Hartley and Secretary, Department of Family and Community Services
[2005] AATA 638
•6 July 2005
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2005] AATA 638
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2004/1051
GENERAL ADMINISTRATIVE DIVISION ) Re CARMEL HARTLEY Applicant
And
SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION
Tribunal Ms N Isenberg, Member Date6 July 2005
PlaceSydney
Decision The Administrative Appeals Tribunal affirms the decision under review.
[sgd] Ms N. Isenberg, Member
CATCHWORDS
SOCIAL SECURITY – lump sum workers’ compensation payment – preclusion period – whether special circumstances exist to justify the exercise of the discretion to disregard all or part of the compensation payment being made – unfairness of the strict application of the ‘50% rule’ – decision affirmed
LEGISLATION
Social Security Act 1991 (Cth) – sections 17, 1170 and 1184
CASE LAW
Beadle v Director of Social Security (1984) 6 ALD 1
Beadle and Director General of Social Security (1985) 60 ALR 225
Groth v Secretary of Social Security (1995) 40 ALD 541
Haidar v Secretary of Social Security (1998) 52 ALD 255
Kirkbright v Secretary, Department of Family and Community Services (2000) 65 ALD 211
Re Martin and Secretary, Department of Social Security (AAT 6482, 14 November 1990)
Re Secretary, Department of Social Security and Hill (1995) 39 ALD 667
Re Secretary, Department of Social Security and VYS (1995) 40 ALD 745
Sammut and Secretary, Department of Family and Community Services [2000] AATA 618
Secretary, Department of Social Security and a’Beckett (1990) 21 ALD 79
Secretary, Department of Social Security v Banks (1990) 20 ALD 19
Secretary, Department of Social Security v Ellis (1997) 46 ALD 1
Secretary, Department of Social Security and Hill (1995) 39 ALD 661
Secretary, Department of Social Security v Hulls (1991) 22 ALD 570
Secretary, Department of Social Security and McFetrish (AAT 12920, 7 May 1998)
Secretary, Department of Social Security v Smith (1991) 23 ALD 277
REASONS FOR DECISION
6 July 2005
Ms N Isenberg, Member
DECISION UNDER REVIEW
1. The decision under review before the Administrative Appeals Tribunal (“the Tribunal”) was the decision of the Social Security Appeal’s Tribunal (“the SSAT”) dated 12 July 2004, reviewing a decision made by Centrelink on 24 March 2004 and affirmed by the Authorised Review Officer (“the ARO”) on 16 June 2004.
BACKGROUND
2. On 20 June 1998, Ms Hartley suffered a back injury (T9/29) and proceedings were commenced on her behalf in the Local Court by her solicitor, Mr Graham Chegwidden of Chegwidden Solicitors. The proceedings were subsequently transferred to the District Court.
3. On 15 March 2004, Ms Hartley settled her common law claim for a lump sum of $80,000, inclusive of costs. (T10/31-33)
4. On 3 March 2004, Centrelink received a fax from the solicitor for the Defendant in the common law proceedings, Karin Ruscoe of Brophy, Bridge & Mirow concerning the settlement. The Centrelink officer noted, after contacting Ms Ruscoe, that the settlement was "Eco loss inclusive". It was based on this information, that a preclusion period of 20 June 1998 to 3 September 1999 was calculated, amounting to $12,402.10. (T7/26)
ISSUE BEFORE THE TRIBUNAL
5. Whether the correct decision was made to apply the preclusion period of 20 June 1998 to 3 September 1999 and, if so, whether there are any special circumstances in which the receipt of part, or all, of the compensation should be disregarded.
THE HEARING
6. A hearing was held before me on 7 June 2005 at which the Applicant appeared without representation. The Respondent, Centrelink was represented by Ms J Green, an advocate from the Centrelink Service Recovery Team.
