King and Secretary, Department of Social Services (Social services second review)

The Administrative Appeals Tribunal considered a dispute between Mr. King and the Secretary of the Department of Social Services concerning the calculation of a preclusion period for a disability support pension. Mr. King had received a lump sum compensation payment, and the Secretary had determined that a portion of this payment was subject to a preclusion period, meaning it would affect his eligibility for the pension. The core of the dispute revolved around whether certain costs incurred by Mr. King, specifically legal costs and medical expenses, should be deducted from the compensation lump sum before calculating the preclusion period.

The Tribunal was required to determine two primary legal issues. Firstly, it had to ascertain whether legal costs incurred by Mr. King in obtaining the compensation settlement constituted a component of the compensation payment itself for the purposes of the social security legislation. Secondly, the Tribunal needed to decide whether medical costs similarly formed part of the compensation amount that could be offset against the pension entitlement. The Tribunal also considered whether the Secretary had properly exercised any discretion available to them in making the initial determination.

In its reasoning, the Tribunal applied the principles of the *Social Security Act 1991* (Cth) concerning compensation payments and preclusion periods. It found that the legislation did not permit the deduction of legal costs from the assessable compensation amount for the purpose of calculating the preclusion period. Similarly, medical expenses were not to be deducted in this manner. The Tribunal concluded that the Secretary had correctly applied the relevant provisions of the Act, including the 50% rule, in determining the preclusion period and the amount to be recovered from Mr. King's lump sum payment. Consequently, the Tribunal affirmed the Secretary's decision.