HODGE and SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
[2010] AATA 808
•20 October 2010
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2010] AATA 808
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2009/5135
GENERAL ADMINISTRATIVE DIVISION ) Re MERVYN HODGE Applicant
And
SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal C Walsh, Senior Member Date20 October 2010
PlacePerth
Decision The Tribunal affirms:
1. the decision made by Centrelink on 2 July 2009 to:
a) preclude Mr Hodge from receiving disability support pension for the period 2 February 2007 to 31 December 2009; and
b) cancel Mr Hodge’s disability support pension, effective 17 June 2009.
2. the decision made by a Centrelink Authorised Review Officer on 10 August 2009 to raise and recover a debt of $40,752.18 for disability support pension paid to Mr Hodge during the period 2 February 2007 to 17 June 2009.
The Tribunal’s decision is based on the evidence provided to the Tribunal by the respondent as required by section 37 of the Administrative Appeals Tribunal Act 1975 (Cth).
...(sgd) C Walsh.................
Senior Member
CATCHWORDS
Social security- disability support pension - lump sum compensation payment- lump sum preclusion period- debt- recoverable amount- cancellation of disability support pension- cancellation of pensioner concession card
LEGISLATION
Social Security Act 1991 (Cth) Social Security (Administration) Act 1999 (Cth)
CASES
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Dranichnikov v Centrelink (2003) 75 ALD 134
Re Colaiacolo and Secretary, Department of Social Security (AAT, 24 April 1985, No 2109)
Re Glossop and the Department of Social Security (AAT, 12 May 1992, No 7948)
Re Kulakov and Secretary, Department of Social Security (1991) 63 SSR 879
Re Hajar and Secretary, Department of Social Security (1988) 16 ALD 716
Bilderbeek and Secretary, Department of Employment and Workplace Relations [2006] AATA 782
Re Lukic and Secretary, Department of Social Security (AAT, 6 May 1991, No 6944)
Ruperez and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2008] AATA 231REASONS FOR DECISION
20 October 2010 C Walsh, Senior Member Introduction
1.Mr Hodge is not a well man. He suffers from Ross River virus, chronic fatigue syndrome and severe depression, in respect of which he was granted a disability support pension by Centrelink a number of years ago.
2.To add to his misfortune, on 25 October 2006 Mr Hodge sustained a crush injury to his left arm in an accident whilst working for Auswest Timber Pty Ltd (Auswest). He subsequently received regular compensation payments from Auswest’s insurer, GIO Insurance Ltd, in respect of that injury. Those compensation payments ceased on 1 February 2007, from which date Mr Hodge again received a disability support pension from Centrelink.
3.Mr Hodge brought a claim for damages for personal injury in the District Court of Western Australia in relation to his work related injury. On 30 April 2009, Mr Hodge’s claim was settled out of court by consent judgement and he received a lump sum compensation payment of $250,000.
4.On 2 July 2009, Centrelink wrote to Mr Hodge advising him that his lump sum compensation payment had affected his entitlement to disability support payments from Centrelink. More specifically, Mr Hodge was told by Centrelink that, based on a lump-sum compensation payment of $239,857.37, he would not be entitled to receive disability support pension payments for the preclusion period 2 February 2007 to 31 December 2009 and that he would be required to repay Centrelink $40,115.48 for disability support pension payments made to him by Centrelink in that period. Information on how these calculations were made was contained on the back of that letter.
5.In another letter dated 2 July 2009, Centrelink wrote to Mr Hodge advising him that because of his compensation settlement, his disability support pension had been cancelled and that his pensioner concession card would only remain valid until 17 June 2009, after which date he should destroy the card immediately.
6.On 20 July 2009, Mr Hodge requested a review by Centrelink of the decision it made on 2 July 2009 to recover the amount of $40,115.48 from him in respect of disability support pension paid to him in the preclusion period. On 28 July 2009, Centrelink reconsidered and affirmed that decision.
7.Dissatisfied, on 3 August 2009, Mr Hodge sought a review of Centrelink’s decision concerning the recoverable amount by a Centrelink Authorised Review Officer. On 10 August 2009, a Centrelink Authorised Review Officer reviewed that decision and decided to increase the recoverable amount from $40,115.48 to $40,752.18.
8.Mr Hodge subsequently applied to the Social Security Appeals Tribunal (SSAT) for a review of the decisions made by Centrelink on 2 July 2009 and the decision made by a Centrelink Authorised Review Officer on 10 August 2009. On 18 September 2009, the SSAT affirmed those decisions. Mr Hodge now seeks a review of those decisions by this Tribunal.
