Dawson and Secretary, Department of Employment and Workplace Relations
[2007] AATA 1141
•16 March 2007
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2007] AATA 1141
ADMINISTRATIVE APPEALS TRIBUNAL )
) No V2006/749
GENERAL ADMINISTRATIVE DIVISION ) Re JEANETTE MARIE DAWSON Applicant
And
SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS
Respondent
DECISION
Tribunal G.D. Friedman, Senior Member Date16 March 2007
PlaceMelbourne
Decision The Tribunal affirms the decision under review. (sgd) G. D. Friedman
Senior Member
SOCIAL SECURITY ‑ lump sum compensation ‑ preclusion period - compensation award by jury - future economic loss - whether strict application of Act constitutes special circumstances
Accident Compensation Act 1985 (Vic.)
Social Security Act 1991 s 1184K(1)
Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25
Director-General of Social Servicesv Hales (1983) 47 ALR 281
Groth v Secretary, Department of Social Security (1995) 40 ALD 541Haidar v Secretary, Department of Social Security (1998) 28 AAR 288
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Re Torda and Secretary, Department of Family and Community Services [2004] AATA 338
Secretary, Department of Family and Community Servicesv Chamberlain [2002] FCA 67Secretary, Department of Social Security v Smith (1991) 23 ALD 277
REASONS FOR DECISION
16 March 2007 G.D. Friedman, Senior Member 1. In 1997 Jeanette Dawson suffered workplace injuries and received weekly compensation payments and then disability support pension until her claim against the State of Victoria concluded in 2004 with an award of compensation by a County Court jury. Centrelink imposed a compensation preclusion period during which Ms Dawson is ineligible for social security benefits. It expires on 19 September 2009.
ISSUE
2. Ms Dawson has not challenged the accuracy of the compensation-affected amount; the divisor that was used as the basis for calculating the compensation preclusion period; or that the calculation included her economic loss. The only issue before the Tribunal is whether some of the compensation can be disregarded so that her preclusion period would end earlier. She seeks to have the period expire at the end of November 2006.
BACKGROUND
3. On 13 June 1997 Ms Dawson sustained injuries while working as a teacher at a special school. She ceased work on that date and commenced receiving weekly compensation payments which ended on 15 January 2000, after which she received disability support pension from 25 September 2000. After a civil trial, a County Court jury on 26 May 2004 (the verdict date) awarded her $351,210 (being $430,000 consisting of $50,000 for pain and suffering and $380,000 for pecuniary loss reduced by weekly compensation payments of $78,790 pursuant to the Accident Compensation Act 1985 (Vic.)), plus interest of $26,400 and costs. On 18 June 2004 Centrelink imposed a compensation preclusion period from 16 January 2000 until 19 September 2009 (505 weeks).
4. The transcript of the County Court proceedings records that in answer to the question: At what sum do you assess …(b) damages for pecuniary loss to the Plaintiff? the jury foreman specified $380,000. In a letter dated 10 June 2004 to the insurer of the Department of Education & Training (Vic.) (the respondent in the civil action) TAC Law stated (T7, page 35):
Mr Richards [counsel for the plaintiff] put $150,000-$200,000 for pain and suffering, past loss at $253,534 (total) and future loss in the sum of $323,647.00 based on a net figure of $788.00 per week which had been agreed, reduced by 15% to age 60).
The letter continued (page 36):
…The vocational evidence for the defendant went very well. Despite this, we believe the verdict represented total for the past and an allowance of approximately $100,000 for the future.
5. In her Statement of Financial Circumstances dated 25 June 2006 (T31) submitted to the Social Security Appeals Tribunal, Ms Dawson described herself as Employed and her occupation as Market Researcher working mainly from home, and has apparently received remuneration for this type of work.
WHAT CONSTITUTES SPECIAL CIRCUMSTANCES?
6. Section 1184K(1) of the Social Security Act 1991 (the Act) provides:
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.
In order for the decision-maker to use the discretion in s 1184K of the Act, 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 Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25 Besanko J stated at [33]:
It was not the intention of Parliament to confine the exercise of the discretion to an exceptional case. There is less risk of overstatement if the words ‘unusual’ or ‘uncommon’ are emphasised. Those words indicate, correctly in my view, the fact that there must be something that distinguishes the case from the ordinary or usual case.
7. In Secretary, Department of Social Security v Smith (1991) 23 ALD 277 Von Doussa J stated at 281:
…The “50% rule” in s 152(2)(c)(i), and the other provisions to which I have referred, are intended to operate together as a fair balance of the interests of the recipient of the payment with the competing interests of others in the community whose needs must be met as far as possible from a finite budget allocation for social security measures.
8. 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. In Haidar v Secretary, Department of Social Security (1998) 28 AAR 288 Hill J stated at 297:
…Without putting too fine a point upon it, the purpose of the basic thrust of the legislation was to avoid a claimant being entitled both to social security benefits and benefits in the nature of income through lump sum payments…
9. In Secretary, Department of Family and Community Services v Chamberlain [2002] FCA 67 Kiefel J stated:
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.
