Ian Hillam and Secretary, Department of Education, Employment and Workplace Relations
[2013] AATA 505
[2013] AATA 505
Division GENERAL ADMINISTRATIVE DIVISION File Number
2012/2346
Re
Ian Hillam
APPLICANT
And
Secretary, Department of Education, Employment and Workplace Relations
RESPONDENT
Decision
Tribunal Senior Member R W Dunne
Date 17 July 2013 Place Adelaide The Tribunal affirms the decision under review.
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Senior Member R W Dunne
Catchwords
SOCIAL SECURITY – pensions, benefits and allowances – workplace injury – compensation – preclusion period as a result of lump sum compensation payment – all compensation monies expended – whether special circumstances exist to warrant treating all or part of the lump sum compensation as not having been made – special circumstances found not to exist – decision under review affirmed.
Legislation
Social Security Act 1991 (Cth), ss 17(1), (2) and (3), 1160(1), 1169(1), 1170(3), (4) and (5), 1171, 1184K(1)
Workers Rehabilitation and Compensation Act 1986 (SA), ss 42, 43
Cases
Banicek and Secretary, Department Employment and Workplace Relations [2006] AATA 435
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Re Angelakos v Department of Employment and Workplace Relations [2007] FCA 25
Beadle v Director-General of Social Security (1985) 7 ALD 670Ryde v The Secretary, Department of Family and Community Services [2005] FCA 866
REASONS FOR DECISION
Senior Member R W Dunne
17 July 2013
introduction
Mr Ian Hillam (“the applicant”) suffered a work place injury on 9 March 2001. He received the following lump payments in connection with the injury:
25 March 2001 $12,661.70 6 February 2008 $55,169.65 31 December 2009 $31,752.72 31 December 2009 $300,000.00 TOTAL $399,584.07
On 8 June 2010, the applicant was issued with a notice informing him that the respondent (“Centrelink”) had made a decision to assess a compensation preclusion period from 30 December 2009 to 17 February 2015, a period of 268 weeks. On 20 December 2011, the applicant requested a review of the decision that the compensation preclusion period be imposed. At the applicant’s request, the decision was reviewed and affirmed by an Authorised Review Officer and the Social Security Appeals Tribunal (“SSAT”). The applicant has applied to this Tribunal for review of the decision of the SSAT.
At the hearing, Mr Hillam represented himself with the assistance of his wife, Ms Rosa Hillam. Centrelink was represented by Mr Christian Visser (from Program Litigation and Review Branch, Department of Human Services). The Tribunal received into evidence the T documents,[1] together with the following documents:
·letter from Dr P J Slattery dated 18 September 2012;[2] and
·letter from Collections (Australia) to Mr and Mrs Hillam dated 27 April 2012.[3]
[1] Exhibit R1.
[2] Exhibit R2.
[3] Exhibit R3.
ISSUEs FOR THE TRIBUNAL
The issues for the Tribunal are as follows:
(a)Has the compensation preclusion period, determined as a result of the lump sum compensation payment received by the applicant, been correctly calculated?
(b)If the compensation preclusion has been correctly calculated, are there “special circumstances” that make it appropriate to reduce the said period, pursuant to s 1184K(1) of the Social Security Act 1991 (“Act”)?
LEGISLATIVE SCHEME
Part 3.14 of the Act provides for the effect of compensation recovery on certain social security benefits. Section 1160(1) of the Act provides for the general effect of that Part of the Act. It reads as follows:
“1160General effect of Part
(1)This Part operates in certain specified circumstances to do one or more of the following:
(a) reduce a person’s compensation affected payment;
(b) render a person’s compensation affected payment not payable;
(c)require the repayment of some or all of a person’s compensation affected payment;
because of the receipt of compensation by the person or the person’s partner.
…”
Section 1169(1) of the Act provides, in effect, that a compensation affected payment is not payable during a lump sum preclusion period. It reads as follows:
“1169 Compensation affected payment not payable during lump sum preclusion period
(1)If:
(a) a person receives or claims a compensation affected payment; and
(b) the person receives a lump sum compensation payment;
the compensation affected payment is not payable to the person in relation to any day or days in the lump sum preclusion period.
…”
Section 17(1) of the Act defines the expression “compensation affected payment”, and a Disability Support Pension is included in that definition.
Section 17(2) of the Act defines “compensation”. This includes a payment of damages “… that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury”.
Section 17(3) of the Act provides an artificial statutory formula for determining “compensation part of a lump sum compensation payment”. Section 17(3) reads:
“Compensation part of a lump sum
(3)Subject to subsection (4), 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
(ab)50% of the payment if the following circumstances apply:
(i) the payment represents that part of a person's entitlement to periodic compensation payments that the person has chosen to receive in the form of a lump sum; and
(ii) the entitlement to periodic compensation payments arose from the settlement (either with or without admission of liability) of a claim that is, in whole or in part, related to a disease, injury or condition; and
(iii) the claim was settled, either by consent judgment being entered in respect of the settlement or otherwise; or
(b)if those circumstances 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.”
