Atherden and Secretary, Department of Employment and Workplace Relations
[2007] AATA 1860
•12 October 2007
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2007] AATA 1860
ADMINISTRATIVE APPEALS TRIBUNAL )
) No W200600403
GENERAL ADMINISTRATIVE DIVISION ) Re
WILLIAM AUSTIN ATHERDEN
Applicant
And
SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS
Respondent
DECISION
Tribunal Ms L R Tovey, Member Date 12 October 2007
PlacePerth
Decision The Tribunal sets aside the decision of the Social Security Appeals Tribunal made on 16 November 2006 and substitutes a decision to:
(a) set aside the decision of the Respondent of 29 September 2006, to cancel the Applicant's parenting payments and apply a lump sum preclusion period from 6 September 2006 to 17 October 2006; and
(b) treat the whole of the compensation payment received by the Applicant on 12 September 2006 as not having been made.
…........[Sgd Ms LR Tovey].........
Member
CATCHWORDS
SOCIAL SECURITY – parenting payment - lump sum compensation payment – preclusion period – special circumstances
Social Security Act 1991 (Cth), ss. 17, 23, 1064, 1160, 1161, 1168, 1170, 1182, 1183, 1184, 1184A, 1184C, 1184K, 1191-1194.
Workers' Compensation and Injury Management Act 1981 (WA).
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Re Beadle and Director-General of Social Security (1985) 7 ALD 670
Clark v Secretary, Department of Employment and Workplace Relations (2007) 96 ALD 129
Director General of Social Services v Hales (1983) 47 ALR 281
Dranichnikov v Centrelink (2003) 75 ALD 134; [2003] FCAFC 133
Re Fuller and Secretary, Department of Family and Community Services (2004) 83 ALD 152; [2004] AATA 615
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Kertland v Secretary, Department of Family and Community Services (1999) 95 FCR 64
Kirkbright v Secretary, Department of Family and Community Services (2000) 106 FCR 281
Secretary, Department of Family and Community Services v Allan (2001) 116 FCR 1
Secretary, Department of Family and Community Services v Chamberlain (2002) 116 FCR 348
REASONS FOR DECISION
12 October 2007 Ms LR Tovey, Member 1. This is an application for review instituted by William Austin Atherden ("the Applicant") in respect of a decision of the Social Security Appeals Tribunal ("the SSAT") made on 16 November 2006, which affirmed a decision of the delegate of the Secretary, Department of Employment and Workplace Relations ("the Respondent") of 29 September 2006. The decision related to the application of a compensation preclusion period to parenting payments received by the Applicant.
FACTS
2. There was, in my view, no conflicting evidence as to the primary facts relevant to my determination. The Applicant gave evidence and presented as a credible witness. His evidence was consistent with the documentary evidence, and the evidence of the Centrelink officer, Ms Fitzpatrick, who he called as a witness. I make the following findings of fact based on the oral evidence of the Applicant and Ms Fitzpatrick, the Section 37 Documents (T Documents) produced by the Respondent and the Applicant's Supplementary Documents.
3. The Applicant is currently 45 years old and, at all material times, rented a house in Wembley Downs. He is a single sole parent with primary care of a son who is currently 15 years old. The Applicant has been separated from his son's mother since November 1991, and has had the care of his son since that time. During the period with which I am concerned, the Applicant received little child support from his former partner. He made a claim for parenting payments on 30 November 2004.
4. In about September 2006 the Applicant obtained full time employment with a "job network" and was working Saturday mornings for a business trading as Bravo Hire. However, after a couple of months he was unable to continue with his position at the job network due to the report writing involved in his job. The Applicant suffers from a form of dyslexia which impairs his capacity to perform written work.
5. At about the time the Applicant ceased working for the job network, he increased the number of days he was working at Bravo Hire to 2 days a week.
6. The Applicant was employed at Bravo Hire as a general hand, and was engaged to clean and maintain equipment on its return from hire. On 1 November 2005 the Applicant was pushing a compactor to wash its underside when he injured his knee. As the Applicant was taking the weight of the compactor to roll it over, his foot rolled off the edge of the concrete on which he was standing into a gap of 50-60mm. The Applicant felt a sharp pain in his knee, accompanied by a snap.
