Conway and Secretary, Department of Family and Community Services

[2004] AATA 811

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 811

ADMINISTRATIVE APPEALS TRIBUNAL        Nº V2004/308

GENERAL ADMINISTRATIVE DIVISION

Re:         MICHAEL KEVIN CONWAY

Applicant

And:       SECRETARY TO THE
  DEPARTMENT OF FAMILY AND

COMMUNITY SERVICES

Respondent

DECISION

Tribunal:       G.D. Friedman, Member

Date:             30 July 2004

Place:            Melbourne

Decision:The Tribunal affirms the decision under review. 

(sgd) G. D. Friedman
  Member

SOCIAL SECURITY ‑ lump sum compensation ‑ preclusion period ‑ purchase of property and other items ‑ whether special circumstances exist

Social Security Act 1991 s 17(1), (2), (3), 1166, 1170(1), (4), (5), 1184K(1)

Director-General of Social Servicesv Hales (1983) 47 ALR 281
Groth v Secretary, Department of Social Security (1996) 40 ALD 541

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

REASONS FOR DECISION

30 July 2004  G.D. Friedman, Member

1.      This is an application by Michael Kevin Conway (the applicant) for review of a decision of the Social Security Appeals Tribunal (SSAT) dated 11 February 2004.  The SSAT affirmed a decision of an authorised review officer of Centrelink dated 27 November 2003 to impose a compensation preclusion period from 20 August 1992 to 29 June 1994 and to recover $15,298.28 in disability support pension paid to the applicant during the preclusion period.

2.      At the hearing on 26 July 2004 the applicant represented himself, and Ms K. Paul, a Centrelink advocate, represented the Secretary to the Department of Family and Community Services (the respondent).

3. The Tribunal received into evidence the documents lodged under s 37 of the Administrative Appeals Tribunal Act 1975 (T1-T41) and one exhibit (Exhibit A1) lodged by the applicant.

BACKGROUND

4.      The applicant has been receiving disability support pension since 7 January 1988.  On 20 August 1992 he suffered injuries in a motor vehicle accident and on 28 November 1994 he settled his compensation claim for $105,000. 

5.      With the settlement amount the applicant purchased a block of land in Heathcote for $40,000, transported and installed a house with sewerage and water connections for $23,000, and gave $25,000 to his brother.

6.      On 17 July 1995 the Department of Social Security advised the applicant that he was liable to repay $15,298.28, which was the amount of disability support pension paid to him during a preclusion period which had been imposed from 20 August 1992 to 29 June 1994.  In June 2002 the applicant sought review of the decision, and on 27 November 2003 an authorised review officer affirmed the decision.    

7.      On 15 December 2003 the applicant sought review by the SSAT, which affirmed Centrelink's decision.  On 4 March 2004 the applicant lodged an application with the Tribunal for review of the SSAT decision.

EVIDENCE

8.      In oral evidence the applicant said that at the time of entering into the settlement of his claim for compensation in the amount of $105,000, he was told by his solicitor that this amount was in addition to all monies received by him, including social security payments.  He said that he began to repay the amount paid to him in social security payments because he was told in 1995 that he could not dispute the debt.

9.      The applicant confirmed that he used the settlement amount to purchase the land and to transport and install a house, requiring the connection of sewerage ($6000) and water ($9000).  He explained that at the time his brother was in financial difficulty, so he gave him $25,000 and that within six months of receiving the funds he had spent all but $300.  He told the Tribunal that in 2002 he obtained a bank loan to repay the money and other debts.

10.     In respect of his current situation the applicant stated that he lives in his car on his cousin’s property, and the house at Heathcote is rented out, with his daughter making all the arrangements to collect the rent and maintain the property.  He said that he receives $671.97 per fortnight in disability support pension and superannuation payments, and contributes to household expenses at his cousin’s residence, but does not pay rent.  He repays the bank loan at $85.00 per fortnight and has $50.00 per fortnight withheld from his pension for repayment of the debt.  The applicant stated that he is in difficult financial circumstances because of Centrelink’s actions.  

11.     The applicant told the Tribunal that that he purchased the house because he needed somewhere to live, but he is happy to allow his daughter to derive benefit from the rental income.  He believes the house should be used by people who need shelter.  He said that he has no intention of selling the house. 

12.     In relation to the terms of the settlement of his personal injuries claim, the applicant stated that under Commonwealth legislation any Centrelink payments must be reimbursed by Comcare.  He maintained that the advice from his solicitors was correct, and that Centrelink payments were separate from compensation, which he said that he has been seeking for many years.  He was extremely critical of Centrelink’s handling of his case, and said that he had made numerous complaints to the Commonwealth Ombudsman and other authorities.  The applicant stated that his dire financial situation was attributable to Centrelink’s refusal to act properly and to pay compensation.      