7. I had before me documents lodged pursuant to section 37 of the Administrative Appeals Tribunals Act 1975 ("the T-documents"), which I took into evidence. Additional documents, which had been attached to the Respondent’s Statement of Facts and Contentions, were also taken in as Exhibits.
8. Ms Hartley gave evidence and was cross-examined on behalf of Centrelink. I also asked her questions.
9. Ms Green called Chelvadoray Ganesan Raju to give evidence about the method by which the debt was calculated.
10. At the conclusion of the hearing Ms Hartley referred to a document showing a break up of settlement monies, which had been given to her by her solicitor, Mr Chegwidden. She did not have that document with her at the hearing.
11. In fairness to Ms Hartley the matter was adjourned until 29 June 2005 so that either the original or a further copy could be produced.
12. On that occasion I spoke with Ms Hartley and Ms Green by conference telephone. Ms Hartley said she had not been able to locate the document she thought she had. She had spoken with her solicitor and he said there was no document prepared, at or after the settlement conference, showing how the settlement amount was made up.
13. In that event I proceeded on the basis of the evidence before me.
LEGISLATION
14. Section 1170 of the Social Security Act 1991 (Cth) (“the Act”) provides that, where a lump sum compensation payment has been received, ‘a compensation affected payment’ is not payable during a lump sum preclusion period. Subsection 17(1) defines a ‘'compensation affected payment'’, to include a social security payment (such as sickness benefits and newstart allowance). Subsection 17(2) defines ‘'compensation'’ to include settlement of a claim for damages and requires that the payment, to be "made wholly or partly in respect of lost earnings or lost capacity to earn".
15. The preclusion period is calculated by reference to the ‘‘compensation part’’ of a lump sum compensation payment. Subsection 17(3) defines the ‘‘compensation part’’ as being equivalent to 50 per cent of the lump sum compensation payment.
16. The length of the preclusion period is calculated using the formula set out in section 1170 of the Act.
17. In applying the statutory formula, therefore, the lump sum compensation payment, $80,000, is divided by the ‘‘income cut-out amount’’, which is defined in section 17(1) of the Act. When making the calculations, the divisor used is the one that applied on the day the compensation claim was settled. At the date of Ms Hartley’s settlement, the income cut-out amount was $633.25. Applying the formula therefore:
$40,000 divided by $633.25 = 63.17 , which rounds to 63 weeks.
18. The preclusion period begins on the date of the injury and ends at the expiration of 63 weeks, that is, from 20 June 1990 to 3 September 1999. Monies paid to Ms Hartley during that period total $12,402.10.
19. Section 1184 of the Act provides potential relief from the strict application of the compensation preclusion period, by giving the Secretary a discretion to disregard the whole or part of the compensation payment in “special circumstances”. Section 1184K (1) of the Act reads:
“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.”
APPLICANT’S EVIDENCE AND SUBMISSION
20. By way of background, Ms Hartley told me that in June 1998 she had lost her footing on the stairs of the hostel where she was staying, falling onto her buttocks. She did not seek medical attention at first, but went to a General Practitioner the next day. She was given painkillers. Then, after another bad night, she decided to go to the hospital where x-rays were conducted and a ‘fractured spine’ and ‘broken tailbone’ were diagnosed. She would have been admitted to hospital but no beds were available. She was again sent home with painkillers. It was recommended that she consult a neurologist and she did so every few months until March 1999. He advised her that she could no longer work as a cleaner and could only undertake non physical work. Unfortunately, she can no longer remember the neurologist’s name.
21. At the time of the accident Ms Hartley said she was receiving unemployment benefits. She also had had a part-time cleaning job for a few months which paid her $50 per week, on a cash basis. After the accident she never returned to the cleaning job.
22. Some time in 2001 she went to Mr Chegwidden, solicitor, because of the ongoing back pain when doing even the most basic of chores. She knew that by that time other people had fallen down the stairs as well and it was her view that the owner should not be running a public place without proper upkeep. Mr Chegwidden filed a Statement of Claim in the Local Court, in accordance with her instructions. The matter was subsequently transferred to the District Court, when it became apparent that she may be entitled to damages which exceeded the Local Court’s jurisdiction.
