Johansen and Secretary, Department of Education, Employment and Workplace Relations

[2008] AATA 941

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 941

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2008/2741

GENERAL ADMINISTRATIVE DIVISION		)
Re		CAROL JOHANSEN

Applicant

And SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Dr M Denovan, Member

Date22 October 2008

PlaceBrisbane

Decision The Tribunal affirms the decision under review.

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

Member

CATCHWORDS

SOCIAL SECURITY – Compensation Recovery – compensation affected payment – preclusion period – no special circumstances – decision under review affirmed.

Social Security Act 1991 (Cth) s 1184K

Dranichnikov v Centrelink (2003) 75 ALD 134

Re Beadle and Director-General of Social Security (1984) 6 ALD 1

Re Colaiacolo and Secretary to Department of Social Security [1985] AATA 91 (24 April 1985)

Groth v Secretary Department of Social Security (1995) 40 ALD 541

Re Zaccardi and the Secretary, Department of Social Security (1995) 40 ALD 760

Haidar v Secretary, Department of Social Security (1998) 52 ALD 255

REASONS FOR DECISION

22 October 2008 Dr M Denovan, Member    

INTRODUCTION

1.      As a result of a motor vehicle accident Ms Johansen sustained injuries. When Ms Johansen received a compensation payment for those injuries Centrelink raised a debt for compensation affected payments.

BACKGROUND

2.      On 12 October 2006 Ms Johansen sustained personal injuries in a motor vehicle accident.  On 21 December 2007, she settled that claim for $44,000[1].

[1] Exhibit 1: T8,folio 48.

3. In a decision dated 23 January 2008 Centrelink decided to recover the amount of $6,385.66 on the basis of the preclusion period calculated in accordance with Part 3.14 of the Social Security Act 1991 (‘the Act’).

4.      Ms Johansen was dissatisfied with that decision and on 9 February 2008 the applicant requested a review of the lump sum preclusion period[2]. Centrelink reconsidered the decision and concluded that the decision was correct and should not be changed[3].

[2] Exhibit 1: T11, folio 62.

[3] Exhibit 1: T12, folio 77.

5.      On 25 February 2008, an Authorised Review Officer affirmed Centrelink’s decision[4].

[4] Exhibit 1: T13, folio 80.

6.      Ms Johansen appealed to the Social Security Appeals Tribunal (SSAT)[5].  The SSAT affirmed the decision on 19 May 2008[6].

[5] Exhibit 1: T14, folio 88.

[6] Exhibit 1: T2, folio 3.

7.      On 26 May 2008 the SSAT affirmed Centrelink’s decision[7].

[7] Exhibit 1: T2, folios 9-15.

8.      The application for review of the decision by the Administrative Appeals Tribunal (AAT) was lodged on 5 June 2008[8].

[8] Exhibit 1: T1, folio 2.

ISSUES FOR DETERMINATION AND RELEVANT LEGISLATION

9.      The relevant legislation is contained in the Social Security Act 1991. A formula is provided to calculate the amount a person may have to repay, if any, when they receive a compensation payment.

10.     The secretary may disregard some compensation payments in special circumstances[9].

[9] Social Security Act 1991 (Cth) s 1184K

11.     It is not in dispute that, as a result of receiving a lump sum compensation payment, a recoverable debt arises in the sum of $6385.66, as a result of newstart payment received by Ms Johansen. I have to decide whether there are special circumstances, which would allow some or all of the compensation payments to be disregarded.

APPLICANT’S CASE

12.     Ms Johansen told the Tribunal that she was aware there would be a Centrelink debt due when she received a compensation payment, Centrelink had provided her with estimates, however they could not give her a precise amount until the amount of her compensation settlement was finalised.

13.     Ms Johansen was shocked when she received her lawyers account for $20 000. She had been given an estimate of $6000 - $13000, and had not been given any cost updates, even though she had asked. Ms Johansen approached the Legal Services Commission and was told that an obligation to give progress accounts was introduced in 2007, soon after her matter had finished. There was nothing she could do to recover from her lawyers what she considered was unfair charges.

14.     Ms Johansen had accumulated considerable debt prior to her car accident, and she used approximately $8000 of her compensation settlement to pay this. She used part of her settlement money to repay money that she had borrowed from her children, she estimated this amount to be $4000.

15.     Ms Johansen has limited possessions. Most of her furniture and household items were destroyed when she left them in the care of a friend. She was living with her son, his partner, her daughter and grandchild in a two bedroom flat for some time, and then moved into rental accommodation with her daughter and granddaughter. This arrangement is no longer suitable as her daughter has re-partnered and is pregnant and requires separate accommodation. Ms Johansen raised the need to re-establish herself in independent accommodation and the fact that she has practically no assets and limited income, as a reason why her circumstances should be regarded as special.

