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

[2018] AATA 460

Findlay and Secretary, Department of Social Services (Social services second review) [2018] AATA 460 (7 February 2018)

Division:GENERAL DIVISION

File Number:  2017/2451

Re:Sherrill Findlay

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

DECISION

Tribunal:Senior Member Theodore Tavoularis

Date:7 February 2018

Date of written reasons:        9 March 2018

Place:Brisbane

The decision under review is affirmed.

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

Senior Member Theodore Tavoularis

CATCHWORDS

SOCIAL SECURITY – Lump Sum Preclusion Period – lump sum compensation payment – whether the lump sum preclusion period applies – Applicant received disability support pension during the preclusion period – Respondent claimed debt for DSP paid during the preclusion period – whether Applicant had special circumstances supporting waiver or reduction of preclusion period - meaning of special circumstances – special circumstances not present – decision under review affirmed

LEGISLATION

Social Security Act 1991 (Cth), ss 17, 1169, 1170, 1184K

CASES

Re Beadle v Director-General of Social Security (1984) 6 ALD 1
Secretary, Department of Social Security and Winterbotham [1990] AATA 808

REASONS FOR DECISION

Senior Member Theodore Tavoularis

9 March 2018

INTRODUCTION

1. This is an application by Ms Sherrill Findlay (“the Applicant”) for review of a decision of the Social Security and Child Support Division of this Tribunal (“AAT1”), dated 7 April 2017.[1] AAT1 upheld the decision of the Respondent (via its associated entity, the Department of Human Services) dated 14 September 2016, which had previously been upheld in an internal review dated 22 November 2016.

   [1] See Exhibit 4, T-Documents, T 2, pp 7-11.

2. The decision under review relates to the Department’s imposition of a preclusion period over the Applicant’s regime of disability support pension (“DSP”) payments. The net effect of the decision is that for the period 14 April 2015 to 29 June 2015, (“the preclusion period”), the DSP should not have been paid to the Applicant.[2] Based on calculations I will discuss later in these reasons, the amount now propounded as a debt payable by the Applicant amounts to $4,101.96.

   [2] Ibid, T 8, pp 35-37.

   FACTUAL SUMMARY

3. The factual circumstances of the matter are not – to the best of my understanding – in dispute, and can be stated in relatively short compass:

   ·The Applicant has been a DSP recipient since 5 March 2008;[3]

   [3] Ibid, T 16, p 118.

   ·She suffered a work injury on 14 April 2015;[4]

   [4] Ibid, T 7, p 34.

   ·On 1 September 2016, she settled a compensation claim for injuries arising from the April 2015 work incident in the sum of $22,918.50;[5]

   [5] Ibid.

   ·The Department was duly notified on 6 September 2016 of this compensation payment by way of letter from the lawyers who acted for the Applicant in that matter;[6]

   [6] Ibid.

   ·Upon receipt of this notice, the Department decided to formulate and apply a preclusion period to the regime of the Applicant’s DSP payments. This decision was made on 14 September 2016;

   ·Particulars of the extent and effect of the applied preclusion period are as follows:

   oThe actual preclusion period runs from 14 April 2015 to 29 June 2015;

   oThe quantum of the debt raised and proposed to be recovered is $4,101.96;

   ·The Applicant was duly notified in writing of the abovementioned extent and effect of the preclusion period on 14 September 2016;[7]

   ·The Applicant initially sought to challenge the Department’s imposition of a preclusion period on the basis that her compensation payout in the sum of $22,918.50 did not include a component for economic loss;

   ·The Department had investigated this point directly with the Applicant’s legal representatives who acted for her in the compensation matter;

   ·Those enquiries revealed that something in the order of 85% of the compensated amount was attributable to lost income;[8]

   ·There followed further review by an Authorised Review Officer of the Department who on 22 November 2016 affirmed the decision to impose the preclusion period;[9]

   ·As mentioned earlier, the matter went to AAT1 review resulting in a further affirmation of the decision to impose the preclusion period; and

   ·The Applicant engaged the jurisdiction of this level of Tribunal review on 22 April 2017. This is the application now before me.

   [7] Ibid, T 8, p 35.

   [8] Respondent’s Statement of Facts, Issues and Contentions (“SFIC”), Attachment A.

   [9] Ibid, T 10, pp 41-47.

   ISSUES FOR DETERMINATION

4. There are two substantive issues for determination:

   i.Has a compensation preclusion period been lawfully and properly applied to the Applicant’s DSP entitlements?

   -    If the answer to this question is “no”, then that is the end of this matter;

   -    If the answer is “yes” the next issue becomes:

   ii.Whether special circumstances exist such as to allow a total or partial disregarding of the Applicant’s lump sum compensation payment for the purpose of calculating the preclusion period. If those special circumstances can be demonstrated, the effect on the Applicant’s DSP payments would be minimal or no-existent.