Section 1170(3) of the Act provides relevantly that the lump sum preclusion period is the period that begins on the day on which the loss of earnings or loss of capacity to earn began, and ends at the end of the number of weeks worked out pursuant to the statutory formula referred to in sub-sections 1170(4) and (5). That formula refers to the “compensation part of lump sum” and the sub-sections read:
“1170 Lump sum preclusion period
…
(4)The number of weeks in the lump sum preclusion period in relation to a person is the number worked out using the formula:
(5)If the number worked out under subsection (4) is not a whole number, the number is to be rounded down to the nearest whole number.”
Multiple lump sum payments can in some instances be deemed to be a single lump sum compensation payment. The relevant provisions are contained in s 1171 of the Act which reads:
“Deemed lump sum payment arising from separate payments
(1)If:
(a)a person receives 2 or more lump sum payments in relation to the same event that gave rise to an entitlement of the person to compensation (the multiple payments ); and
(b)at least one of the multiple payments is made wholly or partly in respect of lost earnings or lost capacity to earn;
the following paragraphs have effect for the purposes of this Act and the Administration Act:
(c)the person is taken to have received one lump sum compensation payment (the single payment) of an amount equal to the sum of the multiple payments;
(d)the single payment is taken to have been received by the person:
(i) on the day on which he or she received the last of the multiple payments; or
(ii) if the multiple payments were all received on the same day, on that day.
(2)A payment is not a lump sum payment for the purposes of paragraph (1)(a) if it relates exclusively to arrears of periodic compensation.”
The above provisions must, however, be read subject to s 1184K of the Act. That section authorises the Secretary (and this Tribunal, standing in the shoes of the Secretary) to disregard the whole or part of a compensation payment in certain circumstances, referred to as “special circumstances”. Section 1184K(1) provides as follows:
“Secretary may disregard some payments
(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.
…”
In the applicant’s case, compensation payments were made pursuant to the South Australian Workers Rehabilitation and Compensation Act 1986 (“Compensation Act”). Section 43 of the Compensation Act provides (inter alia) as follows:
“Lump sum compensation
(1)Subject to this Act, where a worker suffers a permanent disability and the disability is compensable under this Act, the worker is entitled (in addition to any entitlement apart from this section) to compensation for non-economic loss by way of a lump sum.
…”
Section 42 of the Compensation Act provides (inter alia) as follows:
“Redemption of liabilities
(1)Any of the following liabilities may, by agreement between the worker and the Corporation, be redeemed by a capital payment to the worker
(a) a liability to make weekly payments;
(b) a liability to pay compensation under section 32.”
background
There is no dispute relating to the material facts in this matter, which are largely contained in the Reasons for Decision of the SSAT. In December 2009, Mr Hillam received a compensation lump sum settlement following his workplace injury. Information provided by the relevant insurer, Employers Mutual Limited, indicated that periodic (weekly) income maintenance ceased on 29 December 2009. The settlement, pursuant to a s 42 of the Workers’ Rehabilitation and Compensation Act 1986 (South Australia) redemption of $300,000, also included a s 43 lump sum compensation payment for non-economic loss of $31,752.72. Both these sums were paid to Mr Hillam on 31 December 2009. The final lump sum payment of $300,000 was made in redemption of future weekly payments of income maintenance and medical expenses. Other s 43 lump compensation payments of $12,661.70 and $55,169.65 for non-economic loss had previously been paid to Mr Hillam. The total compensation paid amounted to $399,584.07. On 24 March 2010 the applicant applied for a Disability Support Pension.
The preclusion period of 268 weeks was calculated by dividing the “compensation part of the lump sum compensation payment”, that is $199,792.03 under s 17(3) of the Act, by the “income cut-out amount” for pension payments at the time of Mr Hillam’s settlement, which was finalised by consent on 24 November 2009. At that date on the evidence, the income cut-out amount was $742.90. As a result of the compensation payments made to Mr Hillam, the respondent calculated that he was subject to a compensation preclusion period from 30 December 2009 to 17 February 2015, a period of 268 weeks, during which time social security payments would not be paid to him. A determination was made by a Centrelink officer on 8 June 2010 to reject Mr Hillam’s claim for Disability Support Pension due to the application of the compensation preclusion period.
evidence of mr stephen pratt
Mr Stephen Pratt, who is the General Manager, Operations at Prime Super in Melbourne (“Prime”) was called as a witness for the respondent. Mr Pratt’s evidence was that the applicant had accumulated funds of approximately $26,800 in his superannuation account with Prime. He also had a Total and Permanent Disability insurance policy linked to his superannuation account. When asked whether the applicant could obtain the insurance funds, Mr Pratt said it would depend on whether the relevant insurer was satisfied as to his entitlement. He said that additional documentation might be required. If the additional documentation disclosed positively that there was an entitlement, the funds could be available in about two months’ time. As to whether Mr Hillam might obtain access to his accumulated superannuation funds, Mr Pratt said that the $26,800 could be released within two or three days.
