Melissa Richards and Secretary, Department of Education, Employment and Workplace Relations

[2012] AATA 874

[2012] AATA 874  

Division	GENERAL ADMINISTRATIVE DIVISION
File Number(s)	2012/4234
Re	Melissa Richards
APPLICANT
And	Secretary, Department of Education, Employment and Workplace Relations
RESPONDENT

DECISION

Tribunal	Senior Member J F Toohey
Date	12 December 2012
Place	Sydney

The decision under review is set aside and in substitution the Tribunal decides that Ms Richards’ periodic compensation payments from 4 May 2012 to the date of this decision should be disregarded in calculating the parenting payment to which she is entitled.

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

Senior Member J F Toohey

CATCHWORDS

SOCIAL SECURITY – parenting payment – periodic compensation payments – parenting payment reduced – discretion to treat whole or part of compensation payments as not having been made – whether special circumstances – decision under review set aside

LEGISLATION

Social Security Act 1991 ss 17(1)(b), 1173, 1184K

CASES

Director-General of Social Security v Hales (1983) 78 FLR 373

Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Haughey and Secretary, Department of Social Security (1994) 36 ALD 653

Re Beadle and Director General of Social Security (1984) 6 ALD 1

REASONS FOR DECISION

Senior Member J F Toohey

12 December 2012

BACKGROUND

1. Melissa Richards injured her hand at work in September 2011.  Her employer accepted liability for her injury.  Her hand has taken longer than expected to recover and will require injections and, possibly, surgery.  In the meantime, she cannot work and receives weekly compensation payments of $217.56.

2. Ms Richards has two young children.  At the time of her injury, she was receiving Family Tax Benefit.  In March 2012, she separated from her husband.  She was granted parenting payment with effect from 8 March 2012.   

3. This matter concerns the effect of her weekly compensation payments on Ms Richards’ parenting payment. 

   THE LEGISLATION

4. The relevant legislation is the Social Security Act1991 (the Act). 

5. Parenting payment is a compensation affected payment: s 17(1)(b).

6. If, at the time of an injury, a person was not receiving a compensation affected payment, and subsequently receives periodic compensation payments for that injury, their compensation affected payment is reduced dollar-for-dollar by the amount of the periodic payment: s 1173.

7. The Secretary may treat the whole or part of a compensation payment as not having been made if the Secretary thinks it appropriate to do so in the special circumstances of the case: s 1184K.

   THE ISSUE

8. There is no question that Ms Richards qualifies for parenting payment, and there is no dispute that Centrelink has correctly applied the relevant legislation in reducing her parenting payment dollar-for-dollar by the amount of her weekly compensation payment. 

9. The issue in this case is whether there are special circumstances that make it appropriate to treat some or all of Ms Richards’ compensation payments as if they had not been made, meaning that some or all of her parenting payment is not affected.

   MS RICHARDS’ CLAIM FOR PARENTING PAYMENT

10. Ms Richards moved with her husband and their children, now aged 10 and 7, to Inverell in northern New South Wales from Sydney approximately two years ago in the hope that cheaper rents and the prospect of work would help them reduce their debts.  Her husband could not find work and, when they separated on 7 March 2012, they still had substantial debts.  He has not been in contact since they separated and Ms Richards does not know where he is or whether he is working.  He pays no child support. 

11. On 8 March 2012, Ms Richards contacted Centrelink to claim parenting payment.  On 11 April 2012, Centrelink determined that she was entitled to the payment with effect from 8 March 2012.  The information she provided to Centrelink in connection with her claim is considered below.

12. Ms Richards was paid parenting payment from the first pay day after 11 April 2012 at the full rate, with no reduction on account of her compensation payments.  

    THE DECISION TO REDUCE RATE MS RICHARDS’ PARENTING PAYMENT

13. On 17 May 2012, Centrelink determined that Ms Richards’ parenting payment should be reduced by the amount of her weekly compensation payments with effect from 4 May 2012.  The background to that decision is considered below.

14. There is no suggestion that Ms Richards deliberately withheld information or provided false information to Centrelink about her application.  The Social Security Appeals Tribunal (SSAT), which heard her application for review in September 2012, commented that she was an honest witness who gave her evidence “in a straightforward manner and did not dissemble”. I found her to be the same; her honesty is not in question. 

    The original claim for parenting payment

15. Centrelink records show that Ms Richards contacted Centrelink on 8 March 2012 to inquire about parenting payment.  An officer took down her details by way of an online Customer Declaration Form –Parenting Payment – single form which was an approved claim form.  It was then sent to Ms Richards to sign.  She signed it on 19 March 2012 and it was received by Centrelink on 5 April 2012.  The relevant parts show the following:

    Current employer details        

    Not currently working 

    Compensation  
    I have no reason to claim compensation

    Income streams          
    I will provide details and verification of income received from income stream products

    Other income details
              I will provide details and verification of any other income

16. It is not clear from the form what the officer asked Ms Richards about compensation or why she stated she had “no reason to claim compensation”.  Plainly that answer was incorrect.  It is not suggested that she tried to mislead the officer.   Whether due to how the question was asked, or how Ms Richards understood it, clearly some misunderstanding led to the response as recorded on the form. 