   THE APPLICABLE LAW

5. As identified by the Respondent, the applicable legislation is the Social Security Act 1991 (Cth) (“the Act”).

6. The first question is whether the DSP received by the Applicant is a payment or benefit that could be affected by an award of compensation. Clearly, it is. Section 17(1) of the Act includes the DSP as a payment capable of being affected by an award of compensation of the type received by the Applicant in September 2016.

7. The next question is whether the Department had the power to impose a preclusion period on the Applicant’s DSP entitlements. Clearly it did, because section 1169 of the Act empowers the Department to withhold DSP payments for the imposed preclusion period.

8. I turn now to the first of the two substantive issues: was the Applicant’s DSP subject to a preclusion period? I make the following findings in this regard:

   ·Section 17(1) of the Act is satisfied because the DSP is a “compensation affected payment”;[10]

   ·Section 17(2) of the Act is satisfied because the “compensation” contemplated by the Act includes both “a payment of damages”[11] and, by way of catch-all provision, “any other compensation or damages payment”;[12]

   ·Section 17(3) of the Act has been correctly applied by the Department. That subsection provides that if a compensation payment is made in settlement of a claim that is, in whole or in part, related to a disease, injury or condition, then 50% of that payment constitutes the “compensation part of that lump sum compensation payment” for the calculation of the preclusion period;[13]

   ·I am of the view that the Department has thus correctly assessed the “compensation part” of the compensation payment as $11,459.25 which is half of $22,918.50;

   ·I am also of the view that the preclusion period has been properly calculated. Section 1170(4) of the Act provides that the number of weeks for a preclusion period is calculated by dividing the compensation part of the lump sum by the income cut-out amount;

   ·As mentioned above, the compensation part of the lump sum is $11,459.25. The Department’s Compensation Management Summary stipulates the income cut-out amount to be $955.90;[14]

   ·The calculation then becomes $11,459.25 divided by $955.90 which gives a preclusion period of 11.99 weeks which the Department seems to have correctly rounded down to 11 weeks pursuant to section 1170(5) of the Act;

   ·In accordance with section 1170(3) of the Act, the Department correctly commenced application of the preclusion period on the day the Applicant’s workplace injury occurred which gave rise to the lump sum compensation awarded to her. That date is 14 April 2015. 14 April 2015 plus 11 weeks takes us to 29 June 2015. This is the preclusion period; and

   ·I therefore find that the Department has lawfully applied a preclusion period over the Applicant’s DSP entitlements and has correctly calculated both the duration and dollar value of that preclusion period.

   [10] See s 17(1)(a) of the Act.

   [11] See s 17(2)(a) of the Act.

   [12] See s 17(2)(d) of the Act.

   [13] There is, to my mind, no question that the additional provisions of ss 17(3)(a)(i) and 17(3)(a)(ii) are met.

   [14] Exhibit 4, T Documents, T 16, p 120.

9. I turn now to the second substantive issue before the Tribunal: whether special circumstances exist such as to reduce the Applicant’s preclusion period?

10. Section 1184K(1) of the Act allows the Department – for the purposes of calculating a preclusion period – to 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.

    (my underlining)

11. The Act does not contain a statutory definition of “special circumstances”. A definitional guide can be found in Re Beadle v Director-General of Social Security,[15] which has defined “special circumstances” as circumstances which are “unusual, uncommon or exceptional” which make the case “markedly different from the usual run of cases”.[16]

    [15] (1984) 6 ALD 1.

    [16] Re Beadle v Director-General of Social Security (1984) 6 ALD 1.

12. As identified by the Respondent, the (to my mind) fair and reasonable legislative intent behind provisions empowering a Commonwealth statutory instrumentality to activate concepts such as preclusion periods is thus: those who receive a lump sum compensation payment are expected to support themselves from their own available resources for a period before seeking support from the taxpayer.[17] I entirely concur with that observation.

    [17] Exhibit 3, Respondent’s SFIC, [24].

13. The Tribunal made a similar observation in 1990 when Deputy President Burns observed:

    This particular piece of legislation… was aimed specifically at preventing those people receiving compensation for loss of income because of incapacity for work, from being able also to receive benefit from the public purse… Primary responsibility for the payment of such compensation lies as the feet of those responsible for the compensable injury. Once that responsibility has been met, by way of a settlement sum agreed to by both parties, it is inequitable for the recipient to seek supplementary funds from the tax-payer.[18]

    [18] Secretary, Department of Social Security and Winterbotham [1990] AATA 808, [19].

    THE APPLICANT’S CONTENTIONS ABOUT SPECIAL CIRCUMSTANCES

14. The contentions of the Applicant regarding special circumstances seem to fall into four broad categories: (1) what she says she was told or not told by the solicitors who acted for her in the compensation matter; (2) issues of unwellness; (3) financial stricture or difficulty and (4) damage to her residential property. I will address each item in turn.

