JHSJ and Secretary, Department of Social Services (Social security second review)
[2025] ARTA 611
•20 May 2025
JHSJ and Secretary, Department of Social Services (Social security second review) [2025] ARTA 611 (20 May 2025)
Applicant:JHSJ
Respondent: Secretary, Department of Social Services
Tribunal Number: 2024/5497
Tribunal:Senior Member S Trotter (second review)
Place:Brisbane
Date:20 May 2025
Decision:
The Tribunal sets aside the decision under review and remits the matter for reconsideration in accordance with the orders that:
1. JHSJ is subject to a compensation preclusion period which begins on 23 June 2018 and ends on 1 September 2023; and
2. any excess compensation charge paid by on or behalf of JHSJ arising from the difference between the previous compensation preclusion period utilised and the compensation preclusion period found by the Tribunal is to be refunded to JHSJ.
Statement made on 20 May 2025 at 3:12pm
Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been removed from this decision and replaced with generic information so as not to identify involved individuals as required by subsections 201(1A) - 201(1B) of the Social Security (Administration) Act 1999.
Catchwords
Social Security – newstart allowance and disability support pension – lump sum compensation – date upon which preclusion period begins - whether periodic compensation payments received – whether special circumstances
Legislation
Administrative Appeals Tribunal Act 1975
Administrative Review Tribunal Act 2024
Administrative Review Tribunal (Consequential and Transitional Provisions No. 1) Act 2024
Social Security Act 1991Cases
Executor of the Estate of the late Seth Taulaga and Secretary Department of Social Services (Social services second review) [2019] AATA 5408
MDXJ v Secretary, Department of Social Services [2020] FCA 1767
Re Ivovic and Director-General of Social Services (1981) 3 ALN N95
Secretary, Department of Social Security v Hulls (1991) AAR 414
Watsemawa and Secretary, Department of Education, Employment and Workplace Relations [2010] AAT 1028Secondary Materials
Nil
Statement of Reasons
BACKGROUND
JHSJ suffered psychological injuries related to various incidents related to her employment in the period 2004 to 2017 in relation to which she claimed compensation for personal injury. JHSJ initially received weekly payments from WorkCover Queensland (WorkCover) for the period 24 March 2017 to 22 June 2018, with the payments totalling $81,943.03. However, those payments were cancelled on the basis that JHSJ was a contractor rather than a worker as required for receipt of WorkCover payments. JHSJ further pursued compensation from WorkCover in relation to her injuries and while not able to work and awaiting compensation, she received social security benefits, including newstart allowance from 6 July 2018 and disability support pension from 10 October 2018.
As documented in a Release and Discharge signed 25 August 2023, JHSJ resolved her compensation claim for the gross lump sum payment of $740,000. The $740,000 lump sum amount was comprised of $600,000 plus $140,000 costs. $54,438.07 of the $81,943.03 weekly periodic payments from WorkCover paid for the period 24 March 2017 to 22 June 2018, determined not to have been payable, were repaid to WorkCover.
Receipt of compensation of the nature received by JHSJ is legislatively assessed as including an income component resulting in a legislatively calculated preclusion period during which there is no entitlement to social security benefits. The relevant legislation provides that in certain special circumstances, the whole or part of a compensation payment may be treated as not having been made with the result that the period during which a person is precluded from entitlement to social security benefits is reduced. Social security benefits received during a calculated preclusion period are a charge usually required to be repaid.
On 11 December 2023, the Respondent wrote to JHSJ advising of the decision to apply a compensation preclusion period from 23 June 2018 to 17 November 2023 on the basis of JHSJ’s receipt of the $740,000 lump sum payment and receipt of weekly compensation until 22 June 2018 in the amount of $81,943.03. Further, consequentially, JHSJ was required to repay $153,373.45 of the disability support payments received during that period and that amount was recovered from the compensation monies.
