Lawless and Department of Family and Community Services - [2002] AATA 536

DECISION AND REASONS FOR DECISION [2002] AATA 536

ADMINISTRATIVE APPEALS TRIBUNAL )

) No T2001/107

GENERAL ADMINISTRATIVE DIVISION       )
           Re      MARGARET LAWLESS
  Applicant
           And    SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
  Respondent

DECISION

Tribunal Ms A F Cunningham (Part-time Member)

Date2 July 2002
PlaceHobart

Decision The decision under review is set aside and in substitution therefor a decision that: (i) pursuant to s1184(1) of the Social Security Act 1991 the amount of $52,890 should be treated as not having been made or not liable to be made; and (ii) that the application be remitted to the respondent for assessment in accordance with this decision.

[Sgd A F Cunningham]
Part-Time Member
CATCHWORDS
Social Security – receipt of lump sum compensation – preclusion period – discretion to treat or whole or part of the compensation payment as not having been made – "special circumstances".
Social Security Act 1991 – s1184(1)
Secretary, Department of Social Security v Ellis (1997) 46 ALD 7
Stewart and Secretary, Department of Family and Community Services SSR, Volume 3, No 11, October 1999
Re Beadle and Director-General of Social Security (1984) 6 ALD 1

REASONS FOR DECISION

2 July 2002 Ms A F Cunningham (Part-time Member)
Issues

This is an application to review a decision by a delegate of the respondent made on 25 January 2001 to recover a debt of disability support pension in the sum of $9,135.59 in respect of payments paid to the applicant during a compensation preclusion period between 9 March 1995 and 8 May 1996. The decision was subsequently affirmed by the Social Security Appeals Tribunal (SSAT) on 14 June 2001.
The applicant was represented initially by Mr Robert Hamilton and subsequently by Mr Brian Sparkes of the Hobart Community Legal Service. The respondent was represented by Mr T Baker.
The applicant attended the hearing and gave oral evidence. Oral evidence was also given in support of the applicant's case by the applicant's husband, John Lindsay Lawless. Ms Lorraine Brcic gave evidence on behalf of the respondent. The T documents were tendered pursuant to s37 of the Administrative Appeals Tribunal Act 1975. Other documents were tendered in evidence during the hearing.
Whilst it was not contended on behalf of the applicant that the debt of $9,135.59 had not been properly raised in accordance with the relevant legislation, it was argued that the "special circumstances" of the case justified the exercise of a discretion to disregard all or part of the applicant's compensation payment.
Legislation
The relevant legislation in this matter is the Social Security Act 1991 ("the Act") and in particular s1184(1).
Relevant Facts
The following facts arise from the parties statement of facts and contentions and as they did not appear to be in issue the Tribunal accordingly finds as follows:
(1)The applicant was in receipt of a disability support pension when she was involved in an accident on 9 March 1995.
(2)As a result of a compensation claim made in respect of the accident, the applicant received the sum of $52, 890.00 which included a sum of $2,500.00 for legal costs.
(3)Following a data-match with the Health Insurance Commission, Centrelink was advised on 12 December 2000 that the applicant had a compensation claim which had been settled.
(4)As a result of the notification and in consequence of the settlement monies received by the applicant, the respondent specified a compensation preclusion period of 61 weeks from 9 March 1995 to 8 May 1996.
(5)On 25 January 2001 the respondent raised a debt of $9,135.59 as being recoverable from the applicant with respect to the disability support pension that had been paid to the applicant during the preclusion period.
(6)The applicant sought a review of this decision.

The Evidence

The applicant's evidence was that she was not aware at the time she received her compensation settlement that she would have to repay any monies to Centrelink. She said that whilst she had been informed by her solicitor that she would be required to repay the sum of $5,000 to the Health Insurance Commission, she had not been made aware of any other liabilities.
The Tribunal was referred to a document entitled "Authority to Settle Claim for Damages for Personal Injury" contained at T12, page 45 of the T documents. This document dated 19 November 1998 was shown to the applicant who confirmed her signature. The first paragraph of the document reads as follows:
"I hereby authorise and instruct you to settle my current claim in respect of … for an amount of $50,390.50 together with a contribution of $2,500 towards my legal costs.
I understand that after payment of all out of pocket expenses, as well as my legal costs … I will receive the sum of $47,390.50, less any refund claim by HIC."