EVIDENCE OF MRS HILLAM
It was Mrs Hillam’s evidence that the applicant had returned to work since his accident occurred in 2001. However, in 2002, he was not well and had been suffering from persistent left leg pain associated with his ankle injury. She said that a few months prior to his injury the couple had borrowed approximately $500,000 and purchased a new motor vehicle and a residence, subject to a mortgage to National Australia Bank. The applicant received financial advice and, based on that advice, the mortgage was reduced by $250,000. As a result, the balance of the mortgage was approximately $215,000 and there were mortgage arrears of nearly $15,000. The value of the residence had reduced to around $320,000.
Mrs Hillam said that she had been in receipt of carer payment and carer allowance in respect of the applicant since 30 December 2009. The rate of carer payment was reduced due to hobby income and deemed rental income. She also owned a property at Smithfield Plains which had been left to her by her father. The property was intended for her daughter (Megan), but was registered in Mrs Hillam’s name. The property had an estimated value of approximately $185,000 and was currently being occupied by Megan, rent free, because she could not afford to pay any rent to her parents.
consideration
Has the compensation preclusion period determined as a result of the lump sum compensation payment received by the applicant been correctly calculated?
On the evidence, Mr Hillam received a final lump sum s 42 redemption settlement of $300,000 and a s 43 lump compensation payment for non-economic loss of $31,752.72. Both these sums were paid to him on 31 December 2009. He also received other s 43 lump sum compensation payments for non-economic loss of $12,661.71 and $55,169.65. The total compensation paid to Mr Hillam for the work injury thus amounted to $399,584.07. The SSAT found, and I accept, that the total compensation of $399,584.07 contained an amount for lost earnings or lost capacity to earn. In accordance with s 1171(1) of the Act, a single payment (equal to the sum of the multiple payments) was taken to have been received by Mr Hillam on 31 December 2009.
In accordance with s 17(3) of the Act, 50 per cent of Mr Hillam’s total lump sum compensation payment (that is, $199,792.03) is the “compensation part of the lump sum compensation payment” for social security purposes. Thus, under s 1169(1), a “compensation affected payment” (such as a Disability Support Pension) is not payable to Mr Hillam during the “lump sum preclusion period” referrable to the sum of $199,792.03, which is calculated according to the formula in s 1170 of the Act. When the compensation part of the lump sum is divided by the income cut-out amount for pension payments at the time of Hillam’s settlement, the result is a preclusion period calculated at 268 weeks (rounded down in accordance with s 1170(5)) commencing on 30 December 2009 and concluding on 17 February 2015. In these circumstances, subject to what I say below, I am satisfied that the compensation preclusion period has been correctly calculated. As the SSAT found, there is an expectation that Mr Hillam will support himself financially with the compensation part of the lump sum payment.
If the compensation preclusion has been correctly calculated, are there “special circumstances” that make it appropriate to disregard all or part of the lump sum compensation payment, pursuant to s 1184K(1) of the Act?
Mrs Hillam referred to written submissions that had been put to the Tribunal by Ms Del Canto from Welfare Rights Centre (SA) Inc. Ms Del Canto referred to s 1171(1) which was introduced into the Act by the Family and Community Services Legislation (Simplification and Other Measures)Act 2001, effective from 20 September 2001. Section 1171(1) replaced s 17(2B) of the Act which provided:
“For the purposes of this Act, if:
(a)a person receives more than one lump sum payment, whether simultaneously or at different times, in relation to one or more injuries arising from the same event (see subsection (5A)); and
(b)at least one of the payments is made wholly or partly in respect of lost earnings or lost capacity to earn;
the person is taken to receive one lump sum compensation payment, made wholly or partly in respect of lost earnings or lost capacity to earn, of an amount equal to the sum of those lump sum payments.”
