Hooper; Department of Family and Comunity Services - [2001] AATA 243

DECISION AND REASONS FOR DECISION [2001] AATA 243

ADMINISTRATIVE APPEALS TRIBUNAL )

) No N1999/1718

GENERAL ADMINISTRATIVE DIVISION       )
           Re      SECRETARY,DEPARTMENTOF FAMILY & COMMUNITY SERVICES
  Applicant
           And    NOLA HOOPER
  Respondent

DECISION

Tribunal Mr R P HANDLEY, Senior Member

Date27 March 2001
PlaceSydney

Decision The Tribunal sets aside the decision under review and substitutes a new decision that, given the special circumstances of the Respondent's case, it is appropriate to exercise the discretion in section 1184(1) of the Social Security Act 1991 by treating that portion of the compensation awarded to the Respondent as not having been made as will allow the preclusion period to end on 29 August 2002.

[Sgd R P Handley]
Senior Member
CATCHWORDS
Social Security – age pension – compensation preclusion period –work-related injuries – whether special circumstances exist – information received from Centrelink with regard to entitlement – expenditure reasonable and appropriate to needs – deterioration in health- financial situation – unfairness or injustice caused by application of compensation recovery provisions – no double dipping
Social Security Act 1991 – ss 17, 1165, 1184
Beadle v Director-General of Social Security (1985) 7 ALD 670
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Groth v Department of Social Security (1995) 40 ALD 541
Secretary, Department of Social Security v Hales (1998) 51 ALD 695
Kertland v Secretary, Department of Family and Community Services [1999] 57 ALD 600
Secretary, Department of Social Security v Smith (1991) 23 ALD 277
Kirkbright v Secretary, Department of Family and Community Services [2000] FCA 1876

REASONS FOR DECISION

R. HANDLEY , Senior Member

This is an application by the Secretary of the Department of Family and Community Services ("the Applicant") for a review of a decision of the Social Security Appeals Tribunal ("the SSAT"), made on 22 September 1999, to:
(1) set aside a decision of a delegate of the Applicant and an authorised review officer to impose a preclusion period in respect of the payment of age pension to Nola Hooper ("the Respondent"), a period determined by the review officer as being from 6 July 1998 to 20 January 2015; and
(2) substitute a new decision that so much of the compensation received by the Respondent be disregarded as would allow the preclusion period to end on 30 June 2006.
At the hearing, the Applicant was represented by Angela Smith of Centrelink, and the Respondent was represented by Kate Eastman of Counsel. The evidence before the Tribunal comprised the documents produced pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 ("the T Documents") together with the documents tendered by the Respondent. At the hearing, the Respondent gave oral evidence by conference telephone.
background
The Respondent, who was born on 30 August 1932 and is now aged 68, suffered work related injuries to her right shoulder, right arm and right hip whilst working as a nurse at Gladesville Hospital between 5 April 1985 and 7 January 1997, when she ceased work on the advice of her doctor. The Respondent received weekly payments of workers compensation until 5 July 1998. On 14 July 1998, she was awarded compensation of $735,306 by the District Court. Of this sum, the economic loss component was $477,935. However, $123,764.16 was later repaid to the Government Insurance Office (GIO) in respect of periodic workers compensation payments made before the District Court award.
On 12 October 1998, the Respondent lodged a claim for age pension (T9). On 29 October 1998, the Respondent decided to impose a preclusion period in respect of the payment of age pension from 30 May 1998 to 14 May 2020 (T18). This period was later recalculated and a preclusion period imposed from 15 July 1998 to 28 January 2020 (T20). When this decision was reviewed by an authorised review officer, the officer again recalculated the preclusion period, determining, on 13 January 1999, that it commenced on 6 July 1998 and ended on 20 January 2015 (T30).
The preclusion period was calculated pursuant to the Social Security Act 1991 ("the Act"), sections 17(3) and 17(4), by deducting the amount repaid to the GIO ($123,764.16) from the economic loss component of the settlement ($477,935). The balance of $354,220.84 was divided by the income cut-out amount at the time of settlement of $410, to give a figure of 863 weeks for the preclusion period (section 1165(4)). In accordance with section 1165(5) of the Act, this period commenced on the day after the payment of weekly workers compensation to the Respondent ceased, ie on 6 July 1998.
The SSAT conducted a further review and, on 22 September 1999, set aside the review officer's decision and substituted a new decision that so much of the compensation received by the Respondent be disregarded as would allow the preclusion period to end on 30 June 2006 (T2). On 10 November 1999, the Applicant lodged an application for a review by the Administrative Appeals Tribunal (T1).
The facts of the case are not in dispute. At issue is the length of the preclusion period imposed. The relevant provisions of the Act are as follows:
Section 17(2):
"17(2) For the purposes of this Act, compensation means:

(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) that is:
(e) made wholly or partly in respect of lost earnings or lost capacity to earn; and
(f) made either within or outside Australia."

Section 1184 (1):
"1184(1) 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."

The Respondent gave a brief account of where she had lived. From 1966 to 1972, she lived in her own home in Gladesville. In 1972, she moved to Cairns where she bought a house, borrowing money to renovate it. In 1978, the Respondent moved to Toowoomba where she bought a house outright. In 1982, she sold this house and, in 1983, purchased a farm at Golgong, 36 kms north west of Mudgee. She built a house on the land and made other improvements.
From 1983, the Respondent was working as a nurse at Gladesville Hospital. She lived in the nurses' quarters at the Hospital while working a one week, 84-hour shift, following which she had a week off which she spent on her farm. The drive to Golgong took 3 ½ to 4 hours.
It was during this period that the Respondent suffered her first work injury. As a result, she found it very difficult to drive to and from her farm and eventually, in late 1997, she sold the farm. It was a bad time to sell, the farm sold for very little, and after she had repaid her bank loan, the Respondent ended up with about $17,000. She had a holiday in Perth, and the remaining money she spent on a second-hand car.
From about February 1988, the Respondent lived in nurses' quarters at Gladesville Hospital until they were demolished in 1991. She then rented a flat until 1998, when, after the District Court award, she moved to Queensland.
The Respondent said that, in 1995, she had asked her solicitors to inquire about whether, following a compensation award, she would be entitled to an age pension. As a result of the Applicant's answers to these inquiries, the Respondent understood she would be so entitled. The Respondent said that after she ceased work in December 1997, she attended an appointment at the Ryde office of Centrelink. The female officer with whom the Respondent spoke, advised her to lodge a claim for age pension. However, the officer later told the Respondent that she was still receiving workers compensation payments. The Respondent had not previously been aware of this. There had not been any discussion of the Respondent not being able to receive an age pension in the future, and she did not receive any printed information from the Applicant until after she moved to Queensland. This was after the District Court proceedings had been finalised, in the period October to December 1999, when she received printed information from the Centrelink office at Beaudesert.
The Respondent was asked about her living expenses. Her sister and daughter have undertaken her heavy cleaning until now. However, both have recently undertaken further employment and it will be necessary for the Respondent to employ a cleaner. The Respondent said she had obtained estimates of the cost of employing a cleaner – about $15 per hour. She employs someone to mow her lawns and this is done usually two or four weekly depending on weather, and costs about $50 a time.
The Respondent said she sees her doctor about once a month. Although a general practitioner, the doctor does not bulk bill. Each consultation costs $37 of which the Respondent gets $22 back from Medicare. Before Christmas, the Respondent also needed physiotherapy for her left shoulder.
With regard to medication, the Respondent confirmed medication listed in her affidavit (Exhibit R16) at paragraph 25. The Respondent has monthly scripts. While she has a Seniors Health Card, not all her medication is covered by the Commonwealth scheme. The current cost of her medication is $159.95 per month. The Respondent said her right shoulder and hip have been her main problems since the accidents. At the time of the SSAT hearing (22 September 1999), her condition was static. Since that time, her condition has deteriorated, in particular her left shoulder, which is unrelated to the accidents, and right hip.
The Respondent said she has $25,000 in a fixed term deposit and about $9,000 in her every day account at her bank. She has no other liquid assets. The question of the payment of costs arising out of the court proceedings has still not been settled.
the applicant's submissions:
Mrs Smith, for the Applicant, submitted that the SSAT had erred in reducing the preclusion period by undertaking a balancing exercise to achieve a fair and equitable result. She said the legislation seeks to achieve equity. In this instance, although age pension was not originally a compensation affected payment, the legislation was amended to include age pension as such a payment from 20 March 1997. Mrs Smith contended that the SSAT had advantaged the Respondent over younger applicants. While Mrs Smith acknowledged that the Respondent's financial situation was straitened, her circumstances were not so exceptional as to be described as "special".
Mrs Smith said the matters which should be considered in relation to "special circumstances" include the person's financial situation, health, whether the person was aware of the preclusion period, and whether the person received incorrect advice. The Respondent's financial situation, while straitened, is not exceptional, nor could her health, when compared to that of others in similar circumstances, be considered exceptional. Mrs Smith noted that the Respondent has unencumbered assets in her house and car and that, over and above the money she currently has in the bank, further money will be forthcoming once the matter of costs from the legal proceedings is resolved. The information which the Respondent received from the Department of Social Security in 1995 (see the correspondence in Exhibits R2, 3, 4, 5) was correct at that time, being before the legislation was amended to include age pension as a compensation affected payment from 20 March 1997. The information the Respondent was given by the Ryde office of Centrelink in December 1997 was also not incorrect. The Respondent said she was told by a departmental officer that she would be able to get age pension. At that time, there had been no settlement of the Respondent's claim and the officer would have been unable to advise about a preclusion period.
Mrs Smith contended that the fact that the Respondent was affected by the change in the law could not be considered unique. Many others were also affected. As the SSAT noted in their decision at paragraph 26 (T2):
"…the quality of 'special' is required to be discerned not by comparison with the community as a whole but by comparison with that sub-group of the community which is in the situation of having recourse to claims for compensation and income support from Centrelink within the same time frame."

