Clark and Secretary, Department of Employment and Workplace Relations

[2006] AATA 1008

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 1008

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          N2006/488

GENERAL ADMINISTRATIVE DIVISION		)
Re		GRAHAM THOMAS CLARK

Applicant

And SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Ms G Ettinger, Senior Member

Date27 November 2006

PlaceSydney

Decision The decision under review is affirmed.

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

Ms G Ettinger

Senior Member

CATCHWORDS

Social Security - Preclusion Period - compensation for injury - whether calculation correct - whether special circumstances pursuant to section 1184 of the Social Security Act 1991 – calculation of preclusion period correct – no special circumstances found - decision affirmed

Social Security Act 1991, ss 17(3), 1169, 1170, 1184

Administrative Appeals Tribunal Act 1975, s 37

Social Security Amendment Act 1988

Secretary, Department of Social Security v Banks (1990) 20 ALD 19

Re Secretary, Department of Social Security and Jessop (1989) 17 ALD 62

Secretary, Department of Social Security v Cunneen (1997) 48 ALD 251

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

Riddell v Secretary Department of Social Security (1993) 30 ALD 31

Coppard v Department of Family and Community Services [2003] AATA 640 (7 July 2003)

Aiken and Secretary Department of Employment and Workplace Relations [2006] AATA 195 (6 March 2006)

Re Secretary, Department of Social Security and Bolton (1989) 18 ALD 464

REASONS FOR DECISION

27 November 2006 Ms G Ettinger - Senior Member    

1.      The Applicant, Mr Graham Clark, whose date of birth is 29 April 1939, worked as a labourer and truck driver. He turned 65 years of age on 29 April 2004, a matter of significance in this case. He told me that he was working as a haulage driver, and left work in October 2000 after suffering compensable lead poisoning arising out of his work. He said that this manifested itself in memory loss, stiff joints and mood changes which cause him to be aggressive. He attributes the depletion of his social life and damage to his marriage relationship on the lead poisoning. Mr Clark also gave evidence of sleep disturbance, and pins and needles sensations in his arms and legs.

2. Mr Clark’s worker’s compensation claim was initially refused, and he applied for, and was granted, Newstart allowance in October 2000 which was paid until 2 November 2001, followed by periodic payments of workers compensation. His compensation claim was accepted, and the lump sum settled by consent. He received a lump sum settlement of $280,000 of which $88,082.18 was repaid to the workers’ compensation insurer. Mr Clark retained $191,917.82. A preclusion period was calculated during which he cannot receive any compensation affected social security payment. That period was calculated pursuant to section 1170 of the Social Security Act 1991 (“the Act”) to be from 30 April 2005 to 15 February 2008.

3.      Mr Clark who is now 67, is very disappointed, and considers it unfair that he has been precluded from receiving social security payments for such a long period, particularly as the future economic loss which made up the lump sum compensation was calculated to end when he turned 65, and became eligible for age pension.  He gave evidence that he and his wife have been living on a very low income, as Mrs Clark is receiving carer pension.

4.      The Social Security Appeals Tribunal affirmed the decision of the Departmental decision makers, and accordingly Mr Clark has appealed to this Tribunal. At the hearing he was represented by Mr R Hanrahan of counsel, and the Respondent Department by Mr K Bullock, its advocate.

5. I considered the evidence, legislation, case law and submissions of the parties, and am satisfied that the preclusion has been correctly calculated. I have been unable to find special circumstances in this case in order to exercise the discretion available in section 1184 of the Act in order to treat the whole or part of the compensation payment as not having made. I discuss the issues in this case, and the reasons for the findings in the paragraphs below

ISSUES BEFORE THE TRIBUNAL

6.      The issues before the Tribunal were:

·     whether the calculation of the preclusion period was correct;

· whether there are special circumstances pursuant to section 1184 of the Social Security Act1991 which can be applied in order to treat the whole or part of the compensation payment as not having been made .

LEGISLATION

7.      The relevant legislation in this matter is the Social Security Act1991 (“the Act”). The relevant sections of the Act appear in the paragraphs below and the following are three relevant definitions.

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 payment.

receives compensation has the meaning given by subsection (5).

EVIDENCE BEFORE THE TRIBUNAL

8. Documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975, (“the T-documents”) were before the Tribunal as Exhibit R1. The Applicant tendered three documents which were Exhibits A1, A2 and A3 before the Tribunal. Mr Clark gave oral evidence.

