Andonia Glover and Secretary, Department of Families, Community Services and Indigenous Affairs
[2010] AATA 136
•24 February 2010
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2010] AATA 136
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2009/2977
GENERAL ADMINISTRATIVE DIVISION ) Re Andonia Glover Applicant
And
Secretary, Department of Families, Community Services and Indigenous Affairs
Respondent
DECISION
Tribunal Professor RM Creyke
Senior MemberDate24 February 2010
PlaceCanberra
Decision The decision under review is affirmed. The Applicant’s disability support pension debt of $5325.22 has correctly been calculated and the compensation preclusion period from 23 October 2008 to 5 August 2009 has not been disregarded.
.......................[sgd]..................
Professor RM Creyke, Senior Member
CATCHWORDS
SOCIAL SECURITY – whether Applicant received Disability Support Pension when not eligible – whether lump sum preclusion period should be applied – whether preclusion period correctly calculated – if so, whether “special circumstances” warranted disregarding the compensation payment and removing the preclusion period – Applicant’s financial circumstances, health issues and special responsibilities for her son do not warrant exercise of waiver discretion – decision under review affirmed.
Social Security Act 1991 (Cth) ss 17, 1169, 1170, 1173, 1178, 1180, 1181, 1183, 1184F, 1184K, 1223, 1237A, 1237AAD
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Re Groth and Secretary, Department of Social Security (1995) 40 ALD 541
Re Ivovoic and Director-General of Social Services (1981) 3 ALN N95
Re Angelakos and Secretary, Department of Employment and Workplace Relations [2007] FCA 25
Re Krzywak and Director-General of Social Services (1988) 15 ALD 690, 700
Re Zaccardi and Secretary, Department of Social Security (1995) 40 ALD 760
Re Colaiacolo and Secretary, Department of Social Security [1985] AATA 91
Re Dranichnikov and Centrelink [2003] FCAFC 133
Secretary, Department of Social Security v Hulls (1991) 22 ALD 570
Secretary, Department of Family and Community Services v Allan (2001) 66 ALD 14724 February 2010 REASONS FOR DECISION
Professor RM Creyke
Senior MemberBackground
1. Ms Glover was receiving disability support payment from 5 July 2006. She was encouraged by Centrelink to seek employment and did so. However, on 14 March 2008 she was injured at work. From 11 June 2008 until 22 October 2008 she was paid weekly compensation payments and on 17 November 2008 she received a lump sum compensation for her injury. During this period, Ms Glover continued to be paid disability support pension.
2. These events affected her disability support pension. The chronology of Centrelink's decisions in this matter is as follows:
· On 18 December 2008 a decision was made to raise and recover an overpayment of disability support pension of $5,370.24 for the period 11 June 2008 to 22 October 2008.
· On 9 January 2009 a decision was made to recover $3,146.55 overpaid as disability support pension for the period 23 October 2008 to 7 January 2009, and to impose a compensation preclusion period of 50 weeks from 23 October 2008 until 7 October 2009, based on an amount of $78,366 (comprising a lump sum payment of $64,000.00 and costs of $14,366.00).
· On 9 January 2009 Ms Glover was also advised in a separate decision that her disability support pension was cancelled.
·On 14 January 2009, Ms Glover was advised that the decision of 18 December 2008 (an overpayment of $5,370.24) was affirmed. On 13 January 2009, Ms Glover had requested a review because she queried the compensation amount of $903.30 per week on which the overpayment was based, claiming she received less than $700.00 per week.
· On 16 January 2009, Ms Glover was advised that the decision made on 18 December 2008 regarding the overpayment was changed and the debt was $5,325.22.
· On 30 January 2009 Centrelink affirmed the decision of 9 January 2009 that the overpayment for the period 23 October 2008 to 7 January 2009 was $3,146.55. In the same decision, Centrelink affirmed the decision of 9 January 2009 to impose a compensation preclusion period from 23 October 2008 to 7 October 2009.
·On 3 March 2009, the decision to raise and recover an overpayment of $5,325.22 was affirmed by an authorised review officer (ARO). However, the 'screen dump' document shows that the commencement of the period was altered from 29 May 2008 to 11 June 2008. Nonetheless, the first paragraph of the letter from the ARO to Ms Glover, dated 3 March 2009, still referred to the period as 29 May 2008 to 29 October 2009. On page 4 of that letter, however, the period is correctly shown as 11 June 2008 to 22 October 2008. That letter also stated that the periodic compensation amounts paid to Ms Glover were $891.08 gross per week from 11 June 2008 to 18 August 2008 and $903.38 gross per week from 19 August 2008 to 22 October 2008.
·On 4 March 2009, another ARO affirmed the decision of 9 January 2009 to impose a compensation preclusion period from 23 October 2008 to 7 October 2009. The reasons also explained that the total amount recovered by Centrelink, $13,465.80 , from the lump sum compensation payout, comprised:
o $3,146.55 for overpayment of disability support pension in the preclusion period 23 October 2008 to 7 January 2009;
o $5,325.22 for overpayment of disability support pension while Ms Glover was receiving periodic compensation payments in the period 11 June 2008 to 22 October 2008;
o $4,600.00 for an earlier debt raised on 15 February 2001 of which Ms Glover had been notified; and
o $394.03 for the balance of another earlier debt which had not been fully repaid and of which Ms Glover was notified on 15 February 2001.
