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

This matter concerned an appeal by Mr McKenzie against a decision of the Secretary of the Department of Social Services to recover a debt of $43,789.04. This debt arose from Newstart Allowance (NSA) paid to Mr McKenzie and his partner during a period for which Mr McKenzie later received a lump sum compensation payment for lost earnings. The Administrative Appeals Tribunal (AAT) had previously ordered that a portion of the compensation payment should be treated as not having been made, resulting in a refund to Mr McKenzie. The Secretary sought further review of this decision.

The primary legal issue before the Tribunal was whether there were "special circumstances" within the meaning of section 1184K of the *Social Security Act 1991* (Cth) that would justify treating the whole or part of Mr McKenzie's compensation payment as not having been made. Mr McKenzie argued that such special circumstances existed due to his need to fund further litigation against his former employer, his debilitating physical and mental health conditions preventing employment, severe financial hardship, and the delay in receiving his compensation payments.

The Tribunal considered Mr McKenzie's arguments regarding further litigation and found that the evidence did not support his claim that a lack of funds was the primary barrier. It was noted that his injury had not reached maximum medical improvement, a prerequisite for determining permanent incapacity and pursuing certain types of litigation. Furthermore, the Tribunal observed that Mr McKenzie had received a substantial compensation payment but had dissipated a significant portion of it on gambling, rather than allocating it to legal fees. The Tribunal concluded that while the delay in compensation payments caused financial stress, this was not an unusual occurrence, and Mr McKenzie had been notified of potential repayment obligations for Centrelink payments since 2014.

Ultimately, the Tribunal determined that Mr McKenzie's circumstances did not amount to special circumstances that would enliven the discretionary power under section 1184K of the Act. Consequently, the Tribunal set aside the previous AAT decision and substituted a decision to affirm the Secretary's original decision to recover the debt.