Kamalanathan Subramani and Secretary, Department of Social Services

[2013] AATA 953

[2013] AATA 953

Division	GENERAL ADMINISTRATIVE DIVISION
File Number	2012/3906
Re	Kamalanathan Subramani
APPLICANT
And	Secretary, Department of Social Services
RESPONDENT

DECISION

Tribunal	Regina Perton, Member
Date	12 September 2013
Date of written reasons	10 January 2014
Place	Melbourne

For the reasons given orally at the conclusion of the hearing of this matter, the Tribunal varies the decision of the Social Security Appeals Tribunal and remits the decision for reconsideration by the Secretary with the direction that the payment of $59,600 be excluded from the calculation of Mr Subramani’s compensation preclusion period.

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Regina Perton, Member

SOCIAL SECURITY – lump sum compensation - compensation preclusion period – whether special circumstances

Social Security Act 1991 ss 17, 1184K

Ryde v Secretary, Department of Family and Community Services [2005] FCA 866

REASONS FOR DECISION

Regina Perton, Member

10 January 2014

1. The Tribunal provided oral reasons for its decision at a hearing of this application on 12 September 2013.  The applicant subsequently requested written reasons for decision.  The reasons for the Tribunal's decision are set out below.

2. Kamalanathan Subramani was injured in a workplace accident on 5 October 2004.  He still suffers from the effects of the injuries.

3. Mr Subramani received lump sum compensation of $17,880 on 7 July 2009 and continued on periodic payments until 9 September 2011.

4. On 6 January 2012 Mr Subramani lodged a claim for disability support pension with Centrelink.

5. On 16 January 2012 Mr Subramani signed a release for $240,000 which represented both pecuniary loss and pain and suffering damages.  Mr Subramani’s lawyers’ legal fees were deducted from the amount Mr Subramani received.

6. On 24 January 2012 Centrelink notified Mr Subramani of the imposition of a preclusion period from 10 September 2011 until 5 September 2014. 

7. On 14 February 2012 a job capacity assessor assigned a total impairment rating of 20 points which was the level at which a person would qualify for DSP provided that he met other criteria.  However, on 16 March 2012, the claim for DSP was rejected due to the preclusion period that arose from the lump sum compensation claim. 

8. There is provision in social security legislation to allow for all or part of the preclusion period to be waived due to special circumstances.  Mr Subramani submitted that his preclusion period should be waived on a number of grounds including a marital breakdown which resulted in an unexpected payout as well as excessive legal fees. 

9. Mr Subramani sought review from an authorised review officer (ARO) of Centrelink.  The ARO took into account the costs incurred by Mr Subramani in settling a matrimonial dispute.  The ARO varied the original decision by substituting 20 December 2013 as the end of the preclusion period.  The ARO considered that Mr Subramani’s funds had been depleted by $60,870 due to circumstances beyond his control and that such an amount should be excluded from the calculation of the preclusion period. 

10. Mr Subramani sought review of the ARO’s decision at the Social Security Appeals Tribunal (SSAT) which also shortened the preclusion period but to a lesser extent than the ARO.  The SSAT determined that $40,225 should be excluded from the calculation of Mr Subramani’s compensation preclusion period.  This resulted in the preclusion period expiry date being recalculated as 21 March 2014. 

11. Mr Subramani lodged an application for review of the SSAT decision with this Tribunal on 6 September 2012.  On 12 September 2013 the Tribunal gave an oral decision determining that $59,600 be excluded from the calculation of Mr Subramani’s preclusion period. 

    RELEVANT LAW

12. Section 17(1) of the Social Security Act 1991 (the Act) provides that compensation affected payments includes DSP and special benefit.  Section 17(2) of the Act provides:

    Subject to subsection (2B), for the purposes of this Act, compensation means:

    (a)       a payment of damages; or

    (b)       a payment under a scheme of insurance or compensation under a Commonwealth, State or Territory law, including a payment under a contract entered into under such a scheme; or

    (c)       a payment (with or without admission of liability) in settlement of a claim for damages or a claim under such an insurance scheme; or

    (d)       any other compensation or damages payment;

    (whether the payment is in the form of a lump sum or in the form of a series of periodic payments and whether it is made within or outside Australia) that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury.

13. Under s 17(3) of the Act, 50 per cent of a lump sum settlement payment is held to be the compensation part of the payment.  Section 17(4) sets out the methods of calculation where there is more than one compensation payment that incorporates repayment of periodic compensation payments already received.  The Tribunal is satisfied that the calculations are correct and have taken into account the relevant legislative provisions. 

14. Section 1184K(1) of the Act gives the decision maker discretion to treat the whole or part of a compensation payment as not having been made or not liable to be made, if the decision maker thinks it is appropriate to do so in the special circumstances of the case.

