Barker and Secretary, Department of Social Services (Social services second review)
[2021] AATA 2123
•6 July 2021
Barker and Secretary, Department of Social Services (Social services second review) [2021] AATA 2123 (6 July 2021)
Division:GENERAL DIVISION
File Number(s): 2020/7760, 2020/7761
Re:Sarah Barker
APPLICANT
AndSecretary, Department of Social Services
RESPONDENT
DECISION
Tribunal:Mrs J C Kelly, Senior Member
Date:6 July 2021
Place:Sydney
Matter 2020/7760:
The AAT1 decision in relation to the Disability Support Pension compensation charges is set aside. In substitution, it is decided that the Applicant was liable to repay the following compensation charges:
·$45,636.34 for the period 23 May 2014 to 4 June 2016;
·$57,897.73 for the period 5 June 2016 to 30 November 2018.
Matter 2020/7761:
The AAT1 decision in relation to the Newstart compensation charge for the period 28 December 2013 to 22 May 2014 Is affirmed.
.............................................................[sgd].....................
Mrs J C Kelly, Senior Member
CATCHWORDS
SOCIAL SECURITY — Applicant was in receipt of compensation affected payments — Payment made in settlement of claim brought under Workers Compensation Act 1987 (NSW) — Recovery of social security payments — Whether payment “lump sum compensation payment” for purposes of Social Security Act 1991 (Cth) s 17 —Discretion to treat all or part of compensation payment as not having been made — Whether special circumstances exist — Reviewable decision affirmed — Reviewable decision set aside to take into account corrections to payment periods and amounts
LEGISLATION
Social Security Act 1991 (Cth) ss 17, 1160, 1173, 1184K, 1237A, 1237AAD
Workers Compensation Act 1987 (NSW) ss 36, 37, 38
CASES
Kirkbright v Secretary, the Department of Family and Community Services (2000)65 ALD211
Re Beadle and Director-General of Social Security (1984)6 ALD1
Re Secretary Department of Social Security and Winterbotham [1990]AATA 808
Secretary, Department of Social Security v Cunneen (1997)149ALR665
Secretary, Department of Social Security v Hulls (1991) 22 ALD 570
Vernon and Secretary, Department of Education, Employment and Workplace Relations [2008] AATA 513
SECONDARY MATERIALS
Social Security Guide
REASONS FOR DECISION
Mrs J C Kelly, Senior Member
6 July 2021
Introduction
Ms Barker, the Applicant, settled legal proceedings in March 2019 for a workplace injury suffered on 13 May 2013. Allianz Australia Insurance Ltd (Allianz) was the relevant insurer. Centrelink, the agency, imposed a compensation charge because the Applicant received Newstart Allowance (Newstart) and then Disability Support Pension (DSP) between 28 December 2013 and 30 November 2018. The Applicant accepts that those payments were compensation affected payments under the Social Security Act 1991 (Cth) (the Act).[1]
[1] Section 17(1).
The Applicant challenges the basis on which the agency calculated that charge. She claims that the compensation payment was a lump sum payment to which section 17(3) of the Act applied.
The Respondent calculated the charge pursuant to section 1173 of the Act on the basis that the settlement was payment of arrears of periodic payments.
The agency recovered a total of $108,833.44 from Allianz between 2 July 2019 and 18 December 2019. The Applicant claims that if the 50% rule were applied under s 17(3) of the Act, the compensation charge would be $49,638.21, and the agency should refund to her $59,195.23 and waive and refund the compensation charge.
The Applicant seeks the waiver of the compensation charge on two bases: waiver of debt arising from error pursuant to s 1237A, and waiver of the balance because of special circumstances pursuant to section 1184K or 1237AAD of the Act. She claims that she is unable to enter gainful employment because of an unforeseen workplace event and a diagnosis of Chronic Fatigue Syndrome resulting in accumulating debt and financial hardship.
