Li and Secretary, Department of Social Services (Social services second review)
[2024] AATA 1938
•21 June 2024
Li and Secretary, Department of Social Services (Social services second review) [2024] AATA 1938 (21 June 2024)
Division:GENERAL DIVISION
File Number: 2023/5238
Re:He Li
APPLICANT
AndSecretary, Department of Social Services
RESPONDENT
DECISION
Tribunal:Senior Member D. J. Morris
Date:21 June 2024
Place:Melbourne
The decision of the Social Services and Child Support Division of the Tribunal dated 8 June 2023 is set aside. In substitution therefor, the Tribunal remits the matter to the Respondent with a direction that the compensation preclusion period for the Applicant be recalculated on the basis that the amount of $359,240.41 be disregarded under s 1184K of the Social Security Act 1991 (Cth) as not having been made.
.............................[sgn]...........................................
Senior Member D. J. Morris
Catchwords
SOCIAL SERVICES – pensions, benefits and allowances – lump sum preclusion period – parenting payment (single) debt – income support bonus payment debt – decision by agency of the Respondent’s Department that applicant subject to a lump sum preclusion period because of a lump sum compensation payment – also that applicant had parenting payment (single) debt – applicant sought internal review – authorised review officer affirmed decision and also decided applicant had income support bonus payment debt – applicant sought internal review of second decision – second decision affirmed – applicant sought review by Tribunal – parenting payment (single) debt and income support bonus payment debts repaid – Social Services and Child Support Division of Tribunal decided that part of compensation payment to be treated as not having been made – is applicant subject to lump sum preclusion period – does applicant owe recoverable amount to Commonwealth – are there special circumstances which mean all or part of compensation payment may be treated as not having been made – payments to two legal firms – first payment to legal firm should be regarded as never having been made to the applicant because of the operation of State law – second payment to legal firm should be regarded as never having been made to the applicant because of protracted legal proceedings not initiated by the applicant and not beneficial to her – decision under review set aside and new decision substituted with a direction
Legislation
Administrative Appeals Tribunal Act 1975 (Cth)
Return to Work Act 2014 (SA)
Social Security Act 1991 (Cth)
Social Security (Administration) Act 1999 (Cth)Workers Rehabilitation and Compensation Act 1986 (SA)(rep)
Cases
Department for Health and Ageing v Li [2018] SASCFC 52
Secretary, Department of Workplace Relations v Barrington [2006] FCA 527Secretary, Department of Families, Housing, Community Services and Indigenous Affairs v Waters, Re [2011] AATA 666
Secondary Materials
Department of Social Services, Guides to Social Policy Law: Social Security Guide (Version 1.317, released 6 May 2024) <
REASONS FOR DECISION
Senior Member D. J. Morris
21 June 2024
On 8 June 2023 the Social Services and Child Support Division of this Tribunal (‘first review’) decided to set aside two decisions of an authorised review officer of the Respondent’s Department that the Applicant, Ms He Li, is subject to a lump sum preclusion period for the period 26 July 2014 to 11 January 2019 and has a parenting payment (single) debt of $83,143.18 and an income support bonus payment debt of $552.40.
The first review remitted the matter to the Respondent with the directions that part of Ms Li’s compensation payment in excess of $260,000 is to be treated as not having been made under s 1184K of the Social Security Act 1991 (Cth) (‘the Act’), and any resultant debts are to be recovered.
The practical effect of the first review decision was that the amount of $263,976.73 was disregarded from the total amount of compensation paid to Ms Li (which was $523,976.73) so that her lump sum compensation preclusion period was reduced from 26 July 2014 to 7 October 2016. This also reduced the resultant recoverable debts as follows: the parenting payment (single) debt was reduced to $43,136 for the period 26 July 2014 to 25 October 2018 and an income support bonus payment debt remained at $552.40.
The Applicant was dissatisfied with the first review decision and, as she is entitled to do, sought a second review by the Tribunal.
HEARING
A hearing was held by video on 28 March 2024. The Applicant made submissions and gave evidence. The Respondent was represented by Ms Vincci Chan, a Senior Government Lawyer from Services Australia, part of the Respondent’s Department.
