Donald; Secretary, Department of Employment and Workplace Relations
[2006] AATA 920
•30 October 2006
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2006] AATA 920
ADMINISTRATIVE APPEALS TRIBUNAL )
) No S2005/328
GENERAL ADMINISTRATIVE DIVISION ) Re SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS Applicant
And
PAULINE DONALD
Respondent
DECISION
Tribunal Deputy President D G Jarvis Date30 October 2006
PlaceAdelaide
Decision The Tribunal affirms the decision under review.
D.G. Jarvis
(Signed)
Deputy President
CATCHWORDS
SOCIAL SECURITY - compensation receipt - calculation of preclusion period - respondent suffered brain injury and seriously incapacitated - finding that special circumstances exist - respondent purchased home and motor vehicle, and made improvements to home, out of compensation received - respondent retains balance of approximately $100,000 out of compensation received - discussion of factors to consider when determining extent of reduction in preclusion period - decision under review affirmed.
Social Security Act 1991 (Cth), s 1184K(1)
Beadle v Director-General of Social Security (1985) 7 ALD 670
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Haidar v Secretary, Department of Social Security (1998) 52 ALD 255
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Re Fowles and Secretary, Department of Social Security (1995) 38 ALD 152
Re Welch and Secretary, Department of Family and Community Services (2003) 78 ALD 550
Riddell v Secretary, Department of Social Security (1993) 42 FCR 443
Secretary, Department of Family and Community Services v Allan (2001) 66 ALD 147
Secretary, Department of Family and Community Services v Chamberlain (2002) 116 FCR 348
Secretary, Department of Social Security v Thompson (1994) 53 FCR 580
REASONS FOR DECISION
30 October 2006 Deputy President D G Jarvis 1. The respondent, Pauline Donald, was injured in a fall from a horse on 28 July 2000, at Mount Riddock Station, which is located about 200 km from Alice Springs. She sustained a serious brain injury which has left her with very significant ongoing disabilities.
2. She issued proceedings in the Supreme Court of South Australia against the owners and occupiers of the station. On 12 September 2002, her solicitor, Mr Michael Heffernan, filed a Statement of Claim in the proceedings containing details of her claim. The amount of damages claimed included approximately $4.1 million for future medical expenses and care, and $360,000 for past and future loss of earnings and earning capacity. Her solicitor estimated that the upper range of the quantum of her claim would be in the order of $4.7 million to $5.0 million.
3. The proceedings went to trial, but after several days of hearing, were referred to mediation. Ms Donald’s advisers were concerned that due to her head injuries, she was unable to recount the circumstances in which the accident occurred, and might not therefore be able to establish negligence. Following mediation, Ms Donald’s claim was settled for a total amount of $750,000, which included $340,000 by way of legal costs and disbursements (see exhibit A1, T13, page 68). Further amounts also had to be paid out of the settlement figure, including a reimbursement to Centrelink of $46,295.72. Ms Donald was left with approximately $320,000.
4. On 24 June 2005 Centrelink decided to impose a lump sum compensation preclusion period from 28 July 2000 to 26 May 2011, and that the payments already made to Ms Donald during the period from 2 August 2000 to 14 June 2005, amounting to the above figure of $46,295.72, should be repaid to Centrelink (exhibit A1, T21, pages 133 – 134). As a result of Centrelink’s decision, Ms Donald’s disability support pension (DSP) was cancelled as of 15 June 2005.
5. Mr Heffernan, on behalf of Ms Donald, requested a review of Centrelink’s decision, and on 27 June 2005 the decision was affirmed. The matter was then reviewed by an authorised review officer (ARO), who also affirmed the decision.
6. Ms Donald then applied to the Social Security Appeals Tribunals (SSAT) for a review of the decision of the ARO. On 3 November 2005 the SSAT set aside the decision of the ARO and decided that in the special circumstances of Ms Donald’s case, Centrelink should treat so much of the compensation payment as not having been made so as to reduce the compensation preclusion period to end on 3 November 2006.
