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

[2015] AATA 957

Macartney and Secretary, Department of Social Services (Social services second review) [2015] AATA 957 (11 December 2015)

Division	GENERAL DIVISION
File Number(s)	2015/3168
Re	Tammy Macartney
APPLICANT
And	Secretary, Department of Social Services
RESPONDENT

DECISION

Tribunal	Ms G Ettinger, Senior Member
Date	11 December 2015
Place	Sydney

The Tribunal affirms the decision under review.

........................................................................

Ms G Ettinger, Senior Member

CATCHWORDS

SOCIAL SECURITY – lump sum compensation payments - preclusion period imposed – Applicant seeks to have preclusion waived or reduced due to financial hardship – whether special circumstances - decision under review affirmed.

LEGISLATION

Social Security Act 1991 ss 1169, 1170, 1184K

CASES

Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25

Dranichnikov v Centrelink (2003) 75 ALD 134
Groth v Secretary Department of Social Security [1995] FCA 1708
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Re Colaiacolo and Secretary to the Department of Social Security [1985] AATA 91
Re Groth and Secretary, Department of Social Security [1995] AATA 62

Secretary, Department of Social Security v Smith (1991) 30 FCR 56

SECONDARY MATERIALS

Guide to Social Security Law

REASONS FOR DECISION

Ms G Ettinger, Senior Member

11 December 2015

SUMMARY

1. Ms Tammy Macartney who is 39 years old, suffered a compensable injury to her neck at work on 21 September 2009. She was a party to a compensation settlement of $275,000 on 1 March 2013, and represented by lawyers. Ms Macartney had also been paid two other amounts, $54,769.20 and $25,000 in 2012 and 2013 respectively, which had to be aggregated and provided a total compensation payment of $354,769.20. Following deductions for Medicare and legal fees, Ms Macartney received $217,501 clear on 3 April 2013. As she had been receiving weekly compensation payments until 5 April 2013, Centrelink imposed a compensation preclusion period commencing the following day, and lasting from 6 April 2013 to 7 April 2017, a period of 209 weeks. 

2. Ms Macartney was represented by lawyers for the settlement, and fully informed by Centrelink of the action to be taken, and how the compensation preclusion period had been calculated.

3. Ms Macartney appealed the preclusion period as she said that her health situation has not improved since her injury, and that she cannot work.  She would like the preclusion period to be reduced or waived in full, so that she can receive Disability Support Pension (DSP). I note that DSP is a ‘compensation affected payment’, and can therefore not be received during a preclusion period.

4. The decision to impose the preclusion period, and its length, was affirmed first by an Authorised Review Officer (ARO) of the Secretary, Department of Social Services (the Respondent, Centrelink), and, on 27 May 2015, by the Social Security Appeals Tribunal (SSAT), as it then was. Both the ARO and the SSAT found there were no special circumstances to justify exercising the discretion under section 1184K of the Social Security Act 1991 (the Act), to treat all or part of the compensation amount as not having been made. The effect of exercising the discretion in Ms Macartney’s favour would mean that all or part of the preclusion period would be eliminated.

5. Ms Macartney applied for review of the decision of the former SSAT, and attended this Tribunal’s hearing self represented, by telephone. Ms G Doyle, a solicitor, appeared for the Department.

6. I have considered Ms Macartney’s evidence, submissions of both parties, and the law, and am not satisfied that the decision of the SSAT should not be affirmed. My reasons follow.

   ISSUES BEFORE THE TRIBUNAL

7. The issues before the Tribunal are:

   ·whether Ms Macartney is subject to a preclusion period and if so, whether the preclusion period was calculated correctly;

   ·whether it is appropriate to treat a part or all of a lump sum compensation payment received as not having been made in the special circumstances of the case;

   ·whether Ms Macartney's application for DSP should have been rejected on the basis of the preclusion period.

   RELEVANT LEGISLATION

8. The relevant legislation in this matter is the Social Security Act 1991, in particular, sections 1170 and 1184K.

9. Policy guidance set out in the ‘Guide to Social Security Law’ (the Guide) is also relevant.

10. Section 1170 of the Act provides that if a person receives a lump sum compensation payment, they are subject to a compensation preclusion period calculated according to a formula stipulated under the Act. Section 1169 of the Act provides that a person is not eligible to receive a ‘compensation affected payment’ while a lump sum preclusion period is in place. Ms Macartney has applied for DSP, but cannot receive it, because pursuant to the legislation, it is a ‘compensation affected payment’.

