduction for the purposes of subsection 54(1) of the Income Tax Assessment Act 1936 or Division 42 of the Income Tax Assessment Act 1997; and (ba) amounts that relate to the business and can be deducted for the decline in value of depreciating assets under Subdivision 40-B of the Income Tax Assessment Act 1997; and (c) amounts that relate to the business and are allowable deductions under subsection 82AAC(1) of the Income Tax Assessment Act 1936. 1075(2) If, under Division 1B, a person is taken to receive ordinary income on a financial investment, that ordinary income is not to be reduced by the amount of any expenses incurred by the person because of that investment. Note: For financial investment see subsection 9(1). 1075(3) If a person's ordinary income for a period includes rental income from a property that is not business income, the person's ordinary income from that property is to be reduced by losses and outgoings that relate to the property and are allowable deductions for the purposes of section 51 of the Income Tax Assessment Act 1936 or section 8-1 of the Income Tax Assessment Act 1997, as appropriate, for that period. 1075(4) If the amount of the allowable deductions relating to a property for a period under section 51 of the Income Tax Assessment Act 1936 or section 8‑1 of the Income Tax Assessment Act 1997, as appropriate, exceeds the amount of the rental income from the property for that period, the amount of the ordinary income from the property for that period is taken to be nil." (Emphasis added) 31 Amounts paid by way of social security recoverable under the Act are dealt with in Part 5.2. Incorrectly paid amounts were relevantly provided for by s 1223(5): "1223(5) If: (a) an amount (the received amount) has been paid to a person by way of social security payment on or after 1 October 1997... ; and (b) because the received amount had not been correctly calculated using the relevant rate calculator or other provision for calculating the amount, or for any other reason, the received amount is greater than the amount (the correct amount) of social security payment ... 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." (Emphasis added) 32 Debts arising from a recipient's contravention of the Act were relevantly provided for by s 1224(1): "1224(1) If: (a) an amount has been paid to a recipient by way of social security payment ... ; and (b) the amount was paid because the recipient or another person: (i) made a false statement or a false representation; or (ii) failed or omitted to comply with a provision of the social security law or this Act ... ; the amount so paid is a debt due by the recipient to the Commonwealth. ..." 33 As has been noted, mandatory waiver of debt arising from administrative error is provided for by s 1237A: "1237A (1) Subject to subsection (1A), the Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt. Note: Subsection (1) does not allow waiver of a part of a debt that was caused partly by administrative error and partly by one or more other factors (such as error by the debtor). 1237A (1A) Subsection (1) only applies if: (a) the debt is not raised, within a period of 6 weeks from the first payment that caused the debt; or (b) if the debt arose because a person has complied with a notification obligation, the debt is not raised within a period of 6 weeks from the end of the notification period; whichever is the later. ... " The Proceedings in the AAT 34 At the AAT hearing, the respondent, who was not then represented, gave evidence to the following effect: · The respondent had been made redundant after thirty years in the one job when he approached Centrelink in 1997 to enquire whether he might qualify for a social security payment. He was granted Parenting Allowance. There were no difficulties until a time when Centrelink ceased making deposits into his bank account. When the respondent asked Centrelink why this had occurred, he was told that he had failed to notify Centrelink of changes in the family's income. · Since he was notified that he owed a debt he had been given fifteen different figures regarding the amount owing. He was totally confused as to what he owed. · The respondent had told Centrelink everything that Centrelink had required in its notices. He and Mrs Hocking had repeatedly provided payslips. The respondent did not keep copies of all of the notifications he and Mrs Hocking made because at first they did not realise it was necessary. Even some of Centrelink's own letters referred to notifications from the respondent (e.g. the letters from Centrelink dated 28 January 1998 and 22 September 1998 (Exhibit A2) in which the Centrelink writer says, "Thank you for telling us your and your partner's new income details"). · The respondent and Mrs Hocking had left their discussions with Centrelink advisers under the impression that losses incurred by Mrs Hocking from a business in which she was involved could be used to offset her income from casual teaching. · Certain of the salary figures reported by the Department of Education and Training to Centrelink could not, realistically, be correct. · In cross-examination, the respondent agreed that he was aware of the need to