Higgins and Secretary, Department of Family and Community Services

[2004] AATA 793

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 793

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2003/707

GENERAL ADMINISTRATIVE  DIVISION		)
Re		MARK HIGGINS

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Mr S. Webb, Member

Date1 June 2004

PlacePort Macquarie

Decision The decision under review is set aside for the reasons given orally at the hearing. In substitution thereof, the Tribunal decides that the Commonwealth's right to recover $9,133.54 of Mr Higgins' compensation recovery debt under s.1184G of the Social Security Act 1991 is waived in the special circumstances of his case pursuant to s.1237AAD of that Act.

..............................................

Mr S. Webb, Member

CATCHWORDS

SOCIAL SECURITY - compensation recovery - compensation affected payments - lump sum compensation - estimate of preclusion period and recoverable charge - administrative error - special circumstances - decision set aside

Social Security Act 1991 s1184, 1184G, 1184K, 1237A, 1237AAD

Re Beadle and Director General of Social Security (1984) 6 ALD 1

Groth v Secretary, Department of Social Security (1995) 40 ALD 541

Re Secretary, Department of Social Security and McAvoy (1996) 44 ALD 721

Secretary, Department of Family and Community Services v Sekhon (2003) 73 ALD 41

REASONS FOR DECISION

1 June 2004 Mr S. Webb, Member         

1.      Mr Higgins is seeking relief from a Centrelink decision to recover a lump sum preclusion period charge in the amount of $14,353.50 that was affirmed on review and subsequently by the Social Security Appeals Tribunal.

2.      The matter came on for hearing in Port Macquarie on 1 June 2004.  Mr Higgins was unrepresented at the hearing and gave oral evidence.  The Respondent Secretary was represented by Mr A. Zhang, Centrelink Service Recovery Team.  Materials were tendered and labelled as exhibits at the hearing.

3.      My decision was delivered orally at the conclusion of the hearing.  The Secretary, Department of Family and Community Services (“the Secretary”) requested written reasons on 16 July 2004.  Despite the delay in that request, written reasons follow that are consistent with the oral reasons already given.

4.      Mr Higgins’ application arises under the Social Security Act 1991 (“the Act”). Under the Act, relevantly, a person is precluded from receiving income support payment from two sources during the same period of time. Receipt of a lump sum compensation payment, in this case a compensation settlement by consent, results in the imposition of a lump sum preclusion period, during which compensation affected payments, including Newstart Allowance, are not payable. The Act provides that the Secretary may issue a notice for recovery of such payments by deduction from a compensation payment prior to release to the claimant (s.1184). In such cases the recoverable amount that is specified in the notice is a debt to the Commonwealth (s.1184G). The Act specifies the circumstances in which all or part of a compensation payment may be disregarded (s.1184K) and the circumstances in which the recovery of debts payable to the Commonwealth may be waived in whole or in part (s.1237AAD).

5.      The material facts that are not in dispute are as follows:

(a)Mr Higgins was injured on 14 December 1996 during an assault.

(b)He received an amount of $39,889.65 in victims compensation and thereafter, during the period from 14 January 1997 to 10 March 1999, was paid Newstart Allowance.

(c)Mr Higgins claimed compensation in relation to his injuries and requested an estimate of the compensation preclusion period charge that would apply in the case of a nominal settlement of $300,000.  On 31 October 2002 Centrelink advised Mr Higgins that the estimate of charge was $5,219.96, based on a compensation settlement of $300,000 and a lump sum preclusion period from 14 December 1996 to 21 September 2001.

(d)Mr Higgins’ compensation claim was settled by consent on 21 November 2002 in the amount of $200,000.

(e)On 26 November 2002 Centrelink advised Mr Higgins that a lump sum preclusion period would apply from 14 December 1996 to 18 February 2000 and an amount of $14,353.50 was to be repaid by JLT Claims Management before releasing the balance of the settlement to Mr Higgins.

(f)Mr Higgins sought review of that decision to recover $14,353.50 from his compensation settlement and has pursued his right of review to this Tribunal.

6.      It is agreed that Centrelink’s miscalculation of the estimate of that charge was an administrative error.  The amount of the preclusion period charge that was recovered by Centrelink and the duration of the compensation lump sum preclusion period in consequence of Mr Higgins’ compensation settlement is not in dispute.

7.      It follows that the sole issue for determination by this Tribunal is whether there are grounds that make it appropriate to regard all or part of Mr Higgins compensation payment as not having been made or that make it appropriate to waive all or part of the amount that was recovered from that payment by Centrelink.