The Applicant and Respondent submitted documents which are listed in the annexure to these reasons. The Applicant submitted two Statement of Facts, Issues and Contentions, one dated 18 March 2024 settled by her then solicitor, Mr Andrew Wright, and the other settled by Ms Li herself, of the same date. The Respondent submitted a Statement of Facts, Issues and Contentions dated 25 January 2024. Leave was given for submissions to be made after the hearing, and the last of these was received on 23 April 2024.
BACKGROUND
The following background is not in dispute between the parties. In March 2012 whilst the Applicant was employed as a nurse in South Australia, she suffered a psychiatric injury at work. It was found to be a compensable injury.
On 25 July 2014, the Applicant ceased receiving periodic compensation payments for the injury. In August 2014, the Department of Social Services (‘the Department’) issued a notice to Ms Li advising that she was granted parenting payment (single) from 22 July 2014. The notice to the Applicant advised that she should inform the Department of any changes to her circumstances, including that she must advise within seven days ‘if she will receive, has received or [is] likely to receive, compensation.’
On 20 September 2014, Ms Li received an income support bonus payment of $108.90. She received further income support bonus payments: $109.70 (in March 2015); $110.60 (in September 2015); $111.50 (in March 2016); $111.70 (in September 2016).
In November 2016, the Applicant was given a notice about her parenting payment (single) under s 68(2) of the Social Security (Administration) Act 1999 (Cth) (‘the Administration Act’), which required her to advise of any changes in her circumstances, including whether she received compensation. Notices in similar form were sent to her in January and February 2017 and October 2018.
In June 2018, the Full Court of the Supreme Court of South Australia ordered that Ms Li’s claim for worker’s compensation be remitted to a Deputy President of the South Australian Employment Tribunal in relation to a proper construction of s 30A of the Workers Rehabilitation and Compensation Act 1986 (SA).
In July 2020, the Department issued a notice to the Applicant requesting information about her claim for compensation, pursuant to s 196 of the Administration Act. In August 2020, Ms Li responded that she had not received any periodic or lump sum compensation (TD, p 66-67).
In November 2022, His Honour Judge Rossi of the South Australian Employment Tribunal made the following orders in relation to the Applicant’s matter (TD, p. 138):
(1)The Applicant suffered a compensable psychiatric injury during her employment with the South Australian Department of Health and Wellbeing from 7 March 2012 to 15 March 2014 and that there be no order as to weekly payments or other compensation apart from that ordered herein;
(2)The Applicant is entitled to reimbursement of medical expenses fixed and agreed in the sum of $14,736.32;
(3)Pursuant to s 106(4) of the Return to Work Act 2014 (SA), the Department of Health and Wellbeing pay $238,112.07 (inclusive of GST) to [name of Law Firm A redacted];
(4)The Department of Health and Wellbeing pay the Applicant costs in the sum of $121,128.34 (inclusive of GST) plus reasonable disbursements incurred by [name of Law Firm B redacted].
It was acknowledged that the Applicant has accepted a lump sum payment of $150,000 subject to a satisfactory Australian Taxation Office ruling structured as a payment on account of redemption of medical and like expenses in the sum of $20,000 and redemption in the sum of $130,000, such amounts to be paid by way of Redemption Agreement made pursuant to s 42 of the Workers Rehabilitation and Compensation Act 1986 (SA) (since repealed but then in force).
On 10 November 2022, the Department received a form titled Compensation Advice of Lump Sum Payments from Ms Li’s former employer which stated as follows. That the Applicant received periodic payments for her compensable injury which ceased on 25 July 2014; that she received compensation through a consent agreement/settlement of $150,000 from her former employer; and that her compensation included a calculation for economic loss (TD, pp 84-86).
On 9 December 2022, the Department decided that Ms Li was subject to a lump sum preclusion period from July 2014 to January 2019 because she received a lump sum payment of $523,976.73. The Department also decided that she had a parenting payment (single) debt of $83,143. This was described by the Respondent as the ‘first original decision.’