11. The reason behind the compensation preclusion period provisions has been recognised to ensure that a person is not paid from two sources in respect of the same period of time, and that when a person receives compensation, they should use that money to support themselves.

    CONSIDERATION OF THE EVIDENCE AND CASE LAW

    Ms Macartney’s evidence

12. Ms Macartney told me that whilst she does not dispute the calculations made in regard to the preclusion period, she is generally upset at the fact of having a compensation preclusion period imposed. Because there is a preclusion period in place, she cannot have the benefit of a ‘compensation affected payment’ such as DSP. She does however continue to receive Family Tax Benefit (FTB) and Child Care Benefit (CCB), and the Schoolkids Bonus which is approximately $210 every six months.

13. Ms Macartney told me that she has ongoing medical problems arising out of the compensable injury, and that it is a struggle to keep a roof over her head. She acknowledged that she received $217.501 as settlement for her injury, but said that bank and school fees, and her expenses were high.

14. Ms Macartney told me that she paid $160 per session to see her psychologist once every two weeks initially, but sees her less often now. Ms Silvana Giorgi, the clinical psychologist, provided a letter dated 17 September 2015 in which she stated that Ms Macartney had been seeing her since August 2011.  She referred to the 2009 injury, and noted that Ms Macartney initially suffered an Adjustment Disorder with Mixed Anxiety and Depressed Mood which has since developed into Major Depressive Disorder. I am satisfied from the documentation before me that approximately half the cost of attending at the psychologist is reimbursed.

15. Ms Macartney said that rent was $430 - $450 per week for her and her 12 year old daughter who lives with her.  In her Statement of Financial Circumstances prepared for Centrelink, at T17/130, and dated 22 May 2015, Ms Macartney indicated that her rent was $1,760 per month which did not accord with her oral evidence.

16. Ms Macartney also stated that she pays $3,000 per quarter for repairs to her 2005 Holden Commodore. I found that curious and high, given that after her compensation payout, Ms Macartney made major purchases including an amount for a car, which could be $10,000 or $28,000 as she told a Centrelink officer who recorded it at T18/136, or $25,000 spent in 2013 as the Applicant told me at the hearing.

17. Her dental bills are $20,000 a year, and she says this is based on the fact she has had extensive work done, and needs further dental work. When asked to provide receipts for the payment, Ms Macartney replied that the dentist was no longer working, that she paid cash for the service, and that no receipts were available.

18. The $6,000 she put down for entertainment was mainly for outings, and school events such as swimming.

19. Ms Macartney also said that she spent $25,000 on new furniture, and $30,000 taking her family to visit relatives in the UK who were sick. When asked about the expenditure for the trip, Ms Macartney told me at first that she stayed for six weeks, and when this was explored further with her, agreed that she departed Australia on 15 July 2014, and returned on 1 August 2014. That makes it approximately two weeks, and I accept the submissions of the Respondent that the expenditure as given by the Applicant for that period was rather high.

20. Ms Doyle submitted, and I accepted from the documents that the insurance costs incurred by Ms Macartney were shown to be $100 per month whereas the Applicant said that her house, contents insurance and car insurance amounted to $330 per month.

21. I am satisfied also that the costs Ms Macartney claims she has incurred as a result of her injury such as chemists’ expenses, doctors, chiropractors, acupuncture and others, may have amounted to $2,000, but that she was reimbursed by Medicare.

22. Ms Macartney provided certain bank statements which are before me as Exhibit A1.  Other statements which she also provided separately were already before me in the supplementary T-documents as ST1.

23. Ms Macartney was cross-examined on a number of large withdrawals she made out of her accounts, one in particular where she commenced with $47,000 in May 2014, and ended up with $1,386.54 in June 2015. She also explained large withdrawals from accounts (e.g. $48,000 in cash from another financial institution between March 2013 and September 2015), by telling me that she does not have credit cards and deals only in cash.

24. I can only conclude, unfortunately, that Ms Macartney’s evidence is not credible as she appeared to frequently change it, as noted above, when questioned.

    Whether Ms Macartney is subject to a preclusion period and if so, whether that period was calculated correctly

25. I have noted that section 1170 of the Act is applied to work out a lump sum preclusion period where an injured worker has been awarded a lump sum compensation payment.  As noted above, Ms Macartney received three compensation payments, $54,769.20 in 2012, and $25,000 in 2013, as well as $275,000 on 1 March 2013. Pursuant to the legislation, those amounts had to be aggregated, and came to $354,769.20. Following deductions for Medicare and legal fees, and the application of the formula in section 1170 of the Act, Ms Macartney received a payment of $217,501.