Issues
Is Mr Hodge precluded from receiving a disability support pension as a consequence of receiving a lump sum compensation payment?
9.Section 1169 of the Social Security Act 1991 (the Act) makes it clear that if a person receives or claims a “compensation affected payment” and a “lump sum compensation payment” then no “compensation affected payment” is payable to that person in the “lump sum preclusion period”.
10.“Compensation affected payment” is defined in section 17(1) of the Act to include a disability support pension.
11.“Compensation” is defined in section 17(2) of the Act to mean, among other things, any compensation or damages payment (whether lump sum or periodic) “that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury”.
12.The effect, under section 1169 of the Act, of Mr Hodge receiving a disability support pension and a $250,000 in lump sum compensation payment in respect of the injury he sustained whilst working at Auswest, is to preclude Mr Hodge from receiving any disability support pension during the “lump sum preclusion period”.
If yes, for what period is Mr Hodge precluded from receiving a disability support pension?
13.Section 1170 of the Act provides that if a person receives both periodic compensation payments and a lump sum compensation payment the “lump sum preclusion period” begins on the day following the last day of the last periodic compensation payment and ends at the end of the number of weeks calculated by dividing the “compensation part of the lump sum” of the lump sum compensation payment by the “income cut-out amount”. Where that calculation results in a number that is not whole, it is rounded down to the nearest whole number.
14.From his lump sum compensation payment of $250,000, Mr Hodge was required to reimburse the workers compensation insurer an amount of $10,124.63 for the periodic compensation payments made to him until 1 February 2007.
15.Section 17(4A) of the Act provides that arrears of periodic compensation payments are not a lump sum compensation payment for the purposes of the Act. Accordingly, Mr Hodges’s total lump sum payment for the purposes of the preclusion period calculation is $239,875.37 (being $250,000 less $10,124.63 in arrears of compensation payments).
16.Where a claim for personal injury is settled by way of consent judgement, then, pursuant to section 17(3) of the Act, only 50% of the lump sum compensation payment constitutes the “compensation part of the lump sum” for the purpose of the section 1170 calculation. Consequently, in Mr Hodge’s case, the compensation part of the lump sum is $119,937.68 (being $239,875.37 divided by 50%).
17.The “income cut-out amount” is defined, for the purpose of the preclusion period calculation, in section 17(1) and (8) of the Act to, in broad terms, mean the income amount at which a single pension would cease to be payable, as in force at the time the compensation was received. Based on the evidence before the Tribunal, Mr Hodge’s income cut-out amount was $788.75.
18.Therefore, Mr Hodge’s lump sum preclusion period is 152 weeks, calculated as follows:
$119,937.68 (Compensation part of the lump sum) divided by
$788.75 (Income cut-out amount) equals
________________________________152 weeks (rounded down from 152.06)
19.It follows that Mr Hodge’s lump sum preclusion period begins on 2 February 2007 (being the day following the last periodic compensation payment on 1 February 2007) and ends on 31 December 2009 (being 152 weeks from 2 February 2007).
Is Mr Hodge required to repay any amount of disability support pension to Centrelink, in respect of the disability support pension received by him during the preclusion period?
20.Section 1178 of the Act provides that if a person receives a lump sum compensation payment and disability support pension payments (representing a type of “compensation affected payment”) during a lump sum preclusion period, the Secretary may determine by written notice that the person is liable to pay the Commonwealth the “recoverable amount”, as determined under section 1179 of the Act. That section states that the “recoverable amount” is the lesser of the “compensation part of the lump sum” compensation payment (being $119,937.63 in Mr Hodges’ case) and the total amount of disability support pension payments made to the person during the lump sum preclusion period.
21.Mr Hodge appeared before the Tribunal by telephone. On several occasions he made the statement that he didn’t understand why he owed so much money to Centrelink and that he was ”sick of all of this”.
22.This is despite the fact that there was evidence that before settlement, on 8 April 2009, Centrelink wrote to Mr Hodge, his solicitors, Bradley Bayly Legal, and to Auswest’s insurer, explaining that any compensation payment made to Mr Hodge in settlement of his personal injuries claim could result in Mr Hodge being precluded from receiving a disability support pension for a certain period, that his disability support pension may be cancelled and that he may be required to pay any disability support payments made to him since the injury to Centrelink.
23.Part of Mr Hodge’s confusion concerning the quantum of the recoverable amount can clearly be explained by the fact that his solicitors provided Centrelink with inaccurate information about his compensation when they sought an estimate of the recoverable amount from Centrelink before it made its final decision on that issue on 2 July 2009.