On 9 December 2022, Ms Li requested an internal review of the first original decision by an authorised review officer (‘ARO’), who is an officer of the Department who was not involved in the decision. On 19 December 2022, the ARO affirmed the first original decision.
On 17 January 2023, the Department also decided that Ms Li had an income support bonus payment debt of $552.40. On 20 January 2023, the Department issued a notice to the (SA) Department of Health – Insurance Services under s 1184 of the Act requiring payment of $83,143.18 within seven days.
On 9 December 2023, the Department of Health – Insurance Services, repaid the entirety of Ms Li’s parenting payment (single) debt of $83,143.18 to the Respondent’s Department.
On 21 February 2023, Ms Li asked for internal review of the second original decision (i.e. the one relating to the income support bonus payment debt). On 24 March 2023, an ARO affirmed the second original decision.
By 26 April 2023, Ms Li had repaid the entirety of the $552.40 income support bonus payment debt through withholdings to her jobseeker payment (STD 4).
As referred to above, the Tribunal at first review on 8 June 2023 decided the amount of compensation payment over $260,000 that the Applicant had received should be treated as not having been made to her. This meant that $263,976.73 of her total lump sum compensation payment of $523,976.73 was disregarded; her preclusion period was shortened to the period from 26 July 2014 to 7 October 2016; her debt was reduced to $43,136; and she was entitled to a refund of $36,454.78. The Department implemented this decision.
The Respondent’s contentions
The Respondent noted that the intent of the legislative provisions relating to compensation payments to Social Security benefit recipients are designed to ensure that a person who receives compensation for loss of income does not also receive income support from the Australian Government in respect of the same period of time, and that the special circumstances provisions set out in the Act should not be used to override this basic legislative intention (citing Instruction 4.13.4.10 in the Department’s Social Security Guide).
The Respondent submitted that Ms Li is subject to a lump sum preclusion period as the South Australian Employment Tribunal awarded her a total of $523,976.73 and that none of the payments were in relation to arrears of periodic compensation and therefore not excluded under s 1171(2) of the Act as such.
The Respondent noted that the first review decided that there were special circumstances that meant part of Ms Li’s compensation payment above $260,000 should be treated as not having been made. The Respondent accepted that, the Applicant having sought a second review in the General Division, the Tribunal is conducting a review de novo, and can set aside the first review finding, but that the Secretary of the Department considers it is appropriate in the special circumstances of this case to treat $263,976.73 ‘and no more’ as compensation payments as not having been made to the Applicant.
The Respondent submitted that the first review had appropriately exercised the discretion in s 1184K of the Act.
In respect of Ms Li’s financial circumstances, the Respondent submitted that the Applicant is currently in receipt of parenting payment (single) at $1,024.56 and family tax benefit of $200.06 per fortnight. In respect of her own submissions, the Respondent noted that Ms Li has stated that she receives $280 per fortnight in child support, that she has managed to repay personal loans of $30,000 and $90,000, and submitted that Ms Li may have some capacity to resume employment because she stated that she attempted employment with The Royal Women’s Hospital after her compensable event (TD, p 72).
The Respondent also noted that the Applicant stated she has a residence that she states is valued at $850,000 (TD, p 14) and that the first review recorded that Ms Li may also have an investment property in Adelaide. The Respondent cited a Tribunal decision, Re: Secretary, Department of Families, Housing, Community Services and Indigenous Affairs v Waters [2011] AATA 666, where Deputy President Groom stated at [41]:
The Tribunal finds that whilst Ms Walters [sic] has some financial difficulties she is not suffering financial hardship. She has a valuable realisable asset in the house. Clearly she wishes to retain the house and that may well be a very sensible choice to make. But it will be her choice. The house is valuable and it is unencumbered. It could be sold although there may be some delay before a sale could be effected…
The Respondent submitted that Ms Li’s financial circumstances are not ‘special’ as they are not beyond straitened, nor does she appear to be in severe or extreme financial hardship. In respect of the Applicant’s health, the Respondent accepted that Ms Li has provided medical evidence of depression, anxiety and breast cancer, but submitted that these conditions are not ‘special’ circumstances for the reason that the mental health conditions were the basis for her compensation and, in regard to the breast cancer, her medical practitioners have advised that it was temporary and surgically treated (TD, pp 184-185).