8.      Making this decision I have carefully considered all of the evidence, the submissions of the parties, relevant legislation and caselaw. 

9.      I make the following findings:

(a)Mr Higgins received compensation affected payments totalling $14,353.50 during a lump sum preclusion period.

(b)Prior to settling his compensation claim he requested and was provided with an estimate of the amount of compensation affected payments that were recoverable.  That Centrelink estimate was in the amount of $5,219.96 and was in error.

(c)Mr Higgins took into account Centrelink’s erroneous estimate of charge when negotiating his settlement of his compensation claim.

(d)Subsequent to that settlement Centrelink issued a notice pursuant to s.1184 of the Act requiring JLT Claims Management to repay an amount of $14,353.50 on or about 26 November 2002. That amount was a debt due to the Commonwealth pursuant to s.1184G of the Act and was recovered in full from Mr Higgins’ compensation settlement monies.

(e)That debt did not arise solely as the result of administrative error in the Commonwealth.  S.1237A does not apply.

(f)Mr Higgins suffers from the following medical conditions: bipolar disorder that is effectively managed by pharmacological treatments; partial loss of sight in his left eye; nasal dysfunction that may require surgical treatment in the future; vertebral wedging causing club neck; and cluster headaches which are now managed by pharmacological treatment.

(g)Mr Higgins has been in employment since 1999. His current position is “offsider labourer” and he earns approximately $1,036 each fortnight.  Mr Higgins has taken occasional days off work in consequence of his medical conditions as well as in relation to various legal proceedings.  However, by his own account he does not face significant difficulties in his employment now. 

(h)Mr Higgins has the following assets: a car valued at approximately $5000;  and joint ownership of land with Ms Norma McGovern valued at $300,000.  He has the following debts which are joint debts with Ms McGovern: a mortgage against the land of approximately $190,000; and credit card debts of approximately $3000.  By his own evidence, which is not challenged, he has difficulty making ends meet on a weekly basis and finds it difficult to manage money because of his bipolar disorder and the Lithium treatment he takes for that condition.

(i)Mr Higgins lives alone but shares ownership of his abode with Ms McGovern.  He has a daughter by a previous relationship and he sees his daughter every third weekend.  In relation to that responsibility, Mr Higgins pays $362 per month in child support maintenance. 

(j)Prior to his injury Mr Higgins was involved in a business partnership that he was not able to continue following his injury.  The dissolution of that partnership resulted in debts totalling approximately $14,000 for which Mr Higgins was responsible and repaid approximately $7000.

10. The clear intention of the compensation recovery provisions of the Act is to prevent a person receiving income support from two different sources during the same period of time. For that reason compensation affected payments under the Act are not payable during a lump sum preclusion period. However, provision is made to take account of special circumstances whereby it may be appropriate to treat a compensation payment, in whole or in part, as not having been made, or to waive the Commonwealth’s right to recover a debt.

11.     At the heart of this case is the erroneous estimate provided to Mr Higgins by Centrelink prior to settlement of his claim.  In Mr Higgins’ submission he relied on the estimate of charge he received from Centrelink and negotiated a settlement on that basis.  Subsequently Centrelink recovered an amount that was almost three times greater than the estimated charge.  It is common ground that the calculation of the estimate of charge was in error.

12.     In the Secretary's submission Centrelink’s error does not constitute special circumstances because there is no certainty that Mr Higgins would have received a more favourable settlement if he had been advised of the correct amount of the charge.  I do not accept that submission. 

13.     The advice provided by Centrelink was an estimate of the charge that would apply.  That estimate quantified the amount of precluded compensation affected payments that Mr Higgins received during the estimated preclusion period from 14 December 1996 to 21 September 2001.  The purpose of providing the estimate was to enable Mr Higgins to take account of the amount he would have to repay to Centrelink if he settled his claim for the nominated amount of $300,000.  That being the case, it was for Centrelink to ensure, on the basis of the nominated amount, that the estimate was accurate at the date on which it was issued.

14.     In fact Mr Higgins subsequently settled his compensation claim for an amount of $200,000, being $100,000 less than the nominated amount on which the estimated charge was based.  In the circumstances it is not surprising that Mr Higgins expected to repay Centrelink an amount in the order of $5,219 from his compensation payment.  However, the amount Centrelink recovered was almost three times greater than the estimated amount of which he had been advised by Centrelink one month earlier.