7. The Secretary, Department of Employment and Workplace Relations has applied to this tribunal for review of the decision of the SSAT.
Issue
8. In earlier correspondence included in exhibit A1 there was some suggestion from Ms Donald’s solicitor that the compensation payment did not include a component for lost earnings or loss of earning capacity, but this contention appears to have been unsupportable and was not pursued.
9. The only issue in this matter is whether it is appropriate to treat the whole or part of the compensation payment received by Ms Donald as not having been made in the special circumstances of her case.
Procedure at Hearing of the Application
10. Mr Heffernan represented Ms Donald in connection with matters that arose prior to the hearing. However, he then advised the tribunal that he would not be representing Ms Donald at the hearing, and further that neither Ms Donald nor her husband proposed to appear at the hearing themselves. Nevertheless, at a directions hearing which I conducted before the commencement of the hearing, Mr Heffernan arranged to be available by telephone at the time for which the hearing was listed, in case some matter arose which could be clarified by him. I also made a direction giving Mr Heffernan leave to file written submissions on behalf of Ms Donald prior to the hearing. He did this, and annexed to his submissions certain letters or other communications or documents that were referred to in his submissions. Those attachments were received in evidence as exhibits R1 to R7 inclusive.
11. The attachments included a copy of a medical report dated 10 May 2006 from Dr Lian-Lloyd, a general practitioner of Quorn, a small town in the far north of South Australia where Mr and Ms Donald are now residing. A copy of this report had previously been made available to the tribunal. The Secretary’s lawyer had arranged, at my request, for the doctor to give evidence at the hearing by telephone.
12. As matters transpired, an issue arose during the applicant’s case that I wished to explore with Mr Heffernan. He then gave short evidence by telephone during the morning, and also gave supplementary evidence later in the hearing, after Dr Lian-Lloyd had given evidence. I then asked Mr Heffernan whether he sought an adjournment of the proceedings to enable him to investigate certain issues that had arisen during the hearing. He said that he did not seek an adjournment, but wanted to make oral submissions as to the issue before the tribunal.
13. Mr Prince then proceeded to make his final submissions, with Mr Heffernan participating in the hearing by telephone, and Mr Heffernan then made submissions in his capacity as Ms Donald’s lawyer. The procedure adopted in this matter was accordingly most unusual, but I am satisfied that the procedure adopted was appropriate and fair in all of the circumstances, taking into account the difficulties that had led to Mr and Ms Donald not wishing to participate in the proceedings, which Mr Heffernan narrated.
Background
14. Ms Donald was born on 14 January 1957, and her husband was born on 25 May 1964. There is one child of the marriage, Michael Donald, who was born on 5 August 1994.
15. Following the accident at Mt Riddoch Station, Ms Donald was air-lifted to Alice Springs Hospital and the next day to the Royal Adelaide Hospital. She underwent neurosurgery at that hospital, and remained in a coma for several weeks. She received rehabilitation treatment at the Julia Farr Centre from October 2000 until her discharge in June 2001.
16. She is unable to resume her previous employment as a waitress or a sales representative, or in preparing endurance horses for competition and for overseas or local sale, or as a supervisor for Riding for the Disabled.
17. The copy statement of claim (T15 in exhibit A1) sets out at pages 118 – 122 of the exhibit particulars of Ms Donald’s injuries, damage and loss. Further information as to these matters is included in an interim rehabilitation summary from the Hampstead Rehabilitation Centre, covering the period from 14 June 2001 to 28 February 2002 (exhibit A1, T32, pages 185 – 189), medical reports from Dr Peter Flett dated 17 January 2003, 9 July 2004 and 8 May 2005 (exhibit A1, T32, pages 190 – 218, and a report prepared as at 23 March 2005 from Kathy Trankalis & Associates Pty Ltd (exhibit A1, T15, pages 91 – 107). The information in these reports in relation to Ms Donald is further supplemented by a medical report dated 14 June 2001 from Dr S Hooper, the rehabilitation medical officer of the Julia Farr Centre (exhibit R5), and by the medical report dated 10 May 2006 from Dr Lian-Lloyd, to which I have already referred (exhibit R1).
