Bilderbeek and Secretary, Department of Employment and Workplace Relations

[2006] AATA 782

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 782

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No A2006/14

GENERAL ADMINISTRATIVE  DIVISION		)
Re		CATHARINA BILDERBEEK

Applicant

And SECRETARY, DEPARTMENT OF EMPLOYMENT & WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Mr S. Webb, Member

Date13 September 2006

PlaceCanberra

Decision The decision under review is affirmed.

..............................................

Mr S. Webb, Member

CATCHWORDS

SOCIAL SECURITY - disability support pension - compensation affected payment - compensation preclusion period - over estimate of loss of earnings in compensation negotiations - health and financial circumstances - decision affirmed

Social Security Act 1991 ss 17, 1169, 1170, 1184

Re Beadle and Director-General of Social Security (1984) 6 ALD 1

Department of Family and Community Services v Chamberlain (2002) 34 AAR 420

Kertland v Secretary, Department of Family and Community Services (1999) 30 AAR 411

Secretary, Department of Family and Community Services v Smith (1991) 13 AAR 454

Secretary, Department of Family and Community Services v Edwards (2000) 32 AAR 370

REASONS FOR DECISION

13 September 2006 Mr S. Webb, Member         

1.      Catharina Bilderbeek was injured in a fall while attending her church in March 2002.  She was a disability support pensioner at the time.  She claimed compensation and continued to receive disability support pension pending resolution of her claim.  In 2004 Ms Bilderbeek was awarded $30,000 compensation.  Centrelink applied a compensation preclusion period and recovered $4,598.37 from the insurer.  Ms Bilderbeek is seeking payment to her of the amount recovered by Centrelink from her compensation lump sum settlement.

2.      The issues for determination by the Tribunal are:

(a)Was Ms Bilderbeek compensated for loss of earnings and was a compensation preclusion period applicable? And, if so

(b)Was the compensation recovery amount correctly calculated? And, if so

(c)Are there special circumstances that make it appropriate to treat all or part of Ms Bilderbeek’s compensation payment as not having been made?

Was Ms Bilderbeek compensated for loss of earnings and was a compensation preclusion period applicable?

3.      Ms Bilderbeek asserted that she had only claimed compensation for medical treatment expenses and that her earning capacity was over-estimated in the compensation negotiation.

4. The general rule is that a person is not entitled to receive compensation for loss of earnings and social security income support payments for the same period. Thus, if a person in receipt of disability support pension (a compensation affected payment) receives compensation for loss of earnings within the meaning of subs 17(2) of the Social Security Act 1991 (“the Act”), a compensation preclusion period applies during which the person is not entitled to receive pension payments pursuant to ss 1169 and 1170 of the Act.

5.      The consent terms of Ms Bilderbeek’s compensation settlement (T12 folios 35-37) was in relation to an injury she suffered, but did not apportion the settlement under particular heads of damages or claim.  Nevertheless it is plain enough that negotiations leading to the settlement were conducted, at least in part, on the basis of loss of earnings (see T10 folio 30 and T12 folio 34).  It was on that basis that Ms Bilderbeek’s solicitor, Gary Robb and Associates, asked Centrelink to provide an estimated lump sum preclusion period and recovery amount on 14 July 2004 (see T4 folio 22).  It was on that basis that the claim was settled (see T21 folio 49).

6.      On those facts I find that Ms Bilderbeek’s lump sum compensation settlement included compensation, in an unspecified amount, for loss of earnings.  Ms Bilderbeek was in receipt of a disability support pension and was not entitled to receive compensation for loss of earnings as well.  Thus a compensation lump sum preclusion period applies.

7.      I note in passing that I am satisfied that appropriate and necessary notices were given to Ms Bilderbeek and the insurer by Centrelink in relation to her compensation payment and recovery amounts.

8. It appears likely that Ms Bilderbeek’s earning capacity, as distinct from her total income (which included her disability support pension payments), was not accurately estimated. That may be a relevant factor to have regard to when considering whether there are special circumstances in her case. It is not, however, a factor that sets her compensation settlement outside the operation of ss 17, 1169 and 1170 of the Act. Nor is it relevant to the calculation of the applicable preclusion period or the amount to be recovered by Centrelink from her compensation settlement.

Was a compensation preclusion period and related recovery amount correctly calculated?

9.      No issue was taken with the calculations of the applicable compensation lump sum preclusion period or the amount recovered by Centrelink from the insurer.  That being so, and having considered the calculations set out in documents at T13 folio 38 and T14 folio 39, I accept that the applicable preclusion period was from 10 March 2002 to 10 August 2002, and the amount recoverable by Centrelink was $4,598.37.