Neither could the Respondent's protracted legal proceedings be said to be unusual.

With regard to the definition of "compensation" in section 17(2) of the Act, Mrs Smith submitted that the reference to "lost earnings and lost capacity to earn" in subsection 17(2)(e) included both past and future earnings and capacity. The fact that the Respondent did not receive any payment of social security benefit before the District Court award made no difference to the application of the legislation. Moreover, the Respondent had to repay the weekly workers compensation payments received before the award to prevent "double-dipping". Mrs Smith disagreed strongly with the view expressed by the SSAT, at paragraph 30 of their decision (T2), that the lack of income support for a period of 13 years was of such overriding relevance that it by itself should have provided grounds for exercising the discretion allowed in section 1184(1).
the respondent's submission:
Ms Eastman, for the Respondent, endorsed the view expressed by the SSAT that there had been no "double-dipping" by the Respondent and that, by contrast, she would, in fact, have neither income support from Centrelink nor compensation payments for a period of approximately 13 years from August 2002. There was nothing to show that the SSAT had erred in any way in making its decision. There was no error with respect to the evidence and there was no convincing reason to support overturning the SSAT decision. Ms Eastman noted that the SSAT could have gone further and determined that no preclusion period should apply, except in relation to the compensation of $40,000 awarded for future economic loss.
Ms Eastman argued that "double-dipping" referred to more than one payment being received in respect of the same period. There was no evidence of this occurring in the Respondent's case.
Ms Eastman said the inclusion of the section 1184(1) discretion in the Act recognised that there are some circumstances where what would otherwise be the effect of the legislation should be ameliorated. A global approach is required in a consideration of the circumstances of the individual. Section 1184(1) does not require a comparative approach.
Ms Eastman submitted that a relevant matter when considering whether there are special circumstances is the length of the preclusion period. It is undisputed that the Respondent no longer has any capacity to work. The preclusion period determined by the authorised review officer will not end until 2015, that is another 14 years. Thus, the Respondent would be 83 before she would be entitled to receive an age pension. Yet age pension was designed to support members of the community in their aged years.
If the Respondent's workers compensation claim had been resolved before 20 March 1997, then her age pension would not have been affected. It was only because of the long duration of the legal proceedings that this occurred. An arbitration award had been made in her favour in February 1997, 14 months after the arbitration hearing in December 1995 (R16 at paragraph 43). Then, after the arbitration award, the insurer appealed and the matter went to court. Ms Eastman contended that the circumstances relating to the litigation, when combined with the length of the preclusion period and other matters, made this an exceptional case and thus "special".
Ms Eastman said the Respondent's financial situation is one of the other matters to be considered. With regard to the Respondent's expenditure (R16 at paragraph 41), there is nothing to suggest that the Respondent's figures are overstated. Further funds will be forthcoming to the Respondent in respect of costs, but, at this stage, the amount and timing is unknown. Ms Eastman said the Respondent's expenditure on her house and car was modest and appropriate for her needs when viewed in light of her health and age. There was no suggestion that any expenditure had been irresponsible, reckless or frivolous. As the Applicant has acknowledged, the Respondent's overall financial situation is straitened.
With regard to the Respondent's health, Ms Eastman referred the Tribunal to the medical reports supplied in relation to the District Court proceedings. The Respondent's doctor had also provided an updated report dated 9 January 2001 (Exhibit R13) in relation to her current condition. Ms Eastman noted the Respondent's evidence that her health has deteriorated since the SSAT hearing. Ms Eastman said it was reasonable to conclude that the Respondent's health was unlikely to improve and was likely to cause her ongoing difficulties in the future.
Ms Eastman emphasised that the Respondent had sought to find out whether any compensation paid to her would affect her entitlement to an age pension. The Respondent had instructed her solicitor, Ms Lees, to inquire about this with the Department of Social Security. Ms Lees had corresponded with the Department about this in 1995 (Exhibits R2, R3, R4, R5). The result was information that the Respondent's entitlement to age pension would not be affected. The Respondent had relied on this information.
Ms Eastman contended that the combination of all these factors was sufficient to establish the Respondent's circumstances as exceptional and "special", such that they justified exercise of the discretion in section 1184(1). Ms Eastman submitted that only the $40,000 awarded by the District Court in respect of future loss of income should be taken into account in calculating the preclusion period. This would give rise to a preclusion period of 98 weeks from 6 July 1998 to 29 May 2000.
Alternatively, Ms Eastman submitted that the preclusion period should end at the date after which the Respondent did not receive any compensation, pursuant to the award of the District Court, ie until 29 August 2002, the day before the Respondent's 70th birthday.
consideration of law and findings
The issue to be determined by the Tribunal is whether, pursuant to section 1184 (1) of the Act, there are special circumstances which justify the exercise of the Secretary's discretion to treat the whole or part of the compensation award as not having been made. Although the Act provides no guidance as to the meaning of "special circumstances", this has been the subject of statutory interpretation by the Federal Court and the Tribunal.
relevant case law
One of the leading cases is Beadle v Director-General of Social Security (1985) 7 ALD 670, a decision of the Federal Court. In Beadle, the Court did not think it possible to lay down precise limits or precise rules. It would depend on the circumstances of a particular case as to whether they constituted special circumstances. Moreover, even though the phrase "special circumstances" lacks precision, it "is sufficiently understood in our view not to require judicial gloss" (at 674).

In Beadle, the Federal Court affirmed the decision of the Tribunal under review, Re Beadle and Director-General of Social Security (1984) 6 ALD 1, in which the Tribunal, whilst acknowledging that the phrase "special circumstances" is "incapable of precise and exhaustive definition", said, nevertheless, that the circumstances "must have a particular quality of unusualness that permits them to be described as special" (at 3).

