Hanrahan and Secretary, Department of Employment and Workplace Relations
[2007] AATA 1417
•8 June 2007
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2007] AATA 1417
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2006/1580
GENERAL ADMINISTRATIVE DIVISION ) Re GEOFFREY HANRAHAN Applicant
And
SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS
Respondent
DECISION
Tribunal Ms N Isenberg, Senior Member Date8 June 2007
PlaceOrange
Decision The Tribunal decides that the decision of the SSAT is set aside and in substitution therefor the Tribunal finds that Mr Hanrahan’s compensation payments are to be treated as not having been made and that he is to be paid disability support pension in full.
..................[sgd]............................
Ms N Isenberg
Senior Member
CATCHWORDS
SOCIAL SECURITY - disability support pension (blind pension) - compensation affected social security payments - periodic compensation payments made to Applicant - blind pension paid at reduced rate because of compensation payments – compensation payments then stopped – blind pension then paid at full rate – compensation payments then reinstated – blind pension cancelled in full – discretion to disregard whole or part of compensation payment if special circumstances exist – amelioration of unfairness or injustice – Applicant’s circumstances special and attract the exercise of discretion – decision of SSAT set aside – whole of Applicants compensation payments to be treated as having not been paid – blind pension to be paid in full
LEGISLATION
Administrative Appeals Tribunal Act 1975 - section 37
Social Security Act 1991 – sections 17(1), 94(1), (2), (3), (4), (5), (6), 1173(1) 1173(2), 1184K, 1184K(2)(c), 1184K(2), 94, 95, Part 3.14, Schedule 1B
Social Security (Administration) Act 1999 – Schedule 2CASE LAW
Kirkbright v Secretary, Department of Family and Community Services (2000) 65 ALD 211
Beadle v Director General of Social Security (1985) 7ALD 670
Secretary, Department of Social Security v Hulls (1991) 22 ALD 570
Haidar v Secretary Department of Social Security (1998) 52 ALD 255
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Secretary, Department of Social Security v Ellis (1997) 46 ALD 1
Lazarus and Secretary, Department of Family and Community Services [2003] AATA 120
Re McAliney and Secretary, Department of Family and Community Services [2005] AATA 96
Riddell v Secretary Department of Social Security (1993) 42 FCR 443
Secretary, Department of Social Security v Hales (1998) 82 FCR 154REASONS FOR DECISION
8 June 2007 Ms N Isenberg, Senior Member DECISION UNDER REVIEW
1. The Tribunal is reviewing the decision made by the Social Security Appeals Tribunal (“SSAT”) on 11 October 2006 to affirm the decision of a Centrelink officer to cancel Mr Hanrahan’s disability support pension (“DSP”) from 28 March 2006.
BACKGROUND
2. Mr Hanrahan is aged in his forties and was injured in two motor vehicle accidents in 1993 and 1994 in which he sustained injuries to his back. As a result he was awarded periodic compensation payments which were paid by the insurer, the GIO.
3. Mr Hanrahan suffers retinitis pigmentosa, a congenital condition which causes progressive blindness. Although his siblings have been affected for some time, Mr Hanrahan’s first symptoms did not appear until the late 1990s.
4. In August 2001, Mr Hanrahan claimed DSP on the basis of his visual impairment. Although he qualified for DSP because of his loss of vision, Centrelink rejected his claim because of his periodic compensation payments from the GIO. Mr Hanrahan appealed Centrelink’s decision and in November 2002, the Administrative Appeals Tribunal (“the Tribunal”) decided to set aside the decision and substitute a new decision that due to special circumstances, half of Mr Hanrahan’s periodic compensation payments were to be treated as not being made. As a result of the AAT’s decision, Mr Hanrahan started receiving the DSP at a reduced rate.
5. In October 2005, the GIO, for reasons which are unclear and without further medical assessment, stopped Mr Hanrahan’s periodic compensation payments. He then sought and obtained from Centrelink an increase in his DSP payments.
6. In March 2006 the Worker’s Compensation Commission made consent orders reinstating Mr Hanrahan’s periodic compensation payments. As a result, Centrelink decided to regard the full amount of Mr Hanrahan’s periodic compensation payments as a direct deduction from his DSP and as a result, his DSP was cancelled. That decision was affirmed on review by an Authorised Review Officer at Centrelink and by the SSAT.
Legislation
7. Part 3.14 of the Social Security Act 1991 (“the Act”) provides for compensation affected social security payments, (which, according to section 17(1) of the Act, includes DSP) to be reduced because a person has received compensation or damages made wholly or partly in respect of lost earnings or lost earning capacity resulting from personal injury.