3. The Social Security Appeals Tribunal (SSAT) upheld the decision on 19 May 2009 to raise and recover 'an overpayment of disability support pension in the amount of $5,325.22 for the period 29 May 2008 to 29 October 2009'. The SSAT set aside the decision to impose a compensation preclusion period from 23 October 2008 to 7 October 2009 based on an amount of $78,366.00 (which included costs of $14,366.00) and remitted the matter to Centrelink for reconsideration based solely on the lump sum compensation payment of $64,000. Following the SSAT decision, the compensation preclusion period was recalculated to end on 5 August 2009.
4. Ms Glover sought further review by the Tribunal. The matter was heard on 22 January 2010. Ms Glover has been receiving disability support pension since 7 August 2009.
Legislation
5. The relevant legislation follows is set out in the Appendix.
Issues
6. The issues arising in this case are:
- whether Ms Glover received disability support pension for the period 11 June 2008 to 22 October 2008, when she was not eligible for that pension;
- if so, whether the amount overpaid was a debt;
- if so, what was the amount of that debt;
- if so, whether some or all of that debt should be recovered;
- whether a lump sum preclusion period applied to Ms Glover as a consequence of her receiving a lump sum compensation settlement;
- whether the compensation preclusion period had been correctly calculated; and
·if so, whether there were special circumstances that warrant disregarding all or part of the compensation payment and so reducing/removing the compensation preclusion period.
History
7. Ms Glover started work early in 2008 at a snack bar in Mitchell, ACT. She was injured at work on 14 March 2008, an injury for which she claimed workers’ compensation. The claim was settled on 17 November 2008 for $64,000, plus costs. On 16 December 2008, costs were determined as $14,366.
8. On 11 June 2008, CGU, a compensation insurer, commenced payment of periodic payments to Ms Glover. The amounts shown are:
Period Paid amount (wages) Tax amount
11/6/08 to18/8/08 $7,398.67 $1,334.00
19/8/08 to 1/9/08 $1,530.76 $ 276.00
2/9/08 to 14/9/08 $1,377.68 $ 248.40
15/9/08 to 28/9/08 $1,440.76 $ 366.00
29/9/08 to 12/10/08 $1,440.76 $ 366.00
13/10/08 to 22/10/08 $1,152.60 $ 292.80Total $14,341.23 $2,883.20
9. In the period 11 June 2008 to 22 October 2008, Ms Glover was also receiving disability support pension. Centrelink claimed Ms Glover had not declared she had received fortnightly compensation payments in this period. Ms Glover also had earlier debts owed to Centrelink.
Evidence from Hearing
10. Following her injury at work, Ms Glover made a successful workers’ compensation claim on 25 May 2008. Subsequently, she received periodic compensation payments from 11 June 2008 to 22 October 2008, and a lump sum compensation settlement was made on 17 November 2008.
11. Ms Glover stated that before she started receiving compensation payments, and while she was still working at Mitchell, she visited the Centrelink office at Queanbeyan, NSW and informed a staff member called Clinton that she was working. She recalls going into Centrelink every Friday after work, because she said she was paid in cash in a money bag, and showed Clinton the amounts she had received. She did this, she said, because her employer was not paying tax and he provided Centrelink with an incorrect amount for her pay. She said Clinton told her she had work credits which meant that she was allowed to earn a certain amount before it affected her Centrelink payments.
12. Ms Glover also said that she told Clinton she had had an accident, and Clinton told her to take proof of compensation payments to Centrelink once payments commenced. When she did so she said the Centrelink staff refused to copy her payment slip from the insurer. She said that she tried to insist but the Centrelink staff continued to refuse her request. Her father was with her and after an argument, he suggested they leave and she did so without copying the documents. Her recollection is that this was towards the end of July 2008, but she has no evidence of these events. There was also no evidence that Ms Glover made any further attempt to notify Centrelink of her compensation payments.
13. The Centrelink representative said at the hearing that they had rung Centrelink in Queanbeyan but Clinton no longer worked there, and given the time lapse and the number of customers he would have seen while he worked there, it was unlikely that he would recollect the events recounted by Ms Glover. Ms Glover said she has no information about his whereabouts. No evidence has been provided by Centrelink to corroborate these events. The representative from Centrelink said the agency had no information about her periodic payments of compensation until CGU Insurance sent them information on 17 November 2008. Ms Glover said she never lied to Centrelink and the Tribunal has no reason to doubt that statement, nor the honesty of the witness.
14. Centrelink sent letters to Ms Glover, dated 11 July 2007 and 9 July 2008, informing her that she must advise Centrelink within 14 days if she received (or expected to receive) compensation.
15. Ms Glover agreed that she had orally accepted a settlement of her claim for compensation on 17 November 2008. The deed of release is dated 16 December 2008, which is the date on which costs were agreed. The figure shown in the deed of release is $64,000.00 compensation, plus costs. The amount of the costs was $14,366.00. Centrelink was notified of the settlement on 16 December 2008.
16. Certain monies were taken out of this amount before the balance was paid to Ms Glover. Her solicitor advised her by letter dated 23 January 2009, that following deductions from the $64,000.00, the balance payable to Ms Glover was $42,320.28. The deductions included: $468.90 for Medicare; $3,146.55 for repayments to Centrelink; a repayment to Centrelink of the disability support payments received between 11 June 2008 and 22 October 2008 and of earlier debts totalling $10,364.27; solicitor/client costs of $7,000 and the GST component of $700 to the Australian Tax Office.
