DAVID McDOWELL and SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

[2009] AATA 144

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 144

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2008/5614

GENERAL ADMINISTRATIVE DIVISION		)
Re		DAVID McDOWELL

Applicant

And SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Deputy President P E Hack SC

Date4 March 2009

PlaceBrisbane (heard in Maryborough)

Decision The Tribunal affirms the decision under review.

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Deputy President

CATCHWORDS

SOCIAL SECURITY – Newstart payment – compensation lump sum preclusion period – effect of deeming provision is that amount being recovered greatly exceeds the amount of the benefits received – intent of the legislation is administrative simplicity - result arbitrary and objectively unfair – this factor present in many cases and is an aspect of the application of the legislation – this cannot by itself amount to a special circumstance – decision under review affirmed.

Social Security Act 1991 s 1184K(1)

Secretary, Department of Family and Community Services v Chamberlain (2002) 116 FCR 348

Chamberlain and Secretary, Department of Family and Community Services [2001] AATA 178

REASONS FOR DECISION

4 March 2009 Deputy President P E Hack SC    

1.This is an application by Mr David McDowell by which he seeks a review of a decision made by Centrelink on 4 September 2008 to apply a compensation lump sum preclusion period from 24 September 2005 to 3 February 2006 and to recover a charge of $3,149.46. Mr McDowell contends that that result is unfair because the amount being recovered greatly exceeds the amount of the benefits paid to him.

2.The background to the matter may be shortly stated. Mr McDowell was injured in a motor vehicle accident on 24 September 2005. He was off work following the accident. He returned to work on 13 December 2005. He was paid Newstart allowance during the period he was off work.

3.On 27 August 2008 the claim arising from that accident was settled for the sum of $30,000. The settlement contained a component for economic loss, although the amount of this component was not quantified by the insurer.

4.The decision of 4 September 2008, to apply the preclusion period and recover the charge was affirmed on internal and external review.

5.Mr McDowell’s argument is quite simple – it is unfair and unjust to recover the sum of $3,149.46 from him on the assumed basis that he received benefits for the period from 24 September 2005 to 3 February 2006 as a consequence of his accident because the fact is that he returned to work on 13 December 2005 and his receipt thereafter of Newstart allowance had nothing to do with the accident and he certainly was not compensated by the settlement for any economic loss during that period. He accepts that it is fair to require him to repay the benefits paid during the period he was off work following the accident but not after his return to work.

6.It is unnecessary for present purposes to examine the legislation in any detail. Mr McDowell does not take issue with the calculation of the preclusion period and the charge; he says though that his circumstances are “special” thus attracting the discretion in s 1184K(1) of the Social Security Act 1991 (Cth) to treat all or part of his compensation payments as not having been made.

7.The argument advanced by Mr McDowell is relevantly identical to that accepted by the Tribunal, wrongly as the Federal Court subsequently held[1], in Chamberlain and Secretary, Department of Family and Community Services[2]. In that case the applicant, Mrs Chamberlain, had been involved in a motor vehicle accident and suffered personal injury. She was 60 years of age. Prior to the accident Mrs Chamberlain had been in receipt of an age pension and she had previously received a disability support pension. On 6 December 1999 Mrs Chamberlain's claim was settled out of court. The total of the compensation was $35,000 plus $4,000 for costs. Of that amount, $31,500 was attributed by the parties to her pain and suffering and medical expenses and $3,500 was for her loss of earnings to the date of the settlement and for any future loss. The parties' calculation of this sum was not put before the Tribunal. Mrs Chamberlain however said that: "The component of $3,500.00 for past loss of income was on the basis of the loss of opportunity for me to teach music theory after the accident in 1999 and up until the date of settlement of the claim." She said that she was able to earn $50 per week without affecting her entitlement to a pension. Mrs Chamberlain's evidence suggested that she had not in fact earned moneys prior to the accident, but her solicitors, in a letter to the Centrelink Compensation Recovery Team, said that she earned "not more than $50.00 per week" at the time she was injured.  