26. Section 1170 follows as relevant and was applied to work out the dates for the compensation preclusion period, which are 6 April 2013 to 7 April 2017, being 209 weeks.

    1170     Lump sum preclusion period

    (1)  Subject to subsection (2), if a person receives both periodic compensation payments and a lump sum compensation payment, the lump sum preclusion period is the period that:

    (a) begins on the day following the last day of the periodic payments period or, where there is more than one periodic payments period, the day following the last day of the last periodic payments period; and

    (b) ends at the end of the number of weeks worked out under subsections (4) and (5).

    …

    (4) The number of weeks in the lump sum preclusion period in relation to a person is the number worked out using the formula:

    Compensation part of lump sum

    Income cut-out amount

27. Compensation part of a lump sum is defined in section 17(3) of the Act as:

    Compensation part of a lump sum

    (3)       Subject to subsection (4), 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:

    ….

28. I am satisfied from the calculations of the Respondent and the SSAT that Ms Macartney was subject to a preclusion period as a result of having received a compensation payout, and that it was calculated correctly.

29. Ms Macartney’s appeal centres around her perception that she has spent most the settlement moneys, and does not have enough money to live on. She considers that due to the special circumstances of her case, the Tribunal should treat all or part of the compensation payment as not having made in order that the preclusion period can be reduced or completely waived.

    Whether it is appropriate to treat a part of all of the lump sum compensation payment received as not having been made in the ‘special circumstances’ of the case

30. I note that the principles behind the imposition of a compensation preclusion period have been recognised and applied many times in this Tribunal, and in the Federal Court. As already stated, section 1170 of the Act provides that if a person receives a lump sum compensation payment, they are subject to a compensation preclusion period. Section 1169 of the Act provides that a person is not eligible to receive a ‘compensation affected payment’ (such as DSP), while a lump sum preclusion period is in place.

31. The preclusion period is in effect to ensure that a person is not paid from two sources in respect of the same period of time. This reflects the notion that when a person receives compensation, they should use that money to support themselves before turning to taxpayer-funded support in the form of a ‘compensation affected payment’ such as DSP.

32. However, the Secretary, and the Tribunal standing in his shoes, may disregard all or part of the compensation payments as set out in section 1184K of the Act which would shorten the length of the preclusion period or waive it completely, if the Tribunal thinks it is appropriate to do so in the special circumstances of the case.

    s1184K Secretary may disregard some payments

    For the purposes of this Part, the Secretary may treat the whole or part of a compensation payment as:

    not having been made; or

    not liable to be made;

    if the Secretary thinks it is appropriate to do so in the special circumstances of the case

    …

33. For there to be special circumstances, the Tribunal must be satisfied that Ms Macartney’s circumstances are unusual or uncommon. (Re Beadle and the Director-General of Social Security (1984) 6 ALD 1.) In Groth and Secretary Department of Social Security (1995) FCA 1708 the Federal Court held:

    ...The phrase ‘special circumstances’, it has been said, although imprecise is sufficiently understood not to require judicial gloss...it is sufficient to observe that it would require something to distinguish Mr Groth's case from others, to take it out of the usual or ordinary case. That was, I consider, the only enquiry to be undertaken in this case. It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary. The enquiry I have referred to would involve considering what would be the effect, if the provision in question or the principle of liability it creates, is applied...

34. The Tribunal must also consider whether the maintenance of the preclusion period would be unjust, unreasonable or otherwise inappropriate.

35. In coming to a decision, I note that Ms Macartney has provided evidence as detailed above, with regard to the state of her health, and her household expenses. She told me that she has spent almost all of the $217,501 which she received in 2013.

36. Unfortunately that was very difficult to ascertain, and I am not satisfied that I have in fact been able to find out where the bulk of the money was invested, or how it was used. There are large withdrawals from bank accounts, as shown on statements which Ms Macartney has provided.  At ST1/153, for example, Ms Macartney has withdrawn $47,000 from an investment fund in May 2014 as well as many smaller amounts. The opening balance of that fund’s account in May 2014 was $47,000 and the closing amount approximately a year later was $1,386.54. She was unable to give an explanation regarding whether the funds were re-invested, or how they were spent.

37. In another account, she was credited $27,206 on a date in May 2013, and made a withdrawal of $25,000 on the same day (ST2/164). She was unable to give me an explanation which was satisfactory as to the destination of the money, or to what use it was put. She simply said that she withdrew cash to use for her expenses. No receipts were available even for large amounts allegedly spent, including at the dentist. The evidence regarding the $30,000 spent on a six week trip to the UK turned out to be a two week trip. It is difficult to accept, and I do not so accept, that Ms Macartney spent that money during a two week trip.

