Allan and Department of Family and Community Services
[2002] AATA 612
•26 July 2002
DECISION AND REASONS FOR DECISION [2002] AATA 612
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q2002/17
GENERAL ADMINITRATIVE DIVISION )
Re JANE ALLAN
Applicant
And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION
Tribunal Mr IR Way, Member
Date26 July 2002
PlaceBrisbane
Decision The Tribunal sets aside the decision under review and in substitution therefor determines that the social security benefit paid to the applicant during the period 1 July 1998 to 3 February 2000 is not recoverable from the applicant.
....................(Sgd)....................
Mr IR Way
Member
CATCHWORDS
SOCIAL SECURITY – youth allowance – lump sum settlement received for injuries arising out of motor vehicle accident – preclusion period – date of commencement of preclusion period - whether youth allowance paid to applicant can be recovered
Social Security Act 1991
Medlin v The State Government Insurance Commission (1994) 182 CLR 1
Thiele v Commonwealth (1990) 22 FCR 342
REASONS FOR DECISION
26 July 2002 Mr IR Way, Member
This is an application by Jane Allan ("the applicant") for review of a decision of a delegate of the Secretary, Department of Family and Community Services ("the respondent") dated 31 May 2001, affirmed by a decision of the Social Security Appeals Tribunal ("SSAT") on 19 November 2001, to recover from the applicant youth allowance paid to her during the period 1 July 1998 to 3 February 2000 in the sum of $8,737.11.
The Tribunal had before it the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (T1-T3 and S1-S2). The applicant gave oral evidence.
BackgroundThere is no dispute between the parties about the background facts in this matter. In light of this and on the material before it, the Tribunal finds as follows.
(a)The applicant was born on 18 October 1975.
(b)The applicant was seriously injured in a motor vehicle accident on 11 May 1997.
(c)At the time of her accident, the applicant was enrolled full-time in a physiotherapy bachelor degree course at the University of Sydney. The applicant commenced these studies in 1996.
(d)The applicant successfully completed her studies at the end of 1999.
(e)On 16 May 2001 the applicant accepted a settlement lump sum compensation payment of $285,000 in respect of her motor vehicle damages claim.
(f)The applicant was in receipt of a social security benefit of $8,737.11 during the period from 1 July 1998 to 3 February 2000.
Contentions and Issues
Pursuant to the provisions of the Social Security Act 1991 ("the Act"), the applicant does not dispute the respondent's calculations in respect of the compensation part of the applicant's gross settlement payment. The applicant accepts that the respondent has correctly calculated the applicant's preclusion period of 253 weeks.
This matter is contested in respect of the correct date for the commencement of the preclusion period applicable to the applicant. The applicant accepts that if the preclusion period begins on the date of the applicant's motor vehicle accident, clearly the social security benefit of $8,737.11 subsequently paid to the applicant is recoverable. However, the applicant submits that the correct date for commencement of the applicant's preclusion period is after the applicant completed her studies and, as such, the benefit of $8,737.11 is not recoverable.
The relevant provisions of the Act, Section 1165(7) (now contained in the same terms in Section 1170(3) of the Act) are:
"The new lump sum preclusion period is the period that:
(a)begins on the day on which the loss of earnings or loss of earning capacity began; and
(b)ends after the number of weeks worked out under subsections (8) and (9)."
Applicant's evidence
The applicant told the Tribunal that she enrolled in 1996 at the University of Sydney (Cumberland Campus) in the 4 year Bachelor of Physiotherapy course. As a student she was in receipt of Austudy (later youth allowance). Towards the end of the first semester of her second year, on 11 May 1997, she suffered a serious motor vehicle accident which, among other things, fractured her left arm, damaged her right arm, chipped her teeth and caused facial cuts and damaged her lumbar disc.
She told the Tribunal that the accident affected her studies in that she was hospitalised for a short period; had a fortnight home with bed rest; when she went back to her studies she needed a scribe to take notes in lectures; and that she had on occasions taken time off because of not being well enough to pursue her studies. Despite the handicaps and difficulties that she faced in catching up on her studies and clinical placements, she completed her degree within the prescribed time of four years and graduated with her peers.
