Giannekas and Department of Family and Community Services
[2001] AATA 236
•23 March 2001
DECISION AND REASONS FOR DECISION [2001] AATA 236
ADMINISTRATIVE APPEALS TRIBUNAL)
Nº V00/1314
GENERAL ADMINISTRATIVE DIVISION)
Re: THEODOSIA GIANNEKAS
Applicant
And:SECRETARY TO THE DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION
Tribunal: Mrs H.E. Hallowes, Senior Member
Date: 23 March 2001
Place: Melbourne
Decision:The decision under review is set aside. The Tribunal remits the matter to the Secretary for reconsideration in accordance with directions that the Secretary treat that part of Mrs Giannekas's compensation payment which would end the preclusion period on the next pension pay day after the date of this decision as not having been made in the special circumstances of this application.
(sgd) H.E. Hallowes
Senior Member
SOCIAL SECURITY —disability support pension — lump sum compensation payment — new lump sum preclusion period — income cut-out amount — date income cut-out amount determined — whether to treat part of compensation payment as not having been made — whether special circumstances
Social Security Act 1991 ss.17, 1165, 1174, 1184
Kirkbright v Secretary, Department of Family & Community Services
[2000] FCA 1876
Re Stephens and Secretary to the Department of Family and Community Services
[2001] AATA 108
REASONS FOR DECISION
23 March 2001 Mrs H.E. Hallowes, Senior Member
Mrs Giannekas seeks review of a decision of the Social Security Appeals Tribunal ("the SSAT") made on 3 October 2000. The SSAT affirmed a decision of a delegate of the Secretary made on 26 April 2000 ". . . to cancel Mrs. Giannekas' disability support pension on the basis of a lump sum preclusion period from 17 July 1998 to 7 June 2001". The delegate's decision was affirmed by an authorised review officer ("ARO") on 10 July 2000.
Mrs Giannekas represented herself at the hearing. The Secretary was represented by Mr T. Baker, an advocate with Centrelink. The Tribunal had before it the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 ("the documents"). Mr Baker had provided the Tribunal and Mrs Giannekas with a statement of the Secretary's facts and contentions. During the course of the hearing he also provided the Tribunal and Mrs Giannekas with calculations he had made under subsection 1165(8) of the Social Security Act 1991 ("the Act"), which provides:
1165(8) If a compensation lump sum is received on or after 20 March 1997, the number of weeks in the preclusion period is the number worked out under the following formula:
Compensation part of lump sum
Income cut-out amount
Note 1: For compensation part of lump sum, see section 17.
Note 2: For income cut-out amount, see section 17.
Section 17 provides, so far as relevant:
"income cut-out amount" the amount worked out using the following formula:
(Maximum basic Pharmaceutical amount ) Ordinary free2 ( rate + for a single person ) + area limit
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where:
"maximum basic rate" means the amount specified in column 3 of item 1 in Table B in point 1064-B1.
"pharmaceutical amount for a single person" means the amount specified in column 3 of item 1 in the Pharmaceutical Allowance Amount Table in point 1064-C8.
"ordinary free area limit" means the amount specified in column 3 of item 1 in Table E-1 in point 1064-E4.
Mr Baker advised the Tribunal that, in calculating the number of weeks in the preclusion period applying to Mrs Giannekas, he had used the income cut-out amount ("the compensation divisor") in effect at the date he contended the preclusion period commenced, 17 July 1998. The Tribunal asked Mr Baker why that was the date to determine the relevant compensation divisor, which, on his figures, was a sum of $410.00, although the SSAT had used a figure of $428.40, the compensation divisor in effect on 5 April 2000 when Mrs Giannekas's compensation claim was settled. As can be seen from subsection 1165(8) of the Act above, the compensation divisor is an important figure in determining the period a person is precluded from being paid a compensation affected payment. Subsections 1165(5), (6) and (7) of the Act provide:
1165(5) If periodic compensation payments are made in respect of the lost earnings or lost earning capacity, the "new lump sum preclusion period" is the period that:
(a)begins on the day after the last day of the periodic payment period; and
(b)ends after the number of weeks worked out under subsections (8) and (9).
Note: For "periodic payments period" see section 17.