17. Ms Glover said she had outstanding debts and necessary expenditure at that time which means she has spent the $42,320.28 that she received. These expenditures included:
- $2,200.00 owed to her mother;
- $3,000.00 repayment to her credit card;
- $19,990 purchase of a new car;
- $2,970.00 for her younger son Daniel's Year 12 schooling costs, including a uniform, a computer, wood for his woodworking classes and ingredients for his cooking classes;
- $3,000.00 repayment of a loan from a friend;
- $3,000.00 to a funeral director for headstones for her deceased twins;
- $120.00 shoes for Daniel; and
- $110.00 for polarised sunglasses for herself because of her vision problems.
oTOTAL: $34,390.00
18. Ms Glover says she has spent the remaining $8,000.00 or so during the period between 9 January 2008, when her disability support pension ceased and 5 August 2009, when she again became entitled to disability support pension. She had the following regular weekly payments:
· $90.00 rent per week;
· $120.00 to medical specialists (of which only $24.50 is refunded by Medicare);
· $65.00 (based on a monthly amount of between $100.00-$500.00) for medical expenses for Daniel;
· $125.00 on groceries; and
· $7.60 for visits to pool for her son.
oTOTAL: $407.60 per week, or $12,228 for the roughly 30 weeks she did not receive disability support pension.
Monies that Ms Glover received per week include:
- $76.50 family tax benefit; and
- $6.83 per month from her son’s father.
- TOTAL: $83.33 or $2,500.00 for 30 weeks.
19. The Tribunal estimates Medicare repayments would have amounted to approximately $1,500.00 in that period, leaving a balance of $8,228.00. That means Ms Glover did spend the balance on regular outgoings in that period.
20. She needs to spend $28,000.00 for dental work but no longer has the money. She has ceased her own hydrotherapy and physiotherapy treatments at $380.00 per week in November 2008, formerly paid for by CGU, as she cannot afford them. Ms Glover said her youngest son worked part-time for 11 months until he lost his job at the end of 2008. He earned about $70.00 a week, which she regarded as his money.
21. Ms Glover admitted in evidence that she knew there would be a preclusion period, as she had been advised by her solicitor. However, he had also told her there would be sufficient monies from the settlement for her to have her dentistry work done and for her medical treatment.
22. Ms Glover said she has Graves’ disease and lupus, for which she is receiving radiation therapy and chemotherapy. She also suffers from bleeding from the pancreas. She is under the care of several specialists. Over Christmas 2009, her multiple conditions caused her to spend a total of three weeks in hospital. On each of the four occasions she was admitted to hospital by ambulance, which cost her $550.00 per visit.
23. Ms Glover has degenerative arthritis in her spine. According to her physiotherapist, she also suffers ‘significant loss of movement of her cervical spine, shoulder and some loss of thoracic spine movement and forearm movement’ which ‘severely restricts her range of work options and duties now and in the near future.’
24. Ms Glover said she has two children, a son aged 21 who does not live at home and her youngest son, Daniel, aged 16, in year 12 in 2010, who has special education needs and has behavioural difficulties which require considerable effort on her part. Ms Glover said her son requires a special diet with preservative-free food.
25. She said she is distressed that she cannot afford any special treats for her younger son, nor has she been able to buy for herself lingerie, shoes or entertainment. Managing as a single parent in the circumstances she is facing, particularly given her own health concerns, is very difficult.
Consideration
Whether Ms Glover received disability support pension for the period 11 June 2008 to 22 October 2008 when she was not eligible for that pension?
26. The Centrelink Debt Calculator records indicate that Ms Glover was receiving disability support pension for the period 11 June 2008 to 22 October 2008. At the same time, Ms Glover was also in receipt of periodic compensation payments from CGU. In those circumstances, the periodic compensation payments are treated as ordinary income (s 1173(4)).[1] Receipt of ordinary income affects the amount of disability support pension a person is entitled to receive. Given the amount of compensation Ms Glover received during the period 11 June 2008 to 22 October 2008, Ms Glover was overpaid disability support pension in the amount of $5,325.22.
[1] References to sections in this decision are to the Social Security Act 1991 (Cth) (‘the Act’). See the Appendix to this decision.
27. Ms Glover was given a notice by Centrelink that she was liable to repay that amount (section 1180(1)). That amount of $5,325.22 was a 'recoverable amount' (section 1180(2)). In combination, sections 1180(2) and 1181 of the Act provide that Ms Glover is obliged to repay that amount. By section 1184F of the Act, the amount specified in a notice given under section 1180 is a debt to the Commonwealth. The notice sent to Ms Glover on 18 December 2008 was a notice for the purpose of section 1180 of the Act.
28. That means Ms Glover was not eligible to receive disability support pension in the period 11 June 2008 to 22 October 2008. As a consequence, Ms Glover had a debt to the Commonwealth.
If so, what was the amount of that debt?
29. Initially on 18 December 2008, the amount of the debt was calculated as $5,370,24, a decision affirmed on review on 14 January 2009. That decision was based on Ms Glover receiving weekly periodic compensation payments of $903.30 from 11 June 2008 to 22 October 2008. However, on 16 January 2009, Ms Glover was advised that the debt had been recalculated and was $5,325.22. That figure was based on a calculation that Ms Glover had received $891.08 for the period 11 June 2008 to 18 August 2008; and $903.38 from 19 August 2008 to 22 October 2008.
30. At the same time, the CGU figures for the wages component of the periodic compensation are set out at paragraph 8 of these reasons and indicate that from 19 August 2008, Ms Glover's payments varied each fortnight. The only exception is that for the two pay periods between 15 September 2008 and 12 October 2008 the amounts Ms Glover received were the same. Given the variation in these payments, the Tribunal sought further evidence as to why a fixed figure of $903.38 was assessed for the period 19 August 2008 to 22 October 2008, and whether the figure should be $903.30 or $903.38. In addition, the Tribunal sought confirmation that the debt should be $891.08 for 11 June 2008 to 18 August 2008.