7. After the accident the Applicant continued working and put a strap on his knee. After a few weeks his knee was significantly swollen and he was having difficulty walking and bending his leg. At that time the Applicant sought medical attention and was diagnosed with a tear of the medial meniscal tendon in his right knee. An orthopaedic surgeon, Mr Peter Annear, performed surgery to repair the tear. The Applicant made a workers' compensation claim some 4-6 weeks after the accident.
8. In around May 2006 the Applicant consulted a solicitor as to his claim against his employer arising from the accident. On 18 May 2006 the solicitor advised Centrelink that he acted for the Applicant in the Applicant's claim for damages for personal injuries sustained in the accident on 1 November 2005.
9. On 19 May 2006 an officer of Centrelink wrote to the Applicant's solicitor advising that Centrelink no longer provided individual payment details made to a compensation claimant, as they did not necessarily bear any relation to the amount of Centrelink payments that may be recoverable. Centrelink's letter informed the Applicant's solicitor of a service by which an "Estimate of Social Security Charge/Preclusion" could be obtained. There was no evidence that advice of this service was ever given to the Applicant by his solicitor, Centrelink or any other person.
10. Also on 19 May 2006 Centrelink wrote to the Applicant indicating as follows:
"If you receive any payment of weekly compensation or a lump sum compensation payment, some or all of the Centrelink payment paid to you since the date of the injury may have to be paid back.
Any compensation you receive may also stop you from receiving Centrelink payments in the future. You can find information about when you have to tell Centrelink about compensation payments on the back of this letter.
Please contact us, or have your solicitor contact us before you agree to settle your compensation claim to find out whether you will have to pay back any money and if your future payments will be affected."
11. At the same time, Centrelink gave a notice under s 1182 of the Social Security Act 1991 ("the Act") to the workers' compensation insurer of the Applicant's employer. The notice indicated that Centrelink may recover part of the compensation payable to the Applicant. Centrelink also sought information from the insurer as to compensation payments made to the Applicant.
12. At about this time the Applicant consulted his surgeon, Mr Annear, and told Mr Annear that he had engaged a solicitor to represent him. Mr Annear's advice, in the Applicant's words, was that the government prescribed the amount of payment the Applicant would receive as a percentage of his injury and that by engaging a solicitor he wouldn't get more money but would have to pay the solicitor's costs. Mr Annear told the Applicant that he assessed the Applicant's permanent disability at 5% and that the Applicant would be entitled to somewhere between $5,000 and $6,000 compensation in respect of that disability.
13. On 24 May 2006 the Applicant advised his solicitor by telephone that he no longer wanted the solicitor to represent him. He explained what his surgeon had said and said that, based on the information he had been given, the Applicant didn’t feel as if his solicitor was going to be of any help to him. The withdrawal of the solicitor's instructions was subsequently confirmed in writing.
14. On 26 May 2006 the Applicant attempted on a number of occasions to telephone Centrelink to find out what effect his compensation would have on his Centrelink payments. He eventually succeeded in being put through to Ms Fitzpatrick in Centrelink's compensation section. The Applicant told Ms Fitzpatrick that his surgeon had told him that he had a 5% permanent disability and would be receiving between $5,000 and $6,000. The Applicant asked Ms Fitzpatrick how that would affect his Centrelink payments. She told the Applicant that the compensation payment would have little or no effect on his Centrelink payments. At that point the Applicant felt he had notified Centrelink as required by the letter to him of 19 May 2006 and felt that he had been given the information that he needed.
15. Ms Fitzpatrick, understandably, had no recollection of her conversation with the Applicant. Centrelink records indicate that she did speak to the Applicant on 26 May 2006 and accessed a number of displays on her computer, but not the display relating to preclusion periods. Ms Fitzpatrick said that it was not her practice to provide an informal verbal estimate of a preclusion period over the phone. She said that the only circumstance in which she would tell a customer that they would not have a preclusion period was if the customer was quite clear and stated that the claim just settled for impairment or an impairment and pain and suffering only, without any loss of earning capacity. She said that if she was under the belief that compensation was just an impairment payment and/or pain and suffering then she wouldn’t mention anything about preclusion periods because it wouldn't apply to an impairment settlement.
16. I did not find Ms Fitzpatrick's evidence to be inconsistent with that of the Applicant, and I accept the Applicant's account of his conversation with Ms Fitzpatrick on 26 May 2006. I find that Ms Fitzpatrick did not mention anything about a preclusion period to the Applicant at this time, perhaps because she understood that the proposed lump sum payment was only in respect of impairment and did not involve any component for lost earning capacity. However, I find that Ms Fitzpatrick did not inform the Applicant that her advice, to the effect that the acceptance of a lump sum payment would have little or no effect on his Centrelink payments, was contingent on those factors.