1165(6) If a person chooses to receive part of an entitlement to periodic compensation payments in the form of a lump sum, the "new lump sum preclusion period" is the period that:
(a)begins on the first day on which the person's periodic compensation payment is a reduced payment because of that choice; and
(b)ends after the number of weeks worked out under subsections (8) and (9).
1165(7) If neither subsection (5) nor (6) applies, the "new lump sum preclusion period" is the period that:
(a)begins on the day on which the loss of earnings or loss of earning capacity began; and
(b)ends after the number of weeks worked out under subsections (8) and (9).
It was Mr Baker's contention that subsection (7) applied to Mrs Giannekas's circumstances, rather than subsections (5) and (6). A text entered into the Department of Family and Community Services' ("the department") computer on 16 March 2000 discloses that an officer of the department had checked with Mrs Giannekas's former employer, the Royal Automobile Club of Victoria ("the RACV"), and was advised:
. . . A/N was working part-time modified duties up until 16/7/98. She was on a RTW Plan working 4 hours a day & getting 50 per cent of her entitlement for workcover. A/N then RTW on full-time alternative duties & worked until resigning on 1/10/98. RACV are self-insurers.
It appears from this evidence that Mrs Giannekas's last day of periodic payments was 16 July 1998. At the Tribunal's request Mr Baker sought advice from the RACV as to the nature of payments made to Mrs Giannekas between 17 July and 1 October 1998. Mr Baker was advised:
. . . Part time modified duties 17/7/98 to 1/9/98 5 hrs/day 5 days p.w. Unfit for all work 2/9/98 to 1/10/98.
The Tribunal was not assisted by this response but it appears that, after 17 July, Mrs Giannekas worked as above which was what she told the Tribunal. She then claimed disability support pension, which was paid to her from 3 September 1998 onwards. Mrs Giannekas also told the Tribunal she had not resigned from the RACV but that her services had been terminated on 1 October 1998, although she had not attended work during the month of September due to her compensable injury.
In response to a request from Mrs Giannekas's solicitor for an estimate of the amount of disability support pension which would have to be repaid to the Commonwealth and the length of the preclusion period if Mrs Giannekas settled her claim, a delegate of the Secretary advised by letter dated 28 March 2000:
Based on an estimated settlement amount of $130,000.00 and the compensation part amount of $65,000.00, the charge is likely to be $15,686.25 and the preclusion period is likely to be 17 July 1998 to 7 June 2001. If your client is currently in receipt of social security payments, or begins to receive social security payments prior to the final settlement date, then these payments may also be recoverable if the preclusion period extends into the future.
I have prepared this estimate based on the information supplied by you, and you should be aware that it does not apply if the amount you have provided refers to an arrears payment of periodic compensation. You should also be aware that Centrelink will calculate the actual preclusion period and send you a formal recovery notice when the amount of compensation to be paid is known.
Mrs Giannekas settled a claim for compensation on 5 April 2000 and the department apparently received advice from her solicitor that the settlement sum was $130,000.00.
As Mrs Giannekas had been in receipt of a compensation affected payment under the Act before her common law claim was settled, following the termination of her employment on 1 October, a sum of $16,595.45 was recovered from her under section 1174 of the Act, which provides that the Commonwealth may recover a compensation affected payment paid to a customer. Mrs Giannekas had to pay back the disability support pension paid to her for the period between 3 September 1998 and 21 April 2000.
Mr Baker put to the Tribunal that, although, in his opinion, an incorrect compensation divisor had been applied to Mrs Giannekas's circumstances, he was not seeking to extend her preclusion period from 151 weeks, as previously calculated, to 158 weeks, which would result from the use of the compensation divisor in effect on 17 July 1998. Mrs Giannekas expressed her concern and told the Tribunal that she sought review of the decision of the SSAT because she wanted her preclusion period reduced, rather than coming to the Tribunal to find that it may be extended.
In Re Stephens and Secretary to the Department of Family and Community Services [2001] AATA 108 the Tribunal referred to the decision of the Federal Court in Kirkbright v Secretary, Department of Family & Community Services [2000] FCA 1876 (decided 21 December 2000) where Mansfield J said that section 1184 of the Act was designed specifically to enable decision-makers to ameliorate unfairness or injustice where it appears by virtue of the strict application of the Act. Subsection 1184(1) of the Act provides:
1184(1) For the purposes of this Part, the Secretary may 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.