15. She says her solicitors did not tell her that the compensation payout included a component for economic loss. That assertion is squarely at odds with what “Jonathan” from the relevant legal office told the Department when the Department specifically investigated the point. Jonathan told the Department that more than 85% of the compensated amount was deemed to be lost income. Subject to a detailed examination of the solicitors’ file, I find it difficult to accept that the solicitors did not canvass or explain the concept of “economic loss” as an integral component of the Applicant’s claim. I therefore have difficulty in accepting the evidence of the Applicant over that of a suitably-worded diary note provided by the Respondent.[19]

    [19] Exhibit 3, Respondent’s SFIC Attachment A; [8].

16. As well, there is nothing before the Tribunal indicating any allegation of negligence (if any) or miscarriage of the file (if any) by the Applicant against the solicitors. In any event, such an allegation would not, in my view, carry any weight in these proceedings until such proceedings or process (if any) against the solicitors (or more correctly, their professional indemnity insurer) were finalised with specific findings made against the solicitors. I think, on the evidence before me, that is very unlikely.

17. The Applicant told the hearing that: (1) she has a rheumatoid arthritis condition and doesn’t have funds to complete the necessary treatment and (2) that she is seeing a counsellor to help her cope with her current circumstances. The Tribunal accepts the Applicant’s rheumatoid arthritis condition and the emotional confusion that this matter may cause her. But there is no evidence before the Tribunal that these conditions – alone – create such a cataclysmic atmosphere in the life of this Applicant such as to make her circumstances “unusual, uncommon or exceptional.”. To repeat, the Tribunal accepts the truthfulness of the Applicant’s evidence that she suffers from these conditions. But many other DSP recipients are – unfortunately – in far worse medical and psychological conditions than her. The Applicant’s health circumstances, while real and palpable, are not markedly different from the usual run of cases before this Tribunal. As noted by the AAT1 decision-maker, “it is not unusual for people in receipt of the disability pension to have increased medical costs and be in a strained financial position.”[20]

    [20] Exhibit 4, T Documents, T 2, p 10, [19].

18. The Applicant asserts financial difficulty or stricture and has helpfully provided a summary of her assets and her liabilities as at 12 September, 2017. She resides in the Tweed area of northern New South Wales in residential accommodation which she values at $75,000. There is no independent valuation of that property before the Tribunal. The home seems well furnished because she cites a figure of $30,000 for home contents. She also runs a motor vehicle that she values at $5,000. As against that, she has liabilities of $28,000 made up of an unsecured personal loan for $23,000 and a credit card with a debit balance of $5,000. Her net financial position shows a credit balance of $82,000.[21] During cross-examination, the Applicant deposed to receiving three fortnightly benefits comprising (1) the DSP at $651 a fortnight (net of her residential payment); (2) a further allowance of $95 per fortnight; and (3) a further allowance of $62 per fortnight.

    [21] See Exhibit 2, Applicant’s submissions in Support of ‘Special Circumstances’.

19. Depending on how one views the Applicant’s evidence in cross-examination, there is clearly “headroom” left after expenses are deducted from the total fortnightly amounts received by her. On the Respondent’s case, that headroom is something in the order of $100 to $200 per fortnight. On the Applicant’s case, it ranges from $19 to $33 per fortnight.

20. The Applicant also gave evidence of being financially affected by a local flooding event in March 2017 as a result of water build-up in a tidal drain at the rear of her property which, apparently, always floods. As well, she says her property is affected by overhanging and adjacent trees.

21. Her relatively strong and positive net financial position (in terms of assets and liabilities) is impressive and cannot warrant a finding of special circumstances. Yes, she may experience a need for cautious budgeting or near shortfall in meeting her recurring obligations, be they medical bills or house repair and maintenance costs, but it is clear that she can – with some sacrifice and reorganisation – meet those challenges. I am of the view that those types of challenges and requirement for budgetary discipline apply to most of our community, and do not comprise special circumstances.

22. The Applicant’s financial and other circumstances are not so straightened or difficult such as to render them as “unusual, uncommon or exceptional” nor is this aspect of her case “markedly different from the usual run of cases” such as to warrant a finding of special circumstances.

23. More broadly, I concur with the Respondent’s contention that when the totality of her circumstances are weighed against the abovementioned legislative policy and intent behind the relevant legislation, it is not unfair or unjust for the Respondent to impose the preclusion period and for the Applicant to serve it.

24. I therefore affirm the decision under review.

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

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

Associate

Dated: 9 March 2018

Date of hearing:	7 February 2018
Applicant:	In person
Advocate for the Respondent:	Ms Jasmine Forsyth
Solicitors for the Respondent:	Department of Human Services