De Xian Liu and Secretary, Department of Education, Employment and Workplace Relations

[2012] AATA 886

[2012] AATA 886 

Division	GENERAL ADMINISTRATIVE DIVISION
File Number(s)	2012/2544
Re	De Xian Liu
APPLICANT
And	Secretary, Department of Education, Employment and Workplace Relations
RESPONDENT

DECISION

Tribunal	Mr Dean Letcher, QC, Senior Member
Date	17 December 2012
Place	Sydney

The Tribunal affirms the decision under review.

............[sgd]............................................................

Mr Dean Letcher, QC, Senior Member

CATCHWORDS

SOCIAL SECURITY – Workers compensation claim - lump sum payments – Newstart payments – preclusion period – decision affirmed.

LEGISLATION

Social Security Act 1991; ss 1169, 1171

CASES

Secretary Department of Social Security v Banks (1990) 23 FCR 416

Secretary Department of Social Security v Cunneen (1997) 78 FCR 576
Shields; Department of Education, Employment and Workplace Relations [2011] AATA 156

REASONS FOR DECISION

Mr Dean Letcher, QC, Senior Member

17 December 2012

BACKGROUND

1. Mr De Xian Liu (‘the Applicant’) seeks a review of a decision of the Social Security Appeals Tribunal (‘SSAT’) dated 23 May 2012, which applied a preclusion period to his Newstart payments and required a recovery of $4,302.36 from him.

2. The Applicant sustained a workplace injury on 1 August 2001.

3. On 3 March 2005 he was paid $2,700.00 by the worker’s compensation insurer for ‘impairment’ as a consequence of his workplace injury.

4. He received periodic compensation payments until 26 June 2011.

5. On 16 December 2011 Consent Orders were entered in the Workers Compensation Commission of New South Wales whereby the insurer inter alia agreed to pay the Applicant:

   (a)$25.00 per week from 1 October 2005 to 26 June 2011 in an agreed amount of $7,500.00.

   (b)$12,000 in respect of 20 per cent permanent impairment of the back, $11,250 in respect of a 15 per cent loss of use of the right leg, $11,250 in respect of 15 per cent loss of use of the left leg pursuant to s 66 and $18,000 pursuant to s 67.

6. The amounts in paragraphs 3, 5(a) and 5(b) totalled $62,700.00.

7. The Applicant received Newstart payments from 29 June 2011 to 9 January 2012.

8. Centrelink claimed a repayment from Mr Liu of $4,302.36 of those Newstart payments received from 29 June 2011 to 9 January 2012.

9. Section 1169 of the Social Security Act 1991 (‘the Act’) imposes a “lump sum preclusion period” suspending Newstart payments when a “lump sum” compensation payment has been received.

10. Centrelink imposed a lump sum preclusion period on Mr Liu from 27 June 2011 to    18 March 2012.

11. Mr Liu sought internal reviews of this decision and those reviews affirmed the decision.

12. Mr Liu appealed to the SSAT which, on 23 May 2012, affirmed the decision. The Applicant then on 21 June 2012 sought review by this Tribunal.

    LEGISLATION

13. Section 1171 of the Act states:

    (1)If

    (a)   a person receives 2 or more lump sum payments in relation to the same event that gave rise to an entitlement of the person to compensation (the multiple payments); and

    (b)   at least one of the multiple payments is made wholly or partly in respect of lost earnings or lost capacity to earn;

    the following paragraphs have effect for the purposes of this Act and the Administration Act:

    (c)    the person is taken to have received one lump sum compensation payment (the single payment ) of an amount equal to the sum of the multiple payments;

    (d)   the single payment is taken to have been received by the person:

    (i) on the day on which he or she received the last of the multiple payments; or

    (ii) if the multiple payments were all received on the same day, on that day.

    (2)A payment is not a lump sum payment for the purposes of paragraph (1)(a) if it relates exclusively to arrears of periodic compensation.

14. The effect of s 1117(1) of the Act is that if a number of lump sum compensation payments are made to a person, then the whole total is treated as a lump sum if any one or part of the number is in respect of lost earnings or lost capacity to earn. Further s 1117(2) stipulates that a payment is not a lump sum payment for the purposes of s 1117(1)(a) if it relates exclusively to arrears of periodic compensation.

15. At first blush this would indicate that the amount of $7,500 (being 300 weeks at $25 per week and agreed by the Respondent’s counsel to be arrears of periodic compensation) could not be considered as a “lump sum payment”. However, the decided cases of superior courts hold this to be an incorrect interpretation.

16. In Secretary Department of Social Security v Banks (1990) 23 FCR 416, von Doussa J held that the lump sum payment embraced the entire amount paid, even though it included medical expenses and other heads unrelated to wage loss. He referred to the Second Reading speech and the mischief which the sections were intended to address. He acknowledged that the sections introduced “an arbitrary formula”, but argued that it was “a broad attempt to balance the interests of the recipient with the competing interests of others in the community whose needs must be met as far as possible from a finite budget”.