18. It is clear from the above medical reports that Ms Donald sustained a very serious brain injury involving a fractured skull and a cerebral haemorrhage, as well as a fractured right humerus and right clavicle. The Secretary did not seek to challenge the medical evidence as to Ms Donald’s injuries or her subsequent rehabilitative treatment.
19. As a result of her accident, Ms Donald suffers from epilepsy, and takes medication to control her seizures. She will need to continue to take this medication on a long-term basis. She has a metal plate on the side of her skull. A ventricular-peritoneal shunt was inserted, and this remains in place and will need to be replaced in approximately four years’ time. Ms Donald has had one seizure, about four years after she was released from hospital, and is at risk of having future seizures.
20. Ms Donald has difficulty in walking and moving, and if she falls over she is unable to get up again unaided. She has difficulty with her vision on the left side, and this affects her sense of space. Her speech is slurred and has been affected by her injuries, but she can converse with other people. She is unable to drive a motor car.
21. Ms Donald’s weight is of the order of 120 kilograms compared with about 60 kilograms before the accident. Earlier this year Dr Lian-Lloyd conducted blood tests to investigate whether Ms Donald was suffering from diabetes. These tests were negative. However, because of her age and obesity, she is at risk of developing mature on-set diabetes, and this risk will increase as she gets older. There has been some difficulty with short-term memory, and there is a possibility of the early onset of dementia in later life.
22. She is substantially affected in the activities of daily living, and will require a permanent carer. Since her release from rehabilitation hospitalization, her husband has acted as her full-time carer, and gave up his employment to do so. She requires constant supervision in case she falls over or has a seizure. An emergency admission to the nearest hospital would be required if her shunt blocks.
23. There is some conflict in the evidence before me as to the nature and extent of the rehabilitation services Ms Donald requires. The report of Ms Trankalis contains a number of very specific recommendations as to the assistance which she would require in relation to various aspects of her day-to-day activities. Her recommendations are summarised in the report of Dr Flett dated 13 May 2005 and in the appendix to an actuarial calculation commencing at page 216 of exhibit A1. I note that Dr Flett in the main agrees with the recommendations of Ms Trankalis. However, Dr Lian-Lloyd referred in his evidence to the possibility of initial advice being provided by the appropriate therapists, on the basis that that advice would then be implemented by Ms Donald with the therapists later providing periodic assistance or reviews. Clearly that approach would not entail as much ongoing expense. In addition, it appears that much of the necessary advice could be subsidised through Medicare, through a scheme available for people with chronic conditions and complex care needs. A summary of the relevant items is included in exhibit A3. The services eligible for such benefits include dieticians, physiotherapists, podiatrists and (if this were required) speech pathologists.
24. I find that in view of the permanent disabilities from which Ms Donald is suffering, she will undoubtedly need extensive support and assistance from a carer, and periodic support from therapists at least as frequently as Dr Lian-Lloyd suggested, and potentially to a greater extent than he suggested. Whilst Mr Donald continues to care for his wife, she will not incur the significant carer’s expenses referred to by Ms Trankalis. However, if for any reason Mr Donald does not continue to provide the requisite care, Ms Donald will require extensive support from a carer, and this is likely to entail very significant expense, of the order of the costs referred to in the report by Ms Trankalis.
25. Having regard to the fact that Ms Donald and her family now live at Quorn, I prefer the evidence of Dr Lian-Lloyd as to the extent and availability of the various therapist services required by Ms Donald. I find that the likely cost of those services, at least over the next few years, will be substantially less than the estimates provided by Ms Trankalis, and indeed will be of a modest order, having regard to the likelihood that Ms Donald could obtain Medicare benefits.