In respect of Ms Li’s submissions that her medical and legal costs should be excluded from an assessment of her compensation amount, the Respondent submitted that previous decisions of the Tribunal have found that there is no provision for reducing the lump sum figure by the amount of medical expenses which have been paid as part of a lump sum. The Respondent also cited Secretary, Department of Employment and Workplace Relations v Barrington [2006] FCA 527 (‘Barrington’) in support of his contention that legal costs should not be entirely excluded from a received compensation payment.
The Applicant’s submissions
The Applicant agreed that the questions before the Tribunal were those outlined by the Respondent:
Whether the Applicant is subject to a lump sum preclusion period, including the calculation of the lump sum preclusion period;
Whether the Applicant has any special circumstances which may warrant treating the whole, or part of, her compensation payment as not having been made; and
Whether the Applicant owes recoverable debts to the Commonwealth.
However, the Applicant contended that she was never awarded $523,976.73. The Applicant submitted that there was never an equitable right to the amount of $238,112.07 which was awarded to Law Firm A.
The Applicant contended that the first review was correct to exclude the amount payable to Law Firm A because s 1171 of the Act requires that a person must have at least an entitlement to the compensation being awarded, so that it could then be included in the calculation of the preclusion, but in this case the monies were paid direct to Law Firm A under s 106(4) of the South Australian Return to Work Act (‘RTW Act’) not to Ms Li.
The Applicant noted that Judge Rossi of the South Australian Employment Tribunal included in his orders made on 7 November 2022 that the SA Health Department pay legal costs of $238,112.07 to Law Firm A.
In regard to her personal financial circumstances, Ms Li submitted that she owes $708,000 ‘to the bank and the property belongs to the bank’, by which the Tribunal understands her to refer to her Victorian residence. She states that she has mortgage repayments of $4,105 per month. She states that she receives ‘$989 from Centrelink and the child support of $288 fortnightly’ but is struggling to pay off bills and provide food for her child. Ms Li stated that she always aimed to be a responsible citizen and not take advantage of Centrelink or taxpayers. She stated that she has actively contributed to society, ‘serving as a frontline nurse for two years during the severe COVID-19 pandemic and nursing shortages in Melbourne’. The Applicant stated ‘[t]his was my way of reciprocating the support I received from Centrelink and taxpayers, even though it resulted in severe complications from COVID-19 that I continue to suffer from.’
Ms Li submitted that she had several times, in the first review hearing and in subsequent statements, clarified that she does not own an investment property in Adelaide. She said she sold it during the pandemic. She said the Member at first review acknowledged this, and she considered it was wrong of the Respondent to persist with making this assertion without concrete evidence to support it. Ms Li noted she has submitted proof of the sale of her Adelaide property (Exhibit A6).
Ms Li noted that she has been unemployed since 2022 and was eager to return to work as soon as she was able, noting that her income would surpass the single parenting payment she currently receives.
CONSIDERATION
The Tribunal considers that each party made fair submissions, and appropriately made concessions.
The Tribunal considers that the basis of the provisions in the Act for compensation preclusion periods were correctly set out by the Respondent in his submissions, citing the relevant provisions of the Social Security Guide. In essence, the reason these provisions are in the Act are to prevent a person who has received workers compensation for loss of earnings being able to claim a social security benefit at the same time as is covered by a workers’ compensation payment or lump sum. In other words, a form of ‘double-dipping.’
The Tribunal notes that the Applicant cited the relevant provision in the South Australian RTW Act in her written submissions, and also made oral submissions about this at the hearing. Her argument, concisely, is that the South Australian Employment Tribunal made payments to two law firms who had acted for her, when it made orders by consent in relation to her compensable injury, and that these were payments to Law Firm A and Law Firm B, not (and never) to her.