The handwritten note states as follows:

"HIC to retain 10% $5,039.05 on basis that no social security refund.
FLS cheque    $42,351.45
HIC               $ 5,039.50
  $47,390.50"

The document goes on to state at paragraph 3:

"…
My entitlement to the invalid pension or Social Security benefits will be adversely affected by the amount of the settlement and I am aware that a refund is going to have to be paid by me to Social Security for benefits received by them in the sum of $???. In addition I am aware that there will be a preclusion period during which time I will not be able to claim any benefits from Social Security for approximately NIL weeks."

Whilst the applicant acknowledged that paragraph 3 of the said document referred to a preclusion period, she said that as the amount therein prescribed was "nil", she concluded that she did not have a liability and that there would be no affect on her invalid pension.
The applicant went on to state that whilst she recalled her solicitor advising her that she would be required to repay approximately $5,000 to HIC which she might and eventually did recover, she said that her solicitor did not explain the contents of the document to her. He simply stated that she had to sign it in order to get her money. Whilst the applicant conceded that she may have read the document, she did not believe that the preclusion period applied to her because as she stated "I wasn't working before I was on Social Security I really didn't think that it really applied to me because that was my only wages with Social Security."
The applicant conceded that her husband had been subjected to a preclusion period when he received an earlier worker's compensation settlement. The applicant said that she understood that the preclusion period was imposed in her husband's situation because he had been previously working and earning a wage and then was unable to continue to do so as a result of his accident. She thought her situation differed from that of her husband because she was already in receipt of a disability support pension and understood that the compensation settlement that she received was only referable to the small amount of money that she earned from a cleaning job that she was no longer able to continue to do as a result of her accident. She said that she did not understand that a preclusion period would be imposed in relation to the disability support pension that she was currently receiving.
The applicant was then asked as to whether or not she contemplated instituting proceedings against her solicitor for not having explained the affect of the preclusion period and informing Centrelink of her compensation settlement. Whilst the applicant had taken advice about instituting proceedings against her solicitor in Western Australia, she said that it would be difficult to do so from Tasmania and that she could not afford to do so in any event.
The applicant was then asked whether she felt a need to report the terms of the settlement to Centrelink. The applicant's evidence was that she recognised that she had an obligation to inform Centrelink of any change in her financial circumstances and that she attended at the Mandurah Centrelink office shortly after receiving the settlement funds. The applicant was residing at Mandurah at the time and was familiar with the Centrelink office. The applicant recalled that her visit would have been during the first week in December 1998 and that she was accompanied by her husband. The applicant was quite definite about her recollection of the circumstances and the purpose of her visit and her evidence was not contradicted under cross-examination. She said that she handed a copy of the settlement document to a woman at the front desk, who then disappeared to the back offices with the document. When she returned she gave the document back to the applicant and said something to the effect "that's alright, thank you".
The applicant said there was no discussion about the settlement monies or the affect of the payment upon her pension entitlement. She recalled her husband commenting to her at the time that the person they saw was called "Penny" because he had dealt with her on a previous occasion.
The applicant said that she heard nothing further in respect of her compensation monies from Centrelink until she received a phone call early this year from a Centrelink officer informing her that a debt had been raised against her. The applicant was taken completely by surprise. She informed the Centrelink officer that she had taken the relevant documentation to the Mandurah office upon receipt of the settlement monies. She was informed that she would still be required to pay the debt owed.
The applicant said in evidence that she had spent the settlement monies in the meantime by purchasing a new car, a caravan which she and her husband used for a holiday and some furniture. The applicant said that she is unable to work due to health reasons and that the sole source of income for her husband and herself is the age pension in the sum of just over $600 per fortnight. The applicant is currently 62 years of age.
The applicant's husband, John Lindsay Lawless, also gave evidence in relation to the visit to the Mandurah Centrelink office in early December 1998. He recalled waiting in line behind a couple of other of people at the counter which he said was located on the left hand side of the office. He remembered his wife handing over documents which she had received from the solicitor in relation to the compensation payment. He had a fairly clear recollection of the visit and recalled pointing out to his wife that the woman who served them was the same woman he had seen previously at the office when his wife was overseas visiting her family. He said that he had received a telephone call from a woman who identified herself as "Penny" and that he subsequently saw her at the office, and that this was the same woman who attended upon them in December 1998. He recalled the woman picking up the documents and saying that she would require a copy of them and then disappearing, presumably for that purpose. Whilst Mr Lawless could not recall the exact words spoken by the woman when she returned the documents to his wife, he said that she said words to the effect "that's quite OK thanks for letting us know and that should be alright". There was no mention of a debt being owed to Social Security. Mr Lawless confirmed that it was not until about January of this year that they were informed of the debt owed to Centrelink.
Ms Lorraine Brcic was called on behalf of the respondent to inform the Tribunal that there was no confirmation in the respondent's computer records of any visit by the applicant and her husband to the Mandurah office in December 1998 as claimed by them. Whilst Ms Brcic was not able to state specifically what was the practice in the Mandurah office, or what actually occurred at the time of the alleged visit by the applicant, she said that the usual practice of Centrelink officers was to enter records of all attendances and contacts on the computer. She referred to the procedures as laid out in the best practice manual which, she said, is supposed to be followed nationally. Ms Brcic conceded under cross-examination that whilst there was no record of the applicant having informed Centrelink of the compensation payment and of her visit as claimed, it was not impossible that the visit may simply not have been recorded. It was her understanding that there would be a computer located on the front reception desk on to which all attendances should be recorded. She was not familiar with the Mandurah office and could not inform the Tribunal as to whether this was the case at that office.
Consideration and Findings
As there is no issue as to the preclusion period imposed and the amount of the debt subsequently raised against the applicant, the issue for the Tribunal to determine is whether pursuant to the provisions of s1184(1) of the Act it is appropriate to treat the whole or part of the compensation payment as not having been made because of the special circumstances of the case. Section 1184(1) provides:
"1184(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."
The term "special circumstances" has been the subject of much judicial interpretation. The term was defined by Toohey J in Re Beadle and Director-General of Social Security (1984) 6 ALD 1 where it was stated:
"An expression such as `special circumstances' is by its very nature incapable of precise or exhaustive definition. 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."

