Adams and Secretary, Department of Education Employment and Workplace Relations

[2007] AATA 2114

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 2114

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2007/5074

GENERAL ADMINISTRATIVE DIVISION		)
Re		THOMAS ADAMS

Applicant

And SECRETARY, DEPARTMENT OF EDUCATION EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Deputy President P E Hack SC

Date24 December 2007

PlaceBrisbane

Decision For reasons given orally at the hearing, the Tribunal sets aside the decision under review and substitutes a decision that so much of the compensation payment received by Mr Adams as would entitle him to be paid disability support pension from the date of its cancellation in July 2007 be treated as not having been made.

................Signed...........

Deputy President

CATCHWORDS

SOCIAL SECURITY – disability support pension – discogenic disease of the back – discretion to shorten preclusion period – special circumstances apply to applicant due to high legal fees, poor health and poor financial position – respondent’s argument that applicant is unable to live within financial means rejected – decision under review set aside – payments received by applicant since July 2007 be treated as not having been made – ongoing payments continue to be made to applicant

Social Security Act 1991 (Cth.) – Part 3.14, s1184K(1)

Groth v Secretary, Department of Social Security (1995) 40 ALD 541

WRITTEN REASONS FOR DECISION

24 December 2007 Deputy President P E Hack SC    

1.This is an application by Mr Thomas Adams to review a decision made by Centrelink on 2 July 2007 to preclude him from being paid disability support pension until 29 February 2008. Mr Adams says that his circumstances are such as warrant the exercise of a statutory discretion to shorten the preclusion period. I agree. My reasons for reaching that conclusion follow. 

2.The facts are not greatly in dispute. Mr Adams is aged 57 years. He is married. He has worked as a truck driver for most of his working life. In the course of his employment, he injured his back and became entitled to lump sum compensation. His claim for compensation was settled on 26 June 2007 by a payment to him of $100,000 after the refund to WorkCover Queensland of $26,790.51 that had been paid to him in periodic compensation between the time he ceased work and settlement of the claim. 

3.The sum of $100,000 was disbursed as follows: Medicare refund, $2,473.95; Centrelink refund, $10,132.08; solicitor’s costs, $32,564.77; loan repayment, $28,267.81. The balance of $26,561.39 was paid to Mr Adams. The loan repayment was made to discharge loans taken out by Mr Adams – at, if I may say so, exorbitant interest rates – while he was awaiting settlement of his compensation claim.

4.At the time of the settlement of the claim, Mr Adams and his wife were living in rented accommodation and paying rent of $310 per week. They had earlier been living in accommodation at $240 a week, but at that accommodation he was required to pay electricity as well. The new accommodation had the benefit that it had a lift, and the benefit of that was that neither Mr Adams nor his wife can manage stairs particularly well. I will deal with that in more detail shortly. 

5.Having received the balance of this settlement sum, Mr Adams used most of it to purchase a caravan for $18,500, and to effect repairs to his motor car in order the tow the caravan. His intention was to use the caravan as accommodation in order to cut down considerably on the weekly rent costs. The rent on the unit that he and his wife were occupying was set to increase to $350 weekly in September 2007 had they renewed the lease and stayed in that unit. 

6.Mr Adams is in poor health. He has discogenic disease of his back.  As a result, he cannot walk, kneel, stand or sit for any length of time. He is unable to sleep due to chronic ongoing pain, and has been treated for depression. Mr Adams was assessed prior to the settlement as being qualified to receive disability support pension, and there is no doubt that, but for the preclusion period, he would be entitled to be paid that pension again. 

7.Mrs Adams is also in poor health. She has injuries to both knees, and has recently undergone surgery for knee replacement on two occasions. Neither she nor Mr Adams can manage steps, and her condition makes it preferable that she reside in a warm climate. 

8.I should mention briefly the scheme of the legislation that is in play when recipients of Social Security benefits receive lump sum compensation payments. The legislation is aimed at preventing those receiving compensation for loss of income from receiving benefits from the public purse where the lump sum settlement includes a component of economic loss. Part 3.14 of the Social Security Act 1991 has the effect that 50 per cent of the lump sum is taken to be for lost earnings or lost capacity to earn. This amount is the compensation part of the lump sum.  This sum is then used to calculate a period of time when the person will not be eligible to receive Centrelink payments, with some exceptions. This is called the “preclusion period”.

9.If, during the preclusion period, the person has received Centrelink payments, then the Social Security Act creates a statutory charge over the settlement funds to the extent of the payments made. The licensed insurer is obliged to pay the amount of the charge to Centrelink in priority to payments to the person entitled to the benefit of the settlement. Thus, in the case of Mr Adams, the amount of $10,132.08 was refunded by WorkCover Queensland to Centrelink out of the settlement sum, representing amounts paid to Mr Adams during that part of the preclusion period that had passed. 

10.That figure was based upon a preclusion period from 30 September 2006 to 29 February 2008 which was determined by Centrelink on 2 July 2007. Mr Adams was notified of that decision, and the effect on his entitlement to receive disability support pension, by a letter dated 2 July 2007. Mr Adams sought internal review of the decision but it was affirmed. It was affirmed on external review to the Social Security Appeals Tribunal on 24 September 2007. Mr Adams lodged this application on 16 October 2007.

11.I should at this stage indicate that the matter has come on for hearing quite rapidly. There was a telephone conference conducted involving Mr Adams, a representative of Centrelink, and one of the Tribunal’s Conference Registrars on Friday of last week. As a consequence of that, the Conference Registrar raised with me the possibility of conducting an urgent hearing, which has been able to be undertaken today. I am grateful to Mr Hamilton for his willingness to do so. 