The applicant said that she commenced her allocation year (internship) at Prince of Wales Children's Hospital early in 2000 at which stage she was paid wages and was no longer on social security benefits. The Tribunal notes that the applicant's youth allowance was cancelled on 6 December 1999 (because she did not meet the age requirement) and that she was then paid newstart allowance until 3 February when she commenced work at the Prince of Wales Hospital (S2/4). Furthermore, the Tribunal notes that the amount of $8,737.11 which the respondent wishes to recover comprises $7,011.26 youth allowance and $1,725.85 newstart allowance paid to the applicant during the period 1 July 1998 to 3 February 2000 (S2/5).
It was the applicant's evidence that she had difficulty in undertaking the heavier tasks required of her as a qualified physiotherapist because of her injuries and could not maintain a full workload. She said she used all of her sick leave entitlement and in about mid-2000 had to take three to four weeks of unpaid sick leave.
By the end of 2000 she realised she was not well enough to continue working as a physiotherapist and decided to change direction and undertake medical studies. She said that she then ceased work and in early 2001 commenced studies with a view to passing the entry tests for medicine at the University of Sydney. Later in the year the applicant told the Tribunal that she became involved in court proceedings in respect of her motor vehicle damages claim. She told the Tribunal that after three days in court the matter settled on 16 May 2001 and she received a settlement of $285,000 inclusive of costs. She said that after meeting various costs she then had approximately $160,000 left.
It was the applicant's evidence that she did not achieve the required standard in admission tests for medicine at the University of Sydney at her first attempt but later did so and was now awaiting further advice about admission to the University.
The applicant told the Tribunal that when she first failed in her attempt to enter medicine she went overseas to stay with a cousin in London and paid for the trip from savings from the wages she received during her allocation year.
She said she initially put the money she had left from her compensation payment into a term deposit and subsequently invested in a property where she now lives. She said that if she is admitted to medicine at the University of Sydney, she will sell her property to meet costs.
In cross-examination the applicant said that prior to becoming a student she had worked in K-Mart and a video shop. As a student she said she was not working at the time of the motor vehicle accident and that subsequently she had been offered a part-time position in the University cafeteria but had not taken up this position.
The Tribunal notes that the applicant in her request for review stated:
"I wish to apply to the Administrative Appeals Tribunal to review the decision made by Centrelink to impose a charge of $8,737.11 as payback of Youth Allowance received while I was a full time student. I have already applied to the Social security Appeals Tribunal to change the decision but my appeal was not successful. … I have been informed of my further right of appeal to the Administrative Appeals Tribunal.
Why I believe the decision is incorrect:
When I was a University student studying Physiotherapy full time (1996 – 1999) I initially received some AUSTUDY allowance which later changed to Youth Allowance.
On May 11 1997 I was injured in a serious motor vehicle accident as a passenger in a not at fault car.
I required extensive medical treatment and intermittent hospitalisation over six months. Medical consultations and treatments are ongoing.
I still desperately wanted to be a Physiotherapist and with support from Student Welfare Services at the University of Sydney and understanding from my lecturers, I continued my studies. I caught up on missed assignments and Clinical Placements during University breaks so I could graduate with my peers in 1999. This was not easy for me as I continue to suffer from my injuries requiring much time at medical appointments and undergoing medical procedures.
I completed my Hospital Allocation Year in 2000 with assistance from colleagues and staff members.
In my Motor Vehicle Damages Claim I was unable, due to Government Legislation, to claim economic loss for the period I was a full time student.
My claim for past economic loss was only able to be made for wages lost when I was forced to take unpaid sick leave when my injuries prevented me working in the short period I was employed after graduating from University until my case was heard.
My major claim was for future economic loss. It has become clear that the physical nature of my chosen career and the impact of my injuries puts myself and my patients at risk. With counselling from workplace Occupational Therapist Suzanne Ravagnani I have decided to retrain. This payment is to help cover the substantial cost of retraining and future loss of income during this period and into the future.
My compensation payment did not, and could not according to Government Legislation, include any component for economic loss during the period I was a student.
All costs had to be paid from the Judgement Amount. These were considerable.
Centrelink and Social security personnel have advised me there is an anomaly between the Social Security Legislation in respect of Youth Allowance and Motor Vehicle Accident Compensation.
I have spoken with my local member, Mr Ian Causley, who has advised me the Legislation was not intended to recover Allowances such as I received, but rather to recover Sickness Benefit which is able to be claimed as part of a Motor Vehicle Damages Claim.