The Tribunal in Re Stephens noted that preclusion periods, with respect to lump sum compensation payments received before 20 March 1997, were calculated by dividing the compensation part of the lump sum by average weekly earnings and that no compensation affected payment was payable to the person for the old lump sum preclusion period, nor to the person's partner if they were members of a couple. If a person is subject to a new lump sum preclusion period however any entitlement a person's partner may have to a compensation affected payment is not affected. This is of no comfort to Mrs Giannekas who now does not have a partner following her separation from her husband in September 1998.
The Tribunal in Re Stephens also noted that Mr Stephens had the misfortune to have the second lowest compensation divisor applied to his circumstances which resulted in a lengthy period of preclusion. Mrs Giannekas's compensation divisor would be the third lowest if Mr Baker is correct in his contention that the compensation divisor in effect at the commencement of the period is the compensation divisor which should be applied (section 1165). The calculations done by Mr Baker indicate the considerable affect even a small increase in the compensation divisor can have on the length of a preclusion period.
The documents include a copy of compensation divisors in effect since 19 May 1994:
Compensation Divisor (CMDV)
Effective Date Amount Effective Date Amount
1 JUL 2000 $543.63 24 APR 1996 $559.20
20 MAR 2000 $428.40 29 FEB 1996 $554.50
20 SEP 1999 $422.90 8 FEB 1996 $555.00
1 JUL 1999 $417.80 16 NOV 1995 $551.30
20 MAR 1999 $416.80 26 OCT 1995 $552.20
20 SEP 1998 $412.70 17 AUG 1995 $548.50
20 MAR 1998 $410.00 27 JUL 1995 $547.60
1 JUL 1997 $403.20 18 MAY 1995 $544.40
20 MAR 1997 $402.20 27 APR 1995 $544.60
27 FEB 1997 $571.90 2 MAR 1995 $543.40
6 FEB 1997 $572.10 9 FEB 1995 $543.20
14 NOV 1996 $569.20 6 DEC 1994 $539.90
24 OCT 1996 $566.70 10 NOV 1994 $541.00
16 AUG 1996 $564.60 18 AUG 1994 $530.70
25 JUL 1996 $563.60 28 JUL 1994 $530.50
17 MAY 1996 $558.40 19 MAY 1994 $529.00
After the hearing, Mr Baker advised that compensation divisors since 1 July 2000 are:
Compensation Divisor (CMDV)
Effective Date Amount
20 MAR 2001 $562.75
1 JAN 2001 $552.88
20 SEP 2000 $552.63
The compensation divisor is now similar in amount to the compensation divisor in effect during 1996. If Mrs Giannekas's preclusion period was to be calculated on the day the Tribunal heard her application, there would be a considerable reduction in the length of her preclusion period.
In Re Stephens the Tribunal concluded:
30. There are a number of reasons the Tribunal has decided that it should set aside the decision under review and it will remit the matter to the Secretary for reconsideration in accordance with directions that part of Mr Stephens's compensation payment should be treated as if it had not been made. The Tribunal gave consideration as to whether the correct or preferable decision would be that Mr Stephens's preclusion period be recalculated at the date he claimed a compensation payment after receiving his lump sum compensation payment. However, as the Tribunal is satisfied that special circumstances exist in this matter, and having considered what the Federal Court said in Kirkbright with respect to unfairness, it will make its decision under subsection 1184(1) of the Act, . . .
It may be technically correct to require the Secretary to recalculate the preclusion period, but the Tribunal will save the Secretary that trouble.
Subsection 1165(1A) provides:
1165(1A) If:
(a)a person receives or claims a compensation affected payment; and
(b)the person is not a member of a couple; and
(c)the person receives a lump sum compensation payment (whether before or after the person receives or claims the compensation affected payment) on or after 20 March 1997;
no compensation affected payment is payable to the person for the new lump sum preclusion period.
Note 1:for "new lump sum preclusion period" see subsections (5) to (8).
Note 2:A series of lump sum payments can be taken to be one lump sum compensation payment under subsection 17(2B).
Mrs Giannekas had claimed a compensation affected payment and she was being paid disability support pension from 3 September 1998. It could be argued that the SSAT was correct in applying the compensation divisor in effect when her compensation claim was settled but, as in Re Stephens, the Tribunal will consider the matter under subsection 1184(1). One of the special circumstances the Tribunal considered in Re Stephens was the effect of the introduction of the goods and services tax ("GST") on the cost of living, saying:
31. . . . The GST has been in effect since 1 July 2000, and has increased Mr Stephens's cost of living. This is reflected in the more than $110.00 increase in the compensation divisor as from 1 July 2000.