31. Centrelink provided the Tribunal with the further information requested, and these documents contained the amounts Ms Glover received from the insurer, with tax included, and the methods of calculation of her debt for each fortnight. The Tribunal was satisfied that the calculations were correct. That meant the debt to Centrelink of $5,325.22 was correctly assessed.
If so, whether some or all of that debt should be recovered?
32. The debt is due to the Commonwealth. The amount should be recovered by the Commonwealth in accordance with section 1223 of the Act, unless there are grounds to write off (delay recovery) or waive the debt under either section 1237A of the Act or section 1237AAD of the Act. There is no issue about writing off the recovery of the debt since the amount has already been recovered from the lump sum compensation amount.
33. A debt may be waived under section 1237A if it is due solely to administrative error by the Commonwealth and the person received the payments in good faith. The administrative error must be the sole or only reason for the debt.[2] In Ms Glover's case, there is no indication that administrative error on the part of Centrelink caused the debt. She had been advised by Centrelink that if she received compensation payments she should notify Centrelink (sections 1182 and 1183 of the Act).
[2] See P Sutherland et al, Social Security and Family Assistance Law (2nd ed.) (2005), 603, which refers to Gerhardt v Department of Employment, Education and Training [1997] FCA 815.
34. Ms Glover had received a notice advising her of her obligation to inform Centrelink of any compensation payments she might receive (section 1182 of the Act). Although she claims to have tried, probably in July 2008, to notify Centrelink of these payments and they refused to photocopy her documentation, there is no evidence that Ms Glover informed Centrelink of her payments from CGU, nor can she supply any other evidence to prove her attempts to notify Centrelink. So despite accepting Ms Glover as a witness of truth, the Tribunal is not able to be satisfied that the failure to notify Centrelink of her payments did not contribute to the raising of the debt. There is also no evidence that Ms Glover queried the continuance of her disability support payments after she had attempted to inform Centrelink of her periodic compensation payments. In those circumstances, it was not solely administrative failure by Centrelink which contributed to the debt. Ms Glover's failure to notify Centrelink also did so.
35. Nor was the money received in good faith. Ms Glover did not take further steps after the events of July 2008 to notify Centrelink that she continued to receive disability support payments as well as her periodic compensation payments. For these reasons the Tribunal finds that there is no ground for waiving some or all of these payments under section 1237A of the Act.
36. Under section 1237AAD of the Act the debt may be waived provided it was not paid because Ms Glover knowingly made a false statement or a false representation; failed or omitted to comply with the Act or the Administration Act; there are no 'special circumstances'; and it is more appropriate to waive than to write off the debt. The requirement to decide whether it is more appropriate to waive than to write off is not relevant since the amount of the debt as discussed earlier, has already been repaid.
37. Taking those requirements in sequence, Ms Glover did not knowingly make any false statement or false representation to Centrelink. She has, as she said, never tried to lie to Centrelink. The Tribunal accepts that Ms Glover is a witness of truth. No payment has been made to Ms Glover because she misrepresented her position or made any untrue statements.
38. Ms Glover did not actually notify Centrelink she was receiving periodic compensation payments. The Tribunal accepts, however, that she attempted to do so when she took the CGU notification in to Centrelink to be photocopied. For these reasons it would not be possible to establish that she knowingly failed to notify Centrelink.
39. For there to be 'special circumstances', the circumstances must be unusual, uncommon or exceptional.[3] They do not have to be unique but they do need to have 'a particular quality of unusualness that permits them to be described as special'.[4] Specific factors which are commonly relied on are financial hardship, limited assets, how the lump sum was spent, and ill health.[5] Another circumstance in Mrs Glover's case is the needs of her younger son.
Financial hardship
[3] Re Beadle and Director-General of Social Security (1984) 6 ALD 1, 3. See also Re Groth and Secretary, Department of Social Security (1995) 40 ALD 541; Re Ivovic and Director-General of Social Services (1981) 3 ALN N95; Re Angelakos and Secretary, Department of Employment and Workplace Relations [2007] FCA 25.
[4] Re Beadle and Director-General of Social Security (1984) 6 ALD 1, 3. The finding was upheld generally on appeal by the Federal Court in Beadle v Director-General of Social Security (1985) 60 ALR 225 although Toohey J said he would place 'less emphasis on one dictionary definition of "special"' (at 230).
[5] P Sutherland, Annotations to the Social Security Act 1991 (2nd ed.) (2005), 510.
40. Financial hardship on its own is insufficient to qualify as special circumstances. The cases also indicate that financial hardship must go beyond 'straitened' circumstances and be truly exceptional.[6] As the Tribunal noted in Re Colaiacolo and Secretary, Department of Social Security:[7]
It is surely correct, on the basis of the evidence that the applicant and those members of his family still dependent on the combined incomes are by no means well off financially. However, I cannot escape the conclusion that straitened as the financial circumstances are, they are not exceptional. Even if they were, the Tribunal has previously ruled that the financial position of an applicant would not ordinarily constitute a 'special circumstance”: Re Beadle and Director-General of Social Security (1984) 6 ALD 1.
[6] Re Krzywak and Director-General of Social Services (1988) 15 ALD 690, 700; Re Zaccardi and Secretary, Department of Social Security (1995) 40 ALD 760.
[7] Re Colaiacolo and Secretary, Department of Social Security [1985] AATA 91, para 20.