JHSJ requested a review of this decision and, on 16 February 2024, an authorised review officer of the Respondent determined that $11,050 of the lump sum compensation sum could be treated as not having been made as it related to expenditure JHSJ incurred for treatment and surgery for cancer, an injury not the subject of the compensation claim. The preclusion period was consequentially reduced, ending on 15 September 2023 rather than 17 November 2023 with a corresponding reduction in the applicable charge from $153,373.45 to $147,284.83 and refund to JHSJ.
On 9 July 2024, following application for first review of that decision, the Social Security and Child Support Division of the then Administrative Appeals Tribunal (the AAT) affirmed the decision of the authorised review officer. On 31 July 2024, JHSJ lodged an application with the AAT seeking second review of the decision.
On 14 October 2024, the AAT became the Administrative Review Tribunal (the Tribunal). Under the transitional provisions in the Administrative Review Tribunal (Consequential and Transitional Provisions No. 1) Act 2024, proceedings in the AAT that were not finalised before 14 October 2024 are taken to be continued and finalised by the Tribunal. Anything done in relation to the proceeding before 14 October 2024 is taken to have been done by the Tribunal.
JHSJ and the Respondent’s representative participated in a hearing before me on 3 April 2025, with JHSJ giving sworn evidence. Additionally, the following documents were before me and marked as Exhibits (or for identification) as follows:
(a)JHSJ’s statement to police dated 17 July 2020, marked A1;
(b)Letter from Dr HT [full name intentionally deleted by Tribunal] dated 16 August 2018, marked A2;
(c)Document headed ‘Treatment costs’, undated, marked A3;
(d)Letter from Dr O’N [full name intentionally deleted by Tribunal] dated 23 January 2020, marked A4;
(e)Letter from Dr DL [full name intentionally deleted by Tribunal] dated 25 August 2021, marked A5;
(f)Australian Taxation Office Tax Debt Bill dated 18 November 2024, marked A6;
(g)Lotus Institute letter dated 3 October 2024, marked A7;
(h)Residential Tenancies Authorities Notice to Leave dated 23 April 2024, marked A8;
(i)[Name intentionally deleted by Tribunal] Day Surgery Estimate of Costs dated 25 November 2024, marked A9;
(j)[Name intentionally deleted by Tribunal] Clinic Estimate of Patient Expenses dated 31 December 2024, marked A10;
(k)[Name intentionally deleted by Tribunal] Clinic Referral dated 23 December 2021, marked A11;
(l)Letter from Dr N [Full name intentionally deleted by Tribunal] dated 15 October 2024, marked A12;
(m)Email from JHSJ dated 27 November 2024, marked A13;
(n)Email from JHSJ dated 24 December 2024, marked A14;
(o)Email from JHSJ dated 19 January 2025, marked A15;
(p)Additional documents provided by JHSJ during the course of the hearing including screenshots of bank transfers, marked A16;
(q)Documents provided by the Respondent pursuant to section 37 of the then Administrative Appeals Tribunal Act 1975 (the AAT Act), index and pages numbered 1 to 529, marked R1 (the T-Documents);
(r)Documents provided by the Respondent pursuant to section 25 of the Administrative Review Tribunal Act 2024, index and page numbered 1, marked R2; and
(s)Respondent’s Statement of Facts and Contentions and List of Authorities dated 28 February 2025, marked R3.[1]
[1] I note that the Respondent’s representative advised at hearing that paragraph 41 of this document contains an error and that the date ‘6 July 2018’ in that paragraph should be replaced with the date ‘23 June 2018’.
ISSUES
The statutory provisions relevant to this review are contained in the Social Security Act 1991 (the Act).