On 5 May 2000 Mrs Giannekas advised Centrelink that she had bought herself a motor vehicle ($5000.00) and a unit ($70,000.00) in which to live with the proceeds of her compensation settlement, and some furniture for the unit. Her marriage had "split up because of all the hassles with workcover . . ." and she also told the Tribunal that her husband could not forgive her for gambling which led to many debts and which may have led to the loss of their home. She was left with a sum of just under $90,000.00 after solicitors' fees and the Centrelink's charge of $16,595.45 was deducted from the $130,000.00 compensation settlement. She told the Tribunal that she had had a gambling addiction and she therefore thought that it would be wise to accept her solicitor's advice and to buy the unit and the motor vehicle, rather than leaving her money in the bank. She has attended Gamblers Anonymous meetings but she can no longer afford to go to the meetings as she cannot pay for the registration of her motor vehicle, nor for the petrol to run it. Mrs Giannekas had also advised Centrelink on 5 May 2000, as she told the Tribunal, that she signed over her share in the matrimonial home so that it would not be lost to the family because of her gambling debts. Mrs Giannekas said that it had been her solicitor's advice before she purchased the unit and the motor vehicle that she could appeal against any decision by Centrelink with respect to a preclusion period. Credit restrictions placed on her following her gambling debts mean that she cannot obtain any loans against her unit. She has advertised her motor vehicle for sale in the Trading Post as she cannot afford to advertise it more widely. No purchasers have come forward.
Mrs Giannekas still takes medication to ease her pain. She obtains this with the use of a health-care card. She cannot afford to see her doctor, although she told the Tribunal that she was "sick of doctors" in any event. Two operations on her arm have not relieved her pain. Her teeth are in need of attention and she has been on a waiting list for two years at the Dental Hospital to have one of her teeth capped. However, even if she is offered an opportunity to have dental treatment, she would be unable to accept her place in the queue as she has no money with which to make the contribution for the dental treatment which is apparently requested.
Having considered what was said in Kirbright, the Tribunal has decided that it would be unfair to Mrs Giannekas if it did not exercise its discretion under section 1184 of the Act and treat part of her compensation payment as not having been made, as in the Tribunal's opinion, her circumstances are special. Mrs Giannekas's evidence satisfies the Tribunal that she is in dire straits. Her telephone has been cut off and other utilities are about to be disconnected as she has no money with which to settle her accounts. She has tried to find employment, but, as she cannot afford to register her motor vehicle, the only opportunities for employment available to her are to leave her name at local shops as a potential employee. To a large extent she relies on the goodwill of a neighbour who has driven her to a couple of job interviews and who has provided her with some food. In Re Stephens the Tribunal was satisfied that the effect of the introduction of the GST in July 2000 had increased Mr Stephen's cost of living. It is difficult to make the same finding with respect to Mrs Giannekas as she is apparently not paying for anything at all. Even if her utilities are cut off however, debts which she already has outstanding must be paid. The Tribunal assumes that people, such as Mrs Giannekas, who are not in receipt of a payment under the Act have no entitlement to the services of providers who assist those in receipt of pensions or benefits find employment.
If Mrs Giannekas did have money with which to pay for her daily needs, the introduction of the GST would be impacting upon her and this is reflected in the considerable increase in the compensation divisor on 1 July 2000. The break-up of Mrs Giannekas's marriage has also impacted upon her and the Tribunal is satisfied that those factors make her circumstances special such that the preclusion period should end earlier than it otherwise would. The Tribunal will remit the matter to the Secretary for reconsideration in accordance with directions that her preclusion period now come to an end.
It is for these reasons that the matter will be remitted to the Secretary.
I certify that the sixteen [16] preceding paragraphs are a true copy of the reasons for the decision herein of
Mrs H.E. Hallowes, Senior Member(sgd) Catherine Thomas
Personal AssistantDate of Hearing: 28.02.01
Date of Decision: 23.03.01
Solicitor for the Applicant: NIL — IN PERSON
Solicitor for the Respondent: Mr T. Baker, Advocate with Centrelink
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