Curuvija and Secretary, Department of Families, Community Services and Indigenous Affairs

[2006] AATA 856

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 856

ADMINISTRATIVE APPEALS TRIBUNAL        Nº V2006/503

GENERAL ADMINISTRATIVE  DIVISION

Re:        DRAGOLJUB CURUVIJA

Applicant

And:       SECRETARY,

DEPARTMENT OF FAMILIES, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal:       G.D. Friedman, Senior Member

Date:             6 October 2006

Place:            Melbourne

Decision:The Tribunal affirms the decision under review.

(sgd) G. D. Friedman
  Senior Member

SOCIAL SECURITY ‑ lump sum compensation ‑ preclusion period - purchase of property – payment to daughter - whether special circumstances exist

Social Security Act 1991 ss 17(1), (2), (3), 1170, 1184K(1)

Director-General of Social Servicesv Hales (1983) 47 ALR 281
Groth v Secretary, Department of Social Security (1995) 40 ALD 541

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

REASONS FOR DECISION

6 October 2006  G.D.Friedman, Senior Member

1.      Dragoljub Curuvija injured his left hand in a workplace accident and received a compensation payout, which led to a decision by Centrelink to cancel his age pension.  As a result, a compensation preclusion period was imposed from 8 May 2004 until 10 April 2009, during which he is ineligible for age pension. The Social Security Appeals Tribunal affirmed the decision, and Mr Curuvija has sought review.

ISSUES

2.      The issues before the Tribunal are the length of the preclusion period and whether any part of the compensation lump sum should be disregarded due to special circumstances.

BACKGROUND

3.      Mr Curuvija was born on 17 May 1937.  In 2002 at the age of 65 years he registered for the Pension Bonus Scheme on the basis that he would work until the age of 70 years.  On 8 May 2003 Mr Curuvija suffered serious injuries in a workplace accident, and received periodic compensation payments until he was granted age pension from 8 May 2004.  On 21 October 2005 his compensation claim was settled in the gross amount of $350,000, of which he received $310,440.10 after paying a Centrelink charge and his solicitor’s legal bill.  On 25 October 2005 Centrelink informed Mr Curuvija and his lawyer that his age pension had been cancelled and that the preclusion period would apply.

WHAT COMPENSATION PRECLUSION PERIOD APPLIES?

4.      Mr Curuvija disputed the calculation of the preclusion period.  He said that his compensation payment included $250,000 for pain and suffering, which should not form part of the calculation because Centrelink had no right to it.  This amount was compensation for the serious nature of his injuries and the ongoing medical costs and pain associated with the surgery he had to endure.  He stated that only $30,000 for past loss of income and $70,000 for future loss of income should be taken into account.  Mr Curuvija also said that the preclusion period should end in 2007 when he reaches 70 years of age, because he had made an application under the Pension Bonus Scheme on the basis that he would work only until that age.

5.      Section 17(1) of the Social Security Act 1991 (the Act) provides that compensation affected payment includes age pension.  Section 17(2) of the Act provides that a compensation payment includes lost earnings or lost capacity to earn.

6.      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, and ends on a day calculated according to a formula by which the compensation part of the lump sum payment is divided by the income cut-out amount.

7.      The Tribunal notes Mr Curuvija’s claim that the preclusion period should end when he reaches the age of 70 years.  However the legislation does not provide for this to be taken into account.  Section 17(3) of the Act provides that 50 per cent of the lump sum settlement is considered to be the compensation part of the payment if …the payment is made… in settlement of a claim.  Consequently the lump sum payment of $350,000 received by Mr Curuvija includes 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.  The Tribunal does not accept Mr Curuvija’s claim that the amount of $250,000 included as payment for pain and suffering should be disregarded for the purposes of calculating the preclusion period.   

8.      Using the formula specified in s 1170 of the Act, the Tribunal finds that at the relevant time the compensation part of the lump sum is $175,000 and the income cut-out amount is $680.30, giving a preclusion period of 257 weeks, commencing on 8 May 2004 and ending on 10 April 2009.  During this period age pension is not payable to Mr Curuvija.  

DO SPECIAL CIRCUMSTANCES EXIST TO DISREGARD ANY PART OF THE LUMP SUM IN CALCULATING THE PRECLUSION PERIOD?

9.      Mr Curuvija stated that when he and his wife purchased their previous house in 1994 they included their daughter’s name on the title to assist them to obtain finance.  He said that prior to the sale of the house or the receipt of the compensation payout he and his wife decided to give their daughter a one-third share of the proceeds of sale.  She agreed to wait for the compensation payout, when she was given $130,000 to assist her and her husband to purchase a home of their own.  Mr Curuvija told the Tribunal that after purchasing his current residence in 2005 he has $130,000 remaining from the compensation payout in a bank account and has no other assets or income.  The house is fully paid off.  He said that this amount is insufficient to last until the end of the preclusion period.  He noted that the house is in need of urgent repair, and he has ongoing medical costs in addition to daily living expenses.

10.     Mr Curuvija emphasised that his physical and psychological health has suffered significantly as a result of medical issues and the stresses of debts and his financial situation.  He agreed that his wife now receives age pension, but pointed out that she had an accident and also suffers from ongoing health issues.  He stated that he had received poor legal advice but was unable to take action against his former solicitors.  He described the law relating to the preclusion period and his treatment by Centrelink as unfair.

11.     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 ordinary (Groth v Secretary, Department of Social Security (1995) 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.

12.     The Tribunal takes into account Mr Curuvija’s evidence about his current situation and his claims that he has been treated unfairly by Centrelink.  The Tribunal notes his comments about the quality of the legal advice he received, but is satisfied that on a number of occasions Centrelink informed him and his solicitors about the consequences of exhausting the settlement money during the preclusion period.

13.     The Tribunal accepts that payment of $130,000 to his daughter and ongoing living expenses and medical costs have caused Mr Curuvija 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). Mr Curuvija and his wife own their home outright and Mrs Curuvija receives age pension. Mr Curuvija is able to invest the remaining $130,000 in a term deposit or other fund that would attract a reasonable interest rate to give added income in the remaining 30 months of the preclusion period. He chose to give $130,000 to his daughter from the compensation payout during the preclusion period, and the Tribunal is not persuaded that he had a legal obligation to make any payment to her.

14.     After considering all relevant matters, and viewing Mr Curuvija’s case in its entirety, the Tribunal is not satisfied that the matters raised by him 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

15.     The Tribunal affirms the decision under review.

I certify that the fifteen [15] preceding paragraphs are a true copy of the reasons for the decision of:

G.D.Friedman, Senior Member

(sgd)       Lydia Zozual

Associate

Date of hearing:  27 September 2006

Date of decision:  6 October 2006
Advocate for applicant:                Self-represented
Advocate for respondent:            Mr T. Mosby
Solicitor for respondent:              Clayton Utz