Astill and Secretary, Department of Employment and Workplace Relations
[2007] AATA 1888
•25 October 2007
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2007] AATA 1888
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2007/1048
GENERAL ADMINISTRATIVE DIVISION ) Re SCOTT ASTILL Applicant
And
SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS
Respondent
DECISION
Tribunal Senior Member M D Allen Date25 October 2007
PlaceSydney
Decision The decision under review is affirmed.
..................[sgd].....................
M D Allen Senior Member
CATCHWORDS
SOCIAL SECURITY – review of decision by social security appeals tribunal affirming prior determination to raise and recover debt of compensation affected payments – applicant paid social security benefits – applicant also received lump sum settlement payment representing arrears of periodic workers compensation – social security benefits are a compensation affected payment - social security benefits recoverable if employee receives compensation payment representing arrears of periodic workers compensation – decision under review affirmed
LEGISLATION
Social Security Act 1991 sections 17, 17(1), 17(4A), 1173, 1174, 1174, 1180, 1180(2), 1181, 1181(2), 1184K, 1184K(1)
Workers Compensation Act 1987 (NSW) sections 60 and 67
Administrative Appeals Tribunal Act 1975 section 37
CASE LAW
Re Martin and Secretary, Department of Social Security (unreported) AAT No 6482 14 November 1990
Re Hajar and Secretary, Department of Social Security (1988) 6 ALD 716
Re Guerrero and Secretary, Department of Social Security (unreported) AAT No 9603 13 July 1994
Re Secretary, Department of Social Security v Ellis (1996-7) 24 AAR 535
Clark v Secretary Department of Employment and Workplace Relations [2007] FCA 1076
Secretary, Department of Social Security v Smith (1991) 30 FCR 56
REASONS FOR DECISION
25 October 2007 Senior Member M D Allen 1. By application made the 2nd day of April 2007 the Applicant sought review of a decision by a Social Security Appeals Tribunal that affirmed a prior determination to raise a charge in the sum of $33,986.34 representing the part payment of Social Security Benefits following a lump sum settlement paid to the Applicant following proceedings in the New South Wales Workers Compensation Commission.
2. The recovery of Social Security Benefits paid is dealt with by section 17 of the Social Security Act 1991. Subsection 17(1) reads inter alia:
“17(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:
…
(b) a parenting payment; or
(c) a social security benefit; “
Whereas subsection 17(2) goes on to state inter alia:
17(2) Subject to subsection (2B), for the purposes of this Act, compensation means:
…
(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.”
However subsection 17(4A) provides:
“ For the purposes of this Act, a payment of arrears of periodic compensation payments is not a lump sum compensation payment.”
3. Sections 1173 and 1174 SSA provide for the reduction of Social Security Benefits if a person receives a periodic compensation payment. However, in this particular matter the payments were not reduced in accordance with these sections. As a consequence therefor recoverable amounts existed from the payment made to the Applicant pursuant to ss1180 and 1181(2) SSA. Those particular provisions read:
1180(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.
1180(2) The amount to be specified in a notice for the purpose of subsection (1) is the recoverable amount under section 1181.
1181(2)then provides 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.
4. Effectively, under ss1180 and 1181, the recoverable amounts are the lesser of either the compensation actually paid; or the difference between the rate of Centrelink payments actually made, and those that would have been made had the compensation been paid at the same time and reduced those Centrelink payments.
5. The facts leading up to the payment to the Respondent of the sum of $33,986.34 out of the settlement sum obtained by the Applicant in the Workers Compensation Commission are not controverted.
6. On the 11th November 1994 the Applicant was injured during the course of his employment. As a result the Applicant in 1997 commenced proceedings in the New South Wales District Court against his employer alleging negligence.
7. As a prerequisite to commencing an action for common law damages against his employer the Applicant waived his right to a lump sum payment under ss 60 and 67 of the Workers Compensation Act 1987 (NSW).
8. From the date of the accident until July 2004 the Applicant had been in receipt of workers compensation payments from his employer. Those payments ceased in July 2004 as the employer’s insurer determined that the Applicant was able to return to work.
9. Prior to this determination the Applicant’s common law action had been decided in favour of the Defendant employer. An award of costs in the sum of $41,000.00 was made against the Applicant.
10. Upon the determination by the insurer that the Applicant was fit to return to work, the Applicant commenced proceedings in the Workers Compensation Commission claiming weekly compensation. The Applicant also began to receive payment of Newstart Allowance and his wife continued to receive payments of parenting allowance, both of which were Social Security Benefits.
11. Because of his prior election the Applicant was unable to settle his claim in the Workers Compensation Commission by way of a lump sum settlement or a commutation.
