Hondromatidis and Secretary, Department of Employment and Workplace Relations

[2005] AATA 1170

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 1170

ADMINISTRATIVE APPEALS TRIBUNAL        Nº V2005/609

GENERAL  ADMINISTRATIVE DIVISION

Re:       SAVAS HONDROMATIDIS

Applicant

And:     SECRETARY,

DEPARTMENT OF EMPLOYMENT AND

WORKPLACE RELATIONS

Respondent

DECISION

Tribunal:       Dr Gordon Hughes, Member

Date:28 November 2005

Place:Melbourne

Decision:The Tribunal affirms the decision under review.

(sgd) Gordon Hughes

Member

SOCIAL SECURITY - disability support pension – Secretary's discretion to reduce compensation preclusion period under section 1184K of the Social Security Act 1991 – "special circumstances"

Social Security Act 1991 (Cth)

Beadle v Director-General of Social Security (1985) 60 ALR 225

Re Secretary, Department of Social Security and Bolton (1989) 18 ALD 464

Ryde v Secretary, Department of Family and Community Services [2005] FCA 866

REASONS FOR DECISION

28 November 2005  Dr Gordon Hughes, Member

1.      This application was heard on 28 October 2005.  The applicant represented himself.  The respondent was represented by Mr Sean Meehan, a Centrelink advocate.

2.      The applicant sought review of a decision by the Social Security Appeals Tribunal on 9 June 2005, which affirmed a decision of a Centrelink officer of the Secretary to the Department of Employment and Workplace Relations (the respondent) on 24 March 2005, to reject a claim by the applicant for the disability support pension.  The claim had been rejected by the respondent on the basis that the applicant was subject to a compensation preclusion period from 10 March 2005 to 4 July 2007.

3.      There was no dispute between the parties as to the relevant background. The dispute turned on the question of whether the Secretary had failed to exercise his discretion as appropriate, pursuant to section 1184K(1) of the Social Security Act 1991 (Cth) (the Act).

4.      The applicant was injured at work on 20 February 2001.  He issued a  compensation claim against his employer which settled for $160,000 on 9 March 2005.  On 23 March 2005 the applicant lodged a claim for disability support pension.  On 24 March 2005 the respondent rejected the pension claim on the basis that a compensation preclusion period applied until 4 July 2007.

5.      The applicant freely admitted in his evidence to the Tribunal that when he accepted the compensation payment of $160,000, he was aware (following advice from the respondent on 17 March 2005) that he would be subject to a compensation preclusion period. But he said he was hopeful that his personal situation would qualify as "special circumstances", which would induce the Secretary to disregard some or all of the compensation payment, pursuant to the discretion which exists under section 1184K. The respondent did not contest that the applicant remains totally disabled at present. There was no dispute as to the applicable legislation or the calculation of the compensation preclusion period pursuant to the applicable legislation. The sole issue was therefore whether such "special circumstances" existed.

6.      The disability support pension is a "compensation affected payment" as defined in section 17(1) of the Act.  The applicant's lump sum settlement represented "compensation" as defined under section 17(2)(c), that is,

a payment (with or without admission of liability) in settlement of a claim for damages…that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury. 

7.      There was no dispute that the affected part of the lump sum compensation payment was 50 per cent, or $80,000, pursuant to section 17(3) of the Act; or that the compensation preclusion period was 121 weeks under the formula set out in section 1170 of the Act, meaning in this case the period from10 March 2005 to 4 July 2007.

8. Section 1184K(1) of the Act states:

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.

9.      The applicant contended that "special circumstances" existed for the purposes of section 1184K(1) on two bases. First, he emphasised the extent of his ongoing disability; secondly, he emphasised the difficult financial circumstances in which he, his wife and two teenage children find themselves.

10.     As indicated above, there was no dispute as to the extent of the applicant's existing disability.  As to the precariousness of his financial situation, the applicant told the Tribunal that his home was subject to a mortgage, he had annual living expenses of nearly $49,000 and an income (principally in the form of his wife's family tax benefit, carer allowance and carer payment from Centrelink) of approximately $23,000 per annum.  The mortgage on the family home was reduced by $60,000 through the application of part of the lump sum settlement.  Other debts were repaid out of the settlement monies.

11.     Whether "special circumstances" exist depends on the circumstances of the individual case.  The phrase has not been the subject of substantive legislative or judicial definition.  The Federal Court has stated that the phrase "although lacking precision, is sufficiently understood in our view not to require judicial gloss":Beadle v Director-General of Social Security (1985) 60 ALR 225. In Ryde v Secretary, Department of Family and Community Services [2005] FCA 866, Branson J interpreted a statutory requirement for "special circumstances" as connoting "an intention to proscribe waiver in ordinary cases", involving "hardship or unfairness  sufficient to justify departure from the general rule in the particular case".  Her Honour interpreted the Tribunal's decision in Beadle as standing for the proposition that special circumstances did not exist where "the applicant's circumstances were common-place rather than special".

12.     In the opinion of the Tribunal, the applicant in this instance does not satisfy this requirement.  While the Tribunal readily accepts that the applicant is unable to work, and that his financial circumstances are unfortunate, these circumstances fall within the parameters in which a "typical" recipient of a lump sum compensation payment might expect to find himself or herself.

13.     It is not sufficient that the applicant's state of health is such that he is – as conceded by the respondent – qualified to receive the disability support pension:  Re Secretary, Department of Social Security and Bolton (1989) 18 ALD 464. The applicant has received compensation for his disability and it begs the question to suggest that this fact alone should qualify as "special circumstances" – the compensation preclusion period is intended to address this very situation by precluding double dipping in respect of the same period.

14.     It is not to the point that the applicant spent his lump sum settlement on reducing personal debt rather than providing for future living expenses.  He admitted that he was aware of the implications when he made the decision to apply the settlement funds in this manner.  The applicant presented as an intelligent and articulate individual who, rightly or wrongly, determined that this was the most appropriate course of action to follow in his own personal circumstances.

15.     There is no suggestion that the applicant was in any way misled as to the consequences of accepting a lump sum compensation payment, or the consequences of using the compensation payment to reduce debt rather than to fund living expenses in the future.  He was, it would appear, provided with accurate and appropriate advice by both Centrelink and his solicitor as to the choices which he faced.  The applicant was aware of the existence of the "special circumstances" exemption but at no stage was it suggested to him that he would necessarily qualify – the applicant clearly hoped that he might be classified as being subject to "special circumstances" for the purposes of section 1184.  However, in the Tribunal's opinion, this "hope" had no impact on his decision to accept the lump sum settlement or his decision to apply the monies in the way in which he ultimately did.

16.     The applicant and his family clearly face challenging financial circumstances.  The Tribunal does not accept, however, that these difficulties are exceptional.  To the contrary, the applicant appears to have assets in excess of many disadvantaged members of the community.  His personal situation is unquestionably difficult but it is not accompanied by exceptional or extenuating circumstances of any kind which   would necessitate the Secretary to exercise the discretion available under section 1184 of the Act.

17.     For the above reasons, the Tribunal affirms the decision under review.

I certify that the seventeen [17] preceding paragraphs are a true copy of the reasons for the decision herein of

Dr Gordon Hughes, Member

(sgd)     Catherine Thomas

Clerk

Date of Hearing:  28 October 2005

Date of Decision:  23 November 2005
Advocate for the applicant:        Self-represented

Advocate for the respondent:     Mr S. Meehan, Centrelink