Bruce and Department of Family and Community Services

Case •

[2001] AATA 42

•

25 January 2001

DECISION AND REASONS FOR DECISION [2001] AATA 42

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q00/236

GENERAL ADMINISTRATIVE  DIVISION       )       
           Re      RONALD BRUCE  
  Applicant
           And    SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES        
  Respondent

DECISION

Tribunal       Deputy President DP Breen, Presidential Member      

Date25 January 2001

PlaceBrisbane

Decision      The Tribunal affirms the decision under review.           

(Sgd)          DP BREEN
  PRESIDENTIAL MEMBER
CATCHWORDS
SOCIAL SECURITY - compensation charge - whether special circumstances exist permitting waiver - whether incorrect advice was given - financial hardship.

Social Security Act 1991 ss 17, 1165, 1166,1184
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Groth v Secretary, Department of Social Security (1996) 40 ALD 541

REASONS FOR DECISION

25 January 2001     Deputy President DP Breen, Presidential Member                  

  1. This was an appeal against a decision of the Social Security Appeals Tribunal made on 1 March 2000 which affirmed the decision of an Authorised Review Officer to recover a compensation charge amount of $9,404.77 for social security payments paid to the applicant from 17 February 1996 to 4 April 1997.

  2. The matter was heard by me in Southport on 3 October 2000.  Written submissions were received from the respondent on 22 November 2000 and oral submissions in reply were received from the applicant on 20 December 2000.  Mr Ronald Bruce, the applicant, represented himself.  Mr P Kanowski, Departmental Advocate, represented the respondent.

  3. Mr Bruce gave oral evidence at the hearing and the following documents were taken into evidence.

  • Exhibit 1            "T" Documents

  • Exhibit 2            Statutory Declaration of Fran Bruce

  • Exhibit 3            Statutory Declaration of Karina Teresa Christopher

  • Exhibit 4            Letter from Karina Christopher to Ronald Bruce dated 21.12.99

  • Exhibit 5            Letter to District Registrar AAT enclosing receipts dated 17.4.00

  • Exhibit 6            Letter to District Registrar AAT enclosing receipts dated 11.4.00

  • Exhibit 7            Documents from Applicant showing that DFCS knew of his new   address

  • Exhibit 8            Fees and Outlays from Messrs Sinnamon, Lawyers

  1. Mr Bruce and his daughter were injured in a motor vehicle accident on 17 February 1996.  This accident precluded Mr Bruce from returning to work.  On 19 February 1996 Mr Bruce claimed, and was paid, sickness allowance.  On 13 May 1996 he claimed and received newstart allowance and on 5 March 1998 he was granted a disability support pension.

  2. On 28 February 1996 Centrelink sent Mr Bruce a letter advising him that if he received a settlement of his personal injury claim, some or all of the payments he had received would have to be paid back.  A similar letter was sent to his Solicitors on that date.

  3. Centrelink was advised on 7 December 1999 that Mr Bruce had settled his claim for $50,000 plus some costs.  Centrelink informed the Solicitors the next day of the compensation charge which resulted from the preclusion period.

  4. Mr Bruce disputed the charge on two grounds. Firstly, he says he was told on two occasions that if he settled for $50,000 or less he would not be required to pay any monies to Centrelink. He said that if he had known that this was not true he would not have settled for that amount. Secondly, Mr Bruce says that he is in a difficult financial position and so some or all of the compensation paid to him should be disregarded pursuant to Section 1184 of the Social Security Act 1991 for the purposes of calculating the preclusion period.

  5. Mr Bruce also challenged the amount of the compensation charge as he had already paid back some of the entitlements during the preclusion period due to another reason.

  6. With respect to the last contention, I have carefully reviewed the payments Mr Bruce received over the preclusion period and the amounts already repaid were not included in the calculation of the compensation charge.  Therefore, Centrelink is not recovering those amounts a second time.

  7. The relevant Sections of the Social Security Act 1991 are as follows:

    "17(3)  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, on or after 9 February 1988;

    1165(1A)        If:
    (a)       a person receives or claims a compensation affected payment; and
    (b)       the person is not a member of a couple; and

    (c)the person receives a lump sum compensation payment (whether before or after the person receives or claims the compensation affected payment) on or after 20 March 1997;

    no compensation affected payment is payable to the person for the new lump sum preclusion period.
    …..