23. On the 15 March 2004, a settlement conference was arranged that was attended by Ms Hartley, Mr Chegwidden and “his offsider” Mr Elias Kyriacou, and a woman named Karin Ruscoe who, Ms Hartley understood to be an insurance assessor on behalf of Allianz (but was in fact the solicitor for Allianz). Mrs Hartley said she had been advised to take part in the conference because she only had a 50-50 chance of success at hearing and that she was more likely to get something if the matter were to settle.
24. She thought an initial offer of about $20,000 may have been made by the insurer prior to the settlement conference and before the matter was transferred to the District Court.
25. She recalled that prior to the settlement conference her solicitor had told her that Centrelink could possibly take some of the settlement monies, but she said he had “no clue” as to what it would be. She considered that he was “useless” and that he really didn’t care. She thought he ‘fobbed her off’ by guessing it was maybe $2000-$4000. She said if she had realised it was about $12,000 she would have asked for more at the settlement conference.
26. She also saw David Maddox of counsel a few times. Mr Maddox’s advice had been to start off at the settlement conference with an amount that was not too high. It was her idea to ask for $135,000. She said she wanted to claim for past economic loss but Ms Ruscoe, had said there was no evidence to support such a claim, and anyway, the accident had been “half her fault anyway”. She thought Ms Ruscoe’s counter-offer was for less than $61,000.
27. After that, economic loss was not discussed again at the conference and she just told her solicitor that she wanted more money. The offers progressed, she thought, in about $5,000 increments. She thought the meeting went for about two and half hours, towards the end of which her solicitor asked what she thought of ‘about $80,000’, and she decided to take that amount.
28. She told me at the resumed hearing that she thought her general damages should have been about $30,000. Her solicitors’ costs were $25,000. She said ‘that would leave only $25,000 for future economic loss’.
29. She said that during the negotiations she and Ms Ruscoe were never in the same room at the time and Mr Chegwidden would send one or the other out of the room.
30. About ten days after the settlement she received the letter from Centrelink (T9/29) informing her of the preclusion period. She phoned her solicitor to ask what was going on because he had told her she would receive about $55,000 from the settlement monies. He said he would negotiate with Centrelink.
31. She later spoke to ‘the offsider’ and he provided her with copies of letters he had written to Centrelink. He then sent her a bill for $800 for the letters. She phoned Mr Chegwidden again and there were discussions about whether or not she should be charged for the Centrelink letters as she had not been informed in advance that she would be.
32. At the time of the accident Ms Hartley was on unemployment benefits. After the accident she went onto sickness benefits for about nine months until mid March 1999. After that time she went onto newstart allowance. It took a while for her to get the job but in mid 2000 she started at Harry’s Café de Wheels – initially one day per week and then up to three eight hour shifts per week. She worked there for two and half years serving food. It was quite hard work, with few breaks.
33. Since October 2004, she has been receiving newstart allowance and has been living on that money and her settlement monies. She rents a flat which costs $170 a week and her bills total about $20-$30 per week. She probably spends about $60 a week on food, plus about $7 or $8 per week on medication. She still has about $30,000 remaining from the settlement funds.
34. Her back now is “okay” if she is not too strenuous in her activities. However, even doing the cooking and dishes for about ten minutes will require her to take painkillers.
35. Ms Hartley’s main contention was that as the settlement funds did not take into account any economic loss, it was inappropriate for Centrelink to apply a preclusion period. In this regard she referred me to the letters from Mr Chegwidden (T12/38 and T13/47; T13/40 & T16/57) that the settlement figure did not contain a component of economic loss. She also referred me to Ms Ruscoe’s response to Centrelink’s enquiry wherein Ms Ruscoe wrote:
Q. 1. Could you please confirm whether an economic loss component was included in the final settlement in relation to the above named?