26. Mr Heffernan gave evidence that Ms Donald’s brain injury was in the worst 5% to 10% of cases to come before the Courts of South Australia. He based his evidence on his experience as a lawyer with over 30 years of experience which has included specialising in personal injuries claims and also reading reports of judgments in personal injuries cases. In making this assessment, he explained that the worst kind of cases were injuries resulting in the plaintiff being confined to a wheelchair, and on his understanding of the medical reports concerning Ms Donald, she was one step below that situation. The Secretary did not challenge Mr Heffernan’s evidence as to these matters.
Situation of Mr Donald
27. Mr Donald described his role as his wife’s carer, and the difficulties it causes him, in an email of 3 April 2006 to Mr Heffernan (exhibit R2) and in an earlier email of 31 January 2006 (exhibit R6). I note that in his later email, he says that he has become severely depressed. However, Dr Lian-Lloyd has not diagnosed depression, and although he referred Mr Donald for a psychiatric assessment, he did not ever receive a report back from the psychiatrist following that referral. Dr Lian-Lloyd referred to the steps taken by Mr Donald to ensure that he could continue to care for his wife, and said that he appeared to be managing very well, and he questioned whether he in fact would take respite from his role, even if respite relief were available to him. He said that he had only seen Mr Donald on two occasions since November 2005, when he started treating Ms Donald. He thought that because he had not seen Mr Donald for so long, he must be coping reasonably well.
28. It is difficult to make findings about Mr Donald’s situation without having heard evidence from him. However, his concern for his wife and about her condition and the risks of seizures or falls are clearly expressed in his emails. He also refers to being stressed and very tired and to his constant worry. This situation also arises from his role in looking after their child, who suffers from attention deficit hyperactivity disorder and whose behaviour both at school and at home has caused difficulties to both Mr and Mrs Donald. Mr Donald’s emails appear on the face of them to be a cry for help. I accept that his position must be very difficult, and that the demands of looking after Ms Donald are extremely stressful. I find that he would be assisted by periods of respite along the lines suggested by Ms Trankalis, and I note that in his report of 8 May 2005, Dr Flett concurs with her assessment.
Financial position
29. The email from Mr Donald of 31 January 2006 (exhibit R6) sets out the family’s estimated expenses totalling $327 per week, and states that the family’s weekly income is $419.50. Counsel for the applicant, Mr Prince, produced evidence that the family’s Centrelink benefits come to $370 per week, and submitted that the investment of the surplus funds of $100,000 would produce another $100 per week, so that the weekly income would be approximately $470 per week, rather than Mr Donald’s figure of $419.50 per week. I accept the figures provided by Mr Prince in preference to the figures provided by Mr Donald.
30. On Mr Donald’s figures, he said that there was a balance of $92 per week to cover school excursions, clothes and books for his son. On Mr Prince’s figures, this figure would become $142 per week.
31. Ms Donald used approximately $120,000 of the settlement proceeds to purchase their house. She said, and I accept, that she was unable to afford a home within Adelaide, which would of course have been closer to the medical services that she may require for her future support. Because of her condition and the need to be able to obtain urgent medical assistance if some emergency occurred, she also purchased a reliable motor car for about $40,000. She spent a further amount of approximately $60,000 on making improvements to her home, in order to provide the equipment and facilities recommended by Ms Trankalis in her above report. This left her with funds of approximately $100,000 which she invested in an interest bearing deposit. It appears from exhibit R4 that as at 1 August 2006, the balance now held on deposit is approximately $80,000.
32. Mr Heffernan has obtained a refund from the Julia Farr Centre of some $29,664.44, and according to exhibit R2, she has about $2,000 in a savings account.
Legislative Scheme
33. Part 3.14 of the Act provides for the effect of compensation recovery on certain social security benefits. Section 1160(1) of the Act provides for the general effect of that Part of the Act. It provides as follows.