9.      I moved then to consider the issues in this case.

WHETHER THE PRECLUSION PERIOD WAS CORRECTLY CALCULATED

10. There is no question that Mr Clark received a lump sum compensation payment of $280,000 as a result of a work related injury. The documents before me indicated that repayments of periodic workers’ compensation payments totalling $88,082.18 were made. However at the hearing Mr Hanrahan told me that the figure repaid was in fact $97,057.15, and tendered a letter dated 3 May 2005 from solicitors Colin Biggers Paisley to the insurers indicating that that amount was repaid to the insurers (Exhibit A3). Mr Bullock undertook at the hearing to investigate the apparent discrepancy between the two figures, and submitted in his closing written submissions that the discrepancy did not arise out of any error, but that it arose due to the amount spent by the insurer on medical expenses and similar costs. He submitted that pursuant to section 1164 of the Act, only the periodic payments are deducted before the calculation leading to the preclusion period is applied. He submitted that accordingly, the figure of $88,082.18 for the repayment was correct. I accepted that argument.

11. Now, in considering the preclusion period I was mindful firstly of section 17(1) of the Act, which defines particular payments as “compensation affected” payments. I noted that Mr Clark received Newstart Allowance from 1 December 2000 until 2 November 2001, which was repaid at the time of the settlement of his compensation award. Pursuant to section 17(1) of the Act, Newstart is a compensation affected payment. Once liability was accepted by the insurer, Newstart ceased and Mr Clark was paid periodic compensation payments.

12. Sections 17(2) and (3) follow as relevant. Section 17(3) of the Act applies because Mr Clark received a lump sum compensation award by consent. Accordingly 50% of the payment has been considered to be the compensation part of the lump sum for purposes of calculating the preclusion period.

“Compensation

17(2) For the purposes of this Act, compensation means:

(a)  a payment of damages; or

(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) that is:

(e) made wholly or partly in respect of lost earnings or lost capacity to earn; and

(f) made either within or outside Australia.

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 w as settled, either by consent judgment being entered in respect of the settlement or otherwise, on or after 9 February 1988; or …”

13. Section 1169(1) states that compensation affected payments are not payable during a lump sum preclusion period. Accordingly, Mr Clark could not be paid Newstart Allowance or Age Pension during any lump sum preclusion period.

“1169(1)        If:

(a)       a person receives or claims a compensation affected    payment; and

(b)       the person receives a lump sum compensation    payment;

the compensation affected payment is not payable to the              person in relation to any day or days in the lump sum            preclusion period.”

14. Pursuant to section 17(3) of the Act, and in the normal course of events, the compensation part of the lump sum payment is 50 percent of the total $191,917.82 which remained after repayments ($88,082.18). In Mr Clark’s case, that was $95,958.91. The amount of $95,958.91 was then divided by $656.63, the average weekly earnings of the time, to calculate the preclusion period which was 146 weeks from either 29 April or 30 April 2005 to 15 February 2008. I was mindful that the commencement date of the preclusion period is taken to be the day after the periodic payments of workers compensation ceases. I also noted that in one of the several letters from Centrelink to Mr Clark’s lawyers, (T17 dated 12 November 2000), the amount of weekly earnings is shown in error as $663.63 a week).

15.     I was mindful that the “50 percent rule” was introduced by the Social Security Amendment Act 1988. The 1988 amendments were considered by von Doussa J in Secretary, Department of Social Security v Banks (1990) 20 ALD 19 to have been inserted to overcome the administrative difficulties which confronted the Secretary under the earlier provisions where he had been required to form an opinion about economic loss in each case. His Honour, having regard to the Second Reading Speech on the Bill considered that the mischief identified was “the abuse of the earlier provisions which had come about through settlements being manipulated to obscure the economic loss component in the compensation payment.”

16. Mr Hanrahan argued that section 1170(3) of the Act applies in Mr Clark’s case, and that his preclusion period should commence on the day following his injury. Section 1170(1) of the Act follows as relevant.

1170  Lump sum preclusion period

1170(1)          Subject to subsection (2), if a person receives both periodic    compensation payments and a lump sum compensation   payment, the lump sum preclusion period is the period that:

(a)       begins on the day following the last day of the periodic                   payments period or, where there is more than one   periodic payments period, the day following the last day   of the last periodic payments period; and

(b)       ends at the end of the number of weeks worked out    under subsections (4) and (5).

1170(2)          If a person chooses to receive part of an entitlement to periodic                 compensation payments in the form of a lump sum, the 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 at the end of the number of weeks worked out    under subsections (4) and (5).

1170(3)          If neither of subsections (1) and (2) applies, the lump sum    preclusion period is the period that:

(a)       begins on the day on which the loss of earnings or loss                  of capacity to earn began; and

(b)       ends at the end of the number of weeks worked out    under subsections (4) and (5).

1170(4)          The number of weeks in the lump sum preclusion period in    relation to a person is the number worked out using the   formula:

Compensation part of lump sum

Income cut-out amount                ….”