17. Also at about this time the workers' compensation insurer had stopped the Applicant's weekly payments of workers' compensation, which had been made at the rate of $323.20 gross per week. This occurred because the Applicant tried to go back to work but found that his knee suffered problems again and the insurer had not accepted liability in respect of a further period of incapacity. That evidence of the Applicant is supported by advice from the insurer to Centrelink of 31 May 2006, indicating that a further claim for workers' compensation was yet to be accepted.
18. In May and June 2006 the Applicant was subject to a number of additional stressors, apart from his workers' compensation difficulties. The Applicant was having trouble with his son at school. The Applicant's father had been diagnosed with mesothelioma, was seriously ill with that disease and not expected to live long. On 20 June 2006 the Applicant received a notice of termination of his residential tenancy for non-payment of rent.
19. After contacting Workcover and attending a medical appointment arranged by the workers' compensation insurer, the Applicant's weekly payments of workers' compensation resumed. The Applicant's bank statement shows that during July and August 2006 he was receiving payments from Bravo Hire (which I infer was his workers' compensation weekly payments), a Centrelink pension (which I infer was the parenting payment) and family payments from Centrelink. His financial circumstances while receiving these payments appear to have been straightened, as the account was regularly drawn down close to the limit of funds, and on one occasion was overdrawn. This account also shows that the continuing receipt of weekly payments of workers' compensation, of which he had informed Centrelink, was not preventing the Applicant from also receiving parenting payments.
20. On 7 August 2006 Centrelink wrote to the Applicant advising him that he was no longer required to report his income every two weeks in order to get paid his parenting payments. The Applicant understood this to be because he was now receiving regular weekly payments of workers' compensation.
21. On or about 14 August 2006 the Applicant received a letter from the workers' compensation insurer, which referred to the advice of Mr Annear that the Applicant had sustained a permanent residual disability to his right knee which had been assessed at 5% loss of function to the right leg at or above the knee. The letter advised the Applicant that he was entitled to a payment provided for by the Second Schedule of the Workers' Compensation and Injury Management Act 1981 (WA) in the amount of $5,106.20 in respect of that permanent disability.
22. However, the insurer's letter went on to make an offer of a payment of $8,900 in full and final settlement of the whole of the Applicant's workers' compensation claim, including his future entitlement to weekly payments. The proposed terms of settlement included payment of weekly payments and reasonable medical expenses to the date of registration of the agreement with Workcover. While the letter referred to the requirement of the insurer to pay 10% of the settlement amount to Medicare, it did not mention the Applicant's entitlement to Centrelink payments or the potential effect of the settlement sum on the Applicant's future entitlement to Centrelink payments.
23. The Applicant accepted this offer on 17 August 2006. The Memorandum of Agreement signed by the Applicant at that time indicated that the lump sum of $8,900 was made up of:
(a)$2,993.80 in respect of redemption of liability to make future weekly payments as for permanent total incapacity;
(b)$800 in respect of medical expenses; and
(c)$5,106.20 in respect of the permanent loss of the efficient use of his right leg at or above the knee.
24. The Memorandum of Agreement was registered with Workcover on 5 September 2006. The last payment of weekly payments of workers' compensation was made into the Applicant's account on 7 September 2006.
25. At the time he accepted the worker's compensation settlement the Applicant was again behind in the rent for the house in which he was living. That evidence of the Applicant is corroborated by the fact that on 1 September 2006, which was after acceptance of the offer but before registration of the agreement, the Applicant received a second notice of termination of his lease for failure to pay rent. The Applicant said that while he spoke with his doctor about the settlement, and actually got the doctor to witness his signature on the acceptance, he did not discuss the settlement with anyone else. The Applicant's evidence was that he was behind in his rent, and he just wanted to get the money so he could bring his rent back up to date. In addition, the Applicant's father was very ill at that time.
26. The Applicant did not contact Centrelink before accepting the settlement, as Centrelink's letter of 7 August 2006 had informed him that he had 14 days from a change in his circumstances to advise Centrelink of that change. The sum of $8010, being the $8,900 settlement amount less 10% paid to Medicare, was paid into a bank account held by the Applicant on 12 September 2006. Prior to the making of that payment the balance of that account, which was separate from the account into which his Centrelink payments were made, was nil.