12. On 27 April 2006 the Applicant settled his claim in the Workers Compensation Commission on the basis that he would be paid a lump sum representing weekly payments of workers compensation for the closed period of 30 June 2004 to 27 April 2006 and the insurer would waive recovery of its costs in the common law action.
13. The settlement was entered into following advice from the barrister then acting for the Applicant. A copy of the written advice by counsel to the Applicant’s solicitors following the settlement is set out at document T3 of the documents prepared for the Tribunal pursuant to s37 of the Administrative Appeals Act 1975. In that advice counsel states:
“Thus, leaving a possible commutation aside, he had two options: first to run his case; or second to settle for a closed period from 1 July 2004 to date with an artificially high weekly rate, i.e. the statutory rate for a worker with a dependant wife and two children, less any repayment to DSS and HIC.
Of course the big obstacle to all this was the fact that the respondent (defendant) has a costs order in their favour against him in his failed 2001 District Court proceedings.
In conciliation, the respondent (CGU) indicated that it was not prepared to go down the commutation path and predictably was willing to settle on a closed period inflated rate style arrangement…
In all events, I explained to the client that the settlement would amount to approximately $50,000 from which he would have to pay back DSS and HIC and furthermore that the amount would be considered income for the purposes of taxation. I estimated that the DSS preclusion period was approximately 40 weeks from 30 June 2004 and that any repayment would be approximately $6,000 but as much as $18,000 (on his own figure), i.e. dollar for dollar. On more accurate calculation, the minimum repayment in my view will be approximately $8,500. I also advised him that he would have to repay any HIC charge which on his own figures would be between $300 and $1,000.”
14. The advice noted that the client had until 31 May 2006 to decide whether or not to confirm the settlement.
15. The actual Order of the Arbitrator stated at orders 6 and 7:
“6. The above Orders are not to come into effect until the applicant confirms his agreement in writing to the Respondent and the Commission.
7. In the event the Applicant does not confirm his agreement as per Order 6 above, the matter is to be discontinued at 4pm on 31st May 06 with no order as to costs.”
16. As I read the Arbitrator’s Order if the Applicant did not consent to the agreement entered into on 27 April 2006 by close of business on 31 May 2006 the result was that his matter was discontinued, i.e. the Applicant’s claim was dismissed. Consequently the Applicant was bound by the agreement signed on 27 April 2006.
17. The Applicant’s solicitor on 5 May 2006 forwarded to Centrelink a form headed “Estimate of Social Security charge/preclusion”. In that form the solicitor indicated that a gross lump sum settlement in the sum of $50,000 was expected. (The actual sum calculated and paid was $52,590).
18. Two points can be made regarding this document. The first is that at the time it was forwarded to Centrelink, namely 5 May 2006 the Applicant was in reality already bound to the settlement entered into on 27 April 2006 and secondly the form used was incorrect. The front page of the form specifically states “Do not use this form for a payment representing arrears of periodic compensation”.
19. On 11 May 2006 Centrelink replied to the request contained in the form submitted on 5 May 2006. In that letter it was stated:
“From the information you supplied, we have calculated this estimate assuming that the settlement was made on the date of this letter. It assumes that your client’s claim will settle by agreement, that it contains some compensation for lost earnings or lost capacity to earn and that the lump sum will not be solely for arrears of periodic compensation.”
20. Whatever may or may not have been understood by the Applicant’s solicitor to have been the amount that would have to be refunded to Centrelink following settlement of the Applicant’s workers compensation claim is in my opinion irrelevant as the irrevocable decision to accept the lump sum settlement had been made on 27 April 2006 when the Applicant signed the admissions and accepted the settlement (see document T5).
21. The Applicant gave evidence that prior to the arbitration he had phoned Centrelink and asked what sum he would have to repay in the event of a settlement. I accept his evidence that he was told he would have to refund the sum of $18,000 being the money he had been paid by Centrelink. Further I accept his evidence that he would not have settled if he knew he also would have to refund the parenting payments received by his wife in addition to the amount of Newstart Allowance paid to him.
22. In his advice to the Applicant’s solicitor the Applicant’s counsel stated:
“For the record, prior to conciliation, the client advised that DSS had informed him that he had received approximately $18,000 in benefits since July 2004, and his HIC charge would be approximately $300-400, but not more than $1,000. “
23. Any enquiry by the Applicant was a generalised enquiry only. Cross-examined, he conceded that he may not have told the Centrelink enquiry officer his full name. Centrelink have apparently been unable to find any record of the Applicant’s telephone enquiry which indicates that the enquiry was a general enquiry and did not deal with the Applicant’s specific case.