I did not receive Sickness Benefit.
I received no compensation in the Judgement Amount for the period I was a full time student.
…
As my compensation payment did not include any component for economic loss for the period I was paid AUSTUDY and Youth Allowance as a student, I consider it is unfair and unjust that I have to repay that amount.
As I am disadvantaged by the effects of the Legislation, I request you please review the decision of Centrelink to impose a charge and that it be withdrawn."
Submissions
It was submitted for the applicant that in this matter there is a choice of dates for the commencement of the preclusion period, namely on the date of the accident or at a date after the applicant completed her university degree - the former being the date the applicant suffered a loss of earnings capacity, the latter being the time when the applicant suffered a loss of earnings.
It was contended that "loss of earnings" and "loss of earning capacity" are two very different concepts; that the phrases carry no special definition in the Act and therefore the meaning at common law should be adopted; that there is no indication in the Act as to which date should be applied; and that the provisions of the Act relating to preclusion periods should be considered literally and where there is a plain, natural and ordinary meaning in favour of the applicant, that meaning should be adopted.
In this matter it was contended therefore that the applicant first suffered a loss of earnings in mid-2001, the first date on which she took unpaid sick leave while engaged in her first job, post-university, at the Prince of Wales Hospital. That being so, it was submitted that the applicant's preclusion period must begin on a day after the period during which she was paid a social security benefit and therefore there is no amount of compensation-affected payments to be recovered from the applicant.
The initial response of the respondent highlighted the absence of any Statement of Facts and Contentions and Statement of Issues from the applicant and that as a result the respondent was not fully prepared to respond to the applicant's submissions. Having heard submissions from both parties, the Tribunal directed the respondent to lodge written submissions with the Tribunal and the applicant by 17 June and that the applicant subsequently lodge with the Tribunal and the respondent any written reply by 28 June 2002.
In written submissions the respondent stated that the applicant's evidence was that she undertook a number of casual jobs during her studies prior to the accident including having obtained a position as a waitress in a café at the university at the time of the accident and therefore the applicant experienced both a loss of earnings and a loss of earnings capacity from the date of the motor vehicle accident. As such, it was submitted that the lump sum preclusion period should begin on the day of the motor vehicle accident and therefore the decision under review should be affirmed.
It was further submitted that if the Tribunal were to find the applicant only experienced a loss of earning capacity on the date of the accident, then pursuant to subsection 1165(7) the lump sum preclusion period would still begin on the day of the motor vehicle accident.
The respondent submitted:
"2.The inclusion of the word 'or' in paragraph 1165(7)(a) suggests that 'loss of earnings' and 'loss of earnings' capacity can both occur separately, that only one may occur, and that they can occur concurrently.
3.Therefore, if it found that 'loss of earnings' and 'loss of earning capacity' occurred at different times, the determination of when the lump sum preclusion period begins, requires a detailed examination of the case as to the appropriate date.
4.The determination of this issue should not be based on a 'favourable' interpretation for the Applicant. Rather, what is appropriate in each case."
In the alternative, it was submitted:
"1.If the Administrative Appeals Tribunal finds that Ms Allan only experienced a 'loss earning capacity' from the date of the accident and that, in this case, the lump sum preclusion period starts when 'loss of earnings' occurred, that Ms Allan suffered a 'loss of earnings' from the date she finished her studies and was paid Newstart Allowance, 6 December 1999.
2.At the hearing Ms Allan gave evidence that because of the injuries which resulted from her accident her degree took longer to finish and she was required to undertake some of the practical requirements of her course during her holidays. Ms Allan was prevented from immediately undertaking employment following her studies as a result of her accident. Therefore she experienced a 'loss of earnings' at this time.
3.Pursuant to section 1165(7) the lump sum preclusion period for Ms Allan commenced on 6 December 1999."
Considerations
The Tribunal notes that the decision under review refers to recovery of youth allowance in the sum of $8,737.11 paid to the applicant during the period 1 July 1998 to 3 February 2000. The Tribunal is satisfied that during this period the applicant received social security benefits consisting of $7,011.26 youth allowance and $1,725.85 newstart allowance (total $8,737.11), and that this amount is the correct amount to be considered as a compensation-affected payment pursuant to subsection 17(1) of the Act.