41. Ms Glover’s evidence of her financial circumstances indicated considerable hardship, and she and her younger son have to go regularly without special treats. Nonetheless, the calculations in these reasons show that she had sufficient funds for her son's special diet and educational needs, including uniform and equipment for his woodwork and cooking classes. She is able to pay rent on her house. She is unable to pay for the work she requires for her teeth, nor for continuing hydrotherapy or physiotherapy for herself. At the same time, she is managing the essentials and her circumstances would not be considered exceptional. She is again receiving disability support pension.
Limited assets
42. Ms Glover rents her own home, and she has a car which cost $19,990. Her house is furnished, although she gave evidence that the furniture is worth very little. She subscribes to Foxtel and to the internet and she has a computer. In terms of her assets, she is, therefore, not in an unusual or uncommon position.
How lump sum was spent
43. Ms Glover gave detailed evidence, some of which was supported by evidence available to Centrelink, on how she spent the $42,320.28 she actually received. The balance of roughly $8,000.00 was expended on her regular living expenses during the period she was not receiving disability support pension. Ms Glover said that when she recommenced receiving disability support pension, backdated to 5 August 2009, she did not have any of the amount left.
44. It was clear from her evidence that Ms Glover had an expectation that she would receive the lump sum of $64,000 and she was disappointed not to do so. She also had an expectation that she had enough to meet her dentistry needs of $28,000.00, and her ongoing medical expenses. Those expectations were also not realised. At the same time, Ms Glover was told that the balance was only to be $42,320.28 and from that amount she needed to repay certain debts and loans as well as fees for her solicitor for the work completed on finalising the compensation claim. Ms Glover did spend $19,990 on a car, a significant amount, and she said her solicitor did tell her that she would face a compensation preclusion period. So she was aware that she needed to husband some of the remaining monies in order to live. Expenditure of that amount on a car is surprising in those circumstances.
45. In summary, given Ms Glover's assets, how she spent the lump sum compensation monies, and her financial circumstances during the period before recommencement of payment of disability support pension, the financial circumstances of Ms Glover are not so unusual or uncommon as to warrant exercise of the waiver power.
Poor health
46. Ms Glover is seriously ill. The Job Capacity Assessment Report dated 10 August 2006, summed up her conditions:
Client has two significant medical conditions [Lupus and; hypothyroidism or Graves’ disease]. Unfortunately, the treatment offered for both tend to conflict. Hence the medication required to stabilise her Lupus tends to stop the thyroid medication from being fully effective, hence the blood tests every 28 days to adjust her medication. The Lupus produces multiple effects such as rashes, headaches, Bells Palsey [sic], blurred vision, etc. The Graves’ produces fatigue, nausea, fluctuating weight and vomiting.
47. These conditions continue and are compounded by her bleeding from the pancreas, and her degenerative arthritis in the back. She has regular medical expenditure, although it can escalate periodically. Her admissions to the Canberra Hospital for three weeks over Christmas 2009 and the expenses of $2,200.00 on ambulance fees and several taxi fares of $66.00 a time for Daniel to visit her in hospital is an indication. Little evidence was provided about payments for her several medical specialists, nor for the regular chemotherapy and radiation therapy that she is receiving, although she estimated the cost of one specialist to be about $120.00 per week. She said her medical expenses can be $100 – $500 a month, including special shoes for her son. She needs sunglasses because of a vision deterioration associated with her major medical conditions. Again, however, Ms Glover, with the assistance of Medicare repayments, has managed to pay these sums and is not in straitened circumstances. She continues to receive disability support pension. On its own, her ill health and the special medical needs of her son would not amount to special circumstances.
Needs of her younger son
48. Ms Glover was receiving an allowance in respect of Daniel, but this ceased when he turned 16. Daniel has special needs. These clearly impose additional burdens on Ms Glover. However, apart from the extra financial demands for his schooling and for his medical expenses, those needs are being met. Ms Glover said she would dearly love to take Daniel on a holiday and to give him special treats. However, these kinds of expenditures are not of a nature which is intended to be covered by the waiver provisions.
Conclusion
49. On balance, and taking into account all the factors listed, the Tribunal does not consider that the circumstances in combination are so unusual or uncommon as to warrant the exercise of the waiver power in Ms Glover's case.
Whether a lump sum preclusion period applied to Ms Glover as a consequence of her receiving a lump sum compensation settlement?
50. Ms Glover accepted that a lump sum preclusion period applied to her because she received a lump sum compensation payment of $64,000 (section 1169). Ms Glover was receiving a 'compensation affected payment' namely, disability support pension, and hence in accordance with section 1169 of the Act, her disability support pension is not payable during a lump sum preclusion period. The payment was also 'compensation' (section 17) as it was a settlement payment made in respect of a claim for lost earnings or lost capacity to earn. Ms Glover settled her claim for compensation for a lump sum of $64,000 on 17 November 2008 and this amount contained a component for loss of earnings or income. As such the amount is 'compensation' and Ms Glover's disability support pension is subject to a compensation preclusion period.
Whether the compensation preclusion period had been correctly calculated
51. The compensation preclusion period is devised based on half the gross amount of any lump sum compensation payment divided by the amount of the cut off rate for a single rate pension under the income test applying at the date of settlements (section 1170 of the Act). Ms Glover received a compensation settlement of $64,000.00. The 'compensation part' of the lump sum is half or 50% of that amount. Therefore, the 'compensation part' of the lump sum is $32,000.00.
52. The calculation of the preclusion period is made by dividing the compensation part by a fixed amount, the income cut-out amount (section 1170(4), (5)). The figure for the divisor was said by Centrelink in its letter of 9 January 2009 to be $779.13. However, the ARO letter of 4 March, listed the figure as $778.88. Despite these inconsistencies, the calculation leads to the same result, namely, a compensation preclusion period of 41 weeks. The period 23 October 2008 to 5 August 2009 is 41 weeks. The compensation preclusion period has been correctly calculated.