24.That is, the evidence reveals that, on 6 April 2009, Mr Hodge’s solicitors requested an estimate of the recoverable amount from Centrelink by lodging the relevant request form with it. On that form, they were asked to provide the “Date to which periodic compensation was last paid”. Beneath that question was a note which said “Important: our estimate will only be accurate if this question is correctly answered”.
25.The answer given to the question by Mr Hodge’s solicitors was “1 August 2008” when it should have been “1 February 2007”. On this basis, Centrelink advised Mr Hodge’s solicitors that the estimated preclusion period was 2 August 2008 to 12 August 2011 and that the estimated recoverable amount was $12,127.65. That error resulted in the estimated the preclusion period and the recoverable amount being calculated incorrectly. When Centrelink subsequently confirmed Mr Hodge’s compensation details with the insurer’s lawyers, Sparke Helmore, it was told that the last date Mr Hodge was paid weekly compensation was in fact 1 February 2007. Centrelink was then able to determine that the correct preclusion period for Mr Hodge was 2 February 2007 to 31 December 2009 and that the total amount of disability support pension payments for which he was liable was in fact $40,115.48, not $12,127.65 (being the estimated recoverable amount).
26.To add to Mr Hodge’s confusion regarding the size of the recoverable amount is the fact that when, on 2 July 2009, Centrelink first notified Mr Hodge that he would be required to repay an amount for disability support pension payments made to him during the preclusion period, the recoverable amount was calculated to be $40,115.48. However, following a review of that decision by a Centrelink Authorised Review Officer on 10 August 2009, the recoverable amount was increased by $636.70 to $40,752.18. The evidence shows that the increase occurred as a result of a review by the Authorised Review Officer of Centrelink’s computer payment records which indicated that the correct total amount of disability support pension payments made to Mr Hodge by Centrelink in the period 2 February 2007 to 17 June 2009 was in fact $40,752.18, not $40,115.48.
27.Unfortunately for Mr Hodge, none of those misunderstandings change the fact that he is required by Centrelink, acting in accordance with the Act, to repay it $40,752.18 for disability support pension payments made to him during the lump sum preclusion period.
28.There was evidence that from the total recoverable amount of $40,752.18 amount, $11,249.60 has been repaid to Centrelink by the insurer. Consequently, the amount that Mr Hodge still owes to Centrelink is $29,502.58 (subject to any recent adjustments by it). Before the Tribunal, the respondent stated that the amount currently owed by Mr Hodge to Centrelink is $29,268.58.
Do any special circumstances exist which would make it appropriate to disregard any amount of Mr Hodge’s lump sum compensation payment so as to reduce his preclusion period?
29.In his application for review, Mr Hodge stated that the preclusion period was “too excessive” and that he is “so stressed out” because of the amount of money he owes Centrelink. He said that he is “very ill” because of his depression and because he has Ross River virus, for which there is no known cure.
30.Section 1184K of the Act allows the Secretary to treat the whole or a part of a compensation payment to be disregarded if it is appropriate to do so in the “special circumstances” of the case. The practical effect of this is to reduce or, in some cases, remove the lump sum preclusion period determined under 1170 of the Act.
31.The expression “special circumstances” is not defined in the Act. However, it has been considered in a number of Tribunal and Federal Court of Australia decisions.
32.Broadly, those decisions provide that for “special circumstances” to be found, justifying the exercise of the discretion to disregard a compensation payment and thereby reduce a preclusion period, regard must be had to the entire circumstances of a particular case.
33.In Re Beadle and Director-General of Social Security (1984) 6 ALD 1 the Tribunal found (at page 3):
“An expression such as “special circumstances” is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special.”
34.On appeal, the Full Federal Court said ((1985) 60 ALR 225 at page 230):
“While we would place less emphasis on one dictionary definition of ‘special’, we are in broad agreement with the approach of the Tribunal and are in agreement with its conclusion.”: Beadle v Director of Social Security (1985) 60 ALR 225.
35.In in Dranichnikov v Centrelink (2003) 75 ALD 134 the Full Federal Court observed (at 148, para 66) that:
“There will be a requirement that the circumstances are such that takes the case out of the ordinary: Jess v Scott (1986) 12 FCR 187; 70 ALR 185…”
36.Some factors which have been identified as relevant in determining “special circumstances”, and which the Tribunal considers relevant in Mr Hodge’s case, include financial hardship, ill-health and the policy and purpose of the Act.