The reviewable decision made by the Social Services and Child Support Division of the Tribunal (AAT1) on 28 October 2020, affirmed the decision of an Authorised Review Officer (ARO) made on 15 October 2019, to affirm the decisions made to raise and recover a compensation charge for the following amounts:
·$5,283.93 for the period 28 December 2013 to 22 May 2014 (Newstart);
·$45,636.34 for the period 28 December 2013 to 4 June 2016 (DSP); and
·$77,604.66 for the period 5 June 2016 to 25 September 2019 (DSP).
That was a total compensation charge of $128,524.93.
An email dated 26 February 2021 from the agency to its legal representative in these proceedings clarified the relevant dates and amounts of the charges in respect of Newstart and DSP. The agency had reviewed the debts raised and concluded:
As below, three separate charges have been raised relating to periodic compensation:
X5479255: $5,283.93 Newstart Allowance from 28/12/2013 to 22/5/2014
X5479256: $45,636.34 Disability Support Pension with period noted as 28/12/2013 to 4/6/2016
X5501138: $57,897.73 from 5/6/2016 to 30/11/2018.
We have noted that Disability Support Pension was granted from 23/5/2014.
Debt ID X5479256 incorrectly has the start date recorded as 28/12/2013. The correct period of the charge should read 23/5/2014 to 4/6/2016.
We have reviewed the calculation of debt X5479256 and found it is simply the start date that has been incorrectly recorded.
The total compensation charge according to that calculation is $108,618.01.
At the hearing, the parties agreed that the charge period was 28 December 2013 to 30 November 2018.
As a result, the correct dates and periods of the compensation charge are as follows:
·$5,283.93 for the period 28 December 2013 to 22 May 2014 (Newstart);
·$45,636.34 for the period 23 May 2014 to 4 June 2016 (DSP); and
·$57,897.73 for the period 5 June 2016 to 30 November 2018 (DSP).
The evidence
Most of the material before the Tribunal were documents provided by the Respondent pursuant to s 37(1) of the Administrative Appeals Tribunal Act 1975 (Cth) which are referred to as T documents and Supplementary T documents.
The Applicant relied on a bundle of documents she provided prior to the hearing in addition to various T documents to which she referred. She was cross-examined briefly at the hearing.
The legislation
The following provisions of the Act are relevant to the issue in dispute.
Section 17 of the Act is a lengthy and detailed definition provision entitled Compensation recovery definitions. Following are the definitions within that provision that are relevant for the purposes of this decision.
(1)...
…
“compensation part”, in relation to a lump sum compensation payment, has the meaning given by subsections (3) and (4).
…
“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 payments.
…
Compensation
(2) Subject to subsection (2B), for the purposes of this Act, compensation means:
(a) a payment of damages;
(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.
…
(4A) For the purposes of this Act, a payment of arrears of periodic compensation payments is not a lump sum compensation payment.
Part 3.14 of the Act Is entitled Compensation Recovery and sets out provisions that deal with compensation payments where a person is in receipt of a compensation affected payment, including Newstart or DSP .
Section 1160 sets out the general effect of Part 3.14. It reduces, or renders not payable a person’s compensation affected payment, or requires the repayment of some or all of a person’s compensation affected payment.
Section 1173 provides:
(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;
(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) 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.
The factual background
On 5 March 2019, a determination of the Workers Compensation Commission was issued following arbitration stating that the proceedings were discontinued and then:
Notations
3 The respondent agrees on a voluntary basis to pay the applicant weekly compensation as follows pursuant to section 36 and 37 of the Workers Compensation Act 1987:
a) From 7 December 2013 to 8 March 2014 at the rate of $1155.12 per week (95% of $1215.92 PIAWE).
b) From 9 March 2014 to 30 June 2014 at the rate of $972.74 per week (80% of $1215.92 PIAWE).
c) From 1 July 2014 to 30 June 2015 at the rate of $972.74 per week (80% of $1215.92 PIAWE).
d) From 1 July 2015 to 4 June 2016 at the rate of $972.74 per week (80% of
$1215.92 PIAWE)
[Emphasis added]
In summary, Notation 4 stated that the respondent agreed on a voluntary basis to pay the applicant’s reasonably necessary medical expenses up to a maximum of $7000.00 on production of accounts, receipts and Medicare Notes.
