Lourie and Department of Family and Community Services

[2001] AATA 415

DECISION AND REASONS FOR DECISION [2001] AATA 415

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q00/1164

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

DECISION

Tribunal       Deputy President DP Breen, Presidential Member      

Date17 May 2001  

PlaceBrisbane

Decision      The Tribunal affirms the decision under review.           

(Sgd)          DP BREEN
  PRESIDENTIAL MEMBER
CATCHWORDS
SOCIAL SECURITY – compensation preclusion period – special circumstances.

Social Security Act 1991 ss 17(2), (2B),(3)(a), (4), 1184
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Groth v Secretary, Department of Social Security (1996) 40 ALD 541

REASONS FOR DECISION

17 May 2001          Deputy President DP Breen, Presidential Member                  

1. This was an appeal against a decision by Centrelink made on 17 May 2000 to impose on Mr Lourie a lump sum preclusion period of 245 weeks based on the compensation part of a lump sum settlement of $105,054.71 and to recover a charge amount of $22,438.36.  An Authorised Review Officer affirmed this decision on 10 July 2000 as did the Social Security Appeals Tribunal on 4 October 2000.

2. The matter was heard by me in Brisbane on 27 April and 4 May 2001.  Mr Lourie represented himself and gave evidence by telephone.  Mr N Foster, Departmental Advocate, represented the respondent.

3. The following documents were taken into evidence:

• Exhibit 1            "T" Documents

• Exhibit 2            Statement of Dale Wadeson, Team Leader at Centrelink, Cairns

1. Mr Lourie was injured at work in 1995 and on 3 April 2000 he settled his compensation claim.  The total settlement was for $239,739.64, with a refund of $44,735.64 included in that amount.  That $44,735.64 was made up of $29,606.21 in weekly payments with the balance relating to medical expenses.

2. With the compensation monies he received, Mr Lourie purchased a car for his mother, a car for his family, a work car, furniture and put $60,000 towards the purchase of a house.  Within three months Mr Lourie was requesting Centrelink to review its decision to preclude him from social security benefits.

3. Mr Lourie said that in early 2000 he went into the Centrelink office and told them that he was getting a lump sum payment and asked whether his ability to get social security payments would be affected if he purchased a house with that money.  He said that he was told it would not be a problem.  He also said that when he was first told that he could not get benefits he was also told that if he had no money in the bank he could come back and Centrelink could work around the preclusion period as they did it for lots of people.

4. The evidence from Centrelink was that Mr Lourie had merely asked whether his benefits would be affected if he purchased a house.  He did not mention a lump sum payment of compensation.  He was given general information that a person could own a house and live in it but that if they rented it out it would be classed as income and would have an affect on benefits.

5. After this conversation, the settlement occurred and Mr Lourie was sent a letter on 17 May 2000 which clearly set out the calculation of the amount to be recovered and that the preclusion period ran from 11 April 1997 until 20 December 2001 (Document T15).  On that same day a Centrelink officer had a conversation with Mr Lourie and stressed the fact that the monies had to last him until December 2001 as he would not get social security benefits until then (Document T20).  From the record of that conversation, it appears that Mr Lourie either did not have the settlement monies in his possession at that time or he had only just obtained them.

6. Whatever Mr Lourie was told by the Centrelink counter staff upon his initial enquiry, the later letter and conversation made it very clear to him that he would be precluded from receiving social security benefits and his money would have to last him until December 2001.  It was not reasonable for Mr Lourie to rely on his understanding of the first conversation in the face of very clear contradictory information from a person who fully understood his situation.

7. The Social Security Act 1991 is the applicable legislation for calculating the preclusion period.  Section 17(2) provides:

   "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) that is:
   (e)       made wholly or partly in respect of lost earnings or lost capacity to earn; and
   (f)        made either within or outside Australia."

8. Section 17(2B) provides:

   "For the purposes of this Act, if:

   (a)a person receives more than one lump sum payment, whether simultaneously or at different times, in relation to one or more injuries arising from the same event (see subsection (5A)); and

   (b)at least one of the payments is made wholly or partly in respect of lost earnings or lost capacity to earn;

   the person is taken to receive one lump sum compensation payment, made wholly or partly in respect of lost earnings or lost capacity to earn, of an amount equal to the sum of those lump sum payments."

9. Section 17(3)(a) provides:

   "For the purposes of this Act, the compensation part of a lump sum compensation payment is:
   (a)       50% of the payment if the following circumstances apply:

   (i)the payment is made (either with or without admission of liability) in settlement of a claim that is, in whole or in part, related to a disease, injury or condition; and

   (ii)the claim was settled, either by consent judgment being entered in respect of the settlement or otherwise, on or after 9 February 1988; or

   ….."