As indicated above, it is common ground that the applicant received a lump sum payment of $285,000 on 16 May 2001 as a result of settlement of her motor vehicle damages claim and the Tribunal so finds. As a result of the lump sum payment of $285,000 the respondent has calculated the compensation part of this payment to be $142,500 and the relevant preclusion period to be 253 weeks (T17/59). The applicant accepts this calculation as correct and in light of this, and on the evidence before it, the Tribunal so finds.
Turning then to the central issue in this case, namely the correct interpretation of that part of subsection 1165(7) of the Act which states that a lump sum preclusion period "begins on the day on which the loss of earnings or loss of earning capacity began".
It is common ground between the parties and the Tribunal accepts that it should not look to a settlement document to determine when the applicant suffered a loss of earnings. The Tribunal accepts the applicant's submission that what is relevant in this matter is the date upon which the applicant actually suffered a loss of earnings or a loss of earning capacity, as the case may be.
After consideration of all of the material before it and the submissions of both parties, the Tribunal finds:
(a)that the applicant was not employed, nor was employment offered to the applicant at the time of her accident;
(b)that the applicant did not suffer a "loss of earnings", as a result of her accident while she was still a student at the University of Sydney;
(c)that the applicant suffered a loss of earning capacity at the time of her accident;
(d)that despite her accident the applicant made up studies during holiday periods and graduated at the same time as her peers and commenced paid employment in her allocation year as a physiotherapist at the same time as her classmates;
(e)that the applicant undertook unpaid sick leave from her work at the Prince of Wales Hospital for a period of approximately four week in mid-2001;
(f)that the applicant suffered a loss of earnings, in mid-2001, as a result of her motor vehicle accident.
With respect to the interpretation of subsection 1165(7), the Tribunal has formed the view that a lump sum preclusion period can begin on the day on which the loss of earnings began or the day on which the loss of earning capacity began. In this respect the Tribunal accepts the respondent's submission in that:
"2.The inclusion of the word 'or' in paragraph 1165(7) suggests that 'loss of earnings' and 'loss of earnings' capacity can both occur separately, that only one may occur, and that they can occur concurrently.
3.Therefore, if it found that 'loss of earnings' and 'loss of earning capacity' occurred at different times, the determination of when the lump sum preclusion period begins, requires a detailed examination of the case as to the appropriate date."
In so doing the Tribunal notes what the High Court said in Medlin v The State Government Insurance Commission (1994) 182 CLR 1 at 4:
"Nor are we persuaded that, in dealing with the plaintiff's claim as presented at first instance in the present case, the learned trial judge (Debelle J) lost sight of the fact that in an action in negligence in this country an injured plaintiff recovers damages for loss or impairment of earning capacity as distinct from the direct recovery of past or future lost earnings." [Emphasis added]
The central question in this matter is which of the two dates should apply, the date of the motor vehicle accident (11 May 1997) or the time at which the applicant suffered a loss of earnings (mid-2000).
There is no indication in the legislation as to which of the two dates should be applied and the Tribunal accepts the applicant's submission that within the context of the Act being beneficial legislation, ambiguous provisions should be interpreted in a manner favourable to those who benefit from the legislation (see Thiele v Commonwealth (1990) 22 FCR 342 at 346).
Further, the Tribunal accepts the applicant's submission that "the provisions relating to preclusion periods should be considered literally, and where there is a plain, natural and ordinary meaning in favour of the Applicant, that meaning should be adopted".
After consideration of all the material before it and the submissions of both parties and in light of the above findings, the Tribunal finds that the date of the applicant's preclusion period begins mid-2000 and as such no amount of compensation-affected payments may be recovered from the applicant.
The Tribunal sets aside the decision under review and in substitution therefor determines that the social security benefit paid to the applicant during the period 1 July 1998 to 3 February 2000 is not recoverable from the applicant.
I certify that the 36 preceding paragraphs are a true copy of the reasons for the decision herein of Mr IR Way, Member
Signed: Sarah Oliver
AssociateDate of Hearing 7 June 2002
Date of Decision 26 July 2002
Counsel for the Applicant Ms CC Heyworth-Smith
Solicitor for the Applicant Welfare Rights Centre Inc
Solicitor for the Respondent Mr Z McEwan, Departmental Advocate
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