16.     In her case for special circumstances, Ms Johansen also referred to the fact that she has and continues to suffer poor health, and the fact that she finds it very stressful to live with her daughter.

FINDINGS OF TRIBUNAL

Are there special circumstances, which allow all, or part of the compensation to be treated as though it has not been made?

17.     Whilst special circumstances are not defined in the Social Security (Administration)Act 1999, the approach to be taken in interpretation and application of the discretionary provisions have been dealt with by the Tribunal and the Federal Court in numerous circumstances.

18.     In Re Beadle and Director-General of Social Security[10] it was said,

“The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon 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”.

[10] (1984) 6 ALD 1 at 3.

19.     In Dranichnikov v Centrelink[11] the Full Federal Court when considering the meaning of special circumstances observed:

“….what is required will be circumstances which distinguish the case in consideration from the usual case. There will be a requirement that the circumstances are such that takes the case out of the ordinary…”

[11] (2003) 75 ALD 134.

20.     Financial hardship has been considered as a possible component of special circumstances in a number of decisions. It is well established that by itself, hardship is not enough[12], and that financial circumstances must be more than straitened, they must be exceptional[13].

[12] Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 4.

[13] Re Colaiacolo and Secretary to Department of Social Security [1985] AATA 91 (24 April 1985); Groth v Secretary Department of Social Security (1995) 40 ALD 541; Re Zaccardi and the Secretary, Department of Social Security (1995) 40 ALD 760.

21.     It is also important to consider what circumstances are relevant when considering whether there are special circumstances. Whilst the discretion is not limited solely by reference to the person’s circumstances within the preclusion period, events after the exclusion period can only be taken into consideration and are usually not relevant[14]. 

[14] Haidar v Secretary, Department of Social Security (1998) 52 ALD 255.

22.     Ms Johansen’s financial situation is certainly difficult. As the result of her legal bills, plus her repaying loans and debts acquired prior to her injury, Ms Johansen was left with very little of her compensation payment. Ms Johansen’s total combined debt was not however exceptional or unusual in either amount or nature. A considerable percent of people, at the time they receive a compensation payment, have a debt acquired from circumstances that occurred prior to the compensation payment. That Ms Johansen chose to repay her debts with her compensation payment was her personal decision. Were it not for the compensation payment it is likely that Ms Johansen would still be liable for a large percent of the debt that she has now repaid, as the amount she was earning whilst cleaning would have allowed only small repayments, if any, to be made towards her cumulated debt.

23.      Ms Johansen’s legal expenses, though higher than she anticipated are not exceptional for these types of matters.

24.     That Ms Johansen lost all of her furniture and household possessions is unfortunate however it is not in itself a circumstance that elevates her situation to one of special circumstances in my opinion. Prior to her injury Ms Johansen had been living in a boarding house and then in shared accommodation with some of her children. Her possessions were being stored because she had no immediate use for them and no capacity to store them. That her circumstances have changed recently resulting in the possibility that she is unable to continue being with her daughter, so she will, by necessity have to supply her own household furniture and other items, is due to circumstances that occurred after the exclusion period and are not relevant to special circumstances.

25.     In summary, Ms Johansen’s financial circumstances are not out of the ordinary or exceptional when compared to the average person who is in receipt of social security payments. Ms Johansen herself admitted as such, when she said in her submissions that she is aware that there are many people in ‘special’ circumstances at the moment, who are, like herself, struggling to make ends meet.

26.     Ms Johansen’s health problems currently prevent her from working, however she is capable of self care and independent living. She is able to drive.  Her situation is not unusual or exceptional for a person who has received a compensation payment and is in receipt of Disability Support Pension (DSP).

27.     The intention of the Compensation provisions is that those who receive a lump sum compensation payment are expected to support themselves from their own resources for a period before seeking support from the taxpayer. The question of whether there were special circumstances must be asked with this in mind.  

28. The application of s 1184K in these circumstances would be inappropriate as it would frustrate the purpose of the legislation.

29.     For these reasons I consider that there is no reason of injustice or unfairness in Ms Johansen serving the compensation preclusion period and it is therefore not appropriate that any of the lump sum compensation payment received by her be disregarded.

CONCLUSIONS

30.     The decision to recover compensation affected payments totalling $6385.66 for the period 12 October 2006 to 2 May 2007 was correct, and no special circumstances exist that could justify some or all of the repayments being disregarded.

FINDINGS OF THE TRIBUNAL

31.     I affirm the decision under review.

I certify that the 31 preceding paragraphs are a true copy of the reasons for the decision herein of Dr M Denovan, Member

Signed: ........................[Sgd].....................................................
  Elizabeth Young, Research Associate

Date/s of Hearing  7 October 2008
Date of Decision  22 October 2008
For the Applicant  the Applicant was self represented
For the Respondent                 Ms R Knight, departmental advocate