If so, whether there were special circumstances that warrant disregarding all or part of the compensation payment and so reducing/removing the compensation preclusion period?
53. Section 1184K(1) of the Act provides that:
...the Secretary may treat the whole or part of a compensation payment as: (a) not having been made; or (b) not liable to be made; if the Secretary thinks it is appropriate to do so in the special circumstances of the case.
54. The cases establish that the special circumstances 'take the cases out of the ordinary'.[8] The underlying principle behind the compensation preclusion period is that a person who receives compensation should not be 'double dipping', that is, receiving both compensation and a compensation affected payment at the same time.[9]
[8] Re Dranichnikov and Centrelink [2003] FCAFC 133, para 66.
[9] See also Secretary, Department of Social Security v Hulls (1991) 22 ALD 570; Secretary, Department of Family and Community Services v Allan (2001) 66 ALD 147, 148 (per Heerey J).
55. In considering whether it is desirable to waive a debt on the basis of special circumstances the person's individual circumstances must be considered, as well as the general administration of the social security system.
56. The circumstances outlined earlier under waiver are a response to any claim for 'special circumstances' under section 1184K of the Act. Ms Glover's financial circumstances, health issues and special responsibility for Daniel, are not so unusual or uncommon as to warrant the exercise of the discretion in her favour. Nor did the application of the formula within section 1170 produce an unfair, unjust or unintended outcome. The decision under review is affirmed.
I certify that the 56 preceding paragraphs are a true copy of the reasons for the decision herein of Professor RM Creyke, Senior Member.
Signed: ............................[sgd]........................................
C. Kocak, AssociateDate/s of Hearing 22 January 2010
Date of Decision 24 February 2010
Solicitor for the Applicant Self-Represented
Solicitor for the Respondent Centrelink Legal Services
57. Relevant Legislation Appendix
Social Security Act 1991 (Cth)
17 Compensation recovery definitions
(1)In this Act, unless the contrary intention appears:
compensation has the meaning given by subsection (2).
Note: See also section 1163B.
compensation affected payment means:
… (a) a disability support pension …
compensation part , in relation to a lump sum compensation payment, has the meaning given by subsections (3) and (4).
compensation payer means:(a) a person who is liable to make a compensation payment; or
(b) an authority of a State or Territory that has determined that it will make a payment by way of compensation to another person, whether or not the authority is liable to make the payment.
event that gives rise to an entitlement to compensation has the meaning given by subsection (5A). …
income cut–out amount, in relation to a person who has received a compensation payment, means the amount worked out using the formula in subsection (8), as in force at the time when the compensation was received. …periodic payments period means:
(a) the period to which a periodic compensation payment, or a series of periodic compensation payments, relates; or
(b) in the case of a payment of arrears of periodic compensation payments– the period to which those payments would have related if they had not been made by way of an arrears payment. …
receives compensation has the meaning given by subsection (5). …
Compensation
(2)Subject to subsection (2B), for the purposes of this Act, compensation means:
(a) a payment of damages; or
(b) a payment under a scheme of insurance or compensation under a Commonwealth, State or Territory law, including a payment under a contract entered into under such a scheme; or
(c) a payment (with or without admission of liability) in settlement of a claim for damages or a claim under such an insurance scheme; or
(d) any other compensation or damages payment;
(whether the payment is in the form of a lump sum or in the form of a series of periodic payments and whether it is made within or outside Australia) that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury. …
(3) Subject to subsection (4), for the purposes of this Act, the compensation part of a lump sum compensation payment is:
(a) 50% of the payment if the following circumstances apply:
(i) the payment is made (either with or without admission of liability) in settlement of a claim that is, in whole or in part, related to a disease, injury or condition; and
(ii) the claim was settled, either by consent judgment being entered in respect of the settlement or otherwise; or
(ab) 50% of the payment if the following circumstances apply:
(i) the payment represents that part of a person's entitlement to periodic compensation payments that the person has chosen to receive in the form of a lump sum; and
(ii) the entitlement to periodic compensation payments arose from the settlement (either with or without admission of liability) of a claim that is, in whole or in part, related to a disease, injury or condition; and
(iii) the claim was settled, either by consent judgment being entered in respect of the settlement or otherwise; or
(b) if those circumstances do not apply–so much of the payment as is, in the Secretary's opinion, in respect of lost earnings or lost capacity to earn, or both.
(4) Where a person:
(a) has received periodic compensation payments; and
(b) after receiving those payments, receives a lump sum compensation payment (in this subsection called the LSP ); and
(c) because of receiving the LSP, becomes liable to repay an amount (in this subsection called the Repaid Periodic Compensation Payment – RPCP ) equal to the periodic compensation payments received;
then, for the purposes of subsection (3), the amount of the lump sum compensation payment is:
LSP – RPCP
(4A) For the purposes of this Act, a payment of arrears of periodic compensation payments is not a lump sum compensation payment.
Receives compensation
(5) A person receives compensation whether he or she receives it directly or whether another person receives it, on behalf of, or at the direction of the first person.
(5A) For the purposes of subsection (2B) of this section and Part 3.14, the event that gives rise to a person's entitlement to compensation for a disease, injury or condition is:
(a) if the disease, injury or condition was caused by an accident–the accident; or
(b) in any other case–the disease, injury or condition first becoming apparent;
and is not, for example, the decision or settlement under which the compensation is payable.