12.I should, however, add that Mr Hamilton formally submitted that the hearing had come on faster than the Secretary would have wished, although I indicate that that submission was made at the conclusion of the hearing. Mr Hamilton was not able to point to any prejudice that the Secretary might have suffered as a consequence of the hearing, although he indicated that, if given an opportunity, he would seek written instructions as to what that prejudice might be.

13.As it seems to me, a party who wishes to contend that they have been prejudiced by a hearing coming on too quickly at least bears some obligation to formulate and articulate the prejudice in advance of the hearing, rather than seek a further adjournment in order to determine what that prejudice might be. The obvious kinds of prejudice – inability to ascertain or locate witnesses, and such like – seem not to have any relevant in the present case. In any event, to the extent that Mr Hamilton might be thought on behalf of the Secretary to be applying for an adjournment, I refused to grant the adjournment. 

14.There is no issue in the present case about the application of the statute in imposing the preclusion period. It is not suggested by Mr Adams that it has been incorrectly calculated. What is in issue is the operation of s 1184K(1) of the Social Security Act. That section enables the Secretary to treat the whole or part of a compensation payment as not having been made if the Secretary thinks it is appropriate to do so in the special circumstances of the case. Mr Adams seeks to have this Tribunal exercise that discretion in his favour.

15.The expression “special circumstances” is used in a variety of contexts in the Social Security Act. The jurisprudence regarding its meaning suggests that the expression is not capable of precise or exhaustive definition. In Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545, Keiffel J spoke of the requirement for circumstances that distinguish the particular case from others to take it out of the usual or ordinary course. There are, in my view, a number of features of the present case that collectively do make it truly special. I list them in no particular order.

16.First, the level of legal fees seems to me to be quite high. I have no means of knowing what legal work was performed; however, I infer for the form of release and discharge, that proceedings had not been commenced. In those circumstances, I have the distinct impression that legal costs of $32,564.77 are unusually high when the gross settlement was $126,790.51. 

17.Next, there are the circumstances that both Mr and Mrs Adams are in very poor health. I accept that, without more, Mr Adams’ poor health would not ordinarily amount to a special circumstance, given that all recipients of disability support pension are, by definition, in poor health, but it, and Mrs Adams’ poor health, go towards the overall picture.

18.Next, there is the fact that Mr Adams’ present financial position is distinctly unpromising. He and his spouse live on an income of $234 per week, which he receives by way of way of weekly compensation payments. He has an expenditure of $100 per month on insurance on the caravan and motor car. He makes, or is at least obliged to make, repayments of $197 per month to service the interest cost on a loan of $5,000. Ordinarily, he pays $60 per month for a telephone, which could not in any view be regarded as a luxury given the medical condition of both he and his wife, although his telephone bill is at present significant in arrears, and he has a debt of some $393. He cannot afford at the present to park the caravan in what might be described as a legitimate site because he cannot at present afford to pay site fees. He, at the moment, is parking the caravan on the side of the road whenever they are able to find a place to park.  Both he and his wife have a continuing need for medical attention and visit doctors at least once a week or fortnight. 

19.The matter had earlier been determined against Mr Adams on the basis that he had deprived himself of the opportunity to use the remnants of his compensation by buying the caravan. That, I must say, is an unattractive argument, and Mr Hamilton, very fairly, does not press it here. The argument that Mr Hamilton presses is that, on the material, Mr Adams has shown not to have been able to live within his means before he received the compensation settlement, and that he is unlikely to be able to do so even if disability support were restored.

20.Even if I were to accept that argument, it seems to me not to point against the existence of special circumstances, but rather to support the fact that someone with Mr Adams’ limited financial management skills qualifies even more the adjective “special”. But, it is unnecessary for me to reach a concluded view about that. Special circumstances are circumstances that take the matter out of the usual course. It is not to the point, as it seems to me, that Mr Adams’ financial track record is such that he may continue to be in financial difficulty. The removal of the preclusion period will, undoubtedly, alleviate some of the financial pressure that Mr Adams is presently under. It is a matter for him to seek assistance with managing his finances – and there are many worthy community organisations that, I am sure, could assist him in that regard – but the fact that he has in the past not been a good financial manager does not detract from the overall conclusion that his circumstances are special. 

21.Mr Hamilton also submitted that, if the caravan were taken out of the picture – that is, if it were no longer to be pressed that it ought to be sold, the argument that attracted earlier decision makers – Mr Adams still has a motor car which is capable of being sold. That argument I also find unattractive but, more importantly, it is unrealistic. The medical condition of both Mr and Mrs Adams is such that they require a motor car in order to travel for medical treatment and, more importantly, Mr Adams cannot take the risk of leaving the caravan immobile in a circumstance where he has no lawful right to park the caravan. 

22.Having regard to Mr Adams circumstances, I am well satisfied that they do deserve the description “special”. I would, in those circumstances, set aside the decision under review and substitute a decision that so much of the compensation payment received by Mr Adams as would entitle him to be paid disability support pension from the date of its cancellation in July 2007 be treated as not having been made. I intend by that that Mr Adams not be refunded any amount that was refunded to Centrelink out of the settlement sum, but that what I would describe as ongoing payments continue to be made to him. 

I certify that the 22 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President P E Hack SC

Signed:         ..................Signed....................................................
  Eleanor O’Gorman, Associate

Date of Hearing  24 December 2007
Date of Decision  24 December 2007
The Applicant appeared by telephone      
Solicitor for the Respondent     Departmental Advocate