10. I note that the formula at subs 1170(4) for calculating the applicable preclusion period requires calculation of the ‘compensation part of lump sum’. In Ms Bilderbeek’s circumstances, the compensation part of her lump sum is 50% of the total amount of compensation she was awarded pursuant to paragraph 17(3)(a). It matters not that the extent of her earning capacity, and the amount she was able to earn, was over-estimated in the settlement negotiations.

Are there special circumstances that make it appropriate to treat all or part of Ms Bilderbeeks’ compensation payment as not having been made?

11.     Ms Bilderbeek asserted that her health and financial circumstances, the pain and other symptoms she experiences, and the over-estimation of her earning capacity are special circumstances in consequence of which she should be paid the amount Centrelink recovered from her compensation lump sum. 

12.     There is discretion to treat all or part of the compensation payment Ms Bilderbeek received as not having been made if there are special circumstances that make it appropriate to do so (s.1184K).  The term ‘special circumstances’ is not defined.  However, the term refers to circumstances, in their context, that are unusual, uncommon or exceptional (Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 3), or something that distinguishes the case from others where unexpected, unreasonable or unfair may result from a strict application of the Act (Department of Family and Community Services v Chamberlain (2002) 34 AAR 420 at 424-425).

13.     It is necessary to have regard to all of Ms Bilderbeek’s circumstances in their context.

over-estimated loss of earnings and the 50 percent rule

14.     Ms Bilderbeek tendered income tax assessment notices for the 2000, 2001, 2002, 2003, 2004 and 2005 tax years.  These records set out the amounts she earned in those years.  The total income amounts for the 2001 and 2002 tax years appear to include Ms Bilderbeek’s income from the disability support pension as well as her earned income in employment.  It can be seen that her earned income was in the order of $5,000 per year.  The document at T21 folio 49 indicates that Ms Bilderbeek sought compensation on the basis of lost earnings of $218 per week in the period from 2 July 2003 to 2 September 2003 and $100 per week thereafter until the age of 65.

15.     If that estimate is an accurate reflection of what Ms Bilderbeek put in settlement negotiations it can be seen that her loss of earnings amounts was over-estimated.  Had a lower estimate been put, a lower total settlement amount may have resulted.  Whatever the reason Ms Bilderbeek’s loss of earnings were over-estimated, if in fact they were, as will appear, I am satisfied that that occurrence did not have any adverse effect on the length of the preclusion period, or the amount recovered by Centrelink from the compensation settlement amount.

16. The compensation affected part of Ms Bilderbeek’s lump sum amount is to be calculated for the purposes of s.1170 pursuant to subs 17(3) of the Act. The subsection is a deeming provision that arbitrarily apportions 50 percent of the compensation lump sum to economic loss. That is so regardless of the facts concerning such apportionment, if any, in the particular case. The formulae for calculating a compensation lump sum preclusion period, and the arbitrary effect of the deeming provision, apply in cases such as Ms Bilderbeek’s. In such cases it is not uncommon for the Centrelink to recover more than the person would have received by way of compensation for economic loss. That circumstance is not out of the ordinary in those cases.

17.     The amount of Ms Bilderbeek’s loss of earnings, calculated on the basis of her taxation assessment notices, is substantially less than 50 percent of her compensation settlement amount.  Nevertheless, the 50 percent rule applies and the compensation affect part of her lump sum is $15,000.  The actual amount of her economic loss, or the amount of compensation awarded for that loss, is immaterial to that calculation.

18.     When considering whether special circumstances exist as a result of the application of the 50 percent rule, any perceived unfairness to Ms Bilderbeek as a result of applying the rule must be considered in relation to the objects of the legislation, which is to prevent what is know in colloquial parlance as ‘double dipping’ (Secretary, Department of Family and Community Services v Chamberlain (supra) at AAR 427).  It is also necessary to consider whether anything unjust will occur as a result of the strict application of the rule, see for example Kertland v Secretary, Department of Family and Community Services (1999) 30 AAR 411 and Secretary, Department of Family and Community Services v Smith (1991) 13 AAR 454, both of which are distinguished on the facts of Ms Bilderbeek’s case. While Ms Bilderbeek’s perception of unfairness is understandable, having examined the facts of her case I am satisfied that nothing unjust will result from applying the 50 percent rule in the manner required by the Act. The legislators amended the Act in 1988 and adopted the deeming rule in order to overcome abuse of the earlier provisions. On that basis, while sympathetic to Ms Bilderbeek’s concerns about unfairness, I am satisfied that, alone, it does not amount to a special circumstance.

compensation not related to prior disability

19. Ms Bilderbeek’s compensation claim in relation to loss of earnings, and the cause of her loss in that regard, arises from the injuries she suffered in a fall at her (then) church. They are distinct and separate from the impairments that were the cause of her disability and incapacity prior to the accident, on the basis of which she qualified for and was paid disability support pension. Thus the facts giving rise to Ms Bilderbeek’s compensation are not causally related to the facts giving rise to her entitlement to disability support pension. Nevertheless, Ms Bilderbeek received disability support pension, a compensation-affect income support payment, during a period in which she was paid compensation for her inability to exercise her earning capacity as a result of her accident. The policy underlying s.1169 of the Act is to prevent a person receiving income support payments from two sources for the same period. On the facts that is what has occurred in Ms Bilderbeek’s case.