A. The final settlement did not include a component for any past economic loss. As the settlement was “all-inclusive” I do not know how the sum of $80,000 was broken up.
36. In any event, she submitted, if there was an amount for economic loss it was her intention that this related to compensating her for what she might have earned had she not been injured.
37. Further, she contended that she could understand why Centrelink might be entitled to recover an amount from her in respect of the period when she was receiving sickness benefits, but not while she was receiving newstart allowance.
38. She also said that she was still troubled by her back and still requires painkillers every second day. Now she has been advised to take fewer painkillers because of long-term side-effects. When she last saw the neurologist (in March 1999) he essentially told her then that her back would get no better.
CENTRELINK’S SUBMISSION
39. If a lump sum settlement payment includes a component for lost earnings or lost capacity to earn, which Centrelink submitted is the case here, then under section 17(3) of the Act, 50% of that lump sum is deemed to be the “compensation part” of the lump sum compensation payment. This is the application of legislative provision rather than being a finding of fact. The purpose of section 17(3) is to apply this arbitrary rule rather than determine the real amount that was in the settlement for the Ms Hartley’s incapacity for work.
40. S1170 of the Act provides that a lump sum preclusion period starts on the day on which the incapacity for work commenced or the day after the last day of any compensation periodic payment period. The compensation part of the lump sum is divided by the income cut-out amount, which in the current case was $633.25. As Ms Hartley received a lump sum compensation payment, and received a compensation affected payment (newstart allowance), newstart allowance is not payable to Ms Hartley during the preclusion period.
41. $40,000, that is, 50% of the total settlement amount, was used to calculate a preclusion period from 20 June 1998 to 3 September 1999 which resulted in a charge of $12,402.10 for newstart allowance payments paid to Ms Hartley during this period (T15/50-56).
42. It was submitted that once I determine that the settlement contained a “compensation part”, I should not then attempt to dissect the component parts of the settlement, as the legislation does not provide nor support such an approach. In this regard I was referred to Secretary, Department of Social Security and McFetrish (AAT 12920, 7 May 1998) at para 14, quoting O'Loughlin J in Secretary, Department of Social Security v Hulls 22 ALD 570 at 578 where he states:
“Once the mischief at which the amending legislation was aimed has been so clearly identified, it becomes apparent that the legislation prevents any dissection of the ‘lump sum’. Although those words are not defined, I respectfully agree with what Von Doussa J said of them in Banks case: ‘They are not words of art. In the Macquarie Dictionary, a lump sum is defined as a sum including a number of items taken together or in the lump."
43. As to whether the settlement contained a compensation part, it was submitted that I should look at all of the circumstances surrounding the settlement of Ms Hartley’s matter, in that the amended ordinary statement of claim sets out the claim for past and future economic loss, despite what Ms Hartley now says the settlement was meant to represent. This process is approved in the Federal Court case of Secretary, Department of Social Security and a’Beckett (1990) 21 ALD 745 where von Doussa J reasoned that the objective evidence would provide a more reliable guide than the asserted beliefs of the claimant as to how the settlement sum was arrived at (at para 40).
44. In making these submissions Centrelink relied on a number of Federal Court and Tribunal cases. In Sammut and Secretary, Department of Family and Community Services [2000] AATA 618, the applicant similarly filed a statement of claim, claiming, amongst others, economic loss with particulars to be provided. These were provided, and the applicant then settled the matter and received a global lump sum settlement including costs. The Tribunal relevantly stated at para 19:
“All I can deduce from the material before me is that the Applicant's claim against the Defendant referred to economic loss and a lump sum settlement was received covering all heads of damage claimed. In other words, economic loss was, by default, a component of the lump sum settlement".