notify increases in income within fourteen days, although he did not receive the letter dated 1 August 1997. He "considered" that he had "noted" the income figures quoted in the letters. He considered that he would contact Centrelink if a letter was unclear. He believed that he had contacted Centrelink between August 1998 and September 1999, but he had no records and could not recall dates and times. The contacts with Centrelink were both to advise of changes in foster children placed with the respondent and Mrs Hocking and to advise of Mrs Hocking's earnings. In the early stages they communicated with Centrelink by telephone; later, however, they preferred to visit Centrelink. · In her cross-examination, Mrs Hocking said that she had made many of the contacts with Centrelink. She thought that business losses were deductible generally from gross income received and that was why her income quotations were low. Mrs Hocking said that she had lodged with Centrelink profit and loss statements relating to her business. Mrs Hocking said that in 1997 – 1998 she earned $160.00 a day when working for the Department of Education. At first she was earning about $320.00 a fortnight but this grew to about $640.00 a week in August to November 1997, because of the absence from duty of another teacher. The Department's income always caused difficulties in reporting because it was paid, and accounted for, irregularly. Findings by the AAT 35 The AAT stated (at [31]) that the respondent and Mrs Hocking had informed it that "they had left their discussions, from the outset, with Centrelink advisers under the impression that losses incurred by Mrs Hocking from a business in which she was involved could be used to offset her income from casual teaching". Noting that the respondent and Mrs Hocking were dissatisfied with Centrelink because of its handling of their case, the AAT Senior Member said (at [36]): "From the tribunal's perspective it has to be said that the administration of Mr and Mrs Hocking's alleged debt has not been felicitous. It is understandable that the [respondent] has little faith that the quantum arrived at is correct. The tribunal is also not impressed with the lack of completeness of the Section 37 Statement. Despite the emotions affecting them, the tribunal accepts that Mr and Mrs Hocking were witnesses who did their best to provide truthful answers to questions asked of them." 36 Noting that the task of the AAT was to "first ascertain whether there is a debt due to the Commonwealth in this case", the AAT found that there was (at [37]). 37 The AAT also found that it was clear that the respondent and Mrs Hocking were under several misapprehensions in their dealings with Centrelink (at [37]). One example was their belief that business losses could be deducted from gross income earned by way of wages or salary in calculating fortnightly income. The Senior Member stated (at [37]): "It is well established in cases such as Haldane-Stevenson v Director-General of Social Security (1985) 60 ALR 21 (Full Federal Court) and Secretary, Department of Social Security v Garvey (1989) 22 FCR 132 (Full Federal Court) that losses and expenses are quarantined and can be deducted only from any particular income item to which they attach. This is confirmed by s 1075 of the Act. The tribunal accepts the evidence of Mrs Hocking that this issue was discussed in the pre-grant interview at Centrelink, an interview of which there [is] no record, and she was left with the impression that losses from her business were not quarantined. In short, a business loss can be applied to reduce only the income taken to be derived from that business. However, the correct situation is that, if the losses exceed the income from the business, the excess losses cannot be used to reduce the other income items." The AAT's Conclusions (a) The Debt 38 The AAT found that there was a debt due to the Commonwealth of an indeterminate amount, under s 1224(1) of the Act, stating (at [39]): "The tribunal could affirmatively find that there is a debt due to the Commonwealth in the amount found by the SSAT. However, the tribunal was impressed by Mrs Hocking's evidence that there were errors in the income reported by the Department of Education as received by her. This argument has not been picked up and addressed by Centrelink and the SSAT in the past and, in the tribunal's view, it should be." 39 In determining (at [40]) that a debt was due under s 1224(1), the AAT relied on the fact that Mrs Hocking gave evidence that she had under-reported her income because of her understanding that she could reduce her earnings by taking account of business losses. "This ha[d] the effect that she or her husband made false statements in reporting the family income" (at [40]). 