McFarlane and Secretary, Department of Employment and Workplace Relations

[2006] AATA 680

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 680

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No W2005/313

GENERAL  ADMINISTRATIVE DIVISION		)
Re		PHILLIP MCFARLANE

Applicant

And SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Mr A Sweidan, Senior Member

Date3 August 2006

PlacePerth

Decision The Tribunal affirms the decision under review.

.....(Sgd A Sweidan).......

Senior Member

CATCHWORDS

Social Security Act 1991 Part 3.14 - Disability Support Pension - Section 1184K (1) - "special circumstances" – preclusion period for “compensation affected payment”.

CASES

Beadle and Director-General of Social Security (1984) AATA 1548

Dranichnikov v Centrelink (2003) FCAFC 03/133

Bell and Secretary, Department of Social Security [1998] AATA 284

REASONS FOR DECISION

3 August 2006 Mr A Sweidan, Senior Member    

BACKGROUND

1.      This is an appeal against a decision of the Social Security Appeals Tribunal (SSAT) dated 8 August 2005 to affirm the decision of a Centrelink Officer on 5 January 2005 to preclude the applicant from receiving a compensation affected payment for the period 30 December 2004 to 19 July 2006. 

2.      The issues and the relevant facts, to the extent that they are not in dispute, are set out in the respondent’s statement of facts and contentions filed with the Tribunal on 1 December 2005 and it is convenient to set them out here with relevant modifications where appropriate.

Issues

3.      Is Disability Support Pension a compensation affected payment?

4.      Is the applicant precluded from receiving a compensation affected payment for the period 30 December 2004 to 19 July 2006? and, if so

5.      Are there special circumstances in the applicant’s case that allow for part, or all, of the compensation to be disregarded.  

Facts

6.      The applicant was granted a Disability Support Pension from 30 March 1989 and was receiving Disability Support Pension in December 2004.

7.      On 6 December 2004 the applicant’s solicitor, Bradley & Bayly, advised Centrelink that the applicant’s compensation case, in relation to an accident on 6 November 2003, was to proceed to settlement and requested an estimate of any Centrelink charge or preclusions based on a settlement of $106,935.00.

8.      On 7 December 2004 Centrelink wrote to the applicant, and his solicitor Bradley & Bayly, advising that if he received a compensation payment he may have to repay some money and that his future entitlements may be affected.

9.       On 10 December 2004 Centrelink wrote to Bradley & Bayly estimating that, based on a settlement of $106,935.00 there was likely to be a preclusion period from 11 December 2004 to 30 June 2006.

10.     On 30 December 2004 Centrelink received notice from Wesfarmers Insurance that the applicant had settled his compensation claim on 29 December 2004 for a gross amount of $106,785.15.    

11.     On 5 January 2005 Centrelink wrote to the applicant and his solicitor advising that a compensation preclusion period would apply to Centrelink payments from 30 December 2004 to 19 July 2006.

12.     On 5 January 2005 Centrelink wrote to the applicant to advise him that his Disability Support Pension payment was cancelled because of his compensation payout.

13.      On 11 January 2004 the applicant contacted Centrelink seeking a review because he claimed that he had been given contradictory information about the preclusion period.  A letter was sent to the applicant seeking details of his circumstances in order for a review of the decision to be conducted. 

14.     On 14 February 2005 Centrelink received details of the applicant’s circumstances and on 18 March 2005 wrote to the applicant affirming the decision to apply the compensation preclusion period for the period 30 December 2004 to 19 July 2006.

15.     The applicant sought further review of the decision on 23 March 2005 and on 26 April 2005 an Authorised Review Officer affirmed the decision under review.

16.     The applicant did not dispute the facts as set out above but claimed in his evidence to the SSAT and to the Tribunal (as to which see below) that he had been told in conversations with Centrelink officers that a preclusion period would not apply.

RESPONDENT’S Contentions

The respondent contended that:

17.     The decisions under review are decisions made in accordance with the social security law of Australia, which includes the Social Security Act1991 (the Act).

18.     The substantive matter in this case is whether the provisions of Part 3.14 of the Act apply to the payment received on 29 December 2004 resulting in the application of a compensation preclusion period from 30 December 2004 to 19 July 2006.

19.     Part 1.2 of the Act contains definitions of terms used throughout the Act. Relevantly section 17 of the Act contains definitions of terms relevant to Compensation Recovery and section 23 of the Act contains general definitions of terms used in the Act. Part 3.14 of the Act contains the provisions relating to Compensation Recovery.

20.     It is not disputed that the applicant was injured in an accident on 6 November 2003.

21.     The Secretary submits that Disability Support Pension is a compensation affected payment in accordance with subsections 17(1)(a) of the Act.

Compensation recovery definitions

17.(1)  In this Act, unless the contrary intention appears:

...

"compensation affected payment" means:

...

(a)      a disability support pension; or ...