1169Compensation affected payment not payable during lump sum preclusion period
(1) If:
(a) a person receives or claims a compensation affected payment; and
(b) the person receives a lump sum compensation payment;
the compensation affected payment is not payable to the person in relation to any day or days in the lump sum preclusion period.
(2) In this section:
lump sum compensation payment does not include a lump sum payment:
(a) to which section 1164 applies; or
(b) that relates only to arrears of periodic compensation payments.
1170 Lump sum preclusion period
(1) Subject to subsection (2), if a person receives both periodic compensation payments and a lump sum compensation payment, the lump sum preclusion period is the period that:
(a) begins on the day following the last day of the periodic payments period or, where there is more than one periodic payments period, the day following the last day of the last periodic payments period; and
(b) ends at the end of the number of weeks worked out under subsections (4) and (5).
(2) If a person chooses to receive part of an entitlement to periodic compensation payments in the form of a lump sum, the lump sum preclusion period is the period that:
(a) begins on the first day on which the person's periodic compensation payment is a reduced payment because of that choice; and
(b) ends at the end of the number of weeks worked out under subsections (4) and (5).
(3) If neither of subsections (1) and (2) applies, the lump sum preclusion period is the period that:
(a) begins on the day on which the loss of earnings or loss of capacity to earn began; and
(b) ends at the end of the number of weeks worked out under subsections (4) and (5).
(4) The number of weeks in the lump sum preclusion period in relation to a person is the number worked out using the formula:
(5) If the number worked out under subsection (4) is not a whole number, the number is to be rounded down to the nearest whole number
1173Effect of periodic compensation payments on rate of person's compensation affected payment
(1) If:
(a) a person receives periodic compensation payments; and
(b) the person was not, at the time of the event that gave rise to the entitlement of the person to the compensation, qualified for, and receiving, a compensation affected payment; and
(c) the person receives or claims a compensation affected payment in relation to a day or days in the periodic payments period;
the rate of the person's compensation affected payment in relation to that day or those days is reduced in accordance with subsection (2).
(2) The person's daily rate of compensation affected payment is reduced by the amount of the person's daily rate of periodic compensation.
(3) The reference in subsection (2) to a daily rate of periodic compensation is a reference to the amount worked out by dividing the total amount of the periodic compensation payments referred to in paragraph (1)(a) by the number of days in the periodic payments period.
(4) If:
(a) a person receives periodic compensation payments; and
(b) at the time of the event that gave rise to the entitlement of the person to compensation, the person was qualified for, and was receiving, a compensation affected payment; and
(c) the person receives or claims a compensation affected payment in relation to a day or days in the periodic payments period;
the periodic compensation payments are to be treated as ordinary income of the person for the purposes of this Act.
1178Repayment of amount where both lump sum and payments of compensation affected payment have been received
(1) If:
(a) a person receives a lump sum compensation payment; and
(b) the person receives payments of a compensation affected payment in relation to a day or days in the lump sum preclusion period;
the Secretary may, by written notice to the person, determine that the person is liable to pay to the Commonwealth the amount specified in the notice.
(2) The amount to be specified in the notice is the recoverable amount under section 1179.
1180 Repayment where both periodic compensation payments and payments of compensation affected payment have been received
(1) If:
(a) a person receives periodic compensation payments; and
(b) the person was not, at the time of the event that gave rise to the entitlement of the person to the compensation, qualified for, and receiving, a compensation affected payment; and
(c) the person receives payments of a compensation affected payment in relation to a day or days in the periodic payments period; and
(d) the payments referred to in paragraph (c) have not been reduced to nil as a result of the operation of section 1173;
the Secretary may, by written notice to the person, determine that the person is liable to pay to the Commonwealth the amount specified in the notice.
(2) The amount to be specified in a notice for the purpose of subsection (1) is the recoverable amount under section 1181.
1181 The section 1180 recoverable amount
(1) Subject to subsection (2), the recoverable amount under this section is equal to the smaller of the following amounts:
(a) the sum of the periodic compensation payments;
(b) the difference between:
(i) the sum of the compensation affected payments made to the person in relation to a day or days in the periodic payments period; and
(ii) the sum of the compensation affected payments that would have been made to the person in relation to any such day or days had those payments been made at the rate to which the payments were reduced as a result of the operation of section 1173.
(2) If:
(a) a person is a member of a couple; and
(b) the person’s partner receives a compensation affected payment in relation to a day or days in the periodic payments period;
the recoverable amount under this section is equal to the smaller of the following amounts:
(c) the sum of the periodic compensation payments;
(d) the difference between:
(i) the sum of the compensation affected payments made to the person and the person’s partner in relation to a day or days in the periodic payments period; and
(ii) the sum of the compensation affected payments that would have been made to the person and the person’s partner in relation to any such day or days had those payments been made at the rates to which the payments were reduced as a result of the operation of sections 1173 and 1174.
1182 Secretary may send preliminary notice to potential compensation payer or insurer
(1) If:
(a) a person (the claimant ) makes a claim against another person (the potential compensation payer ) for compensation; and
(b) the claimant claims a compensation affected payment in relation to a day or days in the periodic payments period or the lump sum preclusion period, as the case may be;
the Secretary may give written notice to the potential compensation payer that the Secretary may wish to recover an amount from the potential compensation payer.
(2) If:
(a) a person (the claimant ) makes a claim against a person (the potential compensation payer ) for compensation; and
(b) the claimant claims a compensation affected payment for a day or days in the periodic payments period or the lump sum preclusion period, as the case may be; and
(c) an insurer, under a contract of insurance, may be liable to indemnify the potential compensation payer against any liability arising from the claim for compensation;
the Secretary may give written notice to the insurer that the Secretary may wish to recover an amount from the insurer.