Ms Del Canto also referred to the decision of Senior Member Hastwell in Banicek and Secretary, Department Employment and Workplace Relations.[4] In Banicek, the applicant received three lump sum compensation payments in 1998, 2000 and 2004. She was advised by her union and legal advisers that no preclusion period would arise as a result of receiving the first two sums. The first sum was expressed to be for disability alone and the second sum was for a different condition, namely dermatitis. The third sum contained an economic loss component and the issue for the Tribunal was whether all three payments should be added together for the purposes of calculating the preclusion period. At the time the applicant received the first two sums, s 17(2B) of the Act was the relevant section and provided for the adding together of lump sum payments. However, the payments could not be added together under s 17(2B) as the injuries arose from quite different events. The third payment was not made until the broader definition of s 1171(1) was introduced in 2001 and the broad terms of the new provision clearly caught the two earlier payments. Senior Member Hastwell was satisfied there was an unfairness to the applicant in using the total of all three lump sum payments to calculate the preclusion period and she decided that the discretion under 1184K of the Act should be exercised. She was of the view that it was fair to disregard some, but not all, of the payments and that “special circumstances” existed. It was fair, based on all the circumstances, to disregard the second sum, being the payment relating to dermatitis. This sum was deducted from the total lump sum used to calculate the preclusion period.
[4] [2006] AATA 435.
In Mr Hillam’s case, although the first lump sum payment was made on 25 March 2001 (i.e. before s 1171(1) was introduced into the Act, effective from 20 September 2001), all of the lump sum payments were received in relation to the same event that gave rise to the entitlement to compensation, and at least one of those payments was made wholly or partly in respect of lost earnings or lost capacity to earn. In the circumstances, it is not appropriate, in my view, to disregard any of the lump sum payments in calculating the preclusion period. As was found by the SSAT, Mr Hillam is taken to have received one lump sum compensation payment of an amount equal to the sum of the multiple payments and this is used to calculate the preclusion period.
As to whether there are “special circumstances” presently that make it appropriate to disregard all or part of the lump sum compensation payments pursuant to s 1184K of the Act so as to reduce the lump sum preclusion period, there is considerable case law on the subject. In Re Beadle and Director-General of Social Security,[5] the Tribunal comprising Toohey J, Member Wilkins and Member Dr Billings said: [6]
“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 on 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.”
[5] (1984) 6 ALD 1.
[6] (1984) 6 ALD 3.
More recently, in Re Angelakos v Department of Employment and Workplace Relations,[7] Justice Besanko in the Federal Court reviewed the extensive case law on the issue of “special circumstances”. He analysed the decision of the Full Federal Court in Beadle v Director-General of Social Security,[8] where the Court stated that it was not possible to lay down “precise limits or precise rules” as to what constituted special circumstances. The Court said that it “will depend upon the circumstances of the particular case” and that “the phrase ‘special circumstances’ although lacking precision, is sufficiently understood … not to require judicial gloss”. Justice Besanko referred to the decision of Justice Branson in Ryde v The Secretary, Department of Family and Community Services[9] in which she cited with approval the references in Beadle and rejected the suggestion that circumstances are special only if they are “unusual, uncommon or exceptional”. Justice Besanko expressly approved the following test:[10]
“Each particular case must be considered on its merits. It is the essential nature of the provision to create a broad discretion to meet the great variety of circumstances which must occur, raising considerations of individual hardship, need, fairness, reasonableness, and whatever else may move an administrator, keeping in mind the scope and purposes of the Act, to make a decision one way or the other.”
[7] [2007] FCA 25.
[8] (1985) 7 ALD 670.
[9] [2005] FCA 866.
[10] [2007] FCA 25, paragraph 35.
I have had regard to other authorities on special circumstances. As was inferred earlier, what circumstances are “special” will vary from case to case. I understand Mr Hillam’s lawyer was advised that a preclusion period of approximately five years would apply to him if his compensation lump sum was around $400,000. However, he applied for a Disability Support Pension approximately four months after receiving his lump sum payment and then, on 20 December 2011, formally appealed to the respondent the length of his preclusion period. On Mr Pratt’s evidence, the applicant has approximately $26,800 in his superannuation account with Prime that could be, or now may have been, released to him. I understand that there has been the potential to access additional funds, which appear to vary on the evidence between $48,000 and $88,270, through Total and Permanent Disability insurance linked to his superannuation account. It is not clear whether the applicant has obtained access to the funds in his superannuation account or has become entitled to the Total and Permanent Disability insurance sum. If not, it may be possible for him to be paid out the superannuation and insurance funds, if those payments have not already been made.
I am not satisfied that special circumstances exist that make it appropriate to treat the whole or part of the lump sum compensation payment as not having been made, pursuant to s 1184K(1) of the Act. I find that there is nothing unusual, uncommon or exceptional about the applicant’s case that would justify some other conclusion.
DECISION
For the reasons outlined above, the Tribunal affirms the decision under review.
I certify that the preceding 29 (twenty -nine) paragraphs are a true copy of the reasons for the decision herein of ....................[Sgd]....................................................
Administrative Assistant
Dated 17 July 2013
Date(s) of hearing 21 February 2013 Advocate for the Applicant Ms Rosa Hillam Advocate for the Respondent Mr C Visser Solicitors for the Respondent Department of Human Services
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