JANICE LESLEIGHTER and SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

[2012] AATA 209

[2012] AATA 209

Division	GENERAL ADMINISTRATIVE DIVISION
File Number(s)	2011/4483
Re	JANICE LESLEIGHTER
APPLICANT
And	SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
RESPONDENT

Decision

Tribunal	Mr P Wulf, Member
Date	13 April 2012
Place	Brisbane

The Tribunal affirms the decision under review.

………[Sgd]…………………..
    Mr P Wulf, Member

CATCHWORDS

SOCIAL SECURITY – Pensions, benefits and allowances – Settlement of compensation claim – Lump-sum compensation payment includes component referable to lost earnings and capacity to earn – Imposition of preclusion period – Special circumstances not established – Decision under review affirmed

LEGISLATION

Administrative Appeals Tribunal Act 1975 (Cth) s 37
Social Security Act 1991 (Cth) ss 17, 1169, 1170, 1184K

CASES

Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25
Director-General of Social Services v Hales (1983) 47 ALR 281
Groth v Department of Social Security (1995) 40 ALD 541
Re Department of Family and Community Services and Rankin [1999] AATA 496
Re PGVK and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2008] AATA 381
Re Secretary, Department of Family and Community Services and Jones [2003] AATA 505
Re Secretary, Department of Family and Community Services and Peak [2003] AATA 1212
Re Secretary, Department of Family and Community Services and Pearce [2003] AATA 972
Re Stavrakis and Secretary, Department of Family and Community Services [2003] AATA 212
Secretary, Department of Family and Community Services v Allan (2001) 66 ALD 147
Department of Social Security v Smith (1991) 23 ALD 277

REASONS FOR DECISION

Mr P Wulf, Member

13 April 2012

1. Janice Lesleighter ("the applicant")[1] seeks the review of a decision made by Centrelink on 30 June 2011[2] to recover $32,140.85 following the decision to impose a preclusion period following the settlement of a compensation claim.  An Authorised Review Officer (“ARO”) affirmed the decision on 23 August 2011.[3]

   [1] Exhibit 1, T-Document 1/1–2.

   [2] Exhibit 1, T-Document 15/57-58 and T-Document 16/59-61.

   [3] Exhibit 1, T-Document 21/70-78.

2. On 2 September 2011, the applicant appealed to the Social Security Appeals Tribunal (“SSAT”) which upheld the original decision of Centrelink to recover $32,140.85 as no special circumstances existed.[4]

   [4] Exhibit 1, T-Document 2/3-8.

3. The applicant has applied to this Tribunal for review of the SSAT decision. For the reasons stated below, this Tribunal affirms the decision under review.

   THE ISSUE for THE TRIBUNAL'S DETERMINATION

4. The issues for the Tribunal’s determination are whether:

   (a)It was correct to impose the preclusion period (24 April 2007 and 28 December 2009) with respect to the compensation settlement received in mid-May 2011; and, if so

   (b)The preclusion period was correctly calculated; and, if so

   (c)There are any special circumstances allowing all or part of the relevant period to be disregarded; and, if so

   (d)The applicant should be required to repay a compensation charge of $32,140.85 with respect to the preclusion period.

   LEGISLATION

5. The relevant legislative provisions are contained within ss 17, 94, 1169, 1170 and 1184K of the Social Security Act 1991 (Cth) (“the Act”). Section 17 relates to compensation recovery and compensation affected payment definitions. It also includes the meaning of “compensation part”, in relation to a “lump sum compensation payment”. Further, this section defines “income cut out amount”, in relation to a person who has received a compensation payment, which means the amount worked out using the formula in subsection (8), as in force at the time when the compensation was received.

6. Under s 1169 of the Act, compensation affected payments are not payable during the “lump sum preclusion period” if:

   (a)     a person receives or claims a compensation affected payment; and

   (b)     the person receives a lump sum compensation payment...

7. Under s 1170 of the Act, the “lump sum preclusion period” is defined as:

   (1)Subject to subsection (2), if a person receives both periodic compensation payments and a lump sum compensation payment, the lump sum preclusion period is the period that:

   (a)     begins on the day following the last day of the periodic payments period or, where there is more than one periodic payments period, the day following the last day of the last periodic payments period; and

   (b)     ends at the end of the number of weeks worked out under subsections (4) and (5).