40 The AAT also found, accepting their oral evidence on the point, that the respondent and Mrs Hocking did report variations in income as required by Centrelink, "albeit quoting incorrect figures on some or all occasions" (at [41]). (b) Waiver 41 In considering whether waiver of recovery of the debt due to the Commonwealth was compelled under the Act, the AAT said (at [42]): "Subject to s 1237A(1A), s 1237A of the Act compels a decision-maker to waive the right to recover that part of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment(s) that gave rise to that proportion of the debt." 42 The AAT accepted Mrs Hocking's evidence that she was left with the (wrong) impression by Centrelink that losses from her business could be applied to reduce her income from earnings, and found that it was "more likely than not that the correct advice was given by Centrelink but that insufficient care was taken to ensure that it was understood by the [respondent] and Mrs Hocking" (at [43]). The AAT concluded that this "constitute[d] administrative error by the Commonwealth", and that "the overpaid amount was attributable solely to the administrative error" (at [44]). The AAT further found that "the [respondent] has apparently under-reported his wife's income to an unascertained degree because of this incorrect belief about the disposition of business losses" (at [44]); but that the respondent and Mrs Hocking received the relevant payments in good faith and that they had no independent means of knowing what rate of payment they should have been receiving (at [45]). The AAT accepted their evidence that they had notified changes in income and provided payslips; and that "because of an ambiguity in a Centrelink publication [the payments advice booklet], they believed that, because they had four children, they were entitled to maximum rate Parenting Payment" (at [45]). 43 The AAT further held (at [46]) that: "… s1237A(1A) does not prevent the waiver of the right to recover. Centrelink was made aware of a possible debt in August 1998, and in February and May 1999, but did not communicate with the respondent until 22 December 1999 about the accrued debt." 44 The AAT accordingly concluded that recovery of the debt due to the Commonwealth must be waived in accordance with s 1237A. Since the debt had previously been recovered in full, the AAT noted (at [48]) that the effect of its Decision would be that the amount recovered should be refunded to the respondent. The Secretary's Appeal 45 The question of law raised on the appeal is whether the AAT's determination, at pars [43] – [44] of its Decision, that the facts found by it fell within s 1237A of the Act, was permissible. The grounds of the appeal are that the AAT's determination that the facts found by it fell within s 1237A of the Act is wrong in law because, on the facts as found by the Tribunal: · there was no "administrative error made by the Commonwealth". · the error could not be said to be "attributable solely" to the Commonwealth. 46 The orders sought by the Secretary are that the AAT's decision be set aside, and the matter remitted to the AAT to be re-determined according to law. The Respondent's Notice of Contention 47 The Notice of Contention states that the question of law raised is "whether the [AAT] erred in law in finding that Mr Hocking had made false statements in reporting the family income". The grounds are that: "The question of whether the statements of income were false did not turn on how income is to be assessed under [the Act] but on whether Mr Hocking complied with the notification notices he received from Centrelink. Those notices require notification of specified changes in 'total personal income'. The [AAT] found that Mrs Hocking did report variations in income as required by Centrelink, but, in calculating that income, deducted losses from her business. The [AAT] should have concluded that this constituted compliance with the notification notices and that there was no debt under s 1224." Conclusions on the APpeal – the Notice of Contention 48 It will be convenient to consider the notice of contention first. (a) Did the AAT err in concluding that there was a debt under s 1224? 49 As has been mentioned, the first issue for the AAT was whether a debt to the Commonwealth had been created by virtue of the operation of s 1224. It will be recalled that, under s 1224(1)(b)(i), if a social security payment has been made because of a false statement, a debt to the Commonwealth is created. It will further be remembered that the AAT found (at [40]) that the respondent and Mrs Hocking had "under-reported" their income because Mrs Hocking had not correctly understood that she could not reduce her (relevant) income by taking losses from an (independent) business into account; and that this meant that the respondent and Mrs Hocking had made "false statements" within s 1224(1)(b)(i) in reporting family income. 