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

This matter concerned an appeal by Mr Dimitrov against a decision by the Secretary of the Department of Social Services regarding the calculation of a preclusion period for social security benefits. Mr Dimitrov had received a lump sum compensation payment of $375,000. The dispute centred on whether any part of this payment should be disregarded when calculating the preclusion period, and if so, whether special circumstances warranted such a disregard. The decision was made by M J McGrowdie SM.

The primary legal issue before the court was whether the discretion provided by s 1184K(1) of the *Social Security Act 1991* (Cth) should be exercised to treat the whole or part of Mr Dimitrov's compensation payment as not having been made. This discretion is available where special circumstances arise, allowing for a departure from the general rule that 50% of a lump sum compensation payment is deemed to be for economic loss.

The court considered evidence of Mr Dimitrov's significant pre-existing debts, totalling approximately $100,000, at the time of receiving the settlement. Further, the court noted substantial liabilities incurred for family support, including funding his daughter's wedding, supporting his mother and her residence in Macedonia, and a debt of around $70,000 related to a home unit for his ex-wife. The court also took into account Mr Dimitrov's ongoing psychological and psychiatric condition, including depression, anxiety, PTSD, and suicidal thoughts, which were exacerbated by the rejection of his Centrelink benefits claim and ongoing divorce settlement proceedings.

Exercising the discretion under s 1184K(1), the court ordered that the sum of $168,500 be treated as not having been made to Mr Dimitrov as part of his compensation payment. This adjustment resulted in a notional settlement figure of $206,500, with half of that amount ($103,125) being deemed for economic loss.