15. For the Tribunal to use the discretion provided in s 1184K it must be satisfied that there is something to make the case stand out from the usual or the ordinary.  The term special circumstances is not defined in the legislation.  However, many court cases have discussed the term. In those cases, it has generally been defined as requiring a departure from the norm.  In Ryde v Secretary, Department of Family and Community Services [2005] FCA 866 Branson J stated (at paragraph 26) that the circumstances of a particular case must give rise to hardship or unfairness sufficient to justify departure from the general rule.

16. The existence of special circumstances needs to be considered on a case-by-case basis.  In considering this concept, the Tribunal must maintain a balance between the circumstances and difficulties of the individual involved and the purpose of the legislation, which is to prevent people being paid by two sources for the same period.

    TRANSCRIPT OF ORAL DECISION

17. Reproduced below is the transcript of the oral decision delivered on 12 September 2013:

    MEMBER:   I’ve now considered what I’m going to do and if you bear with me, both of you, I’m going to talk about the decision, then come up with my decision and then that will be the decision of the tribunal, all right?

    MR SUBRAMANI:   Yes.

    MEMBER:   Now as we know, you had injuries, Mr Subramani, and as a result of that you were on payments for a while and then eventually there was a settlement of the matter and you applied for Disability Support Pension and you were advised, they actually did a points assessment, which was unusual, and then they decided that because you had a preclusion period you weren’t entitled to receive any pension.  There’d been advice to you through your solicitors that there was a preclusion period and that while that preclusion period was in place that you would be not entitled to any social security benefits, okay.  So initially the decision by the department was that there was a preclusion period.  The authorised review officer looked at it and decided that the property settlement to your wife, the payment to your ex-wife and some of the legal fees should shorten the preclusion period on the basis of special circumstances. 

    You then went to the Social Security Appeals Tribunal which found a lesser amount should be taken off and now you’ve come to us, we’ve had a hearing and we had a further hearing today to try and clarify some of the figures which I think, now, is a lot clearer.  Ms Heffernan on behalf of the agency has put arguments as to why, first of all, they’re quite generously agreeing that there should be a shortening of the preclusion period but also putting up arguments as to why some of the legal fees should be allowed and some not.  So we know that you have paid, you’ve been a gold mine, really, Mr Subramani for the legal profession.  Unfortunately, you’ve spent a significant amount of your settlement on legal fees which, you know, I’m sure you wish you hadn’t have but it was due to the circumstances that arose. 

    Now the decision I really have to look at is whether there are grounds to waive part or all of this preclusion period that you’ve been subject to.  Now I’ve had a look at it a few times and I think that the original calculation of dates based on the amount that’s allowed per week and based on half the compensation award being taken into account appeared to me to be correct as to what the original preclusion period is and that was from the September through to September next year. 

    All right, so section 17 of the Social Security Act says that:

    “compensation affected payments” include DSP and section 17 (2) of the Act tells us what “compensation” is and certainly it’s usually something that’s given wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury.

    So under section 17 (3) of the Act, 50%  of a lump sum settlement “payment” is held to be the “compensation” part of the payment, that’s standard for all people in compensation, Mr Subramani. 

    Section 17 (4) sets out the methods of calculation where there’s more than one “compensation” “payment” and I’m satisfied that the calculations are correct and have taken into account the relevant law. 

    There’s a section of the Social Security Act, section 1184K of the Act which gives a decision maker discretion to treat the whole or part of a compensation payment as:

    (a)  not having been made; or

    (b)  not liable to be made;

    if the [decision maker] thinks it is appropriate to do so in the special circumstances of the case.

    For the tribunal to use the discretion provided in section 1184K it must be satisfied there is something to make the case stand out from the usual or the ordinary.  The term “special circumstances” is not defined in the law but there’s been heaps and heaps of court cases which have discussed the term.  In those cases it’s generally been defined as requiring a departure from the norm.  In Ryde v Secretary, Department of Family and Community Services, Justice Branson, Judge Branson stated that the circumstances of a particular case must give rise to hardship or unfairness sufficient to justify departure from the general rule. 

    The existence of special circumstances needs to be considered on a case by case basis.  In considering this concept, the tribunal must maintain a balance between the circumstances and difficulties of the individual involved and the purpose of the legislation which is to prevent people being paid by two sources from the same period, so in other words, the idea is that when an award like this is meant, it’s meant to cover you and the notion is that you don’t get paid both by the insurer and by the Commonwealth, which is the taxpayer, for the same period of time. 