37.As regards financial hardship, in Re Colaiacolo and Secretary, Department of Social Security (AAT, 24 April 1985, No 2109), the Tribunal took the view that for financial hardship to be considered “special”, the hardship must be “exceptional”.
38.Similarly, in Re Glossop and the Department of Social Security (AAT, 12 May 1992, No 7948, at page 6, para12) the Tribunal observed that for financial hardship to come within section 1184 of the Act, the hardship must be considered “exceptional” or sufficiently “special”. In that case, the Tribunal also found that the applicant wasn’t sufficiently incapacitated by his particular condition so as to constitute “special circumstances”. A comparable approach was taken in Re Hajar and Secretary, Department of Social Security (1988) 16 ALD 716.
39.In Re Kulakov and Secretary, Department of Social Security (1991) 63 SSR 879 it was found that ill-health may be particularly relevant where it involves increasing or continuing medical expenses and where it adversely affects a person’s earning capacity. However, ill-health must be considered in the context of all other factors and cannot alone amount to “special circumstances”.
40.In relation to the policy and purpose of the Act, there are a number of Tribunal decisions which make it clear that a person cannot receive compensation and disability support pension for the same period, regardless of whether the disability support pension was paid for a condition unrelated to that for which the person received compensation.
41.By way of example, in Bilderbeek and Secretary, Department of Employment and Workplace Relations [2006] AATA 782 the Tribunal stated (at page 7, para 19 and page 9, para 25 ):
“The policy underlying s.1169 of the Act is to prevent a person receiving income support payments from two sources for the same period.
………..
Suffering physical or psychological impairment and ill-health is a circumstance that is unfortunately common among recipients of the disability support pension.”
42.In Re Lukic and Secretary, Department of Social Security (AAT, 6 May 1991, No 6944) the Tribunal commented (at page 9, para18):
“The assumptions behind Part XVII are that a recipient of a lump sum payment of compensation will use a proportion, as defined by statute, of that lump sum for normal living expenses, at a weekly rate equal to average male weekly earnings; and that, if it is spent in that manner, it will provide for the person’s living expenses until the expiry of the preclusion period.”
43.Mr Hodge was asked by the Tribunal to provide evidence of his “special circumstances” and, in particular, to discuss his financial situation and his health for the purpose of considering whether it should exercise the discretion in section 1184K of the Act and reduce or remove his preclusion period.
44.Regrettably, Mr Hodge hung up the telephone on the Tribunal without providing it with any specific detail regarding his particular circumstances. The Tribunal attempted to telephone Mr Hodge a second time to offer him another opportunity to put his case, but he was unable to be reached.
45.In those circumstances, the Tribunal considers it appropriate to have regard to any relevant evidence previously given by Mr Hodge concerning his financial circumstances and health and to consider the policy and purpose of the Act.
46.As part of his request for a review of Centrelink’s decision on the lump sum preclusion period and debt, Mr Hodge was required to complete a “Statement of Expenditure & Circumstances” form. In that form (dated 16 July 2009), Mr Hodge stated that he had spent his lump-sum settlement monies on “getting [his] life back together and helping [his] kids”. Mr Hodge also provided some detail of his household expenditure which included $200 per week on rent, $30 per week on electricity, $30 on gas or other heating, $50 on the telephone, $600 per annum on car registration, $500 per annum on car insurance, $80 per week on petrol, $100 per week on food/groceries, $90 per week on medical, $75 per week at the chemist and $50 per week on clothing.
47.When Mr Hodge appeared before the SSAT on 18 September 2009, he provided it with an indication of how he spent some of his lump sum compensation payment. Specifically, he informed the SSAT that:
·He received $153,286.66 in compensation (after expenses).
·He spent $35,000 on cars for two of his children and purchased two cars for himself, one of those was a Commodore (for which he paid $10,000) and the other was a 1957 Ford (for which he paid $19,000 and spent an additional $20,000 doing up). Therefore, he spent a total of $84,000 of his compensation payment on cars.
·He moved from a caravan to a flat which was costing him more in utilities. He paid a $1,200 rental bond and he paid $200 a week in rent.
·He spends $200 a week on food for himself.
·He spent about $3,000 to $4,000 on furniture, including beds, a television and a microwave.
·His mobile phone cost him $100 a week (he didn’t have a land line).
·He spends $75 a week at the chemist on a range of pills, including iron, mega-B vitamins and fish oil. He was charged $50 for each visit to his general practitioner and he did not claim the Medicare rebate for those visits.
