HYHS and Secretary, Department of Social Services (Social services second review)

HYHS and Secretary, Department of Social Services (Social services second review) [2018] AATA 4224 (13 November 2018)
Division:General Division
File Number(s): 2018/2590
Re:HYHS
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Bill Stefaniak AM RFD, Senior Member
Date:13 November 2018
Place:Sydney

The decision of this Tribunal is that the Applicant was entitled to Newstart payments from the period 18 September 2015 to 27 March 2017 inclusive, the reviewable decision is set aside and the matter is remitted to the Secretary to calculate the amount due to be paid to her as a result.
..............................[SGD]..........................................
Bill Stefaniak AM RFD, Senior Member
CATCHWORDS
SOCIAL SECURITY – applicant paid lump sum under NSW Government’s Claims Assessment and Resolution Service - whether lump sum preclusion period calculated correctly – application of 50% rule – preclusion period calculated incorrectly - whether special circumstances exist to justify reduction of preclusion period – decision set aside and remitted.
LEGISLATION
Social Security Act 1991 (Cth) s 8, ss 17(2), (3)
REASONS FOR DECISION
Bill Stefaniak AM RFD, Senior Member
13 November 2018
BACKGROUND

The Applicant is currently 45 years of age and whilst she is the owner of a partly renovated run down house in the Blue Mountains, she lives in her car/van in Sydney with her little dogs, mainly around the coastal areas.
As she was fearful of being recognised, and as the Respondent did not object, her name has been supressed for the purposes of this hearing.
The Applicant was injured in a motor vehicle accident on 17 September 2013.
She was in receipt of Newstart Allowance (Newstart) from 21 March 2013 until 20 January 2016. Under the NSW Government’s Claims Assessment and Resolution Service (CARS) for people injured in Motor Vehicle accidents (which awards compensation outside the court system) she received, on or about 20 January 2016, a lump sum payment from CARS of $199,000, $175,000 of which was for past and future economic loss.
The Respondent imposed a compensation preclusion period from 17 September 2013 until 27 March 2017.
It included a compensation charge of $32,043.72, being for the Newstart paid to the Applicant who is seeking to recover this amount which she stated she has already repaid to Centrelink plus an amount of approximately (her words) $16,022 to cover the period 21 January 2016 to the end of the preclusion period - namely 27 March 2017, during which time the Applicant had not been working (i.e. approx $48,066 in all).
APPLICANT’S CONTENTIONS
Basically, the Applicant contends that she suffered economic loss and not loss of income or future potential income and therefore was entitled to Newstart at all relevant times.
She further contended that the Australian Tax Office (ATO) and indeed Centrelink allow one to keep the profits made on one’s home, and indeed Centrelink will not class as an asset money from the sale of one’s home kept in a bank account for up to one year pending the purchase of a new home.
She further contended that at any rate her personal circumstances amounted to special circumstances thus exempting her from having to repay the Respondent.
CONSIDERATION AND EVIDENCE
This Tribunal listened carefully to what the parties had to say and considered the documentary evidence tendered.
As at the time of the hearing the Applicant advised the Tribunal that she had about $62,000 left after she bought a newer van to drive and live in. She advised that out of her lump sum payment she owed the ATO $58,000 and that she was several years behind in her tax payments. She stated that she had initially got about $150,000 net from the settlement after all deductions were made, including one would assume the $32,043.72 repayment to the Respondent.
The Tribunal is surprised that any payment owed to the ATO did not come out at that stage. It may well be the Applicant may be wrong in her estimate and hopefully may not owe the ATO $58,000 as she believed she did. She was certainly not being chased by the ATO for any monies owed to it as at the time of the hearing in late August 2018.
The Applicant further advised the Tribunal she was slowly renovating a currently uninhabitable property in the Blue Mountains and needed all the remaining monies and more to complete the task.
She stated she could not camp out there as she needed to be closer to her doctor in Sydney for IVF treatment. She was increasingly desperate to have children and was very concerned with the likely onset of infertility due to her age.
She advised she had various health issues as a result of living in a car/van for the last 4 years or more and that she had no proper bed, no fridge, running water, electricity, security or safety and no washing facilities. She also had several little dogs who were like her children and this was a real problem even if she could afford to rent. She relied on them for companionship and it was hard to rent a property if one had one pet, let alone several. She also complained of increasing mental health issues and provided some documentation to support this claim.