    1165(5)          If periodic compensation payments are made in respect of the lost earnings or lost earning capacity, the new lump sum preclusion period is the period that:
    (a)       begins on the day after the last day of the periodic payment period; and
    (b)       ends after the number of weeks worked out under subsections (8) and (9).

    1165(8)          If a compensation lump sum is received on or after 20 March 1997, the number of weeks in the preclusion period is the number worked out under the following formula:
      Compensation part of lump sum

    Income cut-out amount

    1166(1)          If:
    (a)       a person receives a lump sum compensation payment; and

    (b)the person receives payments of a compensation affected payment for the lump sum preclusion period;

    the Secretary may, by written notice to the person, determine that the person is liable to pay to the Commonwealth the amount specified in the notice.

    1166(3)          If the person is not a member of a couple, the recoverable amount is equal to the smaller of the following amounts:
    (a)       the compensation part of the lump sum compensation payment;

    (b)the sum of the payments of the compensation affected payment made to the person:

    …..

    (ii)if the lump sum compensation payment is received on or after 20 March 1997 – for the new lump sum preclusion period.

    1184(1)          For the purposes of this Part, the Secretary may treat the whole or part of a compensation payment as:
    (a)       not having been made; or
    (b)       not liable to be made;
    if the Secretary thinks it is appropriate to do so in the special circumstances of the case."

  1. In working out the compensation charge, Centrelink has to take into account the total settlement figure, not just what applicants actually received in their hands.  The preclusion period and the resultant compensation charge having been correctly calculated, the only issue for the Tribunal to consider is whether there are any "special circumstances" on which to base the exercise of the discretion in Section 1184.

  2. There is no legislative definition of "special circumstances" but the phrase has been considered judicially on a number of occasions.  In the case of Re Beadle and Director-General of Social Security (1984) 6 ALD 1, it was held that the circumstances in question must be "unusual", "uncommon" or "exceptional" in order to be considered special.  In the case of Groth v Secretary, Department of Social Security (1996) 40 ALD 541 Kiefel J observed that when determining whether a person's circumstances are "special" one should look at the effect upon the claimant if the waiver provisions were not applied.  If the consequences were unintended by the legislation, or the effect on the person concerned was different from that which would be felt by others, then the circumstances may be "special". 

  3. The Tribunal finds Mr Bruce's evidence that he was told on two occasions that he would not have to repay any money to Centrelink if his settlement was $50,000 or less, highly suspect.  The amount of $50,000 is not mentioned in the legislation with respect to the preclusion periods or compensation charges.  Nor does this amount bear any resemblance to any of the cut-off amounts for sickness allowance, newstart allowance or disability support pension.

  4. According to Mr Bruce's evidence, both he and his daughter were in a state of shock for some time after the accident, further reducing the reliability of their recollection of what was said to them by Centrelink and the exact context in which things were said.

  5. Even if Mr Bruce were under the misapprehension that he would owe nothing if he did not receive over $50,000 in settlement, his Solicitors were well aware of the operation of the preclusion rules.  Despite the applicant's hope of recovering $500,000, given the state of the medical evidence and the fact that his daughter only received around $6,000 in compensation, it appears that the applicant's Solicitors negotiated the best possible settlement for their client.

  6. There is nothing in these circumstances which can be described as sufficiently "unusual", "uncommon" or "exceptional", nor would applying the preclusion rules create an unintended outcome.

  7. Mr Bruce alerted the Tribunal to the fact that he is suffering financial hardship as he has little of the compensation monies left after expenses.  The preclusion period was not operational after the settlement date so Mr Bruce has at all times been in receipt of an income.  After he repaid loans for medical and living expenses he retained approximately $7,000 of his compensation payment.

  8. While it is true that $7,000 is only a fraction of the $50,000 settlement figure, these financial circumstances are not such as to constitute "special circumstances".  The case law makes it clear that for financial hardship to be considered a "special circumstance" the person generally must have no income and either no saleable assets or no assets at all.

  9. Therefore, it is the Tribunal's view that there are no special circumstances in this case which would justify the exercise of the discretion in Section 1184 of the Social Security Act 1991.  For these reasons the Tribunal affirms the decision under review.

    I certify that the 19 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President DP Breen, Presidential Member

    Signed:         Denise Burton
      Secretary

    Date/s of Hearing  3.10.00
    Written Submissions                22.11.00
    Oral Submissions in Reply      20.12.00
    Date of Decision  25.1.01
    Rep. for the Applicant              Applicant appeared in person
    Solicitor for the Respondent    Mr P Kanowski, Departmental Advocate

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