I also had regard to the Social Security Guide (the Guide) where relevant. As recognised by the Federal Court in MDXJ v Secretary, Department of Social Services [2020] FCA 1767:
The part which a governmental policy should ordinarily play in the determinations of the Tribunal is a matter for the Tribunal to determine, in the context of the particular case, informed by considerations of the desirability of consistency of administrative decisions, but balanced against the ideal of justice in the individual case (Hneidi v Minister for Immigration and Citizenship [2010] FCAFC 20: (2010) 182 FCR 115 at [43]). Further, it is well-established that the Tribunal must make the correct or preferable decision in each case on the material before it and that the Tribunal is at liberty to adopt whatever policy it chooses, or no policy at all, in fulfilling its statutory function (Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 642-643 per Brennan J). The important matter is compliance with the terms of the relevant statute itself Minster for Home Affairs v G [2019] FCAFC 79; (2019) 266 FCR 69.
The Act includes a statutory scheme whereby if a person receives compensation containing a component for past or future loss of income, then they must live off that compensation for a period of time depending upon the amount of compensation received (called a lump sum preclusion period) and they cannot be paid Centrelink payments (called compensation affected payments) during this preclusion period.
The legislation contains a discretion to disregard the whole or part of a compensation payment, and thus reduce or remove a compensation preclusion period, if it is considered appropriate to do so in the special circumstances of the case.
Where a person has previously been paid social security payments during their preclusion period, these payments are usually required to be recovered.
It follows that the issues for me to determine are:
(a)Is JHSJ subject to a preclusion period? And, if so,
(b)What is the duration of the preclusion period and when does the preclusion period begin and end? And
(c)Are there special circumstances in JHSJ’s case so that it is appropriate to treat the compensation payment, or part of it, as not having been made to reduce or remove the preclusion period? And
(d)Is JHSJ liable to repay the Commonwealth in relation to any of the compensation affected payments received by her?
CONSIDERATION
Issue 1: Is JHSJ subject to a preclusion period?
JHSJ does not dispute that she is subject to a preclusion period. Her position is that the preclusion period should commence from a different date than as determined by the Respondent. The Respondent’s position is also that JHSJ is subject to a preclusion period.
The issue of from when the preclusion period commences will be canvassed later in these Reasons. As to whether a preclusion period applies, subsection 1169(1) of the Act provides that if a person claims or receives a compensation affected payment (which includes newstart allowance and disability support pension) and has also received a lump sum compensation payment, then the compensation affected payment is not payable in relation to any days in the lump sum preclusion period.
Pursuant to subsection 17(2) of the Act, the meaning of compensation is wide and includes a payment of damages, a payment in settlement of a claim for damages or any other compensation or damages payment that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury.
The Compensation Advice of Lump Sum Payments form dated 15 November 2023 provided to the Respondent in relation to JHSJ’s compensation[2] includes that the settlement contains a component for economic loss (loss of wages). This is also acknowledged at paragraph 1.2 of the Release and Discharge dated 25 August 2023.[3] It follows that monies received by JHSJ are compensation as defined and JHSJ is subject to a preclusion period.
Issue 2: What is the duration of the preclusion period and when does the preclusion period begin and end?
[2] T-Documents, T44, pages 232 to 234.
[3] T-Documents, T39, page 220
Subsection 1170(4) of the Act provides that the number of weeks in the lump sum preclusion period in relation to a person is the number worked out using the formula:
Compensation part of lump sum
Income cut-out amount
Where the relevant payment is made in settlement of a claim in whole or part related to a disease, injury or condition, as is the case in relation to JHSJ’s claim, pursuant to paragraph 17(3)(a) of the Act, the compensation part of JHSJ’s lump sum compensation payment is 50% of the payment. Relevantly, subsection 17(4) of the Act provides as follows:
(4) Where a person:
(a) has received periodic compensation payments; and
(b)after receiving those payments, receive a lump sum compensation payment (in this subsection called the LSP); and
(c)because of receiving the LSP, becomes liable to repay an amount (in this subsection called the Repaid Periodic Compensation Payment – RPCP) equal to the period compensation payments received;
then, for the purposes of subsection (3), the amount of the lump sum compensation payment is;
LSP - RPCP
The income cut-out amount for the purposes of the formula in subsection 1170(4) of the Act is defined in subsections 17(1) and 17(8) of the Act. It is an indexed figure depending upon various social security rates from time to time, meaning that it changes over time. The income cut-out amount to be utilised is, pursuant to subsection 17(1) of the Act, that in force at the time the compensation was received. The applicable income cut-out amount as at the time JHSJ received the compensation was $1,166.