By facsimile dated 12 March 2019, Allianz advised the agency that it was processing wages for the period 7 December 2013 to 4 June 2016 and seeking advice whether the agency had a charge in relation to that.
On 17 April 2019, Allianz sent another facsimile to the agency advising that it was processing payments for the same period and asking whether the agency had a charge in relation to that.
Allianz sent an email to the Applicant’s legal representatives on 3 June 2019 advising:
I can confirm we will be proceeding with weekly benefits into Section 38 based on the documentation provided. [Emphasis added]
By facsimile dated 26 August 2019, Allianz advised the agency that it was processing wages for the following periods:
Period
Weekly Amount
4/6/2016 - 30/09/2016
$972.74
1/10/2016- 31/03/2017
$976.00
1/4/2017 - 30/9/2017
$992.00
1/10/2017 - 31/3/2018
$1,000.00
1/4/2018- 30/9/2019
$1,016.00
1/10/2018- 31/3/2019
$1,024.00
1/4/2019- 30/9/2019
$1,032.00
1/10/2019 - onwards
$1,040.00
By facsimile dated 11 November 2019, Allianz advised the agency that it was processing wages for the following periods:
Period Weekly Amoun t 5/6/2016 - 30/9/2016
$972.74
1/10/2016 - 31/3/2017
$976.00
1/4/2017 - 30/9/2017
$992.00
1/10/2017 - 31/3/2018
$1,000.00
1/4/2018 - 30/9/2018
$1,016.00
1/10/2018 - 30/11/2018
$1,024.00
The Applicant said that the second facsimile rectified the first. I infer that the second was confined to the charge period.
Agency documents showed the following compensation payments made by Allianz: $45,651.78 and $190.36 on 2 July 2019, $5,093.57 on 3 July 2019, and $57,897.73 on 18 December 2019.[2]
[2] The amount of $45,651.78 was reduced to $45,636.34 on 9 October 2019. The Applicant was notified. T16, p 125.
According to the Applicant, Allianz paid her a total amount of $90,044.56 as follows:
1 July 2019 $41,699.71
15 November 2019 $27,804.92
18 December 2019 $20,539.93[3]
[3] ST5 p 818.
The Applicant obtained from Allianz a completed Centrelink form entitled “Compensation Advice of Lump Sum Payments” dated 3 March 2021. At the beginning of the form the following appears after a red stop sign:
You should NOT complete this form if this payment is solely for arrears of periodic payments for a specified and/or ongoing period. You must complete the Compensation Advice of periodic Payments (SS445) form.
Question 14 asked if the claimant has received any other lump sum payments for the claim, for example, impairment payment or advance payments. The Gross Lump Sum shown recorded is $129,336.58 in respect of section 38 of the Workers Compensation Act 1987 (Cth) (the NSW Act).
In response to question 15 which asked if the current settlement contained a component for economic loss (for example, loss of wages), Allianz indicated Yes.
Question 16 asked if the claimant received periodic payments in respect of the claim. The answer was Yes. A stamp beside the answer stated “in settlement of a claim at WCC incl medical expenses – additional agreement for section 38 payment”.
Question 20 asked “What is the total gross lump sum settlement amount”. The answer in blue was:
- WCC Orders including medical expenses total: $135,827.14.
- Sec 38 payment total: $129,336.58
- Aggregated amounts total: $265,163.72.
While the question included provision for the amount paid for costs, the answer did not refer to costs.
Consideration of the basis of calculation argument
In support of her argument that she received a lump sum settlement and therefore the 50% rule should apply, the Applicant provided extensive, detailed and considered submissions referring to the legislation, the Social Security Guide, Services Australia Calculating a compensation charge for out of court settlements 117-020100210, and Services Australia Operational Blueprint – Treatment of periodic compensation payments 117-03010000.