The Tribunal agrees with the Applicant’s contention that one can buy a principle place of residence, renovate it, then sell it for a profit and then repeat the process.
The Respondent did not advance any evidence to the contrary that any profits made would be taxable, providing of course they were used to buy another place of residence. It would seem if they sat in a bank for over 12 months or were used for further investment then the income derived would be taxable.
The Tribunal notes however that the lump sum payout she received included future economic loss, assessed at $100,000. Assessor Helen Wall from CARS said in Paragraphs 56, 57 and 58 of her report dated 14 December 2015 (see page 103 T-Documents) that she noted the Applicant was trained as a solicitor, had set up two businesses and qualified as a house renovator but the medical evidence submitted said as a result of the accident she was now unfit for the very movements (such as bending etc.) required in renovating houses, but that she was fit for sedentary work.
Ms Wall stated in Paragraph 58:
“I have already determined the most likely circumstances of the Claimant but for the injuries and I am satisfied that the effects of the injuries will continue to cause a reduction in the Claimant’s capacity to earn money in the open labour market. It is difficult however to determine what the future economic loss of this Claimant will be and whether she will return to the property market. I allow a buffer for future economic loss in the sum of $100,000”
Section 17(2)(b) of the Social Security Act 1991 (Cth) (the Act) defines compensation to mean “a payment under a scheme of insurance or compensation under a Commonwealth, State or Territory law, including…”.
The CARS payment is indeed a payment under a law of NSW.
Section 17(2) also provided that such a payment must be made “...wholly or partly in respect of lost earning or lost capacity to earn resulting from personal injury.”
Despite the Applicant arguing that her loss was an economic one and not one of lost earnings or lost capacity to earn, it is clear from Ms Wall’s assessment, even though she assesses past economic loss on the home renovation work, that future economic loss includes (see Paragraph 58 again) a lost capacity to earn resulting from the personal injury ‘...in the open labour market’.
Accordingly, this Tribunal is against the Applicant on this point and section 17(2) is correctly applied to this case.
Similarly, this Tribunal is also satisfied that special circumstances as that term is normally applied to cases of this kind and as submitted by the applicant, probably do not apply in this case - save for the somewhat unique circumstances that will be dealt with towards the end of this judgement.
The Tribunal notes that it is a high bar to clear before special circumstances apply as most people in the Applicant’s position have some very significant problems and there needs to be something really special to distinguish the case from other needy people’s situations.
In the Applicant’s favour is the fact that she has spent the money frugally. She has bought a van for $7000 to live in, she has spent limited sums on her uninhabitable Blue Mountains property and she estimates she survives, with all expenses taken into account on about $30,000 p.a. and this includes some renovation costs. If she is correct about owing the tax then that further strengthens her claim. The Tribunal also accepts the need for her to have the companionship of her little dogs and the difficulties in renting with several dogs in tow, however small they may be.
Factors that are not so relevant to the consideration of special circumstances are her desire to live in the van in Sydney primarily for IVF reasons. Whilst crucially important to her, it is not really a standalone reason that amounts to special circumstances. It falls under choice even though it is the number one issue to the Applicant. As at the time of the ARO review I note the Applicant still had $135,000 left and this obviously weighed heavily in the ARO concluding that the Applicant’s circumstances were no more strained or more severe or worse than the majority of social security recipients.
If the Applicant is correct about the ATO then her circumstances are strained now, but I note that from 4 May 2018 she has been back on Centrelink even though she could have applied any time after the end of the preclusion period which was 27 March 2017 according to the Respondent. Indeed it was the Respondent’s case that she was entitled to apply for Newstart or any other pension she might qualify for with effect from 28 March 2017 onwards.
Further, at the time of the AAT1 decision, on 3 April 2018, she still had $79,000.00 left.