The Tribunal has sympathy with this contention. Section 106 of the RTW Act sets out the provisions for the South Australian Employment Tribunal making awards for costs, and relevantly states, at s 106(4):
Subject to subsection (5), an award of costs to cover professional advice or assistance may, if the Tribunal considers appropriate, be made in favour of the person who provided the professional advice or assistance.
Subsection 106(5) is not relevant to Ms Li’s case.
As the learned Member at first review set out in detail, the orders made by Judge Rossi of the South Australian Employment Tribunal dated 7 November 2022 made a payment to Law Firm A of $238,112.07 under s 106(4). This was an exercise of a discretionary power by His Honour and was a payment direct to Law Firm A. It was not a payment received by the Applicant.
In terms of the costs to Law Firm B, Judge Rossi ordered that these should be paid to Ms Li in the amount of $121,128.34 ‘plus reasonable disbursements.’
It is therefore clear to me that the amount paid to Law Firm A of $238,112.07 should be excluded from the assessment of the lump sum compensation payment: the Applicant never received that money.
The Tribunal considers the Respondent’s citing of Barrington to be unhelpful in respect of how legal costs should be interpreted in cases such as this, except insofar as in that case the legal representative of the Department agreed with Deputy President Groom, as is cited in the extensive extracts of the transcripts of the Tribunal hearing reproduced in Heerey J’s judgment, that the way legal costs are calculated in this part of the Act is ‘arbitrary’.
In that case, the Federal Court was considering whether a person had undertaken personal expenditure after he knew a compensation preclusion period applied to him and, secondly, whether the Tribunal had failed to give natural justice in relation to the relevance of legal costs. Neither of these points is germane to Ms Li’s case.
In terms of whether special circumstances apply to Ms Li, the Tribunal notes her evidence about her financial situation, but also that she has been able to return to work (at least for a period) to assist as a nurse during the pandemic, which is much to her credit. The Tribunal accepts she has sold her Adelaide property and that her own residence is heavily encumbered by a mortgage. The Tribunal also accepts the Applicant has certain health conditions, but notes she did return to work for a period, and does not consider these conditions rise to the level of satisfying the ‘special circumstances’ discretion in s 1184K(1) of the Act. The Tribunal agrees with the Respondent’s submissions that there is no provision for reducing the lump sum figure by the amount of medical expenses which have been paid as part of a lump sum.
The Tribunal has carefully considered the judgment of the Full Court of the Supreme Court of South Australia in Ms Li’s matter (Department for Health and Ageing v Li [2018] SASCFC 52: Kourakis CJ, Stanley and Bampton JJ).
The South Australian Employment Tribunal at first instance had found in favour of Ms Li. The SA Health Department appealed against this decision to the Full Bench of that Tribunal. The Tribunal Full Bench dismissed Ms Li’s claim. The SA Health Department then appealed against the Tribunal Full Bench decision in terms of how the Employment Tribunal had interpreted that State’s workers’ compensation law. Their Honours in the Full Court of the Supreme Court held that the Employment Tribunal erred both at first instance and in the Tribunal Full Bench decision.
It can be clearly seen, as Ms Li’s then legal representative, Mr Wright, said in comprehensive written submissions on her behalf, that all of these events significantly delayed the disposition of the Applicant’s compensation claim. More importantly in the Tribunal’s mind, none of these delays were initiated by, nor within in the control of, the Applicant.
They also led to an additional payment of $121,128.34 awarded to the Applicant under the State’s (then) workers’ compensation legislation for legal costs to Law Firm B, which reflected the length of time the matter had been before the Courts.
The Tribunal is satisfied that this additional payment, although it was notionally paid to the Applicant, actually went immediately to Law Firm B, and should not properly be regarded as constituting any part of the lump sum compensation payment made to the Applicant. It was only ‘received’ by her in a transient sense, and was of no financial benefit to her. It would be inequitable to count it as affecting her entitlement otherwise to social security benefits.
In summary, therefore, the proper approach to this matter is that the lump sum payment made to the Applicant should be reduced at the first instance by $238,112.07. Ms Li never received this money in the term expressed in s 1171(1) of the Act. This is essentially similar to the conclusion the learned Member made at the first review, and this conclusion was not contested by the Respondent.
