Dimitrov and Secretary, Department of Social Services (Social services second review)

[2017] AATA 1384

Dimitrov and Secretary, Department of Social Services (Social services second review) [2017] AATA 1384 (28 August 2017)

Division:GENERAL DIVISION

File Number:          2017/0507

Re:Pero Dimitrov

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

DECISION

Tribunal:Senior Member M J McGrowdie

Date:28 August 2017

Place:Sydney

In accordance with section 1184K(1) of the Social Security Act 1991 (Cth), I exercise a discretion that the sum of $168,500 is to be treated as not having been made to the applicant as part of the compensation payment(s) made to the applicant with respect to the resolution of his damages claim.

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

Senior Member M J McGrowdie

CATCHWORDS

SOCIAL SECURITY – lump sum compensation – preclusion period – whether any of preclusion period should be waived – whether special circumstances arise – decision set aside and remitted.

LEGISLATION

Social Security Act 1991 (Cth)

CASES

Secretary Department of Social Security v Hayles [1998] FCA 219

Re Beadle v Director General ofSocial Security [1984] AATA 176

REASONS FOR DECISION

Senior Member M J McGrowdie

28 August 2017

1. In this matter, the applicant, Pero Dimitrov, seeks a review of a decision of the Social Services and Child Support Division of this Tribunal, made on 3 January 2017 in respect of a compensation preclusion period where a lump sum payment has been made, and whether there are grounds for disregarding all or part of the compensation received because of special circumstances.

2. Mr Dimitrov made a claim for a Disability Support Pension (‘DSP’) on 22 December 2015, however, that claim was refused primarily upon the basis that the applicant was subject to a lump sum preclusion period which currently extends to 23 July 2019. That preclusion period was the result of Mr Dimitrov having received a settlement for a damages claim in an amount totalling $375,000. That sum was reached as a result of three payments of compensation from an insurer, QBE Insurance, to the applicant, as set out in paragraph 25 of the Respondent’s Statement of Facts, Issues and Contentions dated 1 June 2017.

3. The sum of $10,000 was received on 27 April 2010. The sum of $85,000 was received on 23 March 2015 and finally, the sum of $280,000 was received on 15 October 2015. These sums added together total $375,000.

4. In accordance with the legislation, 50% of this sum was nominally attributed to an economic loss component and it was upon that basis that the preclusion period was calculated. This resulted in Mr Dimitrov being precluded from receipt of the DSP until 23 July 2019.

   LEGISLATION

5. Section 1169 of the Social Security Act 1991 (Cth) (‘the Act’) sets out the general rule regarding preclusion periods. Section 17(3) provides that 50% of a lump sum settlement be nominally regarded as being for economic support. It is upon that basis that the preclusion period is calculated for the reason that the applicant is deemed to have been compensated out of the lump sum in respect of economic support for the period of the preclusion period.

6. Section 1184K(1) provides for the application of a discretion to treat the whole or part of a compensation payment as not having been made.

   CONSIDERATION

7. Mr Dimitrov does not dispute that, in total, he received payments from the insurance company in respect of his damages claim in the sum of $375,000. He seeks to distinguish his situation from one where the general rule would apply. As commonly happens in these matters, Mr Dimitrov was liable to pay legal fees to solicitors who conducted the damages claim on his behalf. There is nothing unusual about that. However, Mr Dimitrov gave evidence that, at the time he received the settlement for the final payment comprising the settlement, he already had existing debts of approximately $100,000.

8. Included in these debts and in addition to them, the applicant had liabilities, as he explained, in respect of the support of family members. He was supporting his daughter and according to Macedonian custom, funded her marriage or wedding at considerable expense. Also, the applicant was supporting his mother and the house where she lived in Macedonia and repairs were needed to this residence.

9. The applicant was also providing support to his ex-wife. This included, so far as what the applicant has said, a debt which she apparently incurred for which the applicant became liable in respect to the purchase of a home unit in her name and that of her daughter, and this liability was for a sum of around $70,000. There was also evidence of continuing support provided by the applicant to his ex-wife in terms of her living expenses although the applicant does not regard the support that he provided to his ex-wife as anything other than something he was prevailed upon to provide rather than being entirely voluntary on his part.