The Respondent submits that the number of weeks in the preclusion period is 282 weeks (rounded down) calculated as follows:
50% x ($740,000 (LSP) - $81,943.03 (RPCP)
$1,166
Before reaching a conclusion in relation to the duration of the preclusion period, I first considered the days upon which the preclusion period begins and ends.
The Respondent’s position is that the preclusion period begins on 23 June 2018, being the day after the periodic payments received by JHSJ ended and that the end date of the preclusion period is therefore, 282 weeks later, on 17 November 2023. JHSJ’s position is that although she initially received periodic compensation payments it was later determined that she was not entitled to those payments and that the preclusion period should therefore begin on a date earlier than 23 June 2018.
Subsections 1170(1) to (3) of the Act provide for the start and end date of the preclusion period, depending upon the circumstances, as follows:
1170 Lump sum preclusion period
(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).
As can be seen, the Respondent’s position is that the start day of the preclusion period is governed by subsection 1170(1) of the Act on the basis that JHSJ received both periodic compensation payments and a lump sum compensation payment, and the preclusion period therefore begins on the ‘day following the last day of the periodic payments period’ or the ‘day following the last day of the last periodic payments period’. On the contrary JHSJ’s position is that as it was determined that she was not entitled to the periodic payments, the preclusion period should begin from an earlier date.
At hearing, the Respondent’s representative acknowledged JHSJ’s position in relation to the periodic payments and that although JHSJ had originally received periodic WorkCover payments, it was later determined that she was not entitled to the periodic payments and that $81,943.03 was required to be repaid to WorkCover, with $54,438.07 of the $81,943.03 ultimately repaid. The Respondent’s representative noted that it would not be very often that someone had to repay periodic WorkCover payments on the basis determined was required by JHSJ, however JHSJ has been given the benefit of the full amount of $81,943.03 being deducted from the settlement sum before calculation of the preclusion period. It was submitted that JHSJ had the benefit of both the receipt of the periodic payments at the time as well as the benefit of the full amount of those payments (not just the repaid amount) being deducted from the settlement sum before the preclusion period was calculated. The Respondent’s representative further noted that in the Release and Discharge dated 25 August 2023, at paragraph 4.2, JHSJ agreed to repay any refund required to WorkCover, which is why the Respondent deducted the subsequently calculated amount of $81,943.03 from the settlement sum before calculating the preclusion period. JHSJ acknowledged that of the calculated $81,943.03 that she was required to refund to WorkCover she only ended up refunding $54,438.07 but said nevertheless even though she received periodic payments at the time, the fact that she had to repay them (or some of them) should be recognised and the start date of the preclusion period should not therefore be calculated on the basis that she received periodic payments until 22 June 2018.
It is not uncommon that a person is required to repay periodic compensation payments, usually as a usual consequence of the fact of subsequently receiving compensation requiring refund of the periodic payments (as is contemplated in subsection 17(4) of the Act). In JHSJ’s case, the repayment was required because of a decision that the payments were made in error. The documents before the AAT on first review included a copy of Reasons for decision of the Queensland Office of Industrial Relations of 13 June 2018 in reaching a conclusion that JHSJ was an independent contractor rather than a worker within the meaning of the relevant WorkCover legislation such that the periodic WorkCover payments were made to her in error. JHSJ’s solicitors confirmed that an agreement was reached between JHSJ and WorkCover that $54,438.07 would be accepted in full and final satisfaction of the $81,943.03 weekly benefits paid to JHSJ required to be repaid. JHSJ’s solicitors submitted to the Respondent, and upon first review, that as the WorkCover payments were held to be made in error, they should be ignored for the purposes of (Centrelink) calculations.