8. Section 1173(1) of the Act – “effect of periodic compensation payments on rate of person's compensation affected payment” - says:
1173(1) If:
(a) a person receives periodic compensation payments; and
(b) the person was not, at the time of the event that gave rise to the entitlement of the person to the compensation, qualified for, and receiving, a compensation affected payment; and
(c) the person receives or claims a compensation affected payment in relation to a day or days in the periodic payments period;
the rate of the person's compensation affected payment in relation to that day or those days is reduced in accordance with subsection (2).
1173(2) The person's daily rate of compensation affected payment is reduced by the amount of the person's daily rate of periodic compensation.
9. Subsection 1184K of the Act provides that the whole or part of a compensation payment may be treated as not having been made if there are special circumstances.
ISSUE BEFORE THE TRIBUNAL
10.There was no dispute that Mr Hanrahan’s blindness entitled him to the DSP.
11. However, the issue was whether his compensation payment is to be treated as a direct deduction from his DSP. If so, are there special circumstances for the whole or part of a compensation payment to be treated as not having been made?
EVIDENCE
12. In addition to documents lodged pursuant to section 37 of the Administrative Appeals Tribunals Act 1975, a statement of financial circumstances dated 5 March 2007 was tendered.
13. Mr and Mrs Hanrahan gave evidence and were cross-examined on behalf of Centrelink. I also asked them questions.
CONSIDERATION OF THE EVIDENCE AND FINDINGS
14. In coming to the correct and preferable decision, I took into account all the evidence, submissions, case law and relevant legislation.
15. Centrelink contended, and I must agree, that as Mr Hanrahan was not receiving a compensation affected payment when he had his injuries in 1993/94, section 1173 of the Act requires that his compensation payment be treated as a direct deduction.
16. In the SSAT decision of October 2006 it was stated at paragraphs 19 and 20:
19. The power to treat periodic compensation payments as a direct deduction from compensation affected social security payments is contained in section 1173 of the Social Security Act 1991 (the Act). Under section 17 of the Act, the disability support pension (permanent blindness) is a ‘compensation affected payment.’
20. The effect of this law is that Mr Hanrahan’s disability support pension is reduced on a dollar for dollar basis by the rate of his compensation payments. As the full amount of his compensation payments is greater than the maximum rate of disability support pension payable to him, his disability support pension rate was properly calculated to be nil and was correctly cancelled.
Are there special circumstances to treat some or all of Mr Hanrahan’s compensation payments as not being made?
17. I reviewed the decision in Kirkbright v Secretary, Department of Family and Community Services (2000) 65 ALD 211 where Mansfield J said that section 1184 (as it then was) is designed specifically to enable the Department to ameliorate such unfairness or injustice which results upon the strict application of the Act.
18. The discretion to disregard the whole or part of a compensation payment can be exercised where application of the usual rules would lead to a result that is unfair or inappropriate (see Beadle v Director General of Social Security (1985) 7ALD 670 and Secretary, Department of Social Security v Hulls (1991) 22 ALD 570).
19. The ameliorating provision is a way of alleviating the harshness of the statutory provision in appropriate cases where there are special circumstances. Special circumstances do not have to be statistically “extreme” or “unique”, it is sufficient if there is something that takes the matter out of the usual ordinary case, (see Haidar v Secretary Department of Social Security (1998) 52 ALD 255 at 264, in which Hill J cited the earlier Federal Court cases of Groth v Secretary, Department of Social Security (1995) 40 ALD 541 and Secretary, Department of Social Security v Ellis (1997) 46 ALD 1).
Submissions relating to the GIO
20. Mr Hanrahan’s contention was that, had the GIO not inadvertently ceased his workers compensation payments, he would still be receiving DSP in accordance with this Tribunal’s previous decision from November 2002.
21. The SSAT noted that the GIO’s actions in wrongly cancelling his compensation payments had “unfortunate consequences” for Mr Hanrahan. That action triggered Centrelink’s review of Mr Hanrahan’s entitlement to DSP. In support of Centrelink’s actions, it was submitted by its advocate that it was open to Centrelink to review Mr Hanrahan’s pension at any time and specifically when a change in the legislation occurs.
22. It is noted that there was a change made to the Act in September 2001, amending section 1184K(2). The effect of the amendment was that if a person’s entitlement to a pension is unrelated to the injury which has given rise to compensation payments, this factor alone cannot be a special circumstance. However, the Tribunal’s previous decision was made in November 2002, based on the legislation as it was prior to the changes in September 2001 as the facts took place in August 2001. Therefore it is noted that the Tribunal’s previous decision, appropriately, applied the legislation in force at the date of claim, that is, before the legislative changes.