In Groth v Department of Social Security (1995) 40 ALD 541 at 545, Kiefel J, after referring to the Federal Court's decision in Beadle (supra, 1985), observed that special circumstances:
"…would require something to distinguish Mr Groth's case from others, to take it out of the usual or ordinary case…it would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary."
In the Federal Court decision in Secretary, Department of Social Security v Hales (1998) 51 ALD 695 at 703, French J said of the "concept" of special circumstances that the evident purpose "is 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. French J further stated that: "It is inappropriate to constrain that flexibility by imposing a narrow or artificial construction upon the words."
In Kertland v Secretary, Department of Family and Community Services (1999) 57 ALD 600, Merkel J (at 609) drew attention to the purpose of the compensation recovery provisions in part 3.14 of the Act which:
"…is to avoid 'double payment' of social security benefits and compensation for loss of earnings or loss of earning capacity".

Following von Doussa J in Secretary, Department of Social Security v Smith (1991) 23 ALD 277, Merkel J in Kertland (supra) stated at 609:

"In the present case, it was open to the AAT to find that no part of the compensation the applicant received related to a period during which social security payments were payable with the consequence that, as there has been no 'double payment', there were 'special circumstances' for the purposes of section 1184(1). In such circumstances the exercise of the discretion under section 1184(1) would not be inconsistent with the policy and purpose of the statutory scheme. As was noted by von Doussa J in Smith (at 61-62) the very purpose of the ameliorating provisions of section 156 (and now section 1184(1) is to enable the discretion to be exercised where it is appropriate to do so because the circumstances of the particular case will give rise to an unreasonable or unjust result under the scheme."

Then in Kirkbright v Secretary, Department of Family and Community Services [2000] FCA 1876, Mansfield J said (at paragraph 22):
"In my view, section 1184 is designed specifically to enable the respondent, and on review the Tribunal, to ameliorate such unfairness or injustice when it appears by virtue of the strict application of the Act."

His Honour specifically found that the Tribunal in that case had "erred" in its approval, in that (paragraph 28) it:

"…failed to recognise that section 1184 may provide a release valve for such unfairness or injustice in certain circumstances."