In considering whether I could ignore the periodic payments as having been received as submitted by JHSJ, I had regard to the wording of subsection 1170(1) of the Act. It applies if a person ‘receives both periodic compensation payments and a lump sum compensation payment’. Ms JHSJ, whether entitled to or not at the time, received periodic compensation payments. As regards calculating the lump sum compensation payment, the Repaid Periodic Compensation Payment can be deducted from the amount if subsection 17(4) of the Act applies. The Respondent has found that subsection 17(4) of the Act does apply and deducted the amount JHSJ was liable to refund (albeit that she ultimately repaid a lesser amount) from the lump sum compensation payment. In reaching this conclusion, the Respondent concluded that JHSJ became liable to repay the periodic payments because of receiving the lump sum compensation because paragraph 4.2 of the Release and Discharge.
The issue of the when the ‘lump sum preclusion period’ under section 1170 of the Act begins was considered by the Federal Court in Clark v Secretary, Department of Employment and Workplace Relations [2007] FCA 1076 (Clark). The Court held that the lump sum preclusion period begins on the day following the last day of a periodic payment period, even where the periodic compensation payments have been fully recovered by the insurer stating at [36]:
The fact that the periodic compensations payments have been repaid is already allowed for in the formulae stated in s 1170.
It was held that section 1170 of the Act ‘does not require that the individual retain and have the benefit of both periodic compensation payments and the lump sump payment, and the lump sum preclusion period does begin on the day following the last day of the periodic payments’.
The fact that the periodic compensations payments have been repaid is already allowed for in the formulae stated in s 1170.
Notably the wording of subsection 1170(1) of the Act is that the subsection applies when a person ‘receives’ both periodic compensation payments and a lump sum compensation payment. There is no reference to a person having to have received and also been entitled to the periodic compensation payments.
I agree with the approach adopted in Clark and find that the preclusion period begins on the day following the last day that JHSJ received periodic compensation payments, that is it begins on 23 June 2018.
The duration of the preclusion period is then calculated pursuant to the formula set out in paragraph 19 of these Reasons. Pursuant to subsection 7(4), the lump sum compensation payment part of the formula is calculated as being LSP – RPCP. It is not in dispute that the LSP is $740,000. As to the RPCP, although JHSJ only refunded $54,438.07 of the periodic payments, and it could be argued that only $54,438.07 should therefore be deducted from the LSP, she was liable to repay the whole amount and pursuant to subsection 17(4)(c) of the Act, the RPCP is the amount equal to the periodic compensation payments received not just the amount refunded. I note that this approach is consistent with the Respondent’s submissions and results in a more favourable calculation for JHSJ then if only the repaid amount was deducted from the compensation monies.
The duration of the preclusion period is therefore 282 weeks (rounded down) calculated as follows:
50% x ($740,000 (LSP) - $81,943.03 (RPCP)
$1,166
The preclusion therefore begins on 23 June 2018 and ends on 17 November 2023.
Issue 3: Are there special circumstances in JHSJ’s case so that it is appropriate to treat the compensation payment, or part of it, as not having been made to reduce or remove the preclusion period?
Pursuant to section 1184K of the Act, there is a discretion to disregard the whole or part of a compensation payment, and thus reduce or remove a compensation preclusion period, if it is considered appropriate to do so in the special circumstances of the case.