20.     Those are relevant factors to have regard to when considering whether special circumstances exist (Secretary, Department of Family and Community Services v Edwards (2000) 32 AAR 370 at 379). However, the absence of a causal relationship, alone, does not constitute a special circumstance (subs 1184K(2)).

financial circumstances

21.     Ms Bilderbeek gave oral evidence concerning her financial circumstances.  I accept that she lives in public housing and presently relies on the disability support pension for income.  She also receives mobility allowance and rent assistance payments.  She is not presently in employment.  Ms Bilderbeek told me that she purchased a new car in 2005, using part of her compensation settlement.  I accept that she has less than $1,000 remaining from her compensation settlement payment, an amount of approximately $21,000 which she received in early 2005.  She also gave evidence, which I accept, that she obtains free meals from her church in Fyshwick on a weekly basis.  She estimated that after deduction of regular weekly payments for rent and utilities she has $181 per fortnight to live on.  That amount is required to cover the cost of items such as food, clothing, medical treatments, including medications she requires to manage her diabetes and cholesterol, and consultations concerning a bilateral shoulder condition.  Ms Bilderbeek stated that she has no debts, but has an account at a local pharmacy with a balance of $200 owing.

22.     I accept that Ms Bilderbeek is in straitened financial circumstances.  Nevertheless, she is able to cover the cost of her weekly expenses.  Ms Bilderbeek stated that she is not able to afford to attend a physiotherapist to obtain regular treatment for the injury she sustained in the accident.  I note the letter by Mr David Bloom.  However, Ms Bilderbeek was compensated for her injury.  By her own account she did not spend her compensation money to obtain treatment, but supplemented her weekly income and purchased a new vehicle.  She estimated the cost of each treatment with Mr Bloom would cost $60 after an initial treatment costing $80.  Mr Bloom indicates that Ms Bilderbeek requires 12 to 14 treatments each year.  I am not persuaded that Ms Bilderbeek is unable to afford treatment by Mr Bloom.  It has been open to her to pay for such treatment using her compensation payment, but she has not done so.  Even now, it is open to her to pay for such treatment using the money remaining from her compensation.  On her evidence the amount remaining would be sufficient to pay for treatment for one year or more, following Mr Bloom’s recommendation.

23.     Considering those factors, I am not satisfied that Ms Bilderbeek’s financial circumstances are significantly different than the financial circumstances of many people who rely on social security payments for their sole income, including those receiving the disability support pension.  Ms Bilderbeek’s case is distinguished from many others simply because she suffered an injury and received lump sum compensation.  Her decision to spend the compensation money to supplement her lifestyle and to purchase a new car instead of to obtain medical treatment is a matter for her.

24.     Ms Bilderbeek’s financial circumstances are straitened, even difficult, but not substantially different from so many other that they are out of the ordinary or in any way exceptional.  They are not, therefore, special circumstances.

health

25.     Ms Bilderbeek suffers from multiple sclerosis, diabetes, bilateral rotator cuff tears and related post operative complications.  She also suffers from cervical and lumbar back pain as a result of her accident.  Suffering physical or psychological impairment and ill-health is a circumstance that is unfortunately common among recipients of the disability support pension.  In that context Ms Bilderbeek’s health situation is neither uncommon or unusual or exceptional.  It alone does not amount to a special circumstance for present purposes.

Conclusion

26.     Having careful regard to all of Ms Bilderbeek’s circumstances I find that her case is not exceptional or out of the ordinary, and that nothing unjust will result from applying the compensation recovery provisions and the 50 percent rule in the usual manner.  I accept that Ms Bilderbeek’s circumstances are difficult for her, and I understand that she perceives them as unfair.  But those considerations and the facts of her case do not amount to special circumstances.  It follows, therefore, that it is not appropriate to treat any part of her compensation lump sum as not having been made.

27.     The decision under review is affirmed.

I certify that the 27 preceding paragraphs are a true copy of the reasons for the decision herein of Mr S. Webb, Member

Signed:         Peter Edwards           .....................................................................................

Associate

Date of Hearing  6 September 2006
Date of Decision  13 September 2006
Representative for the Applicant               Self-Represented      
Representative for the Respondent          Alan Duri (Centrelink Legal Services)