Chamberlain and Department of Family and Community Services

Case •

[2001] AATA 178

•

9 March 2001

DECISION AND REASONS FOR DECISION [2001] AATA 178

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q00/519

GENERAL ADMINISTRATIVE  DIVISION       )       
           Re      JOAN MARY CHAMBERLAIN   
  Applicant
           And    SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES        
  Respondent

DECISION

Tribunal       Deputy President DP Breen, Presidential Member      

Date9 March 2001

PlaceBrisbane

Decision      The Tribunal sets aside the decision under review and in substitution therefor remits the matter to the respondent with the direction that the discretion under Section 1184 of the Social Security Act 1991 be exercised in favour of the applicant so that $28,000 of the compensation payment is disregarded in calculating the lump sum preclusion period.      

(Sgd)          DP BREEN
  PRESIDENTIAL MEMBER
CATCHWORDS
SOCIAL SECURITY - compensation - lump sum preclusion period - whether special circumstances existed - what is the effect of specifically itemising economic loss in the settlement details.

Social Security Act 1991 ss 1184
Secretary, Department of Social Security v Banks (1990) 20 ALD 19
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Goth v Secretary, Department of Social Security (1996) 40 ALD 541

REASONS FOR DECISION

9 March 2001          Deputy President DP Breen, Presidential Member                  

  1. This is an appeal against a decision of an Authorised Review Officer made on 10 March 2000 to impose a lump sum preclusion period on Mrs Chamberlain for the period 13 January 1999 to 26 October 1999 and to recover $7,643.36 from her, being disability support pension and age pension paid to her during that period.  This decision was affirmed by the Social Security Appeals Tribunal on 16 May 2000.

  2. This matter was heard by me in Mackay on 6 December 2000.  Mrs Chamberlain, the applicant, was represented by Mr S Naylor, Solicitor of Messrs Macrossan and Amiet.  Mr N Foster, Departmental Advocate, represented the respondent.

  3. Submissions were made by both parties and the following documents were taken into evidence.

  • Exhibit 1            "T" Documents

  • Exhibit 2            Affidavit of Joan Mary Chamberlain sworn 6.12.00

  • Exhibit 3            Affidavit of Gene Christopher Paterson sworn 5.12.00

  • Exhibit 4            Report of Dr DM Parker dated 1.11.00

  1. Mrs Chamberlain was involved in a car accident in January 1999.  On 6 December 1999 she settled out of Court for the sum of $35,000 plus costs of $4,000.  Her settlement was itemised and included an amount of $3,500 for past and future economic loss.

  2. Prior to the accident, Mrs Chamberlain had taught music theory privately from her home and earned around $50 per week for this activity.  The amount of $3,500 was a token amount to compensate for the loss of her ability to teach due to her loss of concentration as a result of the accident.

  3. In calculating the lump sum preclusion period, Centrelink applied the statutory formulae and assessed half of the total compensation payment as being for economic loss. This resulted in Mrs Chamberlain repaying Centrelink more than double the amount she actually received for economic loss. Mrs Chamberlain asked the Tribunal to exercise its discretion under Section 1184 of the Social Security Act1991 so that the lump sum preclusion period more accurately reflected the level of economic loss for which she was actually compensated.

  4. Sections 1165 and 1166 of the Social Security Act 1991 are the Sections under which the lump sum preclusion period is calculated. Section 1165(1A) applies in this case and is in the following terms:

    "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."

  5. Disability support pension and aged pension are both compensation affected payments and were received by Mrs Chamberlain during the relevant period.

  6. Subsections 1165(7) and (8) of the Act are in the following terms:

    "1165(7)If neither subsection (5) nor (6) applies, the new 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 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          "

  7. Subsection 17(3)(a) of the Act defines the compensation part of a lump sum compensation payment as:

    "(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;"

  1. Subsection 1166(1) and (3) of the Act provide as follows:

    "(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.

    …..

    (3)If the person is no 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:

    (i)if the lump sum compensation payment is received before 20 March 1997 – for the old lump sum preclusion period; or

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

  1. The purpose of this legislative scheme was to prevent abuse of the social security system through the manipulation of settlements of compensation claims so as to obscure the economic loss component in compensation payments (Von Doussa J at page 24 – Secretary, Department of Social Security v Banks (1990) 20 ALD 19).

  2. Section 1184 of the Act provides a discretion to some or all of the compensation award when there are special circumstances in a case which makes the arbitrary assessment of 50% unfair.

  3. The respondent referred the Tribunal to a number of cases but in the exercise of a discretion each case will really turn on its own facts. Section 1184 merely requires that there be "special" circumstances in a case such that it is appropriate to exercise the discretion.

  4. There is no legislative definition of the phrase "special circumstances" but it has been considered judicially on a number of occasions in relation to another Section of the same Act.  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 Goth 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.

  5. It is important to note that when a person receives a compensation award as a result of a judgment (other than a consent judgment), the 50% rule does not apply.  Subsection 17(3)(b) then provides that the compensation part of the compensation payment is "so much of the payment as is, in the Secretary's opinion, in respect of lost earnings or lost capacity to earn".  If Mrs Chamberlain's case has been fought and won in the Court and an order in exactly the same terms was made in her favour, then it seems unlikely that the compensation part would have been for any amount other than what it was expressly stipulated to be, namely, $3,500.

  6. It seems quite incredulous that a Government who promotes early resolution of cases to reduce the pressure on the legal system, in effect penalises people who choose to resolve their cases through settlement.  Where a settlement is specifically itemised and a genuine amount has been set for economic loss, the discretion to disregard some or all of the compensation payment in order to ameliorate the effect of the 50% rule is at least opened up.

  7. This is not a case where there was an attempt to hide compensation for economic loss or to double-dip on the social security system.  This is a case where an elderly lady was given a token figure in her compensation payment to cover what was effectively her "play money" – the little extra she earned above her pension to make life that bit easier.

  8. Mr Foster, for the respondent, submitted that when considering whether Mrs Chamberlain's circumstances were special, the Tribunal should keep in mind that she is now over $17,000 better off as a result of her compensation payment.

  9. In this particular case that is not the point.  $31,500 was given to her specifically for her pain and suffering and for her medical expenses.  By having to pay money to Centrelink out of that figure she is in fact in a worse position than that which the payment intended to put her.  This is a case where Centrelink has in effect double-dipped and that can not have been the intention of the legislature.

  10. It was submitted by the applicant that this is a case where the Tribunal should exercise the discretion so as to disregard the whole of the compensation payment.  It is not a submission with which I agree.  This legislation is designed to ensure that a person does not receive compensation for economic loss both from the defendant in their personal injuries case and from Centrelink.  It is important to ensure that this aim of the legislation is upheld.

  11. For the above reasons the Tribunal sets aside the decision under review and remits the matter to the respondent with the direction that the discretion under Section 1184 of the Social Security Act 1991 be exercised in favour of the applicant so that $28,000 of the compensation payment is disregarded in calculating the lump sum preclusion period.

    I certify that the 22 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President DP Breen, Presidential Member

    Signed:         Emma Oettinger      
      Associate

    Date/s of Hearing  6.12.00
    Date of Decision  9.3.01
    Solicitor for the Applicant         Mr S Naylor, Messrs Macrossan and Amiet
    Solicitor for the Respondent    Mr N Foster, Departmental Advocate

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