“1160(1)This Part operates in certain specified circumstances to do one or more of the following:
(a) reduce a person’s compensation affected payment;
(b) render a person’s compensation affected payment not payable;
(c)require the repayment of some or all of a person’s compensation affected payment;
because of the receipt of compensation by the person or the person’s partner.”
34. Section 1169(1) of the Act provides in effect that a compensation affected payment is not payable during a lump sum preclusion period. It provides as follows.
“1169(1) If:
(a)a person receives or claims a compensation affected payment; and
(b) the person receives a lump sum compensation payment;
the compensation affected payment is not payable to the person in relation to any day or days in the lump sum preclusion period.”
35. Section 17(2) of the Act defines “compensation”. This includes a payment of damages “that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury”.
36. Section 17(1) of the Act defines the expression “compensation affected payment”, and a disability support pension (DSP) is included in that definition.
37. Subsection 1170(3) provides relevantly that the lump sum preclusion period is the period that begins on the day on which the loss of earnings or loss of earning capacity began, and ends at the end of the number of weeks worked out pursuant to the statutory formula referred to in subsections 1170(4) and (5). That formula refers to the “compensation part of lump sum”.
38. Section 17(3) of the Act provides an artificial statutory formula for determining the “compensation part of a lump sum compensation payment”. It provides relevantly as follows.
“17(3)Subject to subsection (4), for the purposes of this Act, the compensation part of a lump sum compensation payment is:
(a) 50% of the payment if the following circumstances apply:
(i)the payment is made (either with or without admission of liability) in settlement of a claim that is, in whole or in part, related to a disease, injury or condition; and
(ii)the claim was settled, either by consent judgment being entered in respect of the settlement or otherwise; or … .”
39. The above provisions must, however, be read subject to s 1184K of the Act. That section authorises the Secretary (and this tribunal, standing in the shoes of the Secretary) to disregard the whole or part of a compensation payment in certain circumstances. Subsection 1184K(1) provides as follows.
“1184K(1)For the purposes of this part, the Secretary may treat the whole or part of the 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.”
Contentions of Applicant
40. The applicant contended that the present matter was not one where special circumstances existed, and accordingly subsection 1184K(1) of the Act did not apply. Mr Prince further contended that on the test referred to by this tribunal in Beadle v Director-General of Social Security (1984) 6 ALD 1, the circumstances of the present matter were not “uncommon, unusual or exceptional.”
41. Counsel proceeded to address the principal grounds upon which the SSAT had accepted that special circumstances existed. He contended that it was not unusual for plaintiffs to accept lower amounts of compensation in settlement of claims, after taking into account possible findings of contributory negligence and generally the risks of litigation. He submitted that the respondent is not suffering financial hardship, and the funds she retains would be ample to enable her to receive the necessary rehabilitative treatment in the period between the date of the hearing and the expiration of the preclusion period. He further contended that Ms Donald’s husband is providing the necessary support to meet her needs, and that if that situation were to change, Ms Donald could approach Centrelink again and provide evidence that at that stage, because of her changed circumstances, special circumstances existed and the preclusion period should cease. Finally, Mr Prince contended that Ms Donald had been advised of the preclusion period before agreeing to the settlement of her claim in the Supreme Court, but chose to expend the compensation she received on a house, home improvements and a car, thus reducing her available funds to approximately $100,000, and that in all of the circumstances, it was unreasonable that she should seek support from publicly funded welfare benefits.
42. As against this, Mr Heffernan submitted that in the special circumstances of this case there should be no preclusion period, and that Ms Donald should not have been required to refund the $46,295.72 previously paid to her.
Consideration
43. The concept of what constitutes “special circumstances” has been discussed in many cases in the Federal Court and in this tribunal. In Re Beadle and Director-General of Social Security (1984) 6 ALD 1 the tribunal was dealing with an application under a different section of the Act which also, however, involved a consideration of whether special circumstances existed. Toohey J said (at page 3):
“An expression such as ‘special circumstances’ is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special.”