Accordingly, it is the view of this Tribunal that if special circumstances on the grounds of hardship/health/living conditions did apply, it could only be from some time after March 2017 and would not therefore affect the Applicant. As a result of her prudent spending of the lump sum, she still had monies left over after the preclusion period ended, whichever way one looks at this, and the whole idea behind the preclusion period is to ensure there is no double dipping yet ensure the preclusion period is not so long as to cause unreasonable financial strain on an Applicant.
That is why it is assessed at the highest pension rate per week multiplied by two, plus extras - in the Applicant’s case at $948.00 per week.
THE 50% RULE
There is one final consideration in this case which does not seem to have been raised as such by the Applicant. The Respondent actually refers to it in Paragraph 14 of the Statement of Facts and Contentions.
Paragraph 14 states that “The preclusion period from 17 September 2013 to 27 March 2017 was correctly calculated as per the statutory formula, on the basis of the total lump sum compensation payment received by the Applicant ($199,000), the compensation part of that payment ($99,500 – being 50% of the total compensation payment) and an income cut-out amount of $948.00.”
The Tribunal agrees with the fact that 50% of $199,000 is $99,500 and that the income cut out amount was $948 per week in accordance with the statutory formula. However, the end date of the preclusion period cannot possibly be 27 March 2017. That would make the period 184 weeks which would indicate the sum of $175,000 has been used (as indicated later at Paragraph 28) not $99,500.
$99,500 divided by $948 is 104.96 weeks. In accordance with the formula the figure is rounded down to the nearest week, in this case 104 weeks.
Accordingly, using the 50% rule the preclusion period would be 17 September 2013 (the date of injury) to 17 September 2015, i.e. prior to the date of settlement.
Paragraph 26 of the Respondent’s Statement of Facts and Contentions gives a clue as to the reasoning behind the Respondent’s calculations. It says ‘The Replacement Reasons for Decision (see Page 97 of T-Documents) states that “there does not appear to be any agreement on any heads of damages between the parties” and therefore not by consent judgement.’ It follows that the compensation part of a lump sum compensation payment is so much of the payment in respect of lost earnings or lost capacity to earn.
Ms Wall in her assessment refers to her assessment of the Applicant’s past economic loss only in terms of renovating and selling property (see Paragraphs 48 to 51 inclusive). In Paragraph 50 she states “I find that the injuries sustained in the subject accident have caused a reduction in the Claimant’s capacity to renovate and sell property. I find that led to a past economic loss”. No mention is made of capacity to earn.
She states in Paragraph 49 “…I am satisfied that but for the subject accident the claimant’s most likely circumstances was that she would continue to renovate and sell houses. The profit of course would depend entirely on the amount it took to renovate and what the property market was doing at any time of sale.”
It is only because of the injuries suffered and the medical evidence that indicated that those injuries would make it hard for the Applicant to continue to renovate properties that Ms Wall considered a future capacity to earn money ‘in the open labour market’ (see Paragraph 58 quoted above in Paragraph 19).
It is at least arguable that lost earnings only include a capacity to earn on the open labour market for the reasons advanced by the Applicant, as any profit made from renovating, living in and then selling one’s own home, only to reinvest the money by buying another property do not amount to earnings.
A capacity to earn on the open labour market in future clearly is covered by the Act in my view and in the absence of anything else the $100,000 future earning capacity applies in this case. $100,000 divided by $948 is 105.49 weeks (or 105 weeks rounded down), much the same as for $99,500.
The Respondent did not supply any evidence to contradict the Applicant’s assertion that any money she made from renovating and then selling her home was income as such. If she did not buy another property it would be, but on the one occasion this had occurred in the past she simply used the proceeds to buy a new home.
Section 8(8) Income exemptions under the Act only refer to superannuation type situations and various government payments to person under various Acts.
It appears that the Applicant’s situation is different but subject to an ATO ruling to the contrary or further evidence being adduced by the Respondent, it has not shown that the Applicant is wrong in this aspect of her submission.
At any rate the Respondent seems to rely on there not appearing to be any agreement on any of the heads of damages, thus bringing this case within Section 17(3)(b) of the Act instead of section 17(3)(a).
Section 17(3) says:
Subject to subsection (4) (i.e. periodic payments), for the purposes of this Act, the compensation part of a lump sum compensation payment is:
a. 50% of the payment if the following circumstances apply:
i.the payment is made (either with or without admission of liability) in settlement of a claim that is, in whole or in part, related to a disease, injury or condition; and
ii.the claim was settled, either by consent judgment being entered in respect of the settlement or otherwise; or…”
And subsection 17(3)(ab) goes on to deal with periodic payments which is not relevant.
Section 17(3)(b) says:
“if those circumstances (in ‘a’) do not apply - so much of the payment as is, in the Secretary’s opinion, in respect of lost earnings or lost capacity to earn, or both “
CARS is a NSW government scheme whereby the victim and the insurer have an alternate means to settle and finalise claims without recourse to a court. The scheme provides that if agreement is not reached at the relevant stage the appropriate court in first instance is the District Court of NSW.
The insurer can only opt for the court if liability remains in dispute. If, as was the case here, liability was admitted, the matter then proceeds to an assessment and the insurer is bound by the assessment.
The victim after assessment still has the option of accepting it or disputing it in the District Court of NSW. The Applicant accepted it in this matter and wrote on 15 December 2015 after receiving Ms Walls detailed assessment and reasons dated 14 December 2015 a hand written letter (Exhibit A1) stating:
‘TO WHOM IT MAY CONCERN
I HYSC (real name was inserted in the original), accept Assessor Wall’s award of damages and costs in CARS matter# (claim number).
Regards,
Signed
HYSC’
The insurer QBE on 20 January 2016 wrote to Centrelink advising that “we advise that the above matter has settled.” (see letter from QBE to Centrelink Compensation Management Section, Page 92 of T-Documents) and then going on to say “Could you please advise the amount Centrelink charge for this settlement... We await advice of payback amount as a matter of urgency. Please quote our claim number on all correspondence forwarded to QBE Yours faithfully…”
QBE enclosed the full assessment from Ms Wall.
The Tribunal notes the Respondent seems to have been in two minds as to what the preclusion period was. Paragraph 14 of the Respondent’s Statement of Facts and Contentions refers to the 50% rule in section 17(3)(a) but seems to apply the section 17(3)(b) situation in its figures.
The Respondent submitted the Secretary was not satisfied that section 17(3)(a) or (ab) applied.
The Tribunal notes that it’s an either/or situation in the case of (a) or (ab) and that (ab) does not apply as we are dealing with a lump sum compensation figure and not periodic payments.
However the Tribunal has come to the conclusion that section 17(3)(a) is the correct or if not at least the preferable section to apply here.
For starters, the Applicant has to consent to get the money. Liability is not in issue and the only point in issue is the quantum. So, at that stage of the process QBE has opted to accept the umpires (CARS) decision but if the Applicant does not like it, as the insured/victim, she can still opt to go to court. She did not so opt and decided to accept the offer.
It is referred to by all parties in the process as a “SETTLEMENT”.
The Applicant can’t get the money unless she agrees to settle for that amount as assessed by the CARS assessor. In doing so, she is deemed to have accepted all the various “heads of damages” contained therein. There is no evidence to the contrary. There are no qualifications to her accepting everything in the assessment. If she was unhappy with any aspect of it, one would expected her to mention it, even if she ultimately accepted the assessment so as to get the money – she was a solicitor after all and provided detailed submissions to the Tribunal on many issues during the hearing and before.
QBE, by admitting full liability impliedly from that stage on, accepts everything in the subsequent assessment.
Section 17(3)(a)(i) is satisfied as a payment is made with effect 20 January 2016 with admissions of liability in settlement of a claim that is in whole related to an injury and (ii) is met as the claim was settled either by consent judgement being entered in respect of the settlement or “OTHERWISE” (and as we have seen (ab) does not apply but it is an alternative to (a)).
“Otherwise” is appropriate as this is not technically a consent judgement as it does not involve a court, although the agreement has a similar effect to a consent judgement.
As a result of the above, I find the correct preclusion period to be 104 weeks and covering the period 17 September 2013 to 17 September 2015.
If I am wrong on this then even if section 17(3)(b) applied, I would say, standing in the shoes of the Secretary (the decision maker) as I do, then “so much of the payment as is, in the Secretary’s opinion, in respect of lost earnings or lost capacity to earn, or both” would in my view amount to the $100,000 for loss of future earning capacity as found by the assessor Ms Wall, for the reasons already given above and that would take the end of the preclusion period to 24 September 2015 instead of 17 September 2015 if section 17(3)(a) applied.