and further:

"… the existence of `special circumstances' is to be determined from all the circumstances surrounding the application and the time at which it was made."

It is clear from the authorities that the Tribunal can take into account the whole of a person's circumstances in determining whether they are "special circumstances" within the meaning of the provision in the Act. It was argued on behalf of the respondent that the applicant's circumstances did not constitute "special circumstances" within the meaning of the Act, and that the applicant was well aware of her obligation to inform Centrelink of any change in her financial circumstances, having received correspondence from time to time advising her of her obligation. Mr Baker contended that there was no record of the applicant having ever informed Centrelink of the receipt of her compensation settlement monies. Mr Baker pointed out that following a check of the Computer Record Access Monitor Reports (CRAM Reports) the only record of any action in relation to the applicant's file in December 1998 referred to an entry made by a Centrelink officer at the Spearwood office on 5 December 1998 which appeared to be unrelated to the applicant's claimed visit to the Mandurah office.
Mr Baker contended that it was unlikely that a Centrelink officer would have neglected to record such advice given by the applicant in relation to a worker's compensation payment, and there was no evidence before the Tribunal that Centrelink was ever informed of the claim.
Whilst there was no evidence before the Tribunal of any record of the applicant's visit to the Mandurah office in December 1998, the Tribunal accepts that this may have been due to some administrative error on behalf of a Centrelink officer. The Tribunal was referred to the Tribunal decision, Stewart and Secretary, Department of Family and Community Services SSR, Volume 3, No 11, October 1999 where it was stated:
"….. that there is an increased reliance by the Department of the Computer Record Access Monitor Reports (CRAM reports) as a record of events. The Tribunal considers that where a discrepancy arises between a customer's version of events and the CRAM details, preference should not automatically be given to the CRAM report over the evidence of a customer. The nature of the Department's Call Centre, and the volume of the enquiries it deals with create a large number of variables which must be taken into account. Whilst it may be possible to give evidence as to what is supposed to be said to customers, it is not possible in most cases to say what was actually said. In such cases, the Tribunal considers that it should base its findings on an assessment of the credibility of the customer. If the customer is found to be a credible witness, then this should take preference over the computer records. If, however, there are some discrepancies which the Tribunal is satisfied, on all the evidence, cast doubt on the accuracy of the customer's version, then preference should be given to the Department."
The Tribunal found Mrs Lawless and her husband to be credible witnesses. They gave uncontradicted accounts of a visit to the Mandurah office in early December 1998 for the purpose of informing Centrelink of the applicant's worker's compensation settlement receipt. It is clear that the applicant understood her obligation to inform Centrelink of any change in her financial circumstances and this was the reason for her attending the Mandurah office shortly after receipt of the settlement monies. In the absence of affirmative evidence from the respondent that the visit did not occur, all that the respondent was able to suggest was that it was unlikely in that there would have been a record of such a visit, the Tribunal accepts that the visit did occur and that the applicant did inform Centrelink of the receipt of her settlement monies.
Whether the applicant was misled or given incorrect information or insufficient information and advice, she was left with the impression that the settlement monies would not affect her pension and she proceeded to spend the money accordingly. The authorised review officer stated in a letter to the applicant's solicitor (T18, p58):
"… So I believe that she probably did tell Centrelink at the time of the settlement. However exactly what she told Centrelink is a matter on which I speculated in the last page of my letter to her. If she had the belief that the money represented a small weekly income to replace her lost earnings for the rest of her life and expressed it in such terms, as income rather than compensation, then a Cenrelink officer may have not gained a full picture of matters and may well have told her that it would have no effect".
There is no suggestion that the applicant spent the monies unwisely or in a frivolous manner in the purchase of a motor vehicle and a caravan for a holiday with her husband. The Tribunal further accepts that to require the applicant to repay the debt owed to the respondent would impose a severe hardship as the only income source for the applicant and her husband is the age pension. The applicant gave detailed evidence of their expenditure which she and her husband place on a credit card account and pay each month. They have no savings but do own a car and their own home. They own a block of land which was purchased with the applicant's husband's superannuation funds.
The Tribunal was also referred to the decision of Secretary, Department of Social Security v Ellis (1997) 46 ALD 7 where the pensioner's entitlement to a family benefit was unconnected with the compensation monies. There the court accepted that this was a relevant factor in the exercise of its discretion under s1184 and that it could not be argued that the respondent could be seen to be "double dipping". Similarly in the present case, the applicant was already in receipt of a disability support pension so that her entitlement to a Centrelink pension did not arise as a result of the accident for which she was compensated. As the applicant saw it, her ongoing entitlement to the disability support pension was unrelated to her receipt of the settlement of the settlement monies, which she understood was compensating her for the loss wages that she was earning as a cleaner prior to the accident and was no longer able to undertake.