17. Mr Bullock argued however, that section 1170(1) applies to Mr Clark’s case, and that accordingly, section 1170(3) has no application. Mr Bullock correctly pointed out that Mr Clark received first Newstart allowance and then periodic compensation payments for the period which began on the date of the compensable event, and ended on 29 April 2005, after the settlement in the District Court, Newcastle. I was mindful Mr Clark had received workers compensation payments amounting to $88,081.18, and that accordingly it would double dipping to date Mr Clark’s preclusion period back to the date of injury in 2000 as submitted by Mr Hanrahan.

18. Mr Hanrahan’s argument was that section 1170(3) of the Act applies to Mr Clark, and that the preclusion period commences on the day on which the loss of earnings or loss of capacity to earn began, that is 31 October 2000. Unfortunately that argument is flawed as Mr Clark was receiving first Newstart allowance and then periodic compensation payments for the period which began on the date of the compensable event, and ended on 29 April 2005. Accordingly section 1170(1) of the Act applies as submitted by the Respondent.

19.     Mr Hanrahan also submitted that Mr Clark had not “received” the workers compensation payments because he had not been permitted to “retain” them.  He referred me to a number of cases

20.     He also posed the hypothetical situation in which Mr Clark might have received social security payments throughout until his settlement in the District Court, submitting that the situation would then have been quite different for Mr Clark. That might have been so, however the actual situation was as stated in the paragraph above.

21.     As to the argument that Mr Clark did not “receive” the payment; I was mindful that the meaning of the word “received” was considered in the matter of Re Secretary, Department of Social Security and Jessop (1989) 17 ALD 62.  Re Jessop concerned an application for family allowance supplement pursuant to section 73 of the Social Security Act 1947. There the husband of the applicant had been receiving special benefit at the time the application for family allowance supplement was made and rejected. The husband subsequently obtained a workers compensation settlement which included a requirement that the special benefit be repaid. The wife argued that because the special benefit had been repaid, it had not been received. The Tribunal in reviewing the findings of the SSAT held as follows:

“The applicant’s argument was that the words ‘is not receiving’ in s 73 have a plain meaning and that there was no need to go beyond that. I find myself in agreement with this approach. In the Shorter Oxford English Dictionary the relevant meanings of ‘receive’ are ‘to take in one’s hand or into one’s possession… to take delivery of a thing from another, either for oneself or for a third party … to accept something offered or presented’. The ordinary and natural meaning of the word ‘received’ has reference to the physical act of taking something into one’s possession. ‘Receiving’ and ‘is not receiving’ have corresponding meanings. There is nothing difficult or obscure in understanding the meaning of these words, either in the abstract or in the context in which they are found … At the time the respondent made her application for FAS, her husband was receiving a relevant benefit which thereby disqualified her to receive an allowance.”

22.     I find the situation in this matter on all fours with Re Jessop, and accordingly reject Mr Hanrahan’s argument. I find that the legislation is quite clear about double dipping.

23.     I was mindful that Mr Clark was represented throughout the proceedings during which his compensation claim was settled, and that there were several letters to and from solicitors and Centrelink discussing repayment and the impending preclusion period. Mr Clark is therefore held to have constructive if not actual knowledge of that (T4, T5T6, T7, T9,T10, T11, T13,  T14, T16, T17, T18,T23, T24).

24.     I was mindful that although an appointment was made for Mr Clark to attend Centrelink on 1 March 2004 to discuss the situation surrounding his financial situation, he did not attend that appointment (T8).

25.     I have noted Mr Hanrahan’s arguments that unfairness may occur in the application of the legislation, and am mindful of the cases where that has been remarked upon. Mr Hanrahan referred me to several cases including Secretary, Department of Social Security v Cunneen (1997) 48 ALD 251. I am mindful that the statutory approach in section 17(3) of the Act may produce an unfair and inequitable outcome in some cases. I am mindful however that this Tribunal must respect the integrity of a statutory process which balances both individual social need and a community’s responsibility to ensure equity of resource distribution to meet those needs.

26.     On the basis of the decided cases, the intent of the legislation, and taking into account the facts of Mr Clark's case and the circumstances of his settlement, I have decided that the preclusion period has been correctly calculated.

APPLICATION OF SECTION 1184 OF THE SOCIAL SECURITY ACT1991

27. I moved then to consider Mr Clark's situation pursuant to section 1184 of the Act. Notwithstanding my finding that the 50 percent rule was correct as applied to Mr Clark to determine the preclusion period, that preclusion period could still be reduced if I was able to find that there were “special circumstances” within the terms of section 1184 of the Act. As relevant section 1184 of the Act provides:

“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.”

28.     The phrase “special circumstances” is very well known and has been the  subject of much judicial examination and expression. Perhaps the most well known case is in Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 3 where Toohey J stated:

“An expression such as “special circumstances” is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend on the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special.”