44. In the same case on appeal ((1985) 7 ALD 670 at 674), the Full Federal Court reiterated the need to avoid limiting the scope of what might constitute special circumstances when it explained:
“We do not think it is possible to lay down precise limits or precise rules. The matter is one for the Director-General bearing in mind the purpose for which the power is given. The phrase ‘special circumstances’, although lacking precision, is sufficiently understood in our view not to require judicial gloss.”
The Full Court also said, at page 675, that they did not consider that any error of law had been made by the tribunal, but continued:
“While we would place less emphasis on one dictionary definition of “special”, we are in broad agreement with the approach of the Tribunal and are in agreement with its conclusion.”
45. In a later case, Groth v Secretary, Department of Social Security (1995) 40 ALD 541, at page 545, Kiefel J, after referring to the Federal Court’s decision in Beadle, observed that special circumstances:
“… would require something to distinguish Mr Groth’s case from others, to take it out of the usual or ordinary case ... It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.”
46. The flexibility of the concept of special circumstances was also referred to in Riddell v Secretary, Department of Social Security (1993) 42 FCR 443, where the Full Court of the Federal Court said, at page 450:
“Each particular case must be considered on its merits. It is the essential nature of the provision to create a broad discretion to meet the great variety of circumstances which must occur, raising considerations of individual hardship, need, fairness, reasonableness, and whatever else may move an administrator, keeping in mind the scope and purposes of the Act, to make a decision one way or the other.”
47. In a similar vein Heerey J, in Secretary, Department of Family and Community Services v Allan (2001) 66 ALD 147, said at [17]:
“It is not sensible to lay down precise limits or precise rules as to what may constitute special circumstances … ill health, financial circumstances and the unfairness of a strict application of the Act are some matters which may in an individual case, constitute special circumstances.” (References omitted).
48. Finally, I refer to Haidar v Secretary, Department of Social Security (1998) 52 ALD 255 at 263, where Hill J discussed the predecessor of s 1184K of the Act, and agreed with an earlier observation by von Doussa J to the effect that in that section and attempt was made to balance on the one hand finite budgetary allocations against the interests of the recipient of the payment. His Honour continued:
“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.
However, the legislature was conscious of the possible harshness of a rule structured in an arbitrary way. Section 1184, therefore, provided the means whereby the secretary or, in the event ultimately of an appeal to the Administrative Appeals Tribunal, that tribunal, could alleviate the harshness of the statutory provision in an appropriate case but only where there were special circumstances. The question of what constitutes special circumstances has been the subject of a number of decisions of this court. It suffices here to say no more than that something is required which would take the matter out of the usual ordinary case …”.
49. I refer to my above analysis of the financial position of Ms Donald and her family, and I accept the applicant’s argument that at the present time, Ms Donald is not suffering from financial hardship when her situation is compared with that of many other recipients of social security benefits. However, the extent of financial hardship is only one of many considerations that may need to be taken into account when considering whether special circumstances exist.
50. Mr Heffernan pointed out that Ms Donald had only recovered about $63,000 out of her total claim for $360,000 for past and future economic loss, and that the application of the statutory formula in s 17(3) of the Act meant that she is deemed to have recovered $375,000 as loss of income. However, as pointed out by Kiefel J in Secretary, Department of Family and Community Services v Chamberlain (2002) 116 FCR 348 at [33], it is often the case that the application of the statutory formula leads to a deemed recovery for economic loss of more, and sometimes substantially more, than the amount recovered, but that cannot, by itself, amount to special circumstances, or a matter out of the ordinary. Her Honour also said in effect, at [34], that the extent of the difference between the settlement component for economic loss and the figure produced by the statutory formula could not constitute a “special circumstance”, because the Act has selected a figure which may operate in an arbitrary way.
