Catherine Henningson and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs

[2013] AATA 241

[2013] AATA 241 

Division	GENERAL ADMINISTRATIVE DIVISION
File Number	2012/4743
Re	Catherine Henningson
APPLICANT
And	Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
RESPONDENT

DECISION

Tribunal	Senior Member Bernard J McCabe
Date	23 April 2013
Place	Brisbane

The decision under review is affirmed.

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Senior Member Bernard J McCabe

CATCHWORDS

COMPENSATION – Preclusion period – Special circumstances – Centrelink advice – Decision under review affirmed

LEGISLATION

Social Security Act 1991 Part 3.14, s 1184K

REASONS FOR DECISION

Senior Member Bernard J McCabe

WHAT IS THIS CASE ABOUT?

1. This case is about preclusion periods imposed under Part 3.14 of the Social Security Act 1991 (Cth) (the Act). A preclusion period is imposed on an individual when he or she:

   (a)is in receipt of a compensation affected payment (which includes a range of social security payments, including the disability support pension, or DSP, and the pensioner education supplement, or PES); and

   (b)is paid an amount of compensation for personal injury which includes compensation for economic loss (that is, the individual is compensated for the loss of future earnings that is expected to occur as a result of the injury).

2. Where the individual receives a lump sum payment in settlement of a personal injuries’ claim which includes a component for economic loss, the legislation assumes 50% of the settlement amount has been allocated in respect of economic loss. That adjusted figure is used to calculate the length of time during which the individual should be able to cope without receiving compensation affected payments. The person becomes ineligible to receive payments during that period: they are expected to live on their settlement monies instead of relying on Centrelink benefits. That period is known as the preclusion period.

3. The Secretary (and therefore the Tribunal upon review) has the discretion to reduce the preclusion period if there are special circumstances suggesting it is desirable to do so. The discretion is found in s 1184K of the Act. Under that section, the Secretary may treat all or part of the compensation payment as if it had not been paid, thereby reducing the effective duration of the preclusion period. The Act does not specify what will amount to special circumstances. There is no exhaustive list of what sort of events or situations will be covered by the term. The decision-maker must instead examine each case and ask whether there is something about the case which is exceptional, unusual, or different – and which suggests it is appropriate to treat the case differently.

4. Ms Henningson, the applicant in this case, received a lump sum settlement in 2012 following a car accident in 2008. She was already in receipt of the DSP and PES when she had the accident, although she was doing a few hours of paid work each week at the time. The fact she was doing some work (and the accident was likely to compromise her ability to do as much work in the future) meant a claim was made in respect of economic loss. She continued to receive the DSP and PES following the accident; she has never been cut off from the DSP, and there is no suggestion she should be cut off now. But the legislation still provides for consequences. The Secretary concluded that while the applicant’s compensation affected payment should not be suspended, the legislation required that an amount be deducted from the settlement monies because the applicant continued to receive DSP and PES during what would otherwise have been the preclusion period. Ms Henningson says there are special circumstances within the meaning of s 1184K which mean, in effect, that the monies deducted from her settlement by Centrelink should be remitted to her.

   THE APPLICANT’S ARGUMENT ABOUT SPECIAL CIRCUMSTANCES

5. The substance of Ms Henningson’s argument about special circumstances was hard to divine from a perusal of the file, although there were some helpful submissions that had been prepared for her by a staff member at QPILCH, a legal advice referral service. The bulk of the documents suggest Ms Henningson was complaining about being given wrong advice from Centrelink sometime before she signed the settlement documents. It was not clear why the fact of wrong advice – if indeed it was wrong – would amount to special circumstances given there appeared to be little doubt any errors were clarified before the applicant signed up to the settlement. But there was more to the applicant’s argument, which became apparent at the hearing.

6. While the applicant was injured in a car accident in November 2008, she did not instruct lawyers to commence a claim on her behalf until 2009. The key date is 28 August 2009. On that day, Ms Henningson had a telephone conference with a solicitor from KM Splatt. She told the lawyer about the circumstances of her accident and her injuries and was provided with preliminary oral advice about her prospects. Ms Henningson says the advice was positive: her lawyer gave an estimate of how much she might expect by way of compensation. She recalled she was told she could expect to receive not less than about $30,000 in the hand. She was also told it could take up to three years to receive the money.

7. Ms Henningson explained in her evidence that she asked the lawyer in the course of the initial telephone consultation on 28 August 2009 whether there were any implications for her given she was in receipt of the DSP and PES. She said she was vaguely aware Centrelink might demand some or all of the settlement monies. She recalled her lawyer said the firm would not offer any advice about what Centrelink might do. Ms Henningson was told she would need to talk to Centrelink herself to find out the true position.

8. The applicant said she rang Centrelink the same day to ask about the implications of her damages claim on her entitlements. She spoke with one of the operators. There is a record of the call in Centrelink’s information management system. The operator provided a statement but she did not recollect the conversation, which is unsurprising. The record (a copy of which is attached to the operator’s statement: exhibit 2) does not disclose the substance of the call. The applicant said she was told there was no implication for her unless the settlement she received was in the order of $200,000 or so. At that point, the applicant recalled she was told her payments would be affected. She said she was told only interest earned on the settlement amount would be taken into account, and that would have no effect in the circumstances. Ms Henningson noted at the hearing she was surprised by the advice and asked if the operator was sure. She asked the operator to check.