50 In support of his notice of contention, counsel for the respondent makes these submissions: · It is accepted that in the present statutory context, as von Doussa J held in McAuliffe v Department of Social Security (1993) 23 ALD 284 (at 296), "a statement ... which is untrue in fact, is 'false'. Liability to the Commonwealth for overpayment of benefit is not dependent on proof that the statement was ... intentionally untrue". · However, reliance is placed upon the approach taken by the AAT in Re Department of Social Security v Hoy (1998) 52 ALD 477 in the context of considering whether a change in employment circumstances constituted a change of jobs and thus a "notifiable event". The AAT said (at 478) that, having regard to the serious adverse consequences which may befall the recipient in the event of failure to comply with a statutory recipient notification notice, the statute and the notice "are to be construed strictly, in favour of the recipient ... ". · The AAT erred in holding that the statements of earnings were "false" merely on the ground that the statements were based on an erroneous view of the recipient of how "income" is assessed under the Act. The AAT's approach was flawed in principle. The respondent's obligation to notify Centrelink was as stated by Centrelink in its correspondence. His statements could only be "false" if he failed to comply with the requirements set out in the correspondence. Specifically, the respondent's obligation was to notify Centrelink if the "total personal income" of the respondent and his wife exceeded the amounts specified by Centrelink. Yet the correspondence was silent on the question whether this "income" was "gross" or "net". · The AAT found that the respondent and his wife did report variations in income as required by Centrelink, "albeit quoting incorrect figures on some or all occasions". It accepted their evidence on the point, including the evidence of the respondent that he had told Centrelink everything that Centrelink had required in its notices; that he and his wife had repeatedly provided payslips and that his wife had lodged with Centrelink profit and loss statements related to her business (at [29], [34] and [45]). · It was an irrelevant consideration that the income reported by the Hockings was "incorrect" because they were labouring under a misapprehension as to how income losses were to be treated under the statutory scheme. The only question was whether the Hockings had complied with the obligation imposed on them by the notifications from Centrelink. · What the AAT should have asked itself was whether the Hockings had complied with the obligation imposed on them by Centrelink's notifications. The AAT should have addressed the question: did the Hockings report their "total personal income". · Given the AAT's other findings, it was not open to it to conclude that the Hockings made "false statements" in reporting their "total personal income". In fact, the Hockings reported their "total personal income" "in accordance with the manner in which it is calculated for taxation purposes", so that their statements could not be characterised as "false". If it had asked itself the right question, the AAT could only have come to the conclusion that there was no debt. 51 I cannot accept the respondent's argument. 52 The AAT clearly found, as an objective fact, that, apart from any question of waiver, or subjective beliefs on the part of the Hockings, the debt claimed by the Commonwealth was due. It was plainly within the AAT's jurisdiction to so find, by virtue of the operation of s 1223(5). (An alternative statutory source for the creation of the debt found is s 1224(1)(b)(i), the "falsity" of the statement being objectively ascertained – cf. Hazim v Secretary, Department of Family and Community Services (2002) 34 AAR 458 per Gray J at [41], [55] – [56].) 53 On the material before it, the AAT made no error of law in its approach to this issue. The transcript of the AAT hearing and the AAT's reasons indicate that the real point which the Hockings sought to make here was that they honestly believed that they had complied with their understanding of Centrelink's requirements. But, in the present context, this was immaterial, at least so far as the operation of s 1223(5) was concerned. The fact that Centrelink acted upon wrong information received from the Hockings could constitute "any other reason" for the purposes of s 1223(5). It is no answer to the operation of this provision for the recipient to claim, and rely upon, an imperfect understanding of the recipient's statutory obligations. Did the AAT err in concluding that the debt must be waived? 54 As has been seen, the AAT was unable to make a finding that Centrelink had misrepresented the position to the Hockings. But it found an "administrative error" on Centrelink's part by virtue of the claim by the Hockings, accepted by the AAT, that they were confused in their understanding of the position after discussing the matter with Centrelink's officers. 55 In my opinion, as a question of law, that confusion on the part of the Hockings, without more, could not amount to an "administrative error" on the part of Centrelink. Something more was needed, and none was found by the AAT. To this extent, the appeal must succeed. Orders 56 Accordingly, I make these orders: 1. Decision of the AAT set aside. 2. Remit the matter to the AAT for reconsideration and determination according to law. 57 The Secretary does not seek costs. I certify that the preceding fifty-seven (57) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Beaumont J. Associate: Dated: October 2002 Counsel for the Applicant: Mr T Reilly Solicitor for the Applicant: Australian Government Solicitor Counsel for the Respondent: Mr C Colborne Solicitor for the Respondent: Legal Aid Commission NSW Date of Hearing: 8 October 2002 Date of Judgment: 30 October 2002