CONSIDERATION OF THE ISSUES

13. Section 17(1) of the Social Security Act 1991 (the Act) provides that compensation affected payment includes disability support pension.  Section 17(2) of the Act provides:

17.(2)  Subject to subsection (2B), 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 and whether it is made within or outside Australia) that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury.

14.     Under s 17(3) of the Act, 50 per cent of a lump sum settlement payment is the compensation part of the payment.  Section 1170 of the Act sets out the method of calculating a compensation preclusion period, which commences on the day following the last day of periodic payments (s 1170(1)(a)).  Section 1170(1)(b) provides that the end of the period is calculated according to a formula by which the compensation part of the lump sum payment is divided by the income cut-out amount (s 1170(4) and (5)). 

15.     Section 1184K(1) of the Act provides:

1184K(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.

16.     In reaching its decision the Tribunal takes into account the oral evidence and written material, including the submissions made by the parties.

17.     The Tribunal finds that the lump sum payment of $105,000 received by the applicant on 28 November 1994 included an amount for loss of earnings or loss of earning capacity, so it falls within the definition of compensation in s 17(2) of the Act.  Under s 17(3) of the Act, 50 per cent or $52,500 of the lump sum settlement is the compensation part of the payment.

18.     Using the formula specified in s 1170 of the Act, the Tribunal divides the $52,500 by $539.90 (the cut-out amount), and finds that the preclusion period is 97 whole weeks. That is from 20 August 1992 to 29 June 1994, a period during which no disability support pension was payable to the applicant.  However, disability support pension of $15,298.28 was paid to the applicant during those 97 weeks.  Therefore, the Tribunal finds that under s 1166 of the Act the applicant is liable to repay the $15,298.28 which he received, and this amount is a debt owed to the Commonwealth.

19.      Section 1184K(1) of the Act gives the decision‑maker discretion to treat the whole or part of a compensation payment as not having been made or not liable to be made, if the decision-maker thinks it is appropriate to do so in the special circumstances of the case.   However, in order for the decision-maker to use this discretion, there must be something  to make the case  stand out from the usual or the ordinary (Groth v Secretary, Department of Social Security (1996) 40 ALD 541). In Re Beadle and Director‑General of Social Security (1984) 6 ALD 1 the Tribunal held that special circumstances must be unusual, uncommon or exceptional. 

20.     The Tribunal is satisfied that before and after the settlement of the compensation claim Centrelink informed the applicant and his solicitor of the preclusion period and the consequences of exhausting the settlement money.  The Tribunal accepts that expenditure of the settlement money on the purchase of land, a house, sewerage and water connections and the gift to the applicant’s brother has caused the applicant to live in straitened circumstances. However, financial hardship must go beyond straitened circumstances to constitute special circumstances (Director-General of Social Servicesv Hales (1983) 47 ALR 281). Therefore, the applicant’s straitened circumstances do not constitute special circumstances.

21.     The Tribunal accepts that the applicant feels aggrieved that his claim for compensation payments has not been addressed adequately and believes that Centrelink and other government agencies have acted improperly to demand the repayment of a debt that he believes does not exist.  The Tribunal also takes into account that the applicant supports the legal advice he said was given to him that Comcare should reimburse Centrelink payments.  However, the Tribunal is aware that those and other matters are the subject of complaints by the applicant to the Commonwealth Ombudsman and other agencies.

22.     In respect of the house at Heathcote, the Tribunal takes into account that the applicant is content to rent out the house to needy persons, and that his daughter benefits from the proceeds.  The Tribunal also notes that the applicant receives $671.97 per fortnight in disability support pension and superannuation payments, less the amount to repay the debt and the applicant’s loan, and does not pay rent while living on his cousin’s property.    

23.     The Tribunal concludes that the applicant did not make a reasonable effort to keep sufficient funds in reserve for living and other expenses during the preclusion period.  After considering all relevant matters and viewing the applicant’s case in its entirety, the Tribunal is not satisfied that the matters raised by him, including his financial state and complaints about Centrelink’s actions, are such as to make his circumstances unusual, uncommon or exceptional.  His circumstances, while difficult, are not special circumstances.  Therefore, it is not appropriate for the Tribunal to exercise the discretion under s 1184K(1) of the Act, to disregard the compensation received in whole or in part.

DECISION

24.      The Tribunal affirms the decision under review.

I certify that the twenty‑four [24] preceding paragraphs are a true copy of the reasons for the decision of:

G.D.Friedman, Member

(sgd)       Catherine Lake

Clerk

Date of hearing:  26 July 2004 
Date of decision:  30 July 2004
Advocate for applicant:                Self-represented
Advocate for respondent:            Ms K. Paul, Centrelink