For the reasons that follow, I do not accept her argument.
The documents that Allianz sent to the agency show:
(i)There were three components to the settlement of the legal proceedings in 2019: one pursuant to sections 36 and 37 of the NSW Act in respect of the period 7 December 2013 to 4 June 2016, another in respect to medical expenses, and another pursuant to section 38 of that Act in respect of the period 5 June 2016 to 30 November 2018.
(ii)The first and second components were set out in the determination of the Workers Compensation Commission dated 5 March 2019. I was unable to identify a document setting out the section 38 settlement.
(iii)Sections 36, 37 and 38 of the NSW Act are in Division 2 of Part 3 which is entitled Weekly compensation by way of income support.
(iv)The payments made pursuant to sections 36, 37 and section 38 were payment of arrears of periodic compensation payments which is not a lump sum compensation payment pursuant to s 17(4A) of the Act.
The Compensation Advice of Lump Sum Payments dated 3 March 2021 that Allianz provided to the Applicant at her request does not alter the legal position.
The calculation of the compensation charge is appropriately made pursuant to section 1173 of the Act.
Consideration of special circumstances
The Applicant listed failures that she claimed shows that the agency has been negligent, made administrative errors, was guilty of maladministration, failed to provide procedural fairness, made factual errors, misinterpreted and omitted relevant facts, and was ignorant of or incorrectly interpreted or applied the law. The Applicant’s complaints arose from her view that the basis of the calculation of the charge was incorrect.
There was an error made in respect to the length of the period of the charge in respect of the section 38 payment and consequently the amount of the charge. As set out above, the initial calculation from Allianz on 26 August 2019 was for the period 4 June 2016 “onwards” resulting in a compensation charge of $77,604.66. A correction was made by Allianz on 11 November 2019 when the period was changed to 5 June 2016 to 30 November 2018, and the amount of the charge was subsequently reduced to $57,897.73.
The primary decision made on 7 October 2019 to raise a charge of $77,604.66 in relation to DSP for the period 5 June 2016 to 25 September 2019 was incorrect. The ARO affirmed that decision on 15 October 2019, before the amendment to the period and the amount. AAT1 affirmed the ARO’s decision in turn. The change of the period and consequently the amount of the charge actually imposed was not apparent to the AAT1 decision-maker on 28 October 2020. The agency advised the Applicant of the charge of $57,897.73 by letter dated 15 November 2019. Her evidence was that the charge that was actually imposed was the amount of $57,897.73. I have not identified any administrative error that would result in waiver pursuant to section 1237A of the Act.
The relevant special circumstances provision in this case is section 1184K which is within Part 3.14 of Chapter 3 of the Act, rather than section 1237AAD which falls within Part 5.4 of Chapter 5 of the Act and deals with specific types of debts.
Section 1184K of the Act allows the Secretary (or the Tribunal sitting in the shoes of the Secretary) to treat whole or part of a compensation payment as not having been made or not liable to be made if the Secretary thinks it is appropriate to do so in the special circumstances of the case.
The term ‘special circumstances’ was described by the Tribunal in Beadle and Director General of Social Security (1984) 6 ALD 1 as circumstances that are ‘uncommon, unusual, exceptional’ and that have a ‘particular quality of unusualness’.
Accordingly, section 1184K of the Act is designed to enable a decision maker to exercise discretion to disregard the whole or part of a compensation payment in circumstances where the strict application of the Act would otherwise lead to an unfair or inappropriate result: Re Beadle and Director-General of Social Security (1984) 6 ALD 1; Kirkbright v Secretary, the Department of Family and Community Services (2000) 65 ALD 211; Secretary, Department of Social Security v Cunneen (1997) 149 ALR 665; Re Secretary Department of Social Security and Winterbotham [1990] AATA 808; Secretary, Department of Social Security v Hulls (1991) 22 ALD 570.