the facts

As stated above, the facts of this case are not in dispute. The Tribunal finds that the Respondent was awarded a total of $735,306.00 by Judge Garling at the conclusion of District Court proceedings on 14 July 1998 (T8). Of this amount, $477,935.00 was in respect of past and future economic loss, with $40,000 specifically identified by Judge Garling in respect of future economic loss:
"What of the future? The plaintiff is now nearly sixty-six years of age. At best she could have hoped to work up to the age, in my view, of about seventy but she would have had difficulty in any case. She had the shoulder problems, irrespective of the injury. She has various other health problems. The job was not an easy or a light job and as people especially nurses, get older I would think they would have a fair bit of difficulty dealing with, particularly psychiatric, patients even though modern drugs make it a bit easier than it was in the past, there [sic] is, as she says, and everyone else says, still a fair amount of quite heavy work involved and I do not believe she would have worked a lot past now. She may have done some work up until she was seventy years of age but not a lot. I am inclined to accept the defendant's submission which is that she should be allowed a small cushion for the future on the basis that she may have done some work for some time past now and I adopted the defendant's submission and allow the sum of $40,000."
The work related injuries in respect of which the Respondent was awarded compensation occurred between 1985 and 1987. From 1988, the Respondent worked for the Hospital as an assistant clerk until she ceased work on medical advice on 5 December 1997 at the age of 65. The Respondent continued to receive weekly payments of workers compensation until 5 July 1998. She was not at any time in receipt of Social Security benefits although she would otherwise have been qualified to claim an age pension at the age of 60. From the District Court award of $735,306.00, the sum of $123,764.16 was repaid to the GIO in respect of periodical payments of workers compensation before the award. Thus, it is clear that there has been no "double dipping" – no double payment of social security benefits and compensation in respect of the same period.
With part of her compensation award, the Respondent purchased a house and car. The Applicant has not suggested that these purchases were extravagant. Indeed, the Tribunal accepts that they were reasonable and appropriate to the Respondent's needs. Nor has it been suggested that any of the Respondent's other expenditure has been extravagant or reckless. On her evidence, she now has approximately $34,500 in the bank and has the expectation of being compensated for the costs of the workers compensation proceedings. The amount of party-party costs payable to the Respondent has not yet been assessed. However, in a letter to the SSAT dated 13 April 1999 (T32), the Respondent's solicitor estimated that the Respondent would ultimately have a total of about $181,000 available in funds for investment. In the two years since this letter, a portion of this sum has been spent on living expenses.
The Tribunal accepts the Respondent's evidence that her health has deteriorated since the SSAT hearing on 22 September 1999. There is no dispute that she is unable to work and will never be able to work again. She needs paid assistance with house cleaning (yet to be arranged) and mowing ($50 to $100 per month) and currently pays $159.95 per month for her medication. She needs physiotherapy from time to time and sees her doctor monthly. There is no dispute that the Respondent has significant disabilities and that her financial situation is straitened.