27. On 15 September 2006 the Applicant contacted Centrelink by telephone and informed them of his settlement payment. At this time he was advised that the receipt of the payment would cause a 6 week preclusion period. The Applicant indicated that he was not happy with that as he had been told by Ms Fitzpatrick, who he identified as a "lady with an Irish accent", that the lump sum payment would not affect his pension. The Centrelink officer indicated that he would suspend the parenting payments to prevent an overpayment while the matter was reviewed. A letter from Centrelink dated 15 September 2006 advised the Applicant of the suspension of his parenting payments while the effect of the lump sum compensation payment was investigated.
28. On 19 September 2006 Centrelink sent the Applicant two notices, one advising him of the cancellation of his parenting payments because of his compensation settlement and the other advising that the preclusion period during which he was not eligible to receive parenting payments had been determined as the period between 6 September 2006 and 17 October 2006.
29. The Applicant's evidence, which I accept, was that he had not heard of the term "preclusion period" until he received these notices from Centrelink. He had not been made aware by anyone prior to his receipt of the lump sum payment that the lump sum would prevent him from receiving parenting payments in the future. He recognised that the payment he received was a few thousand dollars more than he had told Ms Fitzpatrick he was going to get, but he didn’t think it would make much difference. His evidence was to the effect, and again I accept, that the Applicant would not have accepted the settlement of an amount beyond his Second Schedule entitlements had he been aware of the effect on his parenting payments.
30. Prior to being informed as to the preclusion period on 19 September 2006, the Applicant had withdrawn $5,000 of the lump sum. He paid some $2,800 in rent, to bring his payments to two weeks in advance. He also used the money to pay chemist bills, vehicle registrations, to recover items on loan, purchase a pushbike for his rehabilitation, pay outstanding utilities bills, purchase household items and pay for school uniforms. By 9 October 2006 all of the money in both of the Applicant's bank accounts had been spent, and the Applicant was forced to rely on food from his family and the Victory Life Church after 4 weeks.
31. I also note that on 30 August 2006, after the Applicant had accepted the settlement but before he received payment, the Applicant's son was attacked at school by another student and suffered facial bruising, a nasal fracture and broken teeth. The Applicant was dissatisfied with the school's response to the incident, and took his son out of school until a transfer to another school could be arranged.
32. I also note that the Applicant's father passed away during the preclusion period. This clearly would have increased the emotional stress to which the Applicant was subject during the preclusion period. I also infer that dealing with his father's death would have increased the Applicant's required expenditure and reduced his capacity to budget expenditure.
33. Finally I note that the Applicant suffers from a variety of medical conditions, not related to the injury which was the subject of the workers' compensation settlement, which are described in a report from the Applicant's general practitioner dated 15 November 2006. These conditions result in an increased financial burden on the Applicant.
34. Following the decision of 19 September 2006 to cancel his parenting payments and apply the preclusion period, the Applicant sought a review of the decision by an authorised review officer of the Respondent. The Authorised review officer confirmed the decision on 29 September 2006. The Applicant then sought further review of the decision by the SSAT which, on 16 November 2006, affirmed the decision under its review. On 15 December 2006 the Applicant sought a review of the SSAT decision by this Tribunal.
LEGISLATIVE BACKGROUND
35. Part 3.14 of the Social Security Act 1991 (Cth) ("the Act") contains provisions for compensation recovery. Section 1160 of the Act describes the effect of that Part in the following terms:
"1160(1) This Part operates in certain specified circumstances to do one or more of the following:
(a) reduce a person’s compensation affected payment;
(b) render a person’s compensation affected payment not payable;
(c)require the repayment of some or all of a person’s compensation affected payment;
because of the receipt of compensation by the person or the person’s partner.
1160(2) This Part applies whether or not there is any connection between the circumstances that give rise to the person’s qualification for the compensation affected payment and the circumstances that give rise to the receipt of compensation by the person or the person’s partner."
36. A parenting payment is a "compensation affected payment", pursuant to paragraph (b) of the definition of that term in s 17(1) of the Act. The lump sum payment of workers' compensation was "compensation", pursuant to the definition of that term in s 17(2) of the Act, as it was made partly in respect of lost earnings or lost capacity to earn resulting from personal injury.