10. So far as his family members are concerned, the applicant appears to have acted out of a sense of obligation.

11. He has also been struggling with an overall general depressive and anxiety condition with drinking, gambling and suicidal thoughts. It would seem that this is part of an overall general psychological or psychiatric condition from which he suffers.

12. The applicant has been under the care of Dr Gordon Hyde, a psychiatrist who has recently provided a report dated 22 June 2017, in which he indicates that the applicant remains depressed and anxious with features of PTSD. He has been treated with medication including Endep but that the applicant was subject to ongoing stressors, particularly in relation to the rejection of his claim for Centrelink benefits. There is also mention of an ongoing court case with regard to his divorce settlement. The report indicates suicidal thoughts but a denial of any specific suicidal plans. Dr Hyde has Mr Dimitrov under regular review. A copy of that report has been furnished to the Respondent and the Tribunal.

13. As previously indicated, the legislation provides that generally 50% of a collective lump sum settlement amount is to be treated for the purposes of economic loss (section 17(3))(a). That is a general rule. However, individual cases can vary where the doing so seems appropriate.

14. It is clear here that the applicant’s individual circumstances were such, including his liabilities at the time of settlement, that leads me to a conclusion that 50% of the settlement amount being attributed to economic loss is not a true indicator of what is applicable in the applicant’s circumstances.

15. I would regard an amount between 25 and 30% and not 50% of the settlement would be a fairer indicator of the applicant’s economic loss component.

16. In accordance with this, 27.5% rather than 50% of $375,000 would result in a figure for economic loss of $103,125 as being a more appropriate figure for economic loss and for the purposes of the preclusion period which should be calculated.

17. In Secretary Department of Social Security v Hayles [1998] FCA 219, French J considered that it was appropriate to regard a wide range of situations and a constellation of factors in deciding whether or not the discretion should be exercised. Section 1184K(1) provides for the discretion to treat the whole or part of the compensation payment as not being made.

18. I should also indicate that in ReBeadle v Director General ofSocial Security [1984] AATA 176, it was considered that relevant circumstances would include circumstances which are unusual, uncommon or exceptional. In the present case, the circumstances which I have outlined are circumstances particular to the applicant and which I would regard to be relevant to the consideration of the exercise of the discretion which I do exercise.

19. The applicant’s individual circumstances included his apparent responsibilities to his daughter, his mother and, grudgingly, to his ex-wife. To my mind, these are sufficient to take the applicant out a situation where it is appropriate to apply the 50% deeming of the lump sum as being for economic support. Included also in the consideration is the applicant’s psychological condition which has manifested itself in terms of drinking, gambling, nicotine addiction and suicidal thoughts.

20. There is little doubt that the applicant now appears to be quite impoverished.

21. The appropriate amount for the economic loss component would be $103,125. . This would be deducted from the total sum of $375,000 and the difference should be treated as not having been made.

22. The discretion in section 1184K of the Act speaks in terms of disregarding a certain amount of the compensation payment as having not been made so if the desired result is to reorganise an economic loss figure of $103,125, it is necessary to work backwards, which would mean that the total amount received would be $206,500 and that would then be subtracted from the original amount of compensation of $375,000.

23. If $168,500 were to be disregarded from the $375,000 that would give a notional settlement figure of $206,500 and half of that would be deemed for economic loss. Accordingly, the economic loss comes back to $103,125.

    DECISION

24. In accordance with section 1184K(1) of the Social Security Act 1991 (Cth), I exercise a discretion, so that the sum of $168,500 is to be treated as not having been made to the applicant as part of the compensation payment(s) made to the applicant with respect to the resolution of his damages claim.

I certify that the preceding 24 (twenty -four) paragraphs are a true copy of the reasons for the decision herein of Senior Member M J McGrowdie

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

Associate

Dated: 28 August 2017

Dates of hearing:	20 June and 27 July 2017
Applicant:	In person
Solicitors for the Respondent:	Mr S Davidson, Department of Human Services