51. I also accept that it is common for plaintiffs to accept settlements entailing a reduction, and sometimes a substantial reduction, in the amount claimed, particularly in claims for personal injuries, because of difficulties of proof or other risks of litigation: see Re Fowles and Secretary, Department of Social Security (1995) 38 ALD 152 at [58].
52. Nevertheless, there are, in my view, features of Ms Donald’s situation that constitute special circumstances, and take this matter out of the ordinary. I have referred above to Mr Heffernan’s assessment that Ms Donald’s injuries put her in the worst 5% to 10% of cases to come before the courts of South Australia. Mr Heffernan explained the basis on which he made that statement, and I accept his evidence. Ms Donald has been left with very serious permanent disabilities, which gravely affect her activities of daily living. She is at risk of having further epileptic seizures, and at increasing risk of developing mature onset diabetes because of her obesity. Whilst she is ambulatory, she is unsteady and ungainly on her feet and if she falls over she is unable to get up by herself. In addition, she has the difficulties with her vision to which I have referred above.
53. Ms Donald is clearly virtually totally reliant on the support and assistance provided by her husband. Whilst he is younger than Ms Donald, the information in exhibits R2 and R6 make it clear that the task of caring for his wife virtually 24 hours a day has been most demanding and has caused him considerable stress. I accept that there is no evidence that Mr Donald is suffering from depression, as he exerts in exhibit R2, but I accept that it is very hard for him to continually attend to the demands which the care for his wife entail.
54. I have noted Dr Lian-Lloyd’s view that Mr Donald appears to be coping well. However, he apparently bases that comment on the fact that Mr Donald has only consulted him on two occasions since the family moved into the Quorn area, and he has not seen Mr Donald since 31 March 2006. Having regard to all of the material before me as to the difficulties which Ms Donald is experiencing in consequence of her injuries, the stress to Mr Donald arising from his role as her carer, and the fact that these matters are further exacerbated by the difficulties arising from their son’s condition, I place little weight on the doctor’s view.
55. Mr Heffernan referred to Re Welch and Secretary, Department and Family Community Services (2003) 78 ALD 550. In that matter Member Allen found that the circumstances of the applicant’s exceptional ongoing medical conditions constituted special circumstances for the purposes of s 1184K of the Act, notwithstanding that there was a balance of more than $1.3 million held in a trust fund for the benefit of the applicant. This figure is, of course, very substantially greater than the balance of the funds currently held by Ms Donald. Mr Prince pointed out that in Welch, the applicant’s injuries were even worse than those of Ms Donald, and the incapacitated applicant was being looked after by his parents who were both in their mid to late fifties, and who would be unlikely to continue to attend to his continuing and increasing needs. I accept that there are clear factual distinctions between Welch and the present case, and I am not, of course, bound by that decision. Nevertheless, I think that the gravity of the condition of an injured claimant whose claim has been settled can in some circumstances amount to special circumstances, so as to make it appropriate to relieve that person from what might otherwise be the harsh operation of the arbitrary statutory formula for determining the deemed compensation component of the settlement.
56. I also take into account that although Mr Donald has not apparently so far availed himself of any respite from his role as his wife’s carer, that is not to say that he may not need such respite in the future. Further, due to the ordinary vicissitudes of life, there is a risk that he may not be able to continue to look after his wife in the future, and this risk is likely to be exacerbated by the stress entailed in attending to the demands of his current role as his wife’s carer. If for any reason Mr Donald were unable to continue to attend to his wife, she would be left in very dire circumstances, since on the cost estimates referred to in the report of Kathy Trankalis & Associates Pty Ltd, the remaining funds held by Ms Donald would very quickly be exhausted, by her need to engage the assistance of paid carers.
What proportion of the compensation payment should be treated as not having been made?
57. The SSAT decided to treat so much of the compensation payment as not having been made as would reduce the preclusion period so that it would end on 3 November 2006. In doing so, the SSAT referred to Secretary, Department of Social Security v Thompson (1994) 53 FCR 580, where Einfeld J, in calculating an appropriate reduction under the Act said:
“… intuitive justice will often be a fairer criteria and as faithful to the legislative intention as any other approach.”