10. In Re Torda and Secretary, Department of Family and Community Services [2004] AATA 338 the compensation preclusion period started after the applicant’s 60th birthday. The applicant commenced civil proceedings in the District Court of New South Wales and the Judge awarded damages for past economic loss because the Judge considered that the applicant would not work beyond the age of 60 years. The Tribunal found that special circumstances existed because the award of damages included an amount for past economic loss up to the applicant’s 60th birthday, but did not include an amount for future economic loss. At [21] the Tribunal stated:
In the light of the authorities outlined, the tribunal concludes that the strict application of the Act has resulted in an outcome which is unfair and unjust to the applicant. In so stating the tribunal, in again noting that the applicant was not awarded damages for future economic loss in the judgement of 30 June 2002, that damages for past economic loss were awarded up to applicant's sixtieth birthday, namely 20 July 1999; that periodic payments paid to 5 January 2000 were deducted from the gross damages award for past economic loss; that age pension payment commenced on 6 January 2000, concludes that any issue of double payment does not exist in this matter, as a consequence of the explicit terms of the damages award in the judgement of 30 June 2002. Further as a consequence of the imposition of a preclusion period of 124 weeks commencing 6 January 2000 pursuant to a strict application of the Act, the applicant has been deprived of 124 weeks of age pension payments, during a period for which she received no compensation by virtue of the judgement of June 2002. This the tribunal finds to be unfair and unjust.
DO SPECIAL CIRCUMSTANCES EXIST TO DISREGARD ANY PART OF THE LUMP SUM IN CALCULATING THE PRECLUSION PERIOD?
11. Mr Carey, on behalf of Ms Dawson, noted that the amount of damages awarded by the jury for future economic loss was $100,000 (as advised by the insurer). He said that her earnings prior to her injuries were $788 per week, and that this amount was submitted to the jury. He said that, on this basis, her future economic loss of $100,000 represented a period of 126.90 weeks ($100,000 divided by $788) rounded to 127 weeks from the verdict date until late November 2006. Mr Carey stated that during the period from this date until the end of the compensation preclusion period (19 September 2009), Ms Dawson is deprived of any Centrelink benefit to which she may be entitled without compensation, so the compensation preclusion period should not extend beyond the end of November 2006. He said that to do otherwise is harsh, unjust and unfair and would constitute special circumstances.
12. Mr Carey submitted that Ms Dawson’s financial circumstances and her prior knowledge of the impact of the compensation preclusion period are not relevant to the main issue, and that the matter comes within the principles established in Re Torda concerning the discretion to be exercised by the Tribunal arising from a strict application of the Act.
13. Mr Knowles, on behalf of the respondent, noted that Ms Dawson was not contesting the calculation of the compensation preclusion period ($327,000 divided by $647.50), and said that Centrelink explained to her and her solicitors by letter dated 29 February 2000 that a compensation preclusion period would apply to any future award of compensation. He submitted that all circumstances should be taken into account when considering the application of s 1184K of the Act, and that Centrelink was correct in assessing total economic loss as the basis for the compensation preclusion period.
14. Mr Knowles submitted that in Re Torda the applicant would have been precluded from receiving age pension during a period for which she had not been compensated because the judgment specified past economic loss up to her 60th birthday and the compensation preclusion period commenced after her 60th birthday. He said that the award of damages to Ms Dawson included an amount for future economic loss arising from her inability to work. She is aged 52 years and on the basis of her Statement of Financial Circumstances she has worked as a market researcher and might seek some form of employment in the future.
15. In reaching its decision the Tribunal takes into account that, unlike the facts in Re Torda, Ms Dawson received an award of compensation for past and future economic loss related to her inability to work due to injury sustained at work, which is the basis for disability support pension. She is working part-time or may do so in the future, including beyond the age of 60 years. She receives superannuation payments of about $582 per fortnight, and has more than $60,000 in savings and assets valued at $290,000.
16. Although in submissions made at Ms Dawson’s civil trial the jury was told by her counsel that her future loss should be calculated on the basis of $788 per week until age 60, the transcript only refers to the jury awarding her $380,000 in damages for pecuniary loss, with no breakdown of that amount. Similarly, the claim that of this amount $100,000 was awarded for future economic loss represents only a belief by the defendant’s insurer that the amount was an allowance of approximately $100,000 for the future.
17. With the uncertainty as to the exact nature of the jury’s award for economic loss and the absence of justification for using the figure of $788 per week (Ms Dawson’s claimed amount of net earnings as at the verdict date) to calculate economic loss, the Tribunal does not accept Mr Carey’s submission that the period of actual economic loss is 127 weeks from the verdict date. The fact that a different construction of the Act would result in Ms Dawson being advantaged financially does not mean that the correct operation of the compensation preclusion period provisions leads to a result that is harsh, unjust and unfair (Chamberlain).
18. In all the circumstances the Tribunal is not satisfied that strict application of the Act makes Ms Dawson’s circumstances unusual, uncommon or exceptional (Re Beadle). Her circumstances 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
19. The Tribunal affirms the decision under review.
I certify that the nineteen [19] preceding paragraphs are a true copy of the reasons for the decision of:
G.D.Friedman, Senior Member
(sgd) Lydia Zozula
Associate
Date of hearing: 1 March 2007
Date of decision: 16 March 2007
Counsel for applicant: Mr M. Carey
Solicitor for applicant:: Clark & Toop
Counsel for respondent: Mr R. Knowles
Solicitor for respondent: Australian Government Solicitor
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