JHSJ’s position is that there are special circumstances in her case. Her evidence was that after repayment of various amounts, she only received two hundred and something thousand dollars in her hand and then she has had unexpected medical expenses and will have further substantial expenses in the future which far exceed what she received by way of compensation. JHSJ’s evidence was that she had no choice to settle her claim (for the amount that she did) but the money she settled it for is just not enough for what her future expenses will be. She said that she was told that if she did not settle, she would have to find another lawyer as her then lawyers were not prepared to take her matter to court. JHSJ referred me to various documentation in evidence including, for example, an estimate of costs from the [Name intentionally deleted by Tribunal] Clinic totalling $22,953 for inpatient treatment that she has been recommended to receive (Exhibit A10). JHSJ agreed that the conditions in relation to which this recommended treatment relates were conditions the subject of her compensation claim but said that her conditions had worsened. Further, she did not have the funds to have private inpatient treatment as was recommended by Dr HT [Full name intentionally deleted by Tribunal] in 2018. JHSJ also referred to a letter from Dr N [Full name intentionally deleted by Tribunal] (Exhibit A12) where he states that it would be beneficial for her to be admitted as an impatient.
JHSJ’s evidence, additionally, was that she had also incurred medical expenses that were not part of the compensation claim and were not previously contemplated. In particular, she required surgery and treatment for a cancer condition in January 2024, May 2024 and January 2025. She noted that the authorised review officer had recognised and allowed an expense of $11,050 in that regard but the cost of that treatment was actually around $$29,000. The cost in February 2024 was more than $11,050 and she has incurred further expenses since. JHSJ’s evidence was that in relation to the January 2024 surgery, she paid a deposit of $7,400 to the surgeon and then a further $11,050,[4] the hospital charge of $6,146.10[5] and the cost of the anaesthetist of $3,600.[6] JHSJ sought to have her doctor’s office email her a document clarifying all the costs of the surgery in January 2024, including, in particular in response to my query as to whether the $7,400 payment was a deposit and additional to the $11,050 (for which a receipt is in evidence). Ultimately JHSJ was not able to obtain any documentation additional to that already before the Tribunal and agreed with my calculation of the total costs of the January 2024 procedure as being $20,796.10 ($11,050 + $6,146.10 + $3,600).
[4] T-Documents, T55, page 286.
[5] T-Documents, T55, page 286.
[6] T-Documents, T55, page 287.
JHSJ’s further evidence was that she then paid another $1,197 for surgery in May 2024 (as corroborated by a transfer from her account to the surgery on 2 May 2024 – Exhibit A16) and another $3,000 for surgery (and pathology costs) in January 2025 in relation to the same cancer condition. In response to questioning from the Respondent’s representative, JHSJ said that she had originally anticipated the further breast surgery/cancer removal surgery in January 2025 to cost $5,500 (as communicated to the Respondent in her email of 24 December 2024, Exhibit 14), however her surgeon agreed to pay the anaesthetist’s costs for her and the total expense was therefore less than she expected. JHSJ also said that she had about $13,000 to $15,000 in dental expenses from dental issues that arose following her first surgery. Further, her previously diagnosed condition of diverticulitis has now progressed and been diagnosed as irritable bowel syndrome and Crohn’s disease, which will also require treatment.
The Respondent’s representative relied upon the written submissions in the 28 February 2025 Statement of Facts and Contentions in relation to special circumstances, and further, by way of oral submissions, said that the Respondent’s position is that JHSJ’s expenses for treating the cancer condition, although a condition for which JHSJ was not compensated as part of the compensation payment, are not of a nature that are very different to a multitude of health conditions impacting other disability support pension recipients. The Respondent’s representative recognised that the authorised review officer had taken into account the unanticipated costs of $11,050 for the January 2024 surgery but submitted that a further finding of special circumstances would be contrary to Parliament’s intention to not provide additional windfalls to a person to be paid for by taxpayers. It was noted further in this regard that this submission was made in circumstances where JHSJ is in continuing receipt of disability support pension and still has approximately $131,000 remaining from the compensation monies such that it could not be suggested the applicant was in financial hardship. It was submitted that JHSJ has the financial means to cover her necessary medical treatment, including her preferred method of treatment. The Respondent’s representative acknowledged JHSJ’s concerns for her future but submitted that compensation is not intended to provide a fund for the remainder of her life and that she remains in receipt of disability support pension by way of income support.