The Tribunal notes that the legal proceedings leading up to the District Court award were protracted. When, in 1995, the Respondent first sought information about whether any compensation settlement would affect her entitlement to age pension, she was correctly advised that her entitlement to age pension would not be affected. Age pension was not compensation affected payment until the Act was amended, with effect from 20 March 1997. The Tribunal notes that the advice the Respondent later received from a departmental officer in about December 1997, after she ceased work, was probably not incorrect since there had been no settlement at that stage. However, it appears that the information was probably not as complete as it might have been, given that the officer revealed to the Respondent that she was, at that time, receiving weekly workers compensation payments.
conclusion
The Respondent's financial situation, her health, and the advice she received are all matters which should be taken into account in considering whether the Respondent's circumstances are sufficiently special to justify exercising the discretion in section 1184(1) of the Act. The Tribunal's view is that, by themselves, these matters are not so exceptional as to make the Respondent's circumstances "special" in accordance with the judicial interpretation of this word discussed above. However, consideration must also be given to whether any unfairness or injustice was caused to the Respondent by the application of the compensation recovery provisions.
In the Tribunal's view, the strict application of the compensation recovery provisions in the Respondent's case so as to preclude her from entitlement to age pension until 20 January 2015, when she will be over 82 years of age, is unfair and unreasonable. The future economic loss component of the District Court award, of $40,000, was stated by Judge Garling to be in respect of the period until the Respondent's 75th birthday. Even then, the Judge accepted the defendant's submission that the "Respondent be allowed a small cushion" only for the future, on the basis, he seems to have assumed, that it was likely that she would only work part-time. Thus, the future economic loss component of $40,000 was a modest one.
The remainder of the economic loss component was in respect of past economic loss. The Tribunal notes there has been no "double-dipping". The Respondent has not received any social security benefits during the relevant period and a repayment was made to the GIO in respect of weekly payments of workers compensation made before the award.
In the Tribunal's view, it should adopt the approach outlined by Merkel J in Kertland (supra). Since there was no "double-dipping" in the Respondent's case, it is appropriate, bearing in mind the Respondent's financial situation, health and the advice she received, to exercise the section 1184(1) discretion to address the unfairness arising from the imposition of a preclusion period until 20 January 2015. Of particular significance is that the award in respect of future economic loss was intended to cover only part-time work until the Respondent's 70th birthday, on 30 August 2002. Thus, the appropriate outcome is for the preclusion period to end on 29 August 2002 after which there will be no element of "double-dipping".
The Tribunal sets aside the decision under review and substitutes a new decision to exercise the Secretary's discretion in section 1184 (1) of the Act to treat that portion of the compensation awarded to the Respondent as not having been made as will allow the preclusion period to end on 29 August 2002.
I certify that the 47 preceding paragraphs are a true copy of the reasons for the decision herein of R P HANDLEY, Senior Member
Signed:         .....................................................................................
  Associate
Date/s of Hearing  9 March 2001
Date of Decision  27 March 2001
Solicitor for the Applicant         Ms Angela Smith
Counsel for the Respondent Ms Kate Eastman