37. Division 3 of Part 3.14 of the Act provides for the "lump sum preclusion period" where compensation is received. Section 1170 of the Act deals with the situation where a person receives both periodic payments of and a lump sum payment of compensation, in the following terms:
"1170(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).
1170(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).
1170(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).
1170(4) The number of weeks in the lump sum preclusion period in relation to a person is the number worked out using the formula:
1170(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."
38. Section 1168 of the Act, which is also in Division 3 of Part 3.14 of the Act provides that:
"A provision of this Division that refers to a person receiving or claiming a compensation affected payment and receiving a lump sum compensation payment has effect regardless of whether the lump sum compensation payment was received before or after the person received or claimed the compensation affected payment."
39. The formula adopted by s. 1170(4) of the Act requires the "compensation part of lump sum" and the "income cut out amount" to be ascertained.
40. Section 17(3)(a) of the Act relevantly defines the "compensation part of a lump sum payment" to be 50% of the payment where:
"(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"
41. Section 17(1) of the Act defines the "income cut out amount" to mean, in relation to a person who has received a compensation payment, the amount worked out using the formula in s 17(8), as in force at the time when the compensation was received. Section 17(8) of the Act provides that:
"For the purposes of the definition of income cut‑out amount in subsection (1), the formula is as follows:
where:
maximum basic rate means the sum of the amount specified in column 3 of item 1 in Table B in point 1064‑B1 and the amount of pension supplement worked out under point 1064‑BA2 for a person who is not a member of a couple.
Note: Point 1064‑BA2 refers to maximum basic rate. Maximum basic rate depends on a person’s family situation. The rate used here is the rate for a person who is not a member of a couple.
ordinary free area limit means the amount specified in column 3 of item 1 in Table E‑1 in point 1064‑E4.
pharmaceutical amount for a single person means the amount specified in column 3 of item 1 in the Pharmaceutical Allowance Amount Table in point 1064‑C8."
42. The amounts identified in the tables in s. 1064 of the Act are subject to adjustments for CPI indexation in the manner prescribed by ss 1191 – 1194 of the Act.
43. Section 1182 of the Act provides for the Respondent to issue a preliminary notice to a person, including an insurer of a person against whom a compensation claim has been made, that the Respondent may wish to recover an amount from the insurer. Where such a notice is given, s 1183 of the Act requires the insurer to notify the Respondent of any liability it has to pay compensation. Section 1184 of the Act then relevantly provides that:
"1184(2) If:
(a)an insurer is liable, under a contract of insurance, to indemnify a compensation payer against any liability arising from a person’s claim for compensation; and
(b)the person has received 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 insurer that the Secretary proposes to recover from the insurer the amount specified in the notice.
1184(3) If a compensation payer or insurer is given notice under subsection (1) or (2), as the case may be, the compensation payer or insurer is liable to pay to the Commonwealth the amount specified in the notice.
1184(4) The amount to be specified in the notice is the recoverable amount under section 1184A."
44. Section 1184A of the Act then provides for the recoverable amount, being the lesser of a number of possible amounts. The lower amount in this case is that provided for by s 1184A(1)(a) of the Act, being:
"the sum of all compensation affected payments made to the person that relate to a day or days in a lump sum preclusion period".
45. Section 1184C(2) of the Act provides that:
"Payment to the Commonwealth of an amount that an insurer is liable to pay under section 1184 in relation to a person operates, to the extent of the payment, as a discharge of:
(a) the insurer’s liability to the compensation payer; and
(b) the compensation payer’s liability to pay compensation to the person."
46. Finally, section 1184K(1) of the Act provides that:
"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."
ISSUES
47. The Applicant accepts that the effect of the above provisions is to apply a preclusion period in respect of his parenting payments for the period from 6 September 2006 to 17 October 2006.
48. The only issue for my determination is therefore whether it is appropriate in the special circumstances of this case to treat the whole or part of the lump sum workers' compensation payment as not having been made, pursuant to s 1184K(1) of the Act.
APPLICABLE PRINCIPLES
49. The term "special circumstances" is not defined by the Act, and the approach of the Tribunal and the Federal Court in a large number of cases has been to regard the matters to which the Tribunal may have regard when considering whether special circumstances exist as unconfined. Although it dealt with a somewhat different provision to s 1184K of the Act, the following passage from the decision of this Tribunal in Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 3 is often cited in this kind of context:
"An expression such as 'special circumstances' is by its nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend on the context in which they occur. For it is context which allows one to say that the circumstances of one case are markedly different from the usual run of cases. That is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be regarded as special".