(3) A notice must contain:
(a) a statement of the potential compensation payer's or insurer's obligation under section 1183; and
(b) a statement of the effect of section 1184D so far as it relates to the notice.
1183 Potential compensation payer or insurer must notify Secretary of liability
(1) If a person (the potential compensation payer ):
(a) is given a notice under subsection 1182(1) in relation to a person; and
(b) whether before or after receiving the notice, the potential compensation payer becomes liable to pay compensation to the person;
the potential compensation payer must give written notice to the Secretary of the liability within 7 days after:
(c) becoming liable; or
(d) receiving the notice;
whichever happens later.
Penalty: Imprisonment for 12 months.
(2) If an insurer:
(a) is given a notice under subsection 1182(2) in relation to a claim by a person; and
(b) whether before or after receiving the notice, the insurer becomes liable to indemnify the potential compensation payer, either wholly or partly, in relation to the claim;
the insurer must give written notice to the Secretary of the liability within 7 days after:
(c) becoming liable; or
(d) receiving the notice;
whichever happens later.
Penalty: Imprisonment for 12 months.
(3) Strict liability applies to:
(a) an element of an offence against subsection (1) that a notice is a notice under subsection 1182(1); and
(b) an element of an offence against subsection (2) that a notice is a notice under subsection 1182(2).
1184F Debts resulting from notices under section 1178 or 1180
If the Secretary gives a person a notice under section 1178 or 1180 determining that the person is liable to pay to the Commonwealth the amount specified in the notice, the amount so specified is a debt due by the person to the Commonwealth.
1184K Secretary may disregard some payments
(1) For the purposes of this Part, the Secretary may treat the whole or part of a compensation payment as:
(a) not having been made; or
(b) not liable to be made;
if the Secretary thinks it is appropriate to do so in the special circumstances of the case.
(2) If:
(a) a person or a person's partner receives or claims a compensation affected payment; and
(b) the person receives compensation; and
(c) the set of circumstances that gave rise to the claim for compensation is not related to the set of circumstances that gave rise to the person's or the person's partner's receipt of, or claim for, the compensation affected payment;
the fact that those 2 sets of circumstances are unrelated does not alone constitute special circumstances for the purposes of subsection (1).
1223 Debts arising from lack of qualification, overpayment etc.
(1) Subject to this section, if:
(a) a social security payment is made; and
(b) a person who obtains the benefit of the payment was not entitled for any reason to obtain that benefit;
the amount of the payment is a debt due to the Commonwealth by the person and the debt is taken to arise when the person obtains the benefit of the payment.
(1AA) If a social security payment is made to, or as directed or authorised by, the person who is entitled to obtain the benefit of the payment, subsection (1) does not apply to any other person who afterwards obtains the benefit of the payment unless the other person obtained the benefit because of a mistake made by the first person in connection with the giving of the direction or authorisation.
(1AB) Without limiting by implication the circumstances to which paragraph (1)(b) applies apart from this subsection, a person who obtained the benefit of a social security payment is taken not to have been entitled to obtain the benefit if the payment should not have been made for any one or more of the following reasons:
(a) the payment was made to the person by mistake as a result of a computer error or an administrative error;
(b) the person for whose benefit the payment was intended to be made was not qualified to receive the payment;
(c) the payment was not payable;
(d) the payment was made as a result of a contravention of the social security law, a false statement or a misrepresentation;
(e) the payment was made in purported compliance with a direction or authority given by the person who was entitled to obtain the benefit of the payment but the direction or authority had been revoked or withdrawn before the payment was made;
(f) the payment was intended to be made for the benefit of someone else who died before the payment was made.
(1AC) If a social security payment was made by mistake as a result of a computer error or an administrative error, subsection (1) applies:
(a) whether or not the payment was made under a determination that had effect at the time when the payment was made; and
(b) whether or not a determination in relation to the payment could be made after that time with effect from and including that time.
(1AD) Subsection (1AC) does not apply if the social security payment was made when it should not have been made because of the occurrence of an event or a change in circumstances where the event or change had not been notified to the Secretary but no valid requirement for notification had been made under the social security law.
1237A Waiver of debt arising from error
Administrative error
(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).
(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. …
Proportion of a debt
(3) For the purposes of this section, a proportion of a debt may be 100% of the debt.
1237AAD Waiver in special circumstances
The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:
(a) the debt did not result wholly or partly from the debtor or another person knowingly:
(i) making a false statement or a false representation; or
(ii) failing or omitting to comply with a provision of this Act, the Administration Act or the 1947 Act; and
(b) there are special circumstances (other than financial hardship alone) that make it desirable to waive; and
(c) it is more appropriate to waive than to write off the debt or part of the debt.
Note 1: Section 1236 allows the Secretary to write off a debt on behalf of the Commonwealth.
Social Security (Administration) Act 1999 (Cth)
68 Person receiving social security payment or holding concession card
(1) Subsection (2) applies to a person to whom a social security payment (other than utilities allowance or seniors supplement) is being paid.
(2) The Secretary may give a person to whom this subsection applies a notice that requires the person to do any or all of the following:
(a) inform the Department if:
(i) a specified event or change of circumstances occurs; or
(ii) the person becomes aware that a specified event or change of circumstances is likely to occur;
(b) give the Department one or more statements about a matter that might affect the payment to the person of the social security payment;
(c) give the Department one or more statements about a matter that might affect the operation, or prospective operation, of Part 3B in relation to the person.
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