However, the Tribunal finds that the legal costs paid to Law Firm B of $121,128.34 should also be treated as not having been made to the Applicant because of the circumstances applicable to that payment: the Applicant did not receive any benefit from the payment of those legal costs; in fact, she received no benefit at all from the protracted legal proceedings which were initiated by the SA Health Department in pursuit of what they decided was a wrong interpretation of the State statute. The Tribunal is satisfied that special circumstances exist in regard to the payment to Law Firm B to enliven the discretion available in s 1184K(1) of the Act.
The Tribunal therefore finds that the correct and preferable decision in this matter is that the Applicant’s compensation preclusion period is reduced by the amount of $359,240.41. While the Tribunal might accept the representations made by the Applicant and her former legal representatives that the amount paid to Law Firm A should never have been included in the calculation, nothing particularly turns on that because the parties are in agreement that that amount should be excluded.
The most efficient way to achieve the equitable and correct outcome is to combine the payments to Law Firm A and Law Firm B and remit the matter to the Respondent with the direction that the combined total of those legal costs should be regard as not having been made to Ms Li and therefore not part of her compensation payment for the purpose of any preclusion period.
The nub of this decision, in contrast to the first review decision, with which in every other respect I respectfully agree with the learned Member, is that I have decided that the separate legal costs paid to Law Firm B should also be excluded from the Department’s calculation. This means, on the Tribunal’s calculation, of the $523,976.73 total amount, $359,240.41 should be deducted, leaving a figure of $164,736.32. The Respondent is directed to check the relevant calculations consistent with these reasons.
The Tribunal makes the point that this is a particularly special case, for two reasons: first, because of the way the particular subsection in the South Australian RTW Act is couched, and, secondly, and because of the protracted legal proceedings on a point of law after Ms Li made her (successful initial compensation) claim, none of which were initiated by her, none of which benefitted her, but which required her to be legally represented to protect her interests. These special circumstances satisfy me that the preferable decision is to carve out the two legal costs amounts from the preclusion period. There has been no ‘double dipping’ by the Applicant in the sense that the preclusion provisions in the Act are designed to guard against. Ms Li has not received beneficial funds to the extent contended by the Respondent which merited the way the preclusion period was calculated.
DECISION
The decision of the Social Services and Child Support Division of the Tribunal dated 8 June 2023 is set aside. In substitution therefor, the Tribunal remits the matter to the Respondent with a direction that the compensation preclusion period for the Applicant be recalculated on the basis that the amount of $359,240.41 be disregarded under s 1184K of the Social Security Act 1991 (Cth) as not having been made.
I certify that the preceding 59 (fifty-nine) paragraphs are a true copy of the reasons for the decision herein of Senior Member D. J. Morris
.........................[sgn]...............................................
Associate
Dated: 21 June 2024
Date of hearing: 28 March 2024 Date final submissions received: 23 April 2024 Applicant: Self-represented Counsel for the Respondent: Ms Vincci Chan Solicitors for the Respondent: Services Australia- Litigation Branch Annexure to reasons for decision
Schedule of Exhibits
T documents (TD) lodged 6 September 2023 Exhibit R1
Supplementary documents (STD), lodged 25 January 2024 Exhibit R2
Debt evidence – email Exhibit A1
Medical certificate of the Applicant Exhibit A2
Statement of Financial circumstances given to first review Exhibit A3
Statement for second review Exhibit A4
Annexure 1 – 221107 SA Employment Tribunal Orders Exhibit A5
Annexure 2 – Settlement confirmation, residence in St Agnes, SA Exhibit A6
Annexure 3 – Financial statement Exhibit A7
Annexure 4 – 220823 Redemption Agreement – Applicant Exhibit A8
Email chain, titled ‘Attachment 1’ Exhibit A9
Document titled ‘Domestic violence’ Exhibit A10
Westpac financial statement of Applicant Exhibit A11
Medical evidence of employment and multiple health conditions Exhibit A12
0
3
0