50. The decision of the Tribunal in Beadle was affirmed by the Full Court of the Federal Court on appeal: (1985) 7 ALD 670. While the Court recognised that it was not possible to lay down precise rules as to what constituted special circumstances, the expression "unusual, uncommon or exceptional" was not, as Hill J noted in Dranichnikov v Centrelink (2003) 75 ALD 134; [2003] FCAFC 133 at [65], actually affirmed by the Full Court.
51. In Secretary, Department of Family and Community Services v Allan (2001) 116 FCR 1 at [17] Heerey J said, in the context of the statutory predecessor to s. 1184K of the Act:
"It is not sensible to lay down precise limits or precise rules about what may constitute special circumstances: Beadle v Director-General of Social Security 7 ALD 670 at 673; 60 ALR 225 at 228. Ill health financial circumstances and the unfairness of a strict application of the Act are some matters which may in an individual case, constitute special circumstances Kirkbright v Secretary, Department of Family and Community Services (2000) 106 FCR 281 at 284, 288; see also Kertland v Secretary, Department of Family and Community Services (1999) 95 FCR 64 at 71."
52. Similarly, in Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545 Kiefel J said, in a passage she again adopted in Secretary, Department of Family and Community Services v Chamberlain (2002) 116 FCR 348 at [19]:
"The phrase “special circumstances”, it has been said, although imprecise is sufficiently understood not to require judicial gloss: Beadle's case (at ALR 229; ALD 674), and 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 enquiry to be undertaken in this case. It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary. The enquiry I have referred to would involve considering what would be the effect, if the provision in question or the principle of liability it creates, is applied."
53. Further, as Kiefel J noted in Chamberlain at [34]-[35] and Lindgren J noted in Clark v Secretary, Department of Employment and Workplace Relations (2007) 96 ALD 129 at [75]:
"The expression “special circumstances” in s 1184K does not embrace the circumstance that the 50% rule will yield a preclusion period beginning on a certain date that will or may be excessive, even grossly excessive, having regard to the component included in a lump sum settlement for loss of earnings or of earning capacity, to the age of the injured person, and perhaps to other circumstances."
54. In Re Fuller and Secretary, Department of Family and Community Services (2004) 83 ALD 152; [2004] AATA 615 at [27] Downes J expressed the view that both hardship and unfairness can form the basis of exercising the discretion under s. 1184K of the Act.
CONSIDERATION OF THE ISSUES
55. There are a number of factors which combine to lead me to the conclusion that the special circumstances of this case make it appropriate to treat the whole of the lump sum payment of workers' compensation as not having been made.
56. Firstly, the Applicant did not appreciate that acceptance of the offer of a total redemption would operate to disentitle him from receiving parenting payments. Rather, he was of the view that the receipt of the lump sum of $8,900 would have little or no effect on his Centrelink payments. In light of the advice which he had received from Centrelink on 26 May 2006, that was a reasonable assumption for the Applicant to have made. If the Applicant had appreciated the true effect of the receipt of the lump sum payment, he would not have accepted the $8,900 offered in full settlement of his claim. Rather, the Applicant would have accepted only his Second Schedule entitlement under the Workers' Compensation and Injury Management Act.
57. In reaching that conclusion I am not being critical of Ms Fitzpatrick. The advice she gave, to the effect that receipt of the lump sum would have little or no effect on the Centrelink payments, was no doubt based on her appreciation, from what the Applicant told her, that the payment related to residual disability with no component for loss of earning capacity. On that assumption the advice was correct. However, the Applicant was not told that the advice he received was dependant on that assumption. He therefore had no reason to seek further advice before accepting the settlement when he received an offer for total redemption of his claim.
58. The Respondent submitted that the Applicant was better off having received the lump sum. I do not think that submission is necessarily correct. If the Applicant had accepted only payment of $5106.20, being his Second Schedule entitlement, he would have continued to receive both weekly payments of workers compensation and parenting payments, together with his family benefits. Whether or not he was better off accepting the offer for total redemption would depend on the period for which he was incapacitated and his further medical expenses. Further, the application of the "50% rule" provided for by s. 17(3) of the Act has the effect that part of the Second Schedule amount is treated as the compensation part of the lump sum payment. If the Applicant had accepted only his Second Schedule entitlement, no part of that lump sum would have counted towards a preclusion period.