22.     Section 17 (2) of the Act describes compensation:-

Compensation

17.(2)Subject to subsection (2B), 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 and whether it is made within or outside Australia) that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury.”

23.     The Secretary submits that subsection 17 (2B) of the Act relates to criminal injury and does not apply in this case. 

24.     The Secretary contends that the applicant was sent a notice on 7 December 2004 explaining that any compensation he received may stop him from receiving Centrelink payments in the future and detailed how the preclusion period would be calculated.

25.     The Secretary contends that Bradley & Bayly, the applicant’s solicitors, were also sent a notice on 7 December 2004 detailing that any compensation payment may affect current and future entitlement and that there may be some Centrelink payment recovery.

26.      The Secretary contends that Bradley & Bayly, the applicant’s solicitors, were sent a further notice on 10 December 2004 providing an estimated preclusion period from 11 December 2004 to 30 June 2006 and explaining how the preclusion period is calculated.

27.     The Secretary submits that on 29 December 2004 the applicant received an amount of $106,785.15 in an out of court settlement for the injury that occurred on 6 November 2003, that the payment was made wholly or partly in respect of lost wages or capacity to earn and that this amount is compensation under the terms of section 17 (2) of the Act. 

28.      The compensation part of a lump sum payment is described at sub-section 17(3) as being 50% of the payment if the payment is made in settlement of a claim that is wholly or partly related to a disease, injury or condition and the claim was settled by consent judgement.

“Compensation part of a lump sum

17(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:

(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 judgement being entered in respect of the settlement or otherwise; or

(ab)     50% of the payment if the following circumstances apply:

(i)the payment represents that part of a person's entitlement to periodic compensation payments that the person has chosen to receive in the form or a lump sum; and

(ii)the entitlement to periodic compensation payments arose from the settlement (either with or without admission of liability) of a claim that is, in whole or in part, related to a disease, injury or condition; and

(iii)the claim was settled, either by consent judgement being entered in respect of the settlement or otherwise; or

(b)if those circumstances do not apply—so much of the payment as is, in the Secretary's opinion, in respect of lost earnings or lost capacity to earn, or both.”

29.     The respondent contends that in the applicant’s case the compensation part of the lump sum payment has been correctly determined to be $53,392.57 under section 17.(3)(a) of the Act.

30.     The provisions of subsection 1169(1) preclude Disability Support Pension from being payable to the applicant in relation to any day in the lump sum preclusion period.

31.     The lump sum preclusion period is calculated under subsections 1170 (3), 1170 (4) and 1170 (5).  These subsections prescribe that the lump sum preclusion period is the period that begins on the day on which the loss of earnings, or loss of capacity to earn, began and ends at the end of the number of weeks worked out by dividing the compensation part of the lump sum divided by the income cut-out amount, rounded down if not a whole number.

32.     Subsection 17 (1) and 17 (8) of the Act describe that the income cut out amount is the income amount at which a single pension would cease to be payable, in force at the time the compensation was received.  As the applicant received his compensation on 30 December 2004 the income cut-out amount in force at that time was $656/63.

33.     The respondent submits that in the applicant’s case this results in the equation of $53,392.57 divided by $656.63 – equal to 81 weeks.  The lump sum preclusion period extends from 30 December 2004 to 19 July 2006.

34.     The respondent contends that the decision that the preclusion period extends from 30 December 2004 to 17 July 2006, notified to the applicant on 5 January 2005 and affirmed by the Social Security Appeals Tribunal on 3 August 2005 is the correct decision. 

35. The respondent submits that section 1184K of the Social Security Act 1991 allows the treatment of the whole, or part, of a compensation payment as not having been made if the respondent thinks it is appropriate to do so in the ‘special circumstances’ of the case. That section relevantly says”

1184K (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.

36.     In Beadle and Director-General of Social Security (1984)n AATA 1548 the AAT found:

“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.”

37.     This view is supported in Dranichnikov v Centrelink (2003) FCAFC 03/133 were the Full Federal Court held that for a finding of special circumstances to be made:

“…what is required will be circumstances which distinguish the case in consideration from the usual case.  There will be a requirement that the circumstances are such that takes the case out of the ordinary…”

38.     The applicant’s evidence to the Social Security Appeals Tribunal was that he had been given incorrect or misleading advice when he contacted Centrelink on 16 December 2004, and again shortly after, by being told that he would not have to serve a preclusion period.

39.     The respondent contends that there is no evidence to support this assertion and that the letters sent to the applicant and the letters to his solicitor clearly indicated, prior to the settlement being accepted, that a preclusion period would apply on receipt of compensation.

40.     In the case of Bell and Secretary, Department of Social Security [1998] AATA 284 the Tribunal found that is was appropriate to waive part of the compensation preclusion period because it found that Centrelink had given Mr Bell wrong information several times which resulted in him being in hardship.

41.     The respondent submits that the applicant’s case is distinguished from re Bell in that the applicant was aware, by the letters Centrelink sent to him and his solicitor that a preclusion period would apply in his case.