The period when deductions can be made are for that 104 week period (or if section 17(3)(b) applied - 105 weeks being the period covered by the award of $100,000 for future loss of earnings/income i.e. to 24 September 2015).
Accordingly the Respondent will need to reimburse the Applicant for the period 18 September 2015 to 20 January 2016 inclusive. A period of a little over 3 months which the Tribunal would estimate as being about $3,000 to $3,500 but which will need to be correctly determined by the Respondent.
The question remains as the Applicant was on Newstart until 20 January 2016 should she be reimbursed for any period beyond that date as she requests.
As a result of the decision of this Tribunal to find that there was a settlement of the Applicants claim (or indeed if for some reason the Tribunal is wrong in that regard but correct in its interpretation of the claims assessment which had the effect of leading to a finding that only future loss of earnings could would be taken into account and accordingly assessed the preclusion period to be 105 weeks, see above Paragraphs 35 to 45 inclusive) and that settlement led, in this Tribunal’s view, to the preclusion period ending some 3 months before settlement then, there arises a question of whether the Applicant is entitled to any further payment from the Respondent.
The Applicant argues that she should be entitled to payment from 21 January 2016 to 28 March 2017, that being the remainder of the preclusion period determined by the Respondent. She estimates this at $16,022. Again, if this Tribunal accepted her argument the exact figure would need to be worked out by the Respondent.
The Tribunal regards this as a grey area as indeed it does for her claim for a further sum to cover the period 29 March 2017 until 4 May 2018 when she actually started to receive Newstart, again.
The Applicant (see page 5 of the T-Documents) states that she had been in receipt of Newstart from prior to the accident and would still be receiving it but for the preclusion period.
She further stated that “during the entire preclusion period I did all the ‘work” required to receive Newstart - I attended fortnightly job agent interviews and continued my job search, just as I was required to do before the car accident. At no time did I get an exemption from those activities, even though the repayment of the Newstart debt effectively meant I was required to do those activities when I was not receiving any financial benefit from Centrelink.” The Tribunal, in the absence of any evidence to the contrary, accepts this.
The Applicant, during her evidence in chief and cross examination volunteered what she saw as impediments to her successfully getting a job - namely evidence (also in documentary form, see Doctor Yates letter dated 28 April 2016 and letters from St Vincents Hospital dated 16 October 2014 and 25 February 2016) as to her health, her difficult living conditions in her van (e.g. she could only shower twice a week), the need for her to attend to her dogs, and what has become it seems, the main purpose in her life at present and that is to have a child through IVF due to the unfortunate unavailability of a partner in the last few years.
The Tribunal also notes her explanation as to why it took her many months before she re- applied for Newstart after the preclusion period ended on 28 March 2017. Had she reapplied in April 2017 one would assume she would have started to receive it in May 2017 instead of May 2018.
However she told the Tribunal that it was difficult, due to her living conditions and medical issues to get into a Centrelink office to apply and she lost several months accordingly in applying as a result.
Let me say in relation to her claim for payment between 28 March 2017 and 3 May 2018 inclusive, whilst I note her difficulties, they were not so insurmountable as to prevent her from applying earlier and as there were no legal impediments stopping her from applying anytime from 28 March 2017 onwards, she is not entitled in my view to any money from Centrelink for this period.
In considering the period 21 January 2016 to 27 March 2017 inclusive I make the following observations.