45. Centrelink referred me to the reasoning of the SSAT, identified in its decision, that the process of settling compensation claims necessarily involves offer and counter offer and pointed out, at paragraph 28, that it would not be unusual for claims for economic loss to be included, excluded and re-introduced during the course of such negotiations. The SSAT went further and referred to the fact that during the history of the claim, Ms Hartley’s barrister, Mr Maddox, suggested various offers to her solicitors, all of which included economic loss components. (T5/19-23 & T6/24-25)
46. Further, the Statement of Particulars (T16/64-66) Ms Hartley claimed for both past and future economic loss: that "as a result of her disabilities...the plaintiff will suffer a diminution in her earning capacity..."(T16/65). It was submitted, therefore, that I was entitled to find that the settlement amount included an amount for her reduced earning capacity.
47. Centrelink’s reliance on the Statement of Particulars in the present case is supported by the decisions in Sammut (supra) at 20 and in a’Beckett (supra) at 90-91, where von Doussa J stated:
“Foremost amongst such statements will be formal particulars of claim. The formal particulars of claim identify the subject-matter of the claim by the pensioner”
48. Ms Hartley’s solicitor advised Centrelink in his letter dated 22 April 2004 that the settlement figure reached did not contain a component of economic loss. (T12/39). It was submitted that this infers that Ms Hartley’s claim for lost capacity to earn in the future was therefore still valid and considered at the date of the settlement. In fact, the handwritten notes of the defendant's solicitor, Ms Ruscoe, which indicate that an amount for "future" (economic loss) of $5,000 formed part of the defendant's solicitor’s initial offer of $61,000.
49. It was Centrelink’s contention that the claim for future economic loss was never withdrawn and therefore remained a component of the claim (McFetrish (supra) at 13).
50. In relation to the formula used to calculate a preclusion period, while arbitrary in nature, it was submitted that it has been put in place by Parliament to effect, as far as possible, equity as between the compensation recipient and the public purse where in cases such as this where no economic loss component has been specifically quantified in the final lump sum settlement figure.
51. Centrelink referred me to Secretary, Department of Social Security v Banks (1990) 20 ALD 19, von Doussa J had regard to the Second Reading Speech on the Bill introducing the Social Security Amendment Act 1988 (Cth) (Act No 58 of 1988). The passages (at 422) to which his Honour referred are as follows:
“This Bill contains measures to improve the administration and integrity of compensation recovery provisions. Where a person receives personal injury compensation that makes up for lost income the Social Security Act provides that pension or benefit may be reduced or recovered. This is one way in which social security expenditures are directed to those most in need. Settlements of lump sum compensation, particularly in the workers compensation jurisdiction are being manipulated to obscure the economic loss component and to avoid recovery of social security payments. To prevent this abuse, the Minister announced on 8 February 1988 that, for future personal injury settlements made by agreement or by consent order, 50 per cent of lump sum compensation will be deemed to be in respect of economic loss. This Bill gives effect to that proposal. Where, on the other hand, a court has made an order after a contested hearing specifying the economic loss component, the Secretary to the Department will continue to have regard to the characterisation given to the award by the court” (Hansard, 13 April 1988, p 1497).
52. Section 1184K of the Act does allow the decision-maker to adjust a harsh or unjust outcome that may arise from the application of the 50% rule.
53. As to ‘special circumstances’ that exist to treat the whole or part of the compensation payment as not having been made, it was Centrelink’s contention that the circumstances surrounding Ms Hartley s expenditure of the settlement monies or her family and financial circumstances are not special, nor unusual, uncommon or exceptional. Centrelink submitted that it is therefore inappropriate to exercise the discretion in her favour.
DISCUSSION AND FINDINGS
54. In coming to the correct and preferable decision, I took into account all the evidence, submissions, case law and relevant legislation.
55. Following settlement of a common law claim in respect of an accident, Ms Hartley received a lump sum payment which was compensation as defined in section 17 of the Act. The matter was settled for the sum of $80,000 inclusive of costs.