15.     The meaning of special circumstances has been considered by previous Courts and tribunals.  Essentially and without limiting the meaning of the term, in order to be considered special the circumstances must have a particular quality of unusualness (see Re Beadle v Director-General of Social Services (1984) 6 ALD 1). Further, considering the circumstances in the context of the applicable law, if it is found that something unfair, unintended or unjust has occurred then special circumstances may exist (see Groth v Secretary, Department of Social Security (1995) 40 ALD 541).

16.     In this case I am satisfied that special circumstances do exist. 

17.     I find that Mr Higgins is not in financial hardship even though his circumstances are somewhat straightened.  There are factors of ill health that were not in evidence when he settled his compensation claim but those factors do not distinguish him from many others who are within the ambit of the Social Security scheme.

18.     What makes the circumstances this case special is the erroneous estimate that Mr Higgins received from Centrelink.  Mr Higgins was entitled to rely on that advice.  In my opinion a citizen such as Mr Higgins is entitled to rely on specific information that is provided by the Government, see Re Secretary, Department of Social Security and McAvoy (1996) 44 ALD 721. That is especially so in a case such as this where the advice is provided to enable the recipient to properly take into account the amount he or she may have to repay to the Commonwealth on settlement of a compensation claim. Had a correct estimate of charge been provided to Mr Higgins he would have had the opportunity to negotiate a settlement in the full knowledge of the amount he would be required to repay to the Commonwealth, as was his right. By being provided with erroneous advice he was denied that opportunity. It would be unfair in those circumstances to strictly enforce the compensation recovery provisions.

19.     The Secretary’s submission that there was no certainty Mr Higgins would have been successful in negotiating a larger settlement if he had been provided with the correct advice is without merit.  By underestimating the amount that would be recovered from his compensation payment Centrelink denied Mr Higgins the opportunity to take into account the amount he would be required to repay to the Commonwealth if he settled his compensation claim for $300,000.  The fact is he settled his claim for the lesser amount of $200,000 on the basis that he would be required to repay an amount of approximately $5,219.   I note in passing that the reduced settlement amount would have the effect of reducing the applicable lump sum preclusion period but not to the extent that the recoverable amount would be reduced.  Mr Higgins received compensation affected payments until 10 March 1999 and not thereafter.

20. In the Secretary’s submission it would not be appropriate to disregard a large part of Mr Higgins compensation settlement amount pursuant to s.1184K of the Act. That submission does not take account of s.1237AAD of the Act concerning the waiver of a debt in special circumstances. S.1184K permits all or part of a compensation payment to be disregarded for the purpose of Part 3.14 of the Act concerning compensation recovery. The effect of disregarding a part of a compensation payment may be to reduce the length of a lump sum preclusion period. That is not at issue in this case. Mr Higgins is seeking a reduction in the amount recovered by Centrelink by way of an s.1184G debt. What is at issue is the recovery of that debt. It follows that it is appropriate to consider s.1237AAD that permits waiver of the Commonwealth’s right to recover all or part of a debt if special circumstances exist that make it desirable to do so (see Secretary, Department of Family and Community Services v Sekhon (2003) 73 ALD 41). In the circumstances of this case I am satisfied that it is appropriate to waive part of Mr Higgins’ debt under s.1237AAD. It is immaterial that Centrelink has in fact recovered the entire amount of the debt.

21. In the special circumstances of Mr Higgins’ case I am satisfied that it is desirable to waive $9133.54 of his s.1184G debt, thereby reducing the recoverable amount from $14,353.50 to the amount of $5,219.96. It is not appropriate to disregard any amount of Mr Higgins’ compensation payment pursuant to s.1184K, nor is it necessary to interfere with the length of the lump sum preclusion period. I note in passing if I had been satisfied that such interference was necessary in the special circumstances of this case I would have applied s.1184K to that effect.

22. I am satisfied that it is more appropriate to waive rather than write off the proportion of debt and find that the debt did not arise as a result of any false statement or misrepresentation. Ss.1237AAD(a) and (c) of the Act do not preclude waiver in the special circumstances of this case.

decision

23. The decision under review is set aside. In substitution thereof, the Tribunal decides that the Commonwealth's right to recover $9,133.54 of Mr Higgins' compensation recovery debt under s.1184G of the Social Security Act 1991 is waived in the special circumstances of his case pursuant to s.1237AAD of that Act.

I certify that the 23 preceding paragraphs are a true copy of the reasons for the decision herein of Mr S. Webb, Member

Signed:  A. Krilis      
  Associate

Date/s of Hearing  1 June 2004
Date of Decision  1 June 2004
Representative for the Applicant    Self - represented
Solicitor for the Respondent          Mr Andrew Zhang