The Applicant states that during the entire preclusion period, despite not receiving money for the period 21 January 2016 to 27 March 2017 she continued to do all the “work” required to get Newstart. There is no evidence to the contrary. Therefore, it was quite possible that she could have got a job at any time from 17 September 2015 to 27 March 2017, and as we know she didn’t.
This in itself is a strong argument in favour of allowing her to be reimbursed for that period because for all intents and purposes she is acting in exactly the same way she would be expected to act if the accident had never occurred.
It is also of some relevance that she was on Newstart at any rate when the accident occurred and was on it until 20 January 2016 i.e 3 months after the correct preclusion period end date as determined by this Tribunal.
The aim of the preclusion period and the law concerning suspending one’s ability to receive benefits is to ensure a person cannot double dip and that the person who injures the victim (or in reality their insurer) pays for it and not the Australian taxpayer. As can be seen, the formula is a generous one and is based on slightly more than twice the amount of the highest pension payable and it is for this reason that it is only in special circumstances that all or part of the preclusion period is waived.
The Applicant’s circumstances, whilst not special in themselves in terms of health and finances available, are somewhat unique in terms of how she lives, how she was on a benefit at the time of the accident (most people go onto benefits because of an accident) and especially how she seemed to abide by her obligations to Centrelink all through the preclusion period.
As a result of this Tribunal’s decision as to when the preclusion period actually should have ended (i.e. in September 2015), had the preclusion period been correctly calculated by the Respondent she would have remained on Centrelink after 20 January 2016 and simply had to reimburse the Respondent for the period 17 September 2013 to 17 September 2015 inclusive out of her lump sum.
This fact situation does take this case out of the ordinary run of cases and in the Tribunal’s view could enliven the special circumstances consideration by itself.
It cannot be said that she may well have obtained work after 20 January 2016 and before 27 March 2017 and therefore it’s impossible to ascertain if she should be allowed payments for that period accordingly, because, she WAS trying for work, just as if her benefits had continued, and she did not get any work. Her situation is therefore not a hypothetical one, it is real.
This Tribunal is comfortably satisfied on the evidence before it, that regardless of the preclusion period, the Applicant would have remained unemployed from 17 September 2015 to 27 March 2017 and in fact did so.
Accordingly, the Tribunal believes that the correct or at least the preferable decision, taking into account the circumstances of this case as described above, is that the Applicant was entitled to Newstart from 18 September 2015 until 27 March 2017 and as well as reimbursing her for the period up to and including 20 January 2016, she is entitled to be reimbursed for the period from 21 January 2016 to 27 March 2017 inclusive as well.
DECISION
The decision of this Tribunal is that the Applicant was entitled to Newstart payments from the period 18 September 2015 to 27 March 2017 inclusive, the reviewable decision is set aside and the matter is remitted to the Secretary to calculate the amount due to be paid to her as a result.

I certify that the preceding 91 (ninety - one) paragraphs are a true copy of the reasons for the decision herein of Bill Stefaniak AM RFD, Senior Member.

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Associate
Dated: 13 November 2018

Date(s) of hearing: 21 August 2018

Applicant: In person

Solicitors for the Respondent: Biljana Salaji, Department of Human Services

[2018] AATA 4224

13 November 2018

Key Legal Topics

Areas of Law

Administrative Law

Statutory Interpretation

Legal Concepts

Appeal

Judicial Review

Procedural Fairness

Remedies

Standing

Statutory Construction

Date(s) of hearing:	21 August 2018
Applicant:	In person
Solicitors for the Respondent:	Biljana Salaji, Department of Human Services