56. I first need to determine if the settlement was one which could properly be described as ‘compensation’. S17 of the Act defines compensation as follows:
“(a) a payment of damages; or
(b)a payment under a scheme of insurance or compensation under a Commonwealth, State or Territory law, including a payment under a contract entered into under such a scheme; or
(c)a payment (with or without admission of liability) in settlement of a claim for damages or a claim under such an insurance scheme; or
(d) any other compensation or damages payment;
(whether the payment is in the form of a lump sum or in the form of a series of periodic payments and whether it is made within or outside Australia) that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury (Tribunal’s emphasis).”
57. I accept that for the purposes of s.17(2) "lost earnings" refers to past earnings loss. "Lost capacity to earn" may apply to the past, present or future loss. In personal injury claims, heads of damages address both past and future economic loss (Re Secretary, Department of Social Security and Hill (1995) 39 ALD 667.)
58. In accordance with a'Beckett (supra) I looked at all of the circumstances surrounding the settlement.
59. In this matter, there is some evidence that the settlement amount did not take into any component for economic loss, past or future.
60. Ms Hartley’s solicitor wrote to Centrelink on 22 April 2004 as follows: (T12/39):
“Upon instructions from my client, I withdrew the claim for economic loss in the settlement negotiations. The settlement was inclusive of costs. It was my belief that the settlement figure reached did not contain a component of economic loss.”
61. In a further letter dated 29 April 2004 (T13/40) he wrote:
“As discussed, whilst our client claimed past and future economic loss in the Statement of Claim this claim was withdrawn prior to settlement negotiations. The settlement, inclusive of costs, was for general damages and out of pocket expenses only. It was my belief that the settlement figure reached did not contain a component of economic loss.”
62. The Defendant’s solicitor, Ms Ruscoe told Centrelink in her letter of 16 April 2004 T10/31):
“we are advised by her solicitors that her claim for economic loss was dropped prior to settlement and that the settlement was for general damages and out of pocket expenses only. The settlement was inclusive of costs.”
63. Curiously, although it may have no special significance, is the use of ‘are advised’ which may suggest that information was provided in the context of the letter, rather than in the context of the settlement negotiations. That economic loss was ‘dropped’ does not accord with Ms Ruscoe’s initial advice to Centrelink recorded in discussions of 16 June 2004 (T22/74).
64. In a further letter to Centrelink dated 15 March 2005 Ms Ruscoe wrote:
I confirm that the plaintiff’s claim was settled for the sum of $80,000.00 inclusive of costs and out of pocket expenses. The amount did not include any amount for past economic loss.
During the settlement negotiations the Plaintiff initially claimed an amount of $135,000.000 including approximately $50,000.00 for economic loss. That offer was rejected and a counter offer of $61,000.00 made with no amount allowed with respect to either future or past economic loss.
The claim was ultimately settled for the sum of $80,000.00. There were no discussions as to how that amount was made up. The break up was never discussed between the parties.
65. The letter attached her handwritten notes of the conference. These notes confirm that the Plaintiff’s starting position at the conference had included an economic loss component of $50,000. Ms Ruscoe’s counter offer of $61,000 had been made on the basis that ‘economic loss’ was eliminated, but there remained, according to the notes, an amount of $5000 for ‘future’. In rejecting that offer Ms Hartley‘s solicitor countered with $90,000. Ms Ruscoe’s note is that this was put on the basis that the Plaintiff:
…says she may deteriorate and not be able to work
66. By way of a counter offer, and without further notation, Ms Ruscoe offered $75,000. That was rejected by Ms Hartley’s solicitor and $80,000 was proposed, again without notation, and was accepted.