24. Cross-examined, the Applicant stated that he had made his barrister aware he would not settle if $18,000 was to be repaid to Centrelink, He had brought up the sum of $18,000 with the barrister and this is corroborated by the barrister’s advice (see document T3). The Applicant said that the barrister’s estimate was that he would have to repay around $6,500. This passage of evidence can be compared to the advice from counsel which as stated read inter alia:
“I estimated that the DSS preclusion period was approximately 40 weeks from 30 June 2004 and that any repayment would be approximately $6,000….”
25. Having regard to the above history and evidence I am satisfied that the reason the Applicant settled his workers compensation claim for the lump sum of $53,290.00 was that he was advised by his barrister that this was the best bargain he could make. This premise was based upon an incomplete knowledge of the repayment provisions of the SSA as to which see ss1180 and 1180(2) quoted above in combination with subs17(4A) as previously quoted.
26. The responsibility to ascertain the specific provisions of the SSA which applied to this Applicant was that of his solicitor and the barrister engaged to present his case in the Workers Compensation Commission. It is now clear that they gave incorrect advice, but negligent legal advice is not of itself a special circumstance for the purposes of s1184K SSA.
27. Subsection 1184K(1) states:
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.
28. This Tribunal has held in a series of matters namely Re Martin and Secretary, Department of Social Security (unreported) AAT No 6482 14 November 1990; Re Hajar and Secretary, Department of Social Security (1988) 16 ALD 716; and Re Guerrero and Secretary, Department of Social Security (unreported) AAT No 9603 13 July 1994 that the provision of incorrect or even negligent legal advice is not persuasive or determinative as to the existence of special circumstances.
29. As to what might constitute special circumstances see Secretary, Department of Social Security v Ellis (1996-7) 24 AAR 535 and 539 where Carr J said:
“In Beadle v Director General of Social Security (1985) 7 ALD 670 a full court of this Court had to consider whether the Administrative Appeals Tribunal had erred in its interpretation of s102(1)(a) SSA which provided for an extension of time in which to claim family allowance… in special circumstances…
At 673-674the Full Court said:
“Presumably in this context special circumstances must include events which would render the six months unfair or inappropriate… it would depend upon the circumstances of the particular case whether these constituted special circumstances. We do not think it is possible to lay down precise limits or precise rules. The matter is one for the Director-General baring in mind the purpose in which the power is given. The phrase ‘special circumstances’ although lacking ………..is sufficiently understood in our view not to require judicial los.
In Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545, Kiefel J after referring to Beadle said:
“…for present purposes it is sufficient to observe that it would require something to distinguish Mr Groth’s case from others, to take it out of the usual or ordinary case. That was, I consider, the only inquiry to be undertaken in this case. I would of course follow that if one were to conclude the something unfair, unintended or unjust had occurred there must be some feature out of the ordinary. The inquiry I have referred to would involve considering what would be the effect, if the provision in question or the principle of liability it creates its supply.”
Later (Kiefel J expressly approved the Tribunal’s reasoning in holding that Mr Groth’s circumstances were not out of the ordinary when Pt 3.14 SSA in which ss1168 and 1184 are to be find) had the same effect on him as it did on other persons qualified to receive a disability support pension. Her honour added ‘It when ought to find that the circumstances and those of his family although difficult, did not constituted hardship and they could not be said to be different from other pension recipients”.
30. The Applicant in this matter gave evidence of his current circumstances. I am satisfied that he and his family are in straightened financial circumstances and this has been made worse by the provision to him of poor legal advice including the original decision to sue his employer for common law damages.
31. The Applicant’s circumstances are however little different from many other social security recipients. The manner in which the lump sum provisions of the Social Security Act operate to act in certain cases to cause hardship, but in cases such as Clark v Secretary Department of Employment and Workplace Relations [2007] FCA 1076 the Federal Court has pointed out that enquiries as to the operation of the recovery provisions of the SSA vis a vis the sum actually obtained is to defeat the legislative intention and will result in appealable error.
32. The scheme of the SSA and its recovery provisions was pointed out by von Dossa J in Secretary DSS v Smith (1991) 30 FCR 56 at 62 namely:
“Clearly the object of the scheme in relation to periodical payments is to prevent a person to having an entitlement to receive payments from two sources for the same inability to work.”
33. Therefore whereas I concede that the legislation has dealt harshly with the Applicant I do not regard his circumstances to be so far outside the norm so as to amount to special circumstances. The decision under review is therefor affirmed.
I certify that the 33 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member M D Allen.
Signed: ..........[sgd]...........
Mwela Kapapa, AssociateDate of Hearing: 9 August 2007
Date of Decision: 25 October 2007
Solicitor for the Applicant: Gerard Malouf & PartnersSolicitor for the Respondent: Australian Government Solicitor
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