38. Unfortunately I could not accept that the evidence about much of the way she managed her money was credible.

39. The two main circumstances in Ms Macartney’s life which she claims are special circumstances are her health and her financial situation. I do not have any evidence of deterioration of Ms Macartney’s health. I note from the report of her psychologist whom she has been seeing her since 2011 that she was able to travel to the UK, and that she  manages to look after her 12 year old daughter for whom she receives income support. There was no evidence before me except her own that she is incapable of even part-time work.

40. As to her financial situation; unfortunately I could not accept that the evidence she gave was credible. She received a net amount of $217,501 in 2013, and I cannot be satisfied as to how and where the bulk of the funds were invested, or how Ms Macartney has spent some or all of the compensation settlement sum in less than two years.  

41. As I have already said, the preclusion period is to ensure that a person is not paid from two sources in respect of the same period of time. This reflects the notion that when a person receives compensation, they should use that money to support themselves.

42. The Act does not define special circumstances, but it is generally accepted by this Tribunal that they are circumstances which are unusual, uncommon or exceptional, making the case markedly different from the usual run of cases. (Re Beadle and Director- General of Social Security (1984) 6 ALD 1). The Full Federal Court of Australia in Dranichnikov and Centrelink (2003) 75 ALD 134, remarked, at [66]: There will be a requirement that the circumstances are such that takes the case out of the ordinary.

43. In Secretary, Department of Social Security v Smith (1991) 30 FCR 56, von Doussa J remarked, at [61],  that the scheme is intended to operate to provide:

    a fair balance of the interests of the recipient of the payment with the competing interests of others in the community whose needs must be met as far as possible from a finite budget allocation for social security measures.

44. The applicant also raises the issue of financial hardship. This Tribunal has found that financial hardship alone cannot qualify as special circumstances. In ReColaiacolo and Secretary To the Department of Social Security [1985] AATA 91, the Tribunal stated, at [20]:

    It is surely correct, on the basis of the evidence, that the applicant and those members of his family still dependent on the combined incomes are by no means well off financially. However, I cannot escape the conclusion that straitened as the financial circumstances are, they are not exceptional. Even if they were, the Tribunal has previously ruled that the financial position of an applicant would not ordinarily constitute a special circumstance (Re Beadle and Director-General of Social Security (1984) 6 ALD 1) … 

45. In Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25, the Federal Court emphasised that for special circumstances to be established pursuant to section 1184K of the Act, the case need not be exceptional but that there would have to be circumstances which distinguished the case from the ordinary or usual.

46. I am not satisfied that Ms Macartney’s circumstances are very different from those of many injured workers, and people who receive a compensation settlement. I have no evidence that her health issues have escalated, and as noted above, I am not satisfied as to the dissipation of the $217,501 she received in a matter of two years. I have taken into account the Guide, the legislation, and the case law.

1. I have formed the view that the Applicant’s circumstances are not special circumstances such as to persuade me to exercise the discretion to treat the whole or part of the compensation payment as not having been made. I do not consider that there is unfairness or unintended consequence arising from the application of the compensation provisions in this case. I am not satisfied that the discretion available to me under s 1184K of the Act ought to be exercised. I do not consider that the maintenance of the preclusion period would be unjust, unreasonable or otherwise inappropriate. Accordingly the preclusion period cannot be truncated or waived.

   Whether Ms Macartney's application for DSP should have been rejected on the basis of the preclusion period

2. I am satisfied as indicated in the paragraphs above that Ms Macartney’s preclusion period imposed upon receipt of her compensation payout was correctly calculated. No ‘compensation affected payment’ such as DSP can be made during a preclusion period.

3. As I have not found special circumstances in this case in order that I can exercise the discretion to either consider all or a part of the compensation payment as not having been made, the preclusion period cannot be either truncated or waived.

4. Accordingly Ms Macartney’s application for DSP was correctly rejected on the basis of the preclusion period.

   DECISION

5. The Tribunal affirms the decision under review.

I certify that the preceding 51 (fifty one) paragraphs are a true copy of the reasons for the decision herein of Ms G Ettinger, Senior Member

.............................[sgd]...........................................

Associate

Dated 11 December 2015

Date(s) of hearing	13 November 2015
Applicant	By phone
Solicitors for the Respondent	Department of Human Services