“Special circumstances”, as required for the application of section 1184K of the Act, is not defined in the Act. However, the term has been extensively considered by Courts and Tribunals. The views of the then AAT in Re Ivovic and Director-General of Social Services (1981) 3 ALN N95 relating to special circumstances were quoted with approval by the Federal Court in Secretary, Department of Social Security v Hulls (1991) AAR 414. Here it was said that the word “special” is intended to allow a decision maker the fullest opportunity to consider the particular circumstances of each case. However, it was said that the exercise of the discretion should not frustrate the aims of the compensation provisions.
As submitted by the Respondent, Topic 4.13.4.10 of the Guide recognises a range of circumstances in which special circumstances would not usually be applied. This includes circumstances in which the person has sufficient liquid assets to support themselves during the preclusion period. The Guide, at Topic 4.13.4.20 further provides guidance as to the types of factors that might be taken into account when considering whether the discretion should be exercised. It is noted that there is usually not one factor which makes a situation unusual, unforeseen or exception, but a combination of factors applying to an individual. It goes on to suggest that major ill health that has a major bearing on an individual circumstances with unforeseen and unexpected medical expenses might be considered such a circumstances but that the state of ill health should be more severe than the majority of disability support recipients and that injury that a person received compensation for cannot generally be regarded as a special circumstance.
Consistent with the Guide, Courts and Tribunals have previously recognised that an injury in relation to which a person has received compensation cannot generally be regarded as a special circumstance, that is additional expenses related to such injuries would not usually form the basis of a special circumstance finding. Submissions were made by the Respondent’s representative including that JHSJ’s choice to have inpatient treatment for her previously compensated injuries was a matter of personal choice and not a cost that should form the basis of the exercise of the special circumstances discretion. Ultimately, it is a matter for JHSJ what treatment she chooses to undertake. Whether that be private inpatient treatment, as recommended by a number of her doctors or other treatment is a matter for her. Either way, I do not consider the expense of treatment of JHSJ’s conditions the subject of her compensation claim, of whatever magnitude, are the basis for a finding of special circumstances. These are conditions for which she has already been compensated, whether or not she agrees that she was justly and properly compensated.
As regards JHSJ’s other medical conditions, I accept as submitted by the Respondent, that many disability support pension recipients are impacted by a multitude of medical conditions requiring treatment and associated cost. This is certainly the case for JHSJ where she has been and continues to be impacted by conditions other than for which she was compensated, including but not limited to the cancer condition, associated dental treatment and now becoming apparent bowel issues. The authorised review officer has recognised and acknowledged $11,050 costs associated with unanticipated costs for the cancer condition in January 2024. I am satisfied based on the evidence that the actual out-of-pocket cost for JHSJ in relation to that condition has been at least $20,796.10 (January 2024 surgery), $1,197 (May 2024 surgery) and $3,000 (January 2025 surgery).
it could not be found that JHSJ is in financial hardship (given her still remaining funds of $130,000 and continuing disability support pension). However, a person does not have to be in financial hardship in order to exercise the special circumstances discretion as was recognised in Executor of the Estate of the late Seth Taulaga and Secretary Department of Social Services (Social services second review) [2019] AATA 5408 at [86] where it was stated that ‘straightened financial circumstances are not a prerequisite to a finding that special circumstances exist’. The Tribunal found in that case that the death of a child, followed by the death of the relevant person’s husband, medical conditions of their son and their grandfather’s death together made the circumstances unusual and exercised the discretion to reduce the compensation preclusion period.