23. What makes Mr Hanrahan’s circumstances even more unfortunate is that notwithstanding that the previous decision of the Tribunal had been in existence for about 18 months before the original decision that is the subject of this review was made, i.e. to cancel Mr Hanrahan’s DSP in full, it appears that Centrelink had taken no action to undertake a review under the new legislation, which by that time, had been in effect for nearly four years. This indicates to me that were it not for the actions of the GIO, Centrelink’s review of Mr Hanrahan’s DSP payments may never have been triggered.
24. I was referred to Lazarus and Secretary, Department of Family and Community Services [2003] AATA 120, where the Tribunal discussed the amended section 1184K(2) of the Act in relation to a legally blind person:
37. The Tribunal in addressing the matters raised as constituting special circumstances does note that the Respondent's blindness, being the issue that related to the Respondent receiving a compensation affected payment, namely the DSP and the work related injury which gave rise to the lump sum compensation payments are unrelated. This alone in the Tribunal's review is insufficient to constitute special circumstances, as it is clear that the Act intends that the Compensation Recovery Provisions in Part 3.14 of the Act should be applied to such a situation, unless there are circumstances arising from implementation which creates circumstances for the Applicant which arise from his condition of blindness and are of such of nature as to be uncommon, unusual or exceptional.
38. The Tribunal, in recognising the special nature of the DSP (permanent blindness, as regards the necessary qualifications as opposed to the detailed qualifications required for section 94 DSP, concludes that for special circumstances to exist, unfairness to the individual must occur as a consequence of the operation of the Act as prescribed, to the extent that such unfair outcomes must be uncommon, unusual or exceptional, and in so doing create significant or unacceptable hardship for the Respondent.
25. The SSAT accepted, as I do, that the GIO’s actions were unusual and uncommon, but was obliged, as am I, to apply section 1184K(2) of the Act, that this alone could not constitute special circumstances for treating the compensation payments as not having been made.
26. Because Centrelink had taken no steps to review Mr Hanrahan’s entitlement other than because of the GIO’s actions, Mr Hanrahan would, in all likelihood, continued to receive his blind pension in accordance with the Tribunal’s previous decision. It seems to me extraordinary that Centrelink had seized the opportunity of the inadvertent change affecting Mr Hanrahan to thereby effectively ignore the Tribunal’s previous decision, irrespective of the change in the legislation.
27. To compound this, Mr Hanrahan’s unchallenged evidence was that he had sought, and obtained, assurance from his Centrelink case manager – “Kim” at the Lithgow office - that if he pursued the GIO for re-instatement of his compensation payments, his entitlement to DSP would remain in accordance with the previous Tribunal’s decision. This, he said, influenced his decision to challenge the GIO.
Income vs. compensation when assessing social security payments
28. Mr Hanrahan submitted that it is unfair that the blind pension is affected by compensation payments in lieu of income, but is unaffected by income per se. He referred to the circumstances of his visually impaired siblings, both of whom have been in full employment and receive the blind pension at the full rate. He even thought he knew of a senior executive, whose income exceeded $200,000, who received the blind pension.
29. Centrelink confirmed that the Act specifically treats income and compensation differently. While it is true that the income test provisions of the Act do not extend to the blind pension, the compensation recovery provisions of the Act extend equally to any payment of DSP regardless of qualification on the basis of permanent blindness or otherwise.
30. Centrelink further contended that by including DSP in the list of compensation affected payments Parliament has clearly intended that this pension, whether paid on the basis of blindness (section 95 of the Act) or other incapacities (section 94 of the Act) is to be affected by the operation of compensation recovery provisions of the Act.
31. Centrelink contended that this result was not an unintended outcome, submitting that Mr Hanrahan’s position is no different from other recipients of compensation affected payments. I was referred to Re McAliney and Secretary, Department of Family and Community Services [2005] AATA 96 where Mr McAliney unsuccessfully sought to have an amount of his periodic workers’ compensation payment disregarded such that he could be paid a pension because of the unfair assessment of his periodic payments as compensation and not as ordinary income. Even though the legislation is more generous in respect of the blind pension being unaffected by income from employment, Mr Hanrahan potentially faces a similar prospect as the legislation stipulates that the blind pension is affected by compensation payments.
32. I do not agree though that the test is to compare Mr Hanrahan’s circumstances with those of other compensation recipients or, as was submitted, other DSP recipients. Mr Hanrahan is disadvantaged compared to other recipients of the blind pension. If he were in employment he would receive the blind pension but because he was injured in the course of his employment, and as a result receives compensation payments, he does not receive the DSP.