9. The operator arranged for the despatch of a document in the mail on 28 August 2009 in apparent response to the applicant’s call that day (exhibit 8). Curiously, the information contained in the letter (which the applicant received a day or so later) does not deal with the question of compensation affected payments. It was more general information referring to rates of payment and the assets’ and incomes’ test. The document included only a brief note warning customers who received a compensation payment to contact Centrelink to discuss their situation.

10. On the same day she spoke with Centrelink and her lawyers, the applicant said she was considering an offer her realtor had received to buy her home. The property had been on the market because Ms Henningson said she was worried about her ability to service the mortgage over the medium term given her disabilities and the possibility she might not be able to work. She explained the combination of positive advice from her lawyers (ie, that she would almost certainly recover at least $30,000) together with the advice from Centrelink (ie, that the compensation payment would not affect her DSP) caused her to reject the offer to buy her house. She said she rang the realtor on either 28 or 29 August 2009 and instructed the agent to reject the offer. She said she was confident she would be able to stay the course with the mortgage given the advice she received. There was no need to sell.

11. There is no record of the offer to buy the property. The realtor’s records apparently do not go back that far. The applicant said she did not see the written offer in any event. She recalled she was told the offer was unconditional and that the prospective purchaser did not require a building inspection because he was a builder. She said that was a significant advantage because there were a number of problems with the building that made it difficult to sell. She noted the property also had only two bedrooms, which made it less attractive.

12. That brings me to the heart of Ms Henningson’s complaint. She said she would never have rejected the offer for her property if she had received correct advice from Centrelink on 28 August 2009. She stated she has put the property back on the market but has not received anything like the offer she rejected in 2009. In the meantime, in 2012, she did not receive the $30,000 amount she expected as compensation. After Centrelink extracted its due, she was left with around $24,000. (The gross settlement amount was $70,660. Costs were extracted from that amount. The economic loss compensation component of the settlement – the figure Centrelink used to calculate the preclusion period – was therefore $35,330. That resulted in a preclusion period of 42 weeks. Centrelink raised debts in respect of the DSP and PES payments over the 42 week period in the amount of $8639.70 and $1310.40 respectively. There does not appear to be any dispute over the quantum of the debts.) Ms Henningson stated she is much worse off now than she would have been if she had sold the property when she had the chance. She said she should receive the payments Centrelink deducted from her settlement as a way of easing her financial distress.

    DO SPECIAL CIRCUMSTANCES EXIST? SHOULD THE PRECLUSION PERIOD BE MODIFIED?

13. Ms Henningson said she relied on incorrect advice from Centrelink at a crucial moment to make what turned out to be a poor decision with far-reaching consequences. She argued erroneous advice from Centrelink suggests the circumstances of the case are unusual and exceptional.

14. The applicant’s story is difficult to assess. She did not have a clear recollection of some of the events: for example she changed her mind at several points during the course of the evidence when asked the date on which she approached the realtor after speaking with her lawyer and Centrelink on 28 August 2009. She initially said she spoke to the realtor on the same day, then suggested it might have been the next day or even later. She also volunteered she was waiting for confirmation from Centrelink before she made her final decision but the letter from Centrelink dated 28 August, when it arrived, could not have provided any comfort because it did not talk about the issue she claimed she discussed with the Centrelink operator on the phone.

15. In fairness to the applicant, she was trying to recall events that occurred over three years ago. Minor inconsistencies in her account are to be expected. She has not kept documents or contemporaneous records that might support her claim, but that is hardly unusual in a case like this. People in Ms Henningson’s position do not necessarily conduct their affairs on the basis they will need to account for themselves in a tribunal some years later. I note Centrelink’s records and the Centrelink operator do not support her claim, and the contents of the letter dated 28 August 2009 cast doubt upon it. Ultimately, though, I do not think it makes any difference to the outcome of the case. I do not think it would be appropriate to effectively shorten the preclusion period in the circumstances of the case even if there was a Centrelink error as Ms Henningson claimed.

16. If Ms Henningson made the decision to reject an offer for her property on the basis of preliminary advice from a lawyer given over the telephone in conjunction with oral advice from a Centrelink telephone operator (advice which even Ms Henningson found difficult to believe) without waiting for the written confirmation from Centrelink that she was promised, the real cause of the applicant’s poor decision was her hasty decision-making process. If there was a Centrelink error, it should not have had the impact Ms Henningson said it did.

17. Ms Henningson’s decision-making process on 28 August 2009 was deficient in other respects. She said the advice from Centrelink and her lawyers made her comfortable she would be able to service her mortgage into the future. There were other variables and imponderables that did not appear to be given any weight in her decision: for example, she assumed she would remain indefinitely on the same or lower interest rates, and she would receive a settlement in the expected amount at a particular time.

18. The applicant’s own evidence suggests she made a poor decision on 28 August 2009. She said Centrelink is to blame. I do not think any error Centrelink made properly explains what occurred. Ms Henningson has simply made a poor choice, and now she is experiencing financial hardship as a result. Financial hardship would not ordinarily qualify as special circumstances. Most social security recipients are under financial pressure.

    CONCLUSION

19. I am not satisfied on the evidence that any error which may have been made by Centrelink amounts to special circumstances that make it appropriate to effectively shorten the preclusion period. I was not referred to any other evidence that suggested special circumstances existed. The decision under review must therefore be affirmed.

I certify that the preceding 19 (nineteen) paragraphs are a true copy of the reasons for the decision herein of Senior Member Bernard J McCabe.

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Associate

Dated  23 April 2013

Date of hearing	13 March 2013
Date final submissions received	12 March 2013
Applicant	In person
Solicitors for the Respondent	Joe Guthrie