10. Section 17(4) provides:

    "Where a person:
    (a)       has received periodic compensation payments; and

    (b)after receiving those payments, receives a lump sum compensation payment (in this subsection called the "LSP"; and

    (c)because of receiving the LSP, becomes liable to repay an amount (in this subsection called the Repaid Periodic Compensation Payment – "RPCP") equal to the periodic compensation payments received;

    then, for the purposes of subsection (3), the amount of the lump sum compensation payment is:
      LSP – RPCP"

11. A compensation payment is defined very widely, and subsection 17(2B) makes it clear that all compensation amounts paid with respect to injuries received by a person are included in the overall calculation of the compensation payment amount.  Subsection 17(4) is the only applicable Section which allows for a deduction from that lump sum compensation payment before the calculation of the compensation part of that payment.  Therefore, all amounts referred to in the settlement, including the workers' compensation refund, are to be assessed as part of the initial lump sum compensation payment amount.  Any periodic payments which have been made and have to be repaid are then deducted before the compensation part is calculated.

12. This means that Centrelink were correct in assessing the entire settlement figure, including the workers' compensation refund, and then deducting the $29,606.21 to calculate the compensation part of the lump sum payment.  It is the Tribunal's finding that Centrelink correctly assessed the compensation payments, the length of the preclusion period and the amount to be repaid.

13. The Tribunal is therefore required to consider whether there are any special circumstances in the applicant's case which would warrant a finding under Section 1184 of the Act that some or all of the compensation payment should be treated as not having been made.

14. The phrase "special circumstances" is not defined in the Act.  However, it has been judicially considered on a number of occasions.  In the case of Re Beadle and Director-General of Social Security (1984) 6 ALD 1 this Tribunal held that the circumstances faced by the applicant must be "unusual", "uncommon" or "exceptional" in order to be classed as "special".

15. Kiefel J in the case of Groth v Secretary, Department of Social Security (1996) 40 ALD 541 observed that when determining whether a person's circumstances are "special", one should look at the effect upon the claimant if the waiver provisions were not applied.  If the consequences were unintended by the legislation, or the effect on the person concerned was different from that which would be felt by others, then the circumstances may be "special".

16. Mr Lourie told the Tribunal that he and his wife have been under a lot of financial pressure as he has not been able to obtain work in Cairns.  Mr Lourie also travelled to South Australia in the search for work but was unable to find any there.  Mr Lourie said that he had already sold the work car he initially purchased and bought a cheaper one instead so that he could pay bills.

17. Financial hardship of itself is not sufficient to warrant a finding of "special circumstances".  The Tribunal does not dispute Mr Lourie's right to spend his settlement monies as he wishes and to provide for his family.  What the Tribunal is concerned with is whether the financial hardship currently suffered by Mr Lourie and his family is sufficient to warrant a finding of "special circumstances" so as to reduce the preclusion period.

18. Mr Lourie received $195,000 from the settlement.  Even taking into account solicitor's fees, medical bills and refunds to Centrelink, he still would have been left with over $100,000 from which to support himself for two years.  He could quite easily have put aside enough money from which to draw a weekly "wage" and still had money to purchase a car and put a deposit on a house.  He could have put money on the mortgage from his weekly "wage" thus still having money to live off and gaining equity in a home.  It is not an unreasonable outcome for Mr Lourie to have been precluded from receiving social security payments for that length of time given the amount of money he received.

19. The situation now, however, is that Mr Lourie has his money tied up in these assets.  The point is that he still has his money.  He has the option of selling a car to raise funds to live off for the remaining seven months of the preclusion period.  He also has the option of borrowing against the $60,000 equity in his home to raise those funds.  Then there is the option of selling the house, investing the equity, so that he has money to live off and then using the remaining equity as a deposit for a new home once he is in receipt of social security payments or wages again.  The Tribunal is not advocating any of these options as the one which Mr Lourie should adopt but is rather pointing out that he does have options available to him so that it cannot be said that he is in extreme financial hardship.

20. It cannot be said that the circumstances of this case are "uncommon", "unusual" or "exceptional" in any way.  Nor can it be said that the legislation is affecting Mr Lourie in a manner different from what was intended or from how it would affect any other person in receipt of compensation.  Therefore, it is this Tribunal's finding that there are no circumstances in this case which can be described as sufficiently "special" so as to justify disregarding some or all of the compensation payment in the calculation of the preclusion period.

21. Therefore, the Tribunal affirms the decision under review.

    I certify that the 24 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President DP Breen, Presidential Member

    Signed:         Emma Oettinger
      Associate

    Date/s of Hearing  4.5.01
    Date of Decision  17.5.01    
    Rep. for the Applicant              Applicant appeared in person by telephone
    Solicitor for the Respondent    Mr N Foster, Departmental Advocate