The Tribunal accepts the applicant's evidence that the contents of the settlement statement which she signed on 9 November 1998 (T12, page 45) and her solicitor's lack of advice also led her to believe that her pension benefits would be unaffected by the compensation monies. Whilst the document contained a reference to a preclusion period and that her entitlement to an invalid pension or social security benefits would adversely be affected by the amount of the settlement, the insertions by the solicitor in the document suggested to the applicant that this was a standard form of document and that it did not apply in her case, particularly the statement that the applicant would not be able to claim benefits from social security for approximately "NIL weeks".
Whilst it has been held in other cases that the failure of a solicitor to provide accurate advice in such circumstances would not of itself constitute "special circumstances", such misleading and inaccurate advice coupled with the fact that the applicant does not have the means to pursue an action against her solicitor in the context of the circumstances of this matter, is a very relevant factor.
The applicant was not made aware until a period of over 2 years after she received her settlement monies that a debt had been raised against her. As the applicant stated, had she been made aware shortly after receipt of her settlement monies that a preclusion period would have been imposed or a debt raised, she may have been able to pursue her solicitor for negligent advice. At the time of receipt of the settlement monies the applicant and her husband were residing in Western Australia. At the time of being advised of the debt raised against her, she was residing in Tasmania and had spent her settlement monies.
In addition to the above matters, the Tribunal takes account of the evidence that the applicant is in poor health, is unable to work having been assessed as eligible for a disability support pension prior to her eligibility for the age pension, and has no savings from which she could repay the debt raised against her, apart from her fortnightly income from the age pension. The Tribunal concludes that it would be unjust and unfair to require the applicant to repay the debt from a pension that is unrelated to the compensation settlement. Not would it be just to require the applicant to sell her home or her car or the land purchased with her husband's superannuation funds.
The Tribunal is satisfied that in taking account of all the circumstances as outlined above, that they are sufficiently unusual, uncommon or exceptional to be "special circumstances" within the meaning of the legislation and as interpreted by the Courts.
The Tribunal having so found it sets aside the decision under review and substitutes it with a decision that pursuant to s1184(1) of the Act the amount of $52,890 should be treated as not having been made or not liable to be made.
I certify that the 43 preceding paragraphs are a true copy of the reasons for the decision herein of Ms A F Cunningham (Part-time Member)
Signed:         .....................................................................................
  Administrative Assistant
Date/s of Hearing  23 November 2001, 8 May 2002
Date of Decision  2 July 2002
Counsel for the Applicant        Mr Brian Sparkes
Solicitor for the Applicant         Hobart Community Legal Service
Counsel for the Respondent    Mr T Baker
Solicitor for the Respondent    Centrelink Advocacy and Administrative Law Team