29.     The discretion in relation to “special circumstances” was also commented on by the Full Federal Court in Riddell v Secretary Department of Social Security (1993) 30 ALD 31 :

“Each particular case must be considered on its merits. It is the essential nature of the provision to create a broad discretion to meet the great variety of circumstances which must occur, raising considerations of individual hardship, need, fairness, reasonableness, and whatever else may move an administrator, keeping in mind the scope and purposes of the Act, to make a decision one way or the other.”

30. In considering whether special circumstances existed pursuant to section 1184 of the Act in this case, I had to consider the constellation of circumstances affecting Mr Clark’s situation, including his health, financial circumstances, legal advice, and the application of the 50 percent rule.

31. In support of Mr Clark’s case for special circumstances, and for section 1184 of the Act to apply so that the Tribunal would treat the whole or part of a compensation payment as not having been made, or not liable to be made, Mr Hanrahan submitted that the legal implications of the legislation as implemented in the decision created unfairness. He pointed to counsel, Mr R Ingram’s affidavit of 22 February 2006 (T27) in which Mr Ingram had deposed in relation to Mr Clark that the claim for future economic loss was to date from October 2000 only to age 65, and that was thus an inherent unfairness to the Applicant.

32.     Mr Hanrahan also submitted that the preclusion period should have been calculated to begin on the day on which Mr Clark’s loss of earnings began, that is 31 October 2000, (rather than 29 April 2005), and that this would have been the case if he had claimed a compensation affected payment such as Newstart instead of having received periodic payments of workers compensation before the settlement at the District Court. Mr Hanrahan cited Coppard v Department of Family and Community Services [2003] AATA 640 (7 July 2003) in this regard, although I noted that the only issue in that case was whether the discretion to allow for a reduction in the preclusion period due to “special circumstances” should be exercised. It was in fact refused. I was mindful that in Aiken and Secretary Department of Employment and Workplace Relations [2006] AATA 195 (6 March 2006), the preclusion period commenced immediately after the injury Mrs Aiken received because she had been receiving age pension at that time which was refunded when the compensation payment was made and the preclusion period imposed.

33.     Mr Hanrahan conceded that financial circumstances were not a basis for pleading “special circumstances” in Mr Clark’s case, because there were indeed people in worse financial situations than the Applicant. Mr Clark, (notwithstanding his ownership of a home and investment property), gave evidence that he is financially strapped and now has a mortgage whereas he previously did not. He did not express any intention to sell his investment property and realise funds in that way.

34.     Mr Bullock argued that there were no “special circumstances” in this case available in order to justify the exercise of the discretion in Mr Clark’s favour. He emphasised that Mr Clark had been represented throughout the proceedings, that Centrelink had provided advice at the time of the settlement, that Mr Clark had received approximately $100,000, that he had a home and an investment property with tenants, and that any resulting repairs and renovations were his responsibility,

35.     I have noted the arguments of both parties. I am mindful that Mr Clark is very unhappy with his situation as due to the lead poisoning, he can no longer drive his truck because his fingers are stiff, he says he is forgetful, has memory loss, his balance has been affected, he has pins and needles in his limbs, and he feels he has lost his independence, his marriage relationship and his friends.

36.     Unfortunately, it is not unusual for a person who has had an accident for which he or she has been compensated, to have accumulated some continuing physical or psychiatric limitations. Having considered the elements of the Applicant’s health condition, I concluded that Mr Clark’s health did not constitute a “special circumstance” in this case (Re Secretary, Department of Social Security and Bolton (1989) 18 ALD 464).

37.     I noted further that Mr Clark was legally represented during his settlement negotiations, and that advice was sought and given by Centrelink.

38.      As noted above by his legal representative, Mr Clark is financially better off than many recipients of compensation. After considering the whole constellation of factors, I could not be satisfied that Mr Clark’s situation is so unusual, unjust or otherwise inappropriate that it would justify the exercise of the discretion to find “special circumstances” in his case.

39.     In summary I found that the circumstances nominated and considered, whether single or together did not constitute “special circumstances”.  In considering all the circumstances nominated as a whole, I concluded that they did not constitute “special circumstances”, for in effect they are not exceptional, uncommon or unusual.

40.     Therefore the decision under review is affirmed.

DECISION

41.     The decision under review is affirmed.

I certify that the 41 preceding paragraphs are a true copy of the reasons for the decision herein of Ms G Ettinger Senior Member

Signed: .............[sgd]..............................................................
  Associate

Date/s of Hearing  19 October 2006; closing written submissions
26 October & 3 November 2006

Date of Decision  27 November 2006
Counsel for the Applicant      Mr R Hanrahan

Respondent’s Advocate       Mr K Bullock