67. On the final page of the Terms of Settlement (T13/ 46) Ms Hartley made a notation:
“confirmed on basis I receive $56,000”
68. The solicitor had also made a notation:
“above confirmation is on basis costs and disbursements
will be $24,000”
69. Read together, the amounts add up to the $80,000 of the settlement monies. It could be suggested that if there were no economic loss component (and therefore no Centrelink payback) then Ms Hartley would indeed receive $56,000. Ms Hartley‘s evidence, however, was that a payback figure to Centrelink was discussed prior to the settlement. Ms Ruscoe’s notes of the settlement conference also record:
“Centrelink $28,000”
70. It is unclear however to what this amount relates, but tends to suggest that a Centrelink payback may have been discussed at least between the solicitors.
71. The amended ordinary statement of claim (T16/59-63) sets out the claim for significant amounts for past and future economic loss, as does the Statement of Particulars (T16/64-66). Ms Hartley’s barrister, Mr Maddox, recommended various offers to her solicitors, all of which included significant economic loss components. (T5/19-23 & T6/24-25).
72. I find that in all the circumstances, the settlement took into account, at least, future economic loss.
73. I also find that the formula used to calculate the preclusion period in this matter is correct and the resultant charge of $12,402.10 of newstart allowance made to Ms Hartley within the preclusion period is also correct.
74. Having concluded the deeming provision applies to the settlement, it becomes necessary to consider whether Ms Hartley’s case is affected by special circumstances such that part or whole of the compensation payment to the Applicant can be disregarded pursuant to section 1184K of the Act.
75. 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.
76. 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 and Director General of Social Security (1985) 60 ALR 225 and Secretary, Department of Social Security v Hulls (1991) 22 ALD 570). The Federal Court in Secretary, Department of Social Security v Smith (1991) 23 ALD 277 held that it is appropriate for the discretion under section 1184 of the Act to be used where the arbitrary nature of the “50% rule” results in unfairness in a particular case.
77. Section 1184K(1) 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).
78. Ms Hartley gave evidence that she is presently in fairly impecunious circumstances. I observe, however, that of her settlement monies she still has an amount of about $30,000 available to her, and she is living off this amount together with her newstart allowance.
79. I also observe that from her settlement monies totalling $80,000, she paid $24,000 (or 30%) in legal fees. It is not for me to determine if she was charged excessively high solicitors’ costs, given that the matter did not proceed to hearing. From the notation on the Terms it is clear that the amount of costs was agreed by Ms Hartley at that time.
80. Since the Tribunal’s decision in Re Martin and Secretary Department of Social Security (AAT 6482, 14 November 1990), the Tribunal has held that incorrect or inadequate advice from a solicitor can be a relevant factor when considering special circumstances. In Re Secretary Department of Social Security and VYS (1995) 40 ALD 745 the Tribunal enunciated a strong argument for viewing incorrect legal advice as a relevant factor. This position has been accepted in a number of later Tribunal decisions. I make no finding as to whether Ms Hartley‘s solicitor had properly advised her. With the benefit of hindsight, it appears, at least from Ms Hartley’s point of view to have been unsatisfactory. I note her evidence that he had ‘no idea’ about the amount she might have to pay Centrelink, and that had she known the amount she would have held out for a higher settlement. She may wish to take this up in another place.
81. On her own evidence though, she was aware that she may have a Centrelink payback, although the quantum was unknown.
82. After reviewing all the evidence, and applying the case law to which I was referred, especially in relation to ‘special circumstances’, I do not find the advice given by her solicitor, nor Ms Hartley‘s residual health problems as she described, nor her financial circumstances to, individually or together, amount to special circumstances.
83. I therefore find that, there are no special circumstances in Ms Hartley’s case such that the discretion to disregard parts of the compensation payments pursuant to section 1184K(1) of the Act should be exercised.
DECISION
84. The Administrative Appeals Tribunal affirms the decision under review.
I certify that the 84 preceding paragraphs are a true copy of the reasons for the decision herein of Ms N Isenberg, Member
Signed: L Feely
AssociateDate of Decision 6 July 2005
Representative for the Applicant Self-represented
Representative for the Respondent Jane Green
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