·He had no other outstanding loans and had no idea of how much money he had in the bank.
48.In addition, Mr Hodge told the SSAT that he has Ross River virus, chronic fatigue syndrome and major depression and that there was no cure for either of those conditions, although no formal medical evidence regarding his conditions was made available to the SSAT. Further, Mr Hodge explained to the SSAT that it was those conditions that were preventing him from working, not the injury for which he was compensated.
49.The Tribunal considers that Mr Hodge has not provided sufficient evidence that he suffers “exceptional” financial hardship or financial hardship that is sufficiently “special” to warrant the exercise of the section 1184K discretion in his favour: Colaiacolo.
50.In Ruperez and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2008] AATA 231, the Tribunal commented (at page 13, para 43):
“Unfortunately many people who have agreed to a lump sum settlement of compensation find themselves in a situation where the money has run out before the preclusion period expires. I see nothing exceptional or significantly different in Mr Ruperez’s case. No new circumstances have arisen that were not foreseeable when Mr Ruperez accepted the lump sum settlement…..Mr Ruperez’s circumstances are not overall “unusual, uncommon or exceptional” and do not warrant the exercise of the discretion in [his] favour”.
51.Based on the evidence, it appears that Mr Hodge, like Mr Ruperez, found himself in a situation where he had simply spent his lump sum compensation amount before his preclusion period expired: Ruperez. In particular, his expenditure of approximately $84,000 on four cars seems somewhat excessive in the circumstances. Particularly considering that Mr Hodge’s compensation monies were intended to cover his living expenses until the expiry of his preclusion period: Re Lukic.
52.The Tribunal acknowledges that Mr Hodge suffers from a number of medical conditions which are most unfortunate and undoubtedly very difficult to live with. However, Mr Hodge has failed to demonstrate to the Tribunal that his case situation is in any way “unusual, uncommon or exceptional”: Beadle.Further, whilst Mr Hodge has stated that his conditions adversely affect his earning capacity and that he has continuing medical expenses associated with them, that alone is not enough to constitute “special circumstances”, warranting an exercise of the section 1184 discretion: Re Kulakov.
53.In conclusion, the Tribunal considers that Mr Hodge’s circumstances are not “special”, as contemplated by the relevant cases and for the purpose of the Act. It would therefore be inappropriate to treat any part of his lump sum compensation payment as not having been made so as to reduce his preclusion period. The Tribunal notes that Mr Hodge has received disability support pension payments since 4 January 2010.
Was Mr Hodge’s: (i) disability support pension; and (ii) pensioner concession card, correctly cancelled?
(i) Was Mr Hodge’s disability support pension correctly cancelled?
54.Under section 80 of the Social Security Administration 1999 (Cth) (the Administration Act) the Secretary is required to cancel or suspend a “social security payment” (which is defined in section 23(1) of the Act to include a payment of disability support pension made under Chapter 2 of the Act) if satisfied that such a payment is being or has been paid to a person to whom the payment is not or was not payable.
55.Since Mr Hodge was subject to a lump sum preclusion period under section 1169(1) of the Act, during which period disability support pension was “not payable” to him in accordance with that section, the decision to cancel Mr Hodge’s disability support pension was correct.
(ii) Was Mr Hodge’s pensioner concession card correctly cancelled?
56.The respondent raised the issue of whether Mr Hodge’s pensioner concession card was correctly cancelled.
57.Section 1061ZA(1) and (3) of the Act provide that a person is qualified for a pensioner concession card on a day if a “social security pension” (which is defined in section 23(1) of the Act to include a disability support pension) is payable to the person for that day and the person is in Australia and is an Australian resident.
58.Further, section 86(1) of the Administration Act requires the Secretary to cancel a concession card which has been granted to a person if satisfied that the person to whom the concession card has been granted is not qualified for the card.
59.Given that Mr Hodge was subject to a lump sum preclusion period pursuant to section 1169(1) of the Act, during which period disability support pension was “not payable” to him in accordance with that section, Mr Hodge was no longer qualified for a pensioner concession card under section 1061ZA of the Act. Accordingly, the decision to cancel to Mr Hodge’s pensioner concession card was correct.
I certify that the 59 preceding paragraphs are a true copy of the reasons for the decision herein of Ms C Walsh, Senior Member
Signed: ..(sgd) T Freeman................
AssociateDate/s of Hearing 7 October 2010
Date of Decision 20 October 2010
Representative for Applicant Self-represented
Representative for Respondent Mr P Maishman
Centrelink Legal Services Branch
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