[1]Secretary, Department of Family and Community Services v Chamberlain (2002) 116 FCR 348.

[2] [2001] AATA 178.

8.The Tribunal described the earnings as "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". The Tribunal came to the conclusion that the result of the imposition of the statutory formula was that Mrs Chamberlain repaid Centrelink more than double the amount she actually received for economic loss. The Tribunal's reasoning was expressed in this way[3]:

“17. 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.

18. 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.

19. Mr Foster, for the respondent, submitted that when considering whether MrsChamberlain'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.

20. 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.

21. 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.”

[3] [2001] AATA 178 at [17] – [21].

9.The approach taken by the Tribunal in that case, namely to consider the supposed reality of the situation, is the approach that Mr McDowell urges me to adopt. It is erroneous and I am unable to adopt it. As Kiefel J said in the appeal[4]:

“[23] It may generally be accepted that the statutory provisions here in question were intended to operate upon factual bases which were assumed and were not intended to reflect the true position. This is so with respect to the figure of 50 per cent taken of the lump sum compensation payment; the amount of basic rate of pension used to divide it; the period during which double payment is assumed to have occurred; and perhaps even the commencement of the period when the loss of earning capacity arose, which would normally be taken to be the date when the compensable injury was occasioned to the person.

[24] Unlike a presumption, which may be rebutted by evidence, the purpose and effect of a deeming provision is to prevent any attempt, by either party, to prove the truth: …; a facility to put to rest the disputes which would otherwise arise concerning the facts: ... Whether a provision has this effect is determined principally by having regard to the purpose for which it is used: …

[25] Here the factual assumptions upon which the calculations are based, including that which treats 50 per cent of the total compensation payment as representing the economic loss component, could not have been intended to be subject to rebuttal in the process of applying the formulae. The statutory purpose is to overcome the need in each case to determine what part of a lump sum compensation payment in truth represents economic loss. Although the assumptions to be made and the result reached are necessarily arbitrary, it is a course which has been taken for administrative simplicity…”

[4] (2002} 116 FCR at 353-4, [23] – [25] (citations have been omitted).

10.Her Honour’s conclusions were expressed thus:

“[33] In the present case, the Tribunal considered that the application of the formulae was unfair to the applicant because she would have to pay more than she had received by way of compensation for economic loss, indeed twice as much. That factor will however be present in most cases and is an aspect of the application of the formulae. In my view it cannot, by itself, amount to a special circumstance, one out of the ordinary.

[34] The basis for the Tribunal's view was its acceptance of what the parties to the settlement said had been offered and accepted for the economic loss component. It was far less than the statute assumed to be the case in applying the formulae. Again, however, this will be so in many, if not most, cases to which the Act applies. Further, the extent of the difference from the basis upon which the parties acted could not provide the necessary ‘special circumstance’. The statute has selected a figure which may operate in an arbitrary way.

[35] The statutory objectives in utilising the formulae, referred to above, must also be borne in mind. It is not intended that a decision-maker be required to consider contentions about what part of the compensation reflected the economic loss component. That is so whether one has regard to the application of the formulae or the discretion under s 1184. The latter does not alter the objective and must be read in light of it.’

11.Thus it is not to the point that, objectively viewed, it may be concluded that Mr McDowell is required to repay considerably more than he received by way of damages for economic loss. The result is arbitrary and objectively unfair in the circumstances of Mr McDowell’s case but I am unable to conclude that it is such as to make Mr McDowell’s circumstances “special”. Mr McDowell did not rely upon any other feature of the case as warranting the exercise of the discretion. In the circumstances I would affirm the decision under review.

I certify that the 11 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President P E Hack SC

Signed: ..................................................................................
  Melissa Hamblin, Associate

Date of Hearing  4 March 2009
Date of Decision  4 March 2009
Applicant   Self-represented
For the Respondent                 Advocate, Centrelink Legal Services