   (2)If a person chooses to receive part of an entitlement to periodic compensation payments in the form of a lump sum, the lump sum preclusion period is the period that:

   (a)     begins on the first day on which the person’s periodic compensation payment is a reduced payment because of that choice; and

   (b)     ends at the end of the number of weeks worked out under subsections (4) and (5).

   (3)If neither of subsections (1) and (2) applies, the lump sum preclusion period is the period that:

   (a)     begins on the day on which the loss of earnings or loss of capacity to earn began; and

   (b)     ends at the end of the number of weeks worked out under subsections (4) and (5).

   (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.

8. Specifically, in relation to the recovery of the debt and potential waiving of the $32,140.85, s 1184K allows the Secretary and therefore the Tribunal to disregard some payments. The section states:

   (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.

   (2)If:

   (a)     a person or a person’s partner receives or claims a compensation affected payment; and

   (b)     the person receives compensation; and

   (c)     the set of circumstances that gave rise to the claim for compensation is not related to the set of circumstances that gave rise to the person’s or the person’s partner’s receipt of, or claim for, the compensation affected payment;

   the fact that those 2 sets of circumstances are unrelated does not alone constitute special circumstances for the purposes of subsection (1).

   THE EVIDENCE

9. The evidence before the Tribunal comprised:

   a)the "T Documents" (T1-23: pp 1-88) lodged by the Secretary, Department of Families, Housing, Community Services and Indigenous Affairs in accordance with s 37 of the Administrative Appeals Tribunal Act 1975 (Cth) (Exhibit 1);

   b)Letter from the applicant dated 5 November 2011 with attached letter from Mrs Colleen Govan dated 29 July 2007 (Exhibit 2);

   c)Letter from the applicant dated 15 December 2011 titled “My Feet” (Exhibit 3);

   d)Letter from Assistant Professor Moran, Sub Dean of Medicine, University of Western Sydney on King Street Medical Centre letterhead dated 22 December 2011 (Exhibit 4);

   e)Centrelink Financial Information Form completed by the applicant dated 13 December 2011 (Exhibit 5);

   f)Respondent's Statement of Facts and Contentions (Exhibit 6);

   g)Australian Government “A guide to Australian Government Payments” dated 1 January – 19 March 2007 (Exhibit 7); and

   h)the oral evidence of the applicant.

   ANALYSIS

10. On 24 April 2007, the applicant suffered personal injuries as a result of a traumatic accident where a gas stove exploded at her daughter’s house. The accident resulted in permanent injuries.  Between 24 April 2007 and 21 March 2011, the applicant sought compensation for her injuries.

11. Prior to the accident, the applicant was working part time at her brother’s dry cleaning business.  She was working approximately eight hours a week.

12. On 21 March 2011, the applicant’s solicitor sought an estimate of the social security charge and any preclusion period from Centrelink based on a settlement amount of $225,000.00.[5] On 23 March 2011, Centrelink advised the applicant’s solicitor that the preclusion period was from 24 April 2007 to 28 December 2009 and the repayment amount was approximately $32,140.85.[6]  The applicant’s solicitor queried that amount on 29 March 2011[7] and via a telephone conversation, Centrelink verified the amount with the applicant’s solicitor on 5 April 2011.[8]

    [5] Exhibit 1, T-Document 6/24.

    [6] Exhibit 1, T-Document 7/25-28.

    [7] Exhibit 1, T-Document 9/30-31.

    [8] Exhibit 1, T-Document 8/29.

13. In mid-May 2011, the applicant accepted $225,000.00 in final settlement of the compensation claim. Following the acceptance of that claim, Centrelink determined that, as a result of the applicant’s receipt of the settlement, she was subject to the relevant preclusion period. The effect of that decision was that the applicant was precluded from receiving all forms of income support payments under the Act during the preclusion period and was required to repay any pension received during that time.

14. Section 1169 of the Act makes it clear that if a person receives or claims a “compensation affected payment” and a “lump sum compensation payment” then no “compensation affected payment” is payable to that person in the “lump sum preclusion period”.

15. “Compensation” is defined in s 17(2) of the Act to mean, among other things, any compensation or damages payment (whether lump sum or periodic) “that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury”. As the applicant has received a lump sum settlement, s 17(3) has the effect of deeming 50% of the payment as the compensation part of the lump sum. An exception to this aggregation is set out in s 1164 of the Act but I am satisfied that this is not applicable to the applicant’s situation.