I note the authorised review officer’s previous recognition of the unforeseen skin/cancer condition impacting JHSJ as amounting to a special circumstance such that it was considered appropriate to reduce the preclusion period in line with the cost of treating that unforeseen skin cancer condition, notwithstanding her financial position. Although still retaining approximately $130,000, JHSH’s finances have reduced further since that time and I have found that the actual cost of that treatment has been at least $24,993.10. Not all unforeseen and unanticipated future costs can be taken into account. As submitted on behalf of the Respondent, it is not unusual that other medical conditions may arise and may require treatment and associated costs. I am conscious that JHSJ is not in financial hardship and still retains not insignificant liquid assets. I also recognise that compensation is not intended to be a nest egg for the future nor act as a windfall (Watsemawa and Secretary, Department of Education, Employment and Workplace Relations [2010] AAT 1028). Nonetheless, having taken all matters into consideration I am satisfied that there are special circumstances within the meaning of section 1184K of the Act that justify a proportion of the compensation monies equivalent to the cost I have found of treating JHSJ’s cancer condition, a condition which arose unexpectedly and very shortly after settlement of the compensation claim and which has been a very significant condition requiring significant treatment, be disregarded. Recognising the cost I have found of treating this condition will result in a recalculation of the duration of the preclusion period as 271 weeks (rounded down) calculated as follows:
50% x ($740,000 - $81,943.03 - $24,993.10)
$1,166
This results in a preclusion period which begins on 23 June 2018 and ends on 1 September 2023.
I note that the authorised review officer’s calculation of an amended compensation preclusion period duration of 273 weeks, based upon deducting $11,050 spent on treatment for the skin cancer condition as unforeseen expenditure, seems to have been incorrectly in JHSH’s favour. On my calculations allowing a deduction of $11,050 only should have resulted in a calculation of 277 weeks that is 50% x ($740,000 - $81,943.03 - $11,050)/ $1,166. Accordingly, even though I have allowed recognition of significantly more expense related to the skin cancer condition, the difference in the preclusion period (and resulting refund – see paragraph 52 of my Reasons) is not as much as might be expected compared to the authorised review officer’s decision.
Issue 4: Is JHSJ liable to repay the Commonwealth in relation to any of the compensation affected payments received by her?
Pursuant to sections 1178 and 1179 of the Act, whether a person has received a lump sum compensation payment and received payment of a compensation affected payment (which includes newstart allowance and disability support pension) in relation to a day in the preclusion period, it may be determined that they are liable to pay the Commonwealth the corresponding amount.
Subsection 1184(3) of the Act provides for a recovery notice to be sent to a compensation payer or insurer for the recovery of compensation affected payments paid to a person in the periodic payment period. That occurred in JHSJ’s case.
I have determined that a different preclusion period applies, from 23 June 2018 to 1 September 2023. JHSJ received compensation affected payments (newstart allowance from 6 July 2018 and disability support pension from 10 October 2018) during part of that period. The Respondent has previously calculated a corresponding compensation charge based on its calculation of the preclusion period, amended further upon the decision of the authorised review officer. A recalculation of the amount of compensation affected payments received by JHSJ is required, being the amount received during the preclusion period I have found applies. JHSJ is liable to pay that recalculated amount to the Commonwealth. As the recalculated amount is likely to be less than has already been paid on JHSJ’s behalf by the compensation insurer, a refund will likely be payable to JHSJ.
Conclusion
Given my findings, the decision under review will be set aside and the matter remitted to the Respondent with orders that the compensation period begins on 23 June 2018 and ends of 1 September 2023 and any excess charge paid by or behalf of JHSJ is to be refunded to her.
DECISION
The Tribunal sets aside the decision under review and remits the matter for reconsideration in accordance with the orders that:
JHSJ is subject to a compensation preclusion period which begins on 23 June 2018 and ends on 1 September 2023; and
any excess compensation charge paid by on or behalf of JHSJ arising from the difference between the previous compensation preclusion period utilised and the compensation preclusion period found by the Tribunal is to be refunded to JHSJ.
Date of hearing: 3 April 2025 Applicant: Self-represented Solicitor for the Respondent: Ms M Kopic
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