The difference in treatment of periodic compensation payments and lump sum payments is not a special circumstance. It is the intended operation of the legislation.[4]
[4] See Vernon and Secretary, Department of Education, Employment and Workplace Relations [2008] AATA 513.
The Applicant is 32 years of age. Her workers’ compensation claims have been finalised. She received a total of $265,163.72, including $7,000 for medical expenses. From that, the agency recovered $108,833.44. I understood the Applicant claims that she received about $90,000 from Allianz. It is not clear to me what happened to the balance of approximately $58,000, taking into account a deduction for medical expenses component of the settlement of $7,000. She has relied on Newstart and then DSP since 2013. She continues to receive DSP of $944.30 per fortnight because of her medical condition. She has ongoing symptoms from the workplace incident and is unable to work. She holds a pensioner concession card. She lives in stable, shared accommodation and pays $100 per week in board.
At the time of the AAT1 hearing in October 2020 the Applicant had savings of approximately $40,000. She had received a veterinary bill for $32,000. She has a tax debt. Her Statement of Financial Circumstances dated 6 April 2020 showed that she pays for car insurance, and spends $130 per fortnight on parking fees, tolls, and taxi and Uber fares. It showed that her costs of living per fortnight were $315 higher than her income. Bank statements provided to AAT1 showed outgoings for general day-to-day expenses. Her pharmacy/medical bills are approximately $400 per month. She has a health care card.
Her evidence before this Tribunal was different with respect to her total debts which she said were $33,181.21, and her assets which she said were nil. She pointed out that her fortnightly living expenses did not include unavoidable or reasonable expenses that may occur. The Applicant also referred to the Asset Hardship provisions.
The Applicant told AAT1 that she is not required to support others and has family support, physically, emotionally and financially.
I am not satisfied that the Applicant’s circumstances are ‘uncommon, unusual, exceptional’ and that they have a ‘particular quality of unusualness’ for a person receiving DSP. It is therefore not appropriate to treat all or part of the compensation payment as not having been made for the purposes of section 1184k of the Act.
Conclusion
In accordance with section 1173 of the Act, the rate of Newstart and DSP payable to the Applicant in the period 28 December 2013 to 30 November 2018 was appropriately reduced to nil.
The Respondent’s legal representative did not address the appropriate decision to be made taking into account both the reduction of the amount for the period of 5 June 2016 to 30 November 2018 from $77,604.66 to $57,897.73, and the correction to the start date of the $45,636.34 DSP compensation charge (which had no bearing on the amount for that period). In the Statement of Facts Issues and Contentions, the Respondent contended that the decision of AAT1 should be affirmed. That decision affirmed the ARO’s decision as discussed above. The “correct” decision in relation to the $57,897.73 DSP charge was made by the agency by letter dated 15 November 2019.
The AAT1’s decision in relation to the compensation charge of $5,283.93 for the Newstart payment period 28 December 2013 to 22 May 2014, was based on the correct payment period and amount.
The correct amounts and periods of the compensation charges are correctly set out in the email from the agency dated 26 February 2021.
There were two matters before this Tribunal: 2020/7760 which relates to the compensation charge for the receipt of DSP, and 2020/7761 which relates to the compensation charge for receipt of Newstart.
DECISION
Matter 2020/7760
The AAT1 decision in relation to the Disability Support Pension compensation charges is set aside. In substitution, it is decided that the Applicant was liable to repay the following compensation charges:
·$45,636.34 for the period 23 May 2014 to 4 June 2016;
·$57,897.73 for the period 5 June 2016 to 30 November 2018.
Matter 2020/7761
The AAT1 decision in relation to the Newstart compensation charge for the period 28 December 2013 to 22 May 2014 Is affirmed.
I certify that the preceding 58 (fifty-eight) paragraphs are a true copy of the reasons for the decision herein of Mrs J C Kelly, Senior Member
......................................[sgd]..................................
Associate
Dated: 6 July 2021
Date(s) of hearing: 22 June 2021 Applicant: Self-Represented Solicitors for the Respondent: B Erak, Services Australia
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