42.     It is the respondent’s contention that, even if it should be established that the applicant was told by Centrelink that there would not be a preclusion period, the estimated settlement amount was advised to Centrelink by the solicitor on 6 December 2004 and the alleged incorrect advice given on, or after, 16 December 2004 cannot be said to be the casual factor to any perceived loss suffered by the applicant by accepting the settlement offer.

43. The respondent contends that there has been no other evidence presented by the applicant which would allow his circumstances to be considered unusual, uncommon or exceptional to warrant the application of section 1184K of the Social Security Act 1991. 

EVIDENCE

44. At the hearing of the matter which took place on 16 June 2006 the applicant represented himself and the respondent was represented by Mr Nipperus of the Legal Services Branch of Centrelink in Western Australia. The Tribunal had before it the “T” documents prescribed by section 37 of the Administrative Appeals Tribunal Act 1975.

45.     The applicant gave evidence the gist of which was that after receiving the letters from Centrelink in December 2004 referred to above advising him that a preclusion period would apply because of his receiving an amount in respect of damages, he had a telephone conversation with a person in the Centrelink office whose name he was unable to state but which he believed was “Sean or Shane or something” and also spoke with a lady by the name of Jan in Centrelink’s office in Geraldton.  He said that in both conversations he was told that his Disability Support Pension would not be affected by his receipt of compensation, notwithstanding the written advice to the contrary sent to both the applicant and his solicitors by Centrelink.

46.     The applicant admitted having received the letters referred to but said that because of the verbal advice to the contrary which he claimed to have received he had assumed that his Disability Support Pension would not be affected by the receipt of compensation.

47.     The applicant furthermore claimed that he had accordingly proceeded to expend monies on school fees, uniforms and books for his children as well as another child that he was supporting and asserted that he would not have done so if he had not believed that his Disability Support Pension would continue.  The applicant also claimed that on another, unrelated occasion he was given incorrect information by Centrelink.  However, the Tribunal finds that to be irrelevant to this matter.

48.     Unfortunately, the applicant’s evidence was far from clear.  He had initially claimed that the telephone conversation in question took place on the 19^th of December but he subsequently acknowledged that as this date was a Sunday it could not have been on that date but then said it must have been on an earlier date, either the 10^th or the 16^th December 2004.

49.     In cross-examination the Centrelink records of telephone conversations between Centrelink Officers and the applicant were put to the applicant.  There is no record of any conversation on 10^th December 2004.  There is a record of a conversation on 16 December 2004 which appears at page 57 of the “T” documents but this contains no reference to the preclusion period.  The applicant was adamant that the preclusion period was discussed in a telephone conversation with a Centrelink officer although he was uncertain of the date.  There is a record of a later conversation on 11 January 2005 which is at page 37 of the “T” documents and which reads as follows:

“ANNOTATE BY XCO ON 5 JAN 2005

A/n tfr’d from CC.

States has received contradictory information with regards to how settlement will affect his pension.  Seems to be a situation where information provided was misinterpreted.  Also claims to have liaised with a CSO from Moora via comp section, this information contradicts settlement assessment.  Also claim estimate contradicts previously provided info.

Special Circ’s form issued.

Didn’t advise a/n of what his chances of having the decision reversed were.”

50.     It appears that apart from being confused as to the date of the alleged telephone conversation the applicant was also confused as to the content thereof.  The applicant acknowledged that there were also other matters discussed in his telephone calls to Centrelink and also in his discussions with Jan namely in regard to monies that had been overpaid to him and a consequent debt which he had to Centrelink.  The applicant was unable to say which matters had been discussed in which conversation.

51.     The Tribunal accepts that Mr McFarlane, the applicant, was convinced in his own mind that at some stage he had been told by someone at Centrelink that no preclusion period would apply.  The SSAT found that the applicant honestly held this belief.  However it is clear that the applicant chose to believe this notwithstanding the earlier written advice from Centrelink and his solicitors to the contrary.  At no time did the applicant seek to obtain any written confirmation from Centrelink of the contrary statement that he claims was made to him.

52. In all of the circumstances, while the Tribunal sympathises with the applicant who has clearly experienced very difficult personal circumstances over a period of time the Tribunal is unable to find that there are special circumstances in this matter as required by section 1184K(1) of the Act.

53.     In the circumstances, the Tribunal finds that the answers to the questions set out in paragraphs 3, 4 and 5 above are as follows:

3 – Yes

4 – Yes

5 – No

and the Tribunal accordingly affirms the decision under review.

I certify that the 53 preceding paragraphs are a true copy of the reasons for the decision herein of Mr A Sweidan, Senior Member

Signed:         ..........(Sgd S da Motta)...............................
  Associate

Date of Hearing  16 June 2006
Date of Decision  3 August 2006
Representative for the Applicant               Self represented

Representative for the Applicant               Mr F Nipperus

Legal Services Branch

Centrelink