    Some of the moneys that you’ve spent have been moneys you needed to pay out during this period, some not.  I accept that you’ve got medical problems that are going to be ongoing which you’re going to continue to face for the foreseeable future and I know that you believe that you weren’t really compensated sufficiently in the settlement that was negotiated by your solicitors.  So in terms of having a medical condition and a serious one, anyone who receives a compensation award like this, they don’t give them out willy-nilly, it means that they have significant medical issues.

    The Department, through Mr Noonan and also the original authorised review officer and the SSAT all felt that your situation was such that the family law breakdown and the family breakdown and also some of the legal fees that resulted should shorten the period by, in effect, more than eight months in the Department’s case.  I’ve had a look at this again and I’ve also considered the argument that Ms Heffernan put up about the ongoing children’s issues which I note are ongoing and I agree with the department that the legal fees incurred in relation to the children, we don’t have enough evidence as to why they were initiated, why it couldn’t be dealt with through a family mediation service, we’ve got no evidence as to what you raised, what transgressions or what breaches your wife committed, what breaches you did, and I think in the circumstances it’s not appropriate for me to shorten the preclusion period because of the children’s issues. 

    So the tribunal, accepts the recommendation of the respondent, of the department that the preclusion period be shortened to reflect the $22,500 in marital settlement and the associated legal fees of $35,000 which the secretary calculated would bring an end to the preclusion period on 3 January 2014.  Furthermore, that I am also adding the amount expended on legal fees for lodgement of a complaint made to the Legal Services Commission which I believe arose directly out of the marital property settlement and appear to have been taken at the suggestion of the magistrate, I accept your evidence on that, Mr Subramani, and that’s an additional $2100. 

    I can understand why you want the other legal fees but the children’s matter is not resolved and I think that the department in suggesting that you had the other legal fees been taken into account has been, shall I say, a lot more generous than it quite often is in these cases.  So I’m going to accept the recommendation of the respondent, of the department that the $22,500 and the $35,000 be taken into account.  I’m going to add another $2100, being the Legal Services Commission fees which arose directly out of, in my view, the property settlement and the irregularities that there appear to have been.  I accept that it’s an unusual circumstance, it’s perhaps a special circumstance, as to the Legal Services Commission, so I am varying the decision of the Social Security Appeals Tribunal and remitting the decision for reconsideration by the secretary with the direction that the payment of $59,600 be excluded from the calculation of Mr Subramani’s compensation preclusion period.  Now that’s going to bring it back into some time in December, I can’t say to you the exact date because it will need to be calculated, but it virtually gets you to approximately the same place you were with the authorised review officer. 

    It’s sad that we’ve had to go through all this routine but I feel while I have great sympathy for your situation, Mr Subramani, I think in terms of the preclusion period, the children’s issues arising up subsequently to family law is not, again, such an unusual situation and I think the department has been much more lenient than it quite often is in these sorts of cases, just to tell you that.  Usually there’s an argument in, quite often in circumstances such as this that there shouldn’t be any shortening of the preclusion period.  So it’s been a lot of angst, a lot of stress to I guess the same outcome, roughly, as the authorised review officer but I can’t change that. 

    Originally when I looked at this I thought that it was a little too generous but I’ve changed my mind and I think I’m prepared to find special circumstances and that’s my reasoning in this matter, that your preclusion period will finish towards late December, maybe mid-December 2013, but you are going to have to reapply for Disability Support Pension again, your original application won’t stand.  It may be that you may be found eligible, you may not find.  It’s quite a difficult test to get Disability Support Pension and unfortunately you’re going to have to go through that routine and meet all the criteria.  On the other hand, if you don’t meet that it’s quite possible that you might meet Newstart provisions which is a possibility as well. 

    So I wish you well.  I’ll be sending out a decision that says that the tribunal varies the decision of the SSAT and remitting it with the payment of $59,600 which is the $22,500 that the Secretary said, the $35,000 plus the extra $2100 which brings it to the $59,600.  So that’s a considerable shortening of your preclusion period, I’m sure it’s not what you wanted but it’s better than a lot of people end up with.  So best of luck, Mr Subramani…

    DECISION

    18.       For the reasons given orally at the conclusion of the hearing of this matter, the Tribunal varies the decision of the Social Security Appeals Tribunal and remits the decision for reconsideration by the Secretary with the direction that the payment of $59,600 be excluded from the calculation of Mr Subramani’s compensation preclusion period.

I certify that the preceding  18 (eighteen) paragraphs are a true copy of the reasons for the decision  of Regina Perton, Member

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Assistant

Dated 10 January 2014

Dates of hearing	24 July & 12 September 2013
Applicant	In person
Advocate for the Respondent	Ms P Heffernan
Solicitors for the Respondent	Department of Human Services, Program Litigation and Review Branch