59. In any event, I do not consider the submission of the Respondent that the Applicant was better off accepting the lump sum provides an answer to this point. The effect of acceptance of a lump sum on the Applicant's future entitlement to parenting payments was a matter which the Applicant should reasonably have taken into account when deciding whether or not to accept the settlement offer. The failure to advise him of that possibility deprived the Applicant of the opportunity to consider that factor. There is an element of unfairness in the application of the preclusion period to him in those circumstances.
60. Secondly, I consider that the Applicant faced significant financial hardship during the preclusion period. In reaching that conclusion I recognise, as did Sheppard J in Director General of Social Services v Hales (1983) 47 ALR 281 at 321, that recipients of social security are commonly impecunious and in straitened circumstances. However, while the lump sum payment provided additional income to the Applicant, he reasonably spent that money well prior to the end of the preclusion period. For the latter part of the preclusion period he was unable to afford food for himself and his son and was reliant on assistance from his family and a church group.
61. Thirdly, I take account of the emotional strain under which the Applicant was suffering during the preclusion period due to his ill health, the problems which his son was having which led to him being taken out of school for a period and the death of the Applicant's father. These matters would, in my view, have indirectly increased the financial strain to which the Applicant was subject.
62. Fourthly, I consider it relevant to note that the lost earnings for which the Applicant was being compensated would not have operated to preclude the Applicant from receiving parenting payments. This is not a case where the parenting payments were a substitute for lost income which were the subject of the compensation payment. While not itself a special circumstance, this is a factor which is relevant to take into account when considering the cumulative effect of all of the above matters.
63. It may be that, take in isolation, none of the above factors would of themself constitute special circumstances which would lead me to treat the whole or part of the lump sum payment as not having been made. However, in my view, the above factors combine to lead me to the conclusion that the strict application of Part 3.14 of the Act would cause unusual hardship and unfairness to the Applicant and take this case out of the usual or ordinary case.
64. Further, it is my view that my discretion under s 1184K of the Act is most appropriately exercised by treating the whole of the lump sum payment received by the Applicant on 12 September 2006 as not having been made. That approach would reflect the understanding given to the Applicant that the lump sum payment would have little or no effect on his Centrelink payments. It also reflects the fact that parenting payments would have continued for the whole of the relevant period had the Applicant, understanding the preclusion period issue, decided to continue to receive weekly payments of worker's compensation. It is an appropriate response to the significant hardship which the Applicant suffered during the preclusion period, and takes account of the other difficulties facing the Applicant during this time, referred to at paragraph 61 above.
65. As a consequence it is, in my view, appropriate to treat the whole of the lump sum payment of workers' compensation as not having been made in the special circumstances of this case.
66. In reaching that conclusion, I note that there were two other matters put forward by the Applicant which I do not consider to either constitute special circumstances or contribute towards a conclusion that special circumstances exist.
67. The first matter is the circumstances in which the Applicant came to terminate the services of his solicitor. In relation to that matter, it is not uncommon for claimants under the Workers' Compensation and Injury Management Act to be self-represented.
68. The second matter was the workers' compensation insurer's failure to comply with the s. 1182 notice. In relation to that matter, I note that there were no past overpayments to which a notice under s. 1183 of the Act might have applied. I therefore do not consider that any failure to comply with those provisions, which relate to recovery of compensation affected payments already made, affected the Applicant's position.
DECISION
69. For the above reasons, the Tribunal sets aside the decision of the Social Security Appeals Tribunal made on 16 November 2006 and substitutes a decision to:
(a)set aside the decision of the Respondent of 29 September 2006, to cancel the Applicant's parenting payments and apply a lump sum preclusion period from 6 September 2006 to 17 October 2006; and
(b)treat the whole of the compensation payment received by the Applicant on 12 September 2006 as not having been made.
I certify that the 69 preceding paragraphs are a true copy of the reasons for the decision herein of Ms LR Tovey, Member
Signed:……………....[Sgd Ms R Riberi]….............
AssociateDates of Hearing: 26 June 2007
Date of Decision 12 October 2007
Representatives for the Applicant Ms C Belcher,
Welfare Rights & Advocacy Service
Representatives for the Respondent Mr R Wright,
Centrelink Legal Services Branch
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