Financial circumstances
33. The Secretary contends that Mr Hanrahan is not financially worse off than other social security recipients (including those who are blind), whose sole source of income is the DSP. It was conceded by Centrelink that Mr Hanrahan’s financial circumstances are “not easy”.
34. The SSAT found that on Mr Hanrahan’s evidence, his expenses, at that time, marginally exceeded his income. At the day of the hearing Mr Hanrahan updated the information he had provided to the SSAT as to his current expenses, with some amendments which led to him now being in a worse financial position. He noted:
·Instead of $340.90 per week in compensation he was receiving about $2000 a month. However that amount has recently decreased to $505 per week and is likely to reduce again as the children are not living with him and his wife (see below);
·The compensation payments are determined by his earnings “15 years ago” i.e. at the dates of the accidents, whereas the cost of living has increased “three times”;
·He has had to increase his mortgage to $16,000 to cover different expenses. The monthly repayments have increased to $300 per month;
·He had omitted about $38 per month for mobile phone costs;
·His car motor needed replacement recently at a cost of $2000;
·They no longer eat meat because they can’t afford it;
·He relies on a mate for household maintenance;
·Petrol costs have increased from $50 per month to $400 because of the increased need to consult solicitors (see below) and attend the Family Court in Penrith;
·Additional wear and tear on the car because of increased travel is estimated at $100 per month;
·Mrs Hanrahan’s ex-husband failed to return the children after holiday access and this has given rise to the need for extra consultation with her solicitor. An amount of $11,000 has been spent on legal fees in the last six months, and nothing has yet been achieved. Significant additional legal fees are expected;
·Since Mrs Hanrahan’s ex-husband failed to return the children, the Child Support Agency has ceased payments to Mrs Hanrahan;
·Mrs Hanrahan’s entitlement to Family Tax Benefit (“FTB”) is in question after her ex-husband told Centrelink he had the children for a greater period than had been assessed. That gave rise to Mrs Hanrahan incurring a $1000 debt, which is being recovered at $90 per fortnight. (It is unclear if Mrs Hanrahan has an entitlement to FTB in circumstances where the children have been taken without her consent);
·Mrs Hanrahan is being pursued for payment of her ex-husband’s credit card, a debt of $31,000, which she is paying off at $640 per month;
·Mrs Hanrahan no longer works and is essentially a carer for her husband. Mr Hanrahan said that she was unlikely to get a carer’s pension because he is determined to be as independent as possible. It was unrealistic for her to apply for newstart allowance because she would be obliged to look for work, and she could not leave him for extended periods. In any event, the nearest location of a job would be in Mudgee, some 80 kms away. Even to travel to apply for those jobs would present an added financial burden in terms of petrol expenditure.
35. Mr Hanrahan has been repairing lawnmowers, which he said he had come to almost by accident. Prior to truck driving (his job at the time he was injured), he was a mechanic. He understood that “after the last election” he was required to look for work. Opportunities were limited because he was unable to drive, having let his licence lapse in 1999. To enhance his prospects he arranged a tutor to come to his home to teach him how to use a computer. Then he went to Bathurst “Tech” to do a “small motors” course. He found his previous experience as a mechanic to be very useful, and his back permitted him to manage the smaller engines. He started repairing lawnmowers out of his garage. He received referrals mostly by word of mouth. People have to bring their mowers to him because he is unable to collect them. Although the business has a turnover of $56,000, he makes only about $2,000 per annum. He said that he has the business as a means of “keeping [his] brain working”. He relies on his hearing and “instinct” to determine what is wrong with a motor. His wife said that he is only able to do this work because he is in his own workshop and knows exactly where everything is and does it “by feel”. He has about $10,000 in his business account, and needs to maintain that amount in order to be able to buy parts etc for the business.
36. Having taken all this evidence into consideration, I find Mr Hanrahan’s financial circumstances to be considerably worse than “not easy”, as conceded by the Centrelink advocate.
Other issues associated with Mr Hanrahan’s blindness
37. Mr Hanrahan considers his lack of vision to be his major impediment, far exceeding his back problems.
38. Mr Hanrahan’s eye condition is deteriorating. When last checked two years ago, his vision was 15% of the norm. He had difficulties seeing anyone in the hearing room and can make out nothing at all at night. He feels it is worse in the last 12 months but considers it a waste of money to have it checked, as nothing can be done.