58. As mentioned above, Mr Heffernan submitted that in view of the gravity of Ms Donald’s situation, there should be no preclusion period. The discretion under subsection 1184K(1) could produce this result, if the whole of the compensation payment was treated as not having been made. However, the question is whether this would be appropriate in the circumstances of the present matter.
59. In Welch (supra), Member Allen had regard to the actual economic loss component in the agreed settlement and varied the preclusion period so as to reflect that amount. In doing so, he said that that approach would, as far as practicable, give effect to the statutory objective that there should be no “double-dipping” by those who receive compensation payments and then seek social security benefits.
60. There is merit in Member Allen’s approach. In view of the policy underlying Part 3.15 of the Act, it is I think relevant to consider whether a proposed reduction in the preclusion period would result in a claimant who has settled his or her claim recovering both compensation for economic loss and social security benefits.
61. The present matter differs from Welch on its facts, in that in Welch the compromise was approved by the court, so that the court must have considered the various components, including economic loss, that made up the approved compromise amount. In the present matter, exhibit A1 includes a copy of the statement of claim and actuarial reports supporting a claim for economic loss of $360,000. The applicant did not challenge that quantification of that aspect of Ms Donald’s claim. On Mr Heffernan’s analysis, Ms Donald recovered only about $63,000 of her total claim for economic loss, of which she has repaid $46,295.72, being the benefits paid to her up to and including 14 June 2006. Ms Donald has therefore recovered a net balance of about $17,000. At the current rate of the disability support pension, that figure would equate with DSP payments for about 80 weeks from 15 June 2005, or a period that ended on 19 October 2006.
62. The reduced preclusion period determined by the SSAT, that is, a period ending on 3 November 2006, would on the above analysis not lead to any double-dipping. It would mean that Ms Donald would not have received any DSP for a period of more than six years from the date of her accident. She will be left with some retained funds from her settlement, but the amount is substantially less than the currently permitted combined assets for homeowners before the entitlement to DSP begins to reduce, namely $229,000, and substantially less than the level at which the entitlement of such persons to DSP is lost, namely $516,500 (see exhibit A6). That range of figures can be taken to represent the government’s view as to the funds that people can retain and still be eligible for DSP. As mentioned above, Ms Donald may need to have recourse to her remaining funds to meet future needs for future rehabilitation or carer’s assistance. I do not think that those remaining funds, or the modest accruals to those funds arising from their investment or from modest savings which Mr and Ms Donald may be able to make during a shortened preclusion period, are such that the preclusion period should not be substantially reduced from the period determined by the statutory formula. Ms Donald will continue to need a reliable motor car, and her existing car will at some stage require replacement. I also consider that she should not be criticised for the manner in which she has used the settlement funds.
63. Nevertheless, Ms Donald’s present financial position is not precarious, and it is likely that she will continue to be looked after by her husband, and will be able to access necessary rehabilitative services without undue future expense, for many years to come. I consider that in view of these matters, it would not be appropriate to accede to Mr Heffernan’s contention that there should be no preclusion period at all.
64. My function is, of course, to determine this matter de novo, and to exercise my own discretion as to the preferable decision. Having approached the matter in this way, I consider that the decision made by the SSAT as to the amount of the compensation payment that should be deemed not to have been received, with its resulting effective reduction of the preclusion period, is fair and appropriate, and I see no reason to vary the SSAT’s decision.
Decision
65. The decision under review is affirmed.
I certify that the 65 preceding paragraphs are
a true copy of the reasons for the decision
herein of Deputy President D G JarvisSigned: .....................................................................................
B. Bills AssistantDate/s of Hearing 10 October 2006
Date of Decision 30 October 2006
Counsel for the Applicant Mr R Prince
Solicitor for the Applicant Australian Government Solicitor
Solicitor for the Respondent Mr M Heffernan
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