17. This pragmatic approach was followed by Foster J in Secretary Department of Social Security v Cunneen (1997) 78 FCR 576 and by Bell SM in the Administrative Appeals Tribunal case of Shields; Department of Education, Employment and Workplace Relations [2011] AATA 156. Those decisions make it clear that they consider that the words of s 1117(2) do not stand alone, and that if other lump sums relate to wage loss or impairment, then the sum for arrears of payments would also be dragged in as a component of the total sum.

18. My own view is that this reading does violence to the words of s 1117(2) and that those words should be given their full meaning because otherwise they have “no work to do” and are redundant. Clearly s 1171 contemplates that two or more lump sum payments may be made. The section commences:

    (1) If

    (a) a person receives 2 or more lump sum payments in relation to the same event that gave rise to an entitlement of the person to compensation (the multiple payments) [and it goes on to provide that the multiple payments are deemed to be a single payment of the total].

19. But s 1171(2) states:

    ‘A payment is not a lump sum payment for the purposes of paragraph (1)(a) if it relates exclusively to arrears of periodic compensation’ (emphasis added).

20. To me, this means that such a payment is not to be added in with the other payments. I cannot see any other meaning or purpose for this sub-section. The purpose of paragraph (1)(a) is to identify amounts which fall within the expression “multiple payments”, and the only work and reason for existence of s 1171(2) is to exclude from that expression any amount relating exclusively to arrears of periodic compensation.

21. The mischief for which these new sections were introduced is clear. A claimant could avoid a repayment of unemployment benefits by a workers’ compensation insurer agreeing to pay a lump sum really for loss of wages following full or partial incapacity, but ostensibly for other non-economic claims. That was the mischief which led to ‘double-dipping’ by receipt of social security benefits and also workers’ compensation payments. However, I query whether the draconian reading of s 1117(2) is necessary or desirable to achieve the result. Why should a man not receive medical expenses (as in Banks) without penalty? In Mr Liu’s case, the so-called lump sum of $7,500 was actually the product of multiplying 300 weeks by $25, rather than being an actual lump sum. I realise that the overall amount he received added up to $60,000, and has the appearance of a very round figure when agreed in December 2011, but that does not mean it did not represent the individual amounts stated.

22. However, I am bound by the clear rulings of a superior court. My task is to arrive at the correct or preferable decision. When a question of law is involved there is only one correct decision. This case concerns the construction of a statute which has been construed by two Federal Court judges in very similar circumstances. I may disagree with their interpretation of the statute but I am bound to follow their ruling and I do.

23. The lump sums for loss of use, impairment and arrears together total $62,700.00, and because not each and every component is demonstrably solely for arrears of periodic payment, there is a preclusion period to be calculated in respect of the whole of this amount.

24. The calculation required by law is: take half of $62,700 ($31,350) and divide by 823.00 (“income cut-out amount”) and the result is 38 weeks preclusion period from 27 June 2011 (not 29 June as the SSAT determined). Centrelink has put the period into effect and it has also recovered the calculated amount it overpaid the Applicant (“double-dipping”) from the worker’s compensation insurer.

25. Ms Salaji, representative for the Respondent, assured me that the preclusion period had ended some months ago, the Applicant was now receiving Newstart, he would continue to do so and he had no remaining liability to anyone for the overpayment.

26. Section 1184K of the Act provides for a discretion to shorten or dispense with a preclusion period if there are “special circumstances”. This means that there must be matters that are at least unusual, unforeseen or extraordinary in some way. In interviews with Centrelink, the Applicant had maintained that his legal advice had been that he would not be required to repay any amount and nor would a preclusion period apply. The Applicant could read English but required a Mandarin interpreter for the hearing. His language difficulties could be seen as an aspect of his understanding of the legal situation.

27. In the SSAT hearing it was said that of the combined lump sum the Applicant received he had expended $20,000 on nursing home care for his mother in China because his Chinese siblings were unable to pay for such care, and that he had spent another $35,000 repaying loans received from friends. However in the Tribunal hearing, the Applicant stated that his lawyer had told him that he had no liability only in respect of the $7,500. Further, his evidence now was that he had expended $10,000 concerning his mother, $2,000 renovating a family home, $12,000 in air fares and other amounts in ‘social costs’, although he adhered to his earlier evidence about repaying loans. There was no evidence of actual hardship. The Applicant and his wife both receive social security payments and will continue to do so. I specifically note the assurance of the Respondent that no amount is outstanding to any entity in relation to the “compensation charge” of $4,302.36, and no recovery will be sought from the Applicant beyond the adjustments made in the past.

28. In these circumstances I make no finding of special circumstances enlivening the operation of s 1184K of the Act.

    DECISION

29. The decision under review is affirmed.

I certify that the preceding 29 (twenty -nine) paragraphs are a true copy of the reasons for the decision herein of

.........[sgd]...............................................................

Associate

Dated  17 December 2012

Date(s) of hearing	19 October 2012
Applicant	In person
Respondent	Centrelink Legal Services