39. Mrs Hanrahan must do the cooking and shopping, as Mr Hanrahan cannot read labels. He was unable to read any of the papers prepared for the hearing and had his wife read them to him. She also does the books of the business and sometimes picks up mowers if customers are unable to deliver them to his home. He also relies on his wife to do all the driving for the family.
40. Mr Hanrahan spoke about the Royal Blind Society and when asked about any support sought from them, he expressed some frustration about this. He has previously sought assistance from the Society but thinks he is being refused assistance because he is not on the blind pension. That means he must buy his aids, such as magnifiers. In one way he has been fortunate as he buys these cheaply from his siblings (who are assisted by the Royal Blind Society) as their sight has unfortunately deteriorated to the extent that aids are of no assistance. The aids he has however are now outmoded. To replace them would cost about $5-6000.
41. Mr Hanrahan believes he is not yet eligible for a guide dog because he has some daytime vision. In any event, he was doubtful if he could manage to walk with one as he has had to give up walking his own dog because it aggravates his back injury when the dog pulls him.
Combined effect of Mr Hanrahan’s circumstances
42. Centrelink contended that taken globally, Mr Hanrahan’s circumstances cannot be said to be unusual, uncommon or exceptional. It contended that neither could it be said that an unfair, unintended or unjust outcome has resulted.
43. The breadth of the discretion in relation to “special circumstances” was also commented on by the Full Federal Court in Riddell v Secretary Department of Social Security (1993) 42 FCR 443 at 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.
44. Similarly, in Secretary, Department of Social Security v Hales (1998) 82 FCR 154 at 162, it was stated by the Tribunal that the "concept" of special circumstances was “…to enable a flexible response to the wide range of situations which could give rise to hardship or unfairness [in the event of a rigid application of the law].”
45. There are a number of matters which I have taken into account in finding that Mr Hanrahan’s circumstances attract the exercise of the discretion. Essentially, had the GIO not inadvertently ceased Mr Hanrahan’s workers compensation payments, he would probably still be receiving DSP in accordance with the Tribunal’s previous decision. Mr Hanrahan apparently relied on Centrelink’s advice that his pension would be unaffected by re-instatement of his compensation payments. Mr Hanrahan is also disadvantaged compared to other recipients of the blind pension who are capable of work in that because he has been incapacitated for work, he does not receive the DSP. Mr Hanrahan’s financial circumstances have significantly deteriorated in recent times. Even Centrelink conceded things were “not easy”. This is an understatement. Put bluntly, the support and love that Mrs Hanrahan provides comes at a price: the family’s financial situation is burdened by debt and unproductive legal expenses. Added to this is the trauma associated with the withholding of the children by Mrs Hanrahan’s ex-husband. Another result of these domestic circumstances is the fluctuating entitlement to child support, FTB and compensation. On top of all this is Mr Hanrahan’s progressive blindness. He knows that relatively soon he will be able to see nothing at all, just as his siblings are affected. He is apparently unable to access support from the Royal Blind Society. Even a guide dog will not be able to assist him.
46. Notwithstanding his physical limitations Mr Hanrahan has endeavoured to remain self-sufficient. He has a job which he undertakes to keep active and avoid becoming depressed about his situation. He manages it by feel and instinct. I note though he can do it only in an environment in which he is familiar. Even so, his wife must assist at times. He should be praised for his endeavours in attempting to lead a normal and independent life.
47. I find that, considering Mr Hanrahan’s circumstances in their totality, his circumstances are “special” within the meaning of section 1184K of the Act. As such, it is appropriate to exercise the discretion under section 1184K to disregard his compensation payments when assessing his pension rate. The breadth of Mr Hanrahan’s difficult situation is striking, although he is strident in his attempts to maintain his independence. Because of his exceptional circumstances, including the actions of Centrelink in ceasing his DSP payments which have led to an unfair result, the serious financial strains on him and his family, his worsening eye condition, the limited support available from the Royal Blind Society, his inability to work, despite his desire to do so, and the sacrifices, financial and otherwise, that his wife has had to make because of his situation, I have decided that the whole of Mr Hanrahan’s compensation payments are to be treated as not having been made.
DECISION
48. The Tribunal decides that the decision of the SSAT is set aside and in substitution therefor the Tribunal finds that Mr Hanrahan’s compensation payments are to be treated as not having been made and that he is to be paid disability support pension in full.
I certify that the 48 preceding paragraphs are a true copy of the reasons for the decision herein of Ms N Isenberg, Senior Member
Signed: ...K Portus................................
AssociateDate of Hearing 17 May 2007
Date of Decision 8 June 2007
Appearance for Applicant Self-represented
Advocate for the Respondent Mr J Larcombe of Centrelink, Legal Services
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