16. It is clear from the evidence that the applicant’s solicitor and therefore the applicant were fully aware of the preclusion period and the repayment amounts given their correspondence with Centrelink.[9] Therefore, any argument as to whether the preclusion period should apply is fatally flawed.

    [9] Exhibit 1, T-Document 7/23-28.

17. The formula set out in s 1170 of the Act was applied correctly to the aggregate of her payments. I am satisfied that the amount used in applying the statutory formula was in accordance with the definition of “income cut-out amount” set out in s 17(8) of the Act. I am also satisfied that the calculation of the length of the relevant period has been properly made in the decision under review.

18. The purpose of the provisions relating to preclusion periods has been the subject of judicial commentary. They have been described as operating as a:

    …fair balance of the interests of the recipient of the payment with the competing interests of others in the community whose needs must be met as far as possible from a finite budget allocation for social security measures.[10]

    [10] Department of Social Security v Smith (1991) 23 ALD 277 at 281-282.

19. Similarly, they have been described as a safeguard against “double dipping” in that:

    People should not receive social security payments for loss of earnings where they have received compensation for that same loss of earnings from another source.[11]

    [11] Secretary, Department of Family and Community Services v Allan (2001) 66 ALD 147 at 148.

20. These considerations must be kept in mind when determining, for the purposes of applying s 1184K(1) of the Act, whether or not special circumstances exist in a given case. The issue of special circumstances arises in various parts of the Act. In the context of other aspects of the Act, it was observed that what is required is:

    … something to distinguish ... [the] … 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.[12]

    [12] Groth v Department of Social Security (1995) 40 ALD 541 at 545.

21. That observation is equally applicable to s 1184K(1) of the Act. Accordingly, there must be something about the applicant’s situation which makes it “unusual” or “uncommon” such that it distinguishes it from the ordinary or usual case.[13]

    [13] Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25 at [33].

22. It was submitted that financial hardship is a relevant consideration in this matter.  This will not generally constitute a special circumstance unless the financial hardship goes beyond straitened circumstances and is truly exceptional.[14] 

    [14] Director-General of Social Services v Hales (1983) 47 ALR 281 at 321, 322.

23. It is apparent that the applicant has significant funds in her bank account.  For example, the applicant received approximately $170,000.00 as part of the lump sum payout after outlays (including solicitor’s fees).[15] However, strangely, the applicant appeared to argue that this money and all assets (monies and house (no mortgage) for example) were her husband’s property.  Further, the applicant stated that the house was in fact his.[16] Based on common family law principles, this argument fails in that half of the assets are clearly the applicant’s. This includes bank accounts in her husband’s name. More importantly, the applicant clearly states she has no debts owing to Centrelink.[17]

    [15] Exhibit 1, T9/30-31.

    [16] Exhibit 5/5.

    [17] Exhibit 5/6.

24. The applicant also argued that additional special circumstances existed in that she needed to move houses as the house she is currently living in is unsatisfactory for the purposes of her future.  The applicant indicated that the house has 16 stairs to get inside and as a result of the design of the house, it is not possible to use a walker within the house.[18] While the Tribunal acknowledges these issues insofar as they might be an impediment to the applicant, based on the assets that the applicant and her husband have, they are not in such a financial position that they cannot move properties.

    [18] Exhibit 3/1.

25. The breadth of the discretion in s 1184K(1) of the Act is such as to accommodate health problems and an inability to return to work. The applicant is limited in her opportunity to gain work. The applicant’s evidence was that those consequences are directly related to the injuries for which she was compensated. It is not an unusual or uncommon consequence that the compensated conditions would lead to the outcomes described by the applicant[19] and I am satisfied that they are not sufficient in order to enliven the discretion under s 1184K(1) of the Act.

    [19] See PGVK v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs (2008) AATA 381.

    DECISION

26. I am satisfied that there are no circumstances, either individually or in conjunction with each other, that are special such as to meet the requirements of s 1184K(1) of the Act and therefore the Tribunal affirms the decision under review.

27.       I certify that the preceding 26 (twenty six) paragraphs are a true copy of the reasons for the decision herein of Mr P Wulf, Member.

........[Sgd]...............................................

Associate

Dated 13 April 2012 

Date(s) of hearing	16 February 2012
Applicant	In person
Advocate for the Respondent	Rick McQuinlan