17. It appears that, at the same time that Centrelink sent the Customer Declaration Form to Ms Richards, she was also sent an Income and Assets form.   She signed both on 19 March 2012 and returned them to Centrelink.   The Income and Assets form does not contain any questions about periodic compensation payments, and directs a claimant not to include information about any compensation lump sum payments.  However, it does ask whether the claimant receives income from “any sources not already advised about on the form”.  Ms Richards indicated she did not.

18. It is fair to say that Ms Richards should have been alerted by the question on the Income and Assets about income from “any sources not already advised” but she was not and, read in context, that is perhaps understandable, because the question directs the claimant to include “gratuities; match or sporting payments; other income or payment from other countries; payment in kind such as non-monetary payment for services; scholarships, educational assistance or allowance; any other income”.  In any event, it is not suggested this was anything other than an honest mistake.

19. It appears that the first time that compensation payments were raised with Ms Richards was on 18 April 2012, when a Centrelink officer contacted her after noting she had no employment pathway plan in place as required.  Ms Richards’ response was that she was unable to work and, as a result, was receiving compensation payments, and she provided a copy of her Workcover medical certificate.

20. This conversation led Centrelink to send Ms Richards a Mod C Compensation and Damages form which she signed on 26 April 2012 and returned on 27 April 2012 together with a letter from her workers compensation insurer confirming it had accepted liability for her injury. 

21. Ms Richards believes she told Centrelink about her periodic payments some time before 18 April 2010 but there is no evidence of this.  On balance, I think it more probable than not that the first that Centrelink knew of the payments was the discussion on 18 April 2012.  I am satisfied that, had Centrelink been aware that she was receiving weekly compensation payments, that information would have triggered the standard procedure by which a Mod C Compensation and Damages would be issued.

22. Around this time, Ms Richards had decided to move back to Sydney with her children to be near her extended family.  She knew that rents would be higher than in Inverell.  She could not afford to rent in the suburbs, so she rented a house in Helensburgh on the outskirts of Sydney.  She gave evidence that she calculated she had a total income from her weekly compensation payments, parenting payment and family allowance of $1,695 a fortnight.  It is relevant that, by this time, she had been receiving parenting payment at the full rate as of 8 March 2012.  The weekly rent of $480 in Helensburgh was $270 more than she had been paying in Inverell but she calculated she could afford it.   

    Conversation with Centrelink officer

23. Ms Richards signed the lease on the property on 15 May 2012.  Before doing so, she contacted Centrelink and spoke to an officer to confirm her rate of parenting payment.  There is no dispute that this conversation occurred.  However, Ms Richards and the officer appear to have interpreted it differently.

24. It is not clear precisely when this conversation occurred.  Ms Richards believes it was some time in late April, around the time she first saw the house in Helensburgh.  Centrelink records show contact with Ms Richards on 18 April, 27 April and 10 May 2012.  The notes refer to her compensation and parenting payments but do not record details of conversations.  The next recorded conversation was after she had signed the lease.  In the end, little turns on the precise date of the conversation.  It is not in dispute that it occurred sometime before Ms Richards signed the lease on the Helensburgh property.

25. Ms Richards gave evidence, which I accept, that the purpose of the conversation was to ensure she could afford the higher rent before moving her children from their school and back to Sydney.  She says she estimated her budget carefully, taking into account the substantial debts she and her husband still had.  She says she would not have moved and taken on the increased cost of rent had it not been for advice given by the Centrelink officer. 

26. According to Ms Richards, she asked the officer about the effect on her parenting payment of her compensation payments, and told him the information was important because she intended moving closer to her family and taking on increased rent.  It is not in dispute that the officer told her they did not handle compensation in that office and he would not process her claim.  Giving evidence, Ms Richards agreed that the officer said a final decision would be made by someone else.

27. Ms Richards accepts that the officer did not state definitively that her parenting payment would not be affected but she says that, after consulting with another officer, he advised her that, from what he knew, her payment should not be affected.  He referred to the fact that she had been receiving the full payment as of 8 March 2012 without any adjustment, and he gave her a printout showing how much she could earn without her parenting payment being affected. 

28. A copy of the printout that the officer gave Ms Richards is before the Tribunal (Income Test – Parenting Payment Single).  It shows the rate by which income reduces fortnightly parenting payment, from a threshold below which payment is not affected, to an amount at which parenting payment cuts out altogether.  It is not about the effect of compensation payments which, by s 1173, reduce parenting payment (and other compensation affected payments) dollar-for-dollar.  Ms Richards gave evidence that, based on this information, she calculated that any reduction in her parenting payment would be affordable, even with the increased rent. 

29. A note made by the Authorised Review Officer who reviewed the decision to reduce Ms Richards’ payment shows that he spoke to her and the officer concerned in late June or early July 2012.  The officer could not recall details of their conversation but recalled saying they did not process compensation claims in that office and he did not think he would have told her it would have no effect on her parenting payment.

30. On 15 May 2012, Ms Richards signed the lease agreement.  The SSAT accepted that she relied on the advice she was given.  I also accept her evidence about this.

31. On 17 May 2012, applying s 1173 of the Act, Centrelink determined to reduce Ms Richards’ parenting payment by the full amount of her periodic payment with effect from 4 May 2012.  On 21 May 2012, Ms Richards received Centrelink’s letter advising of that decision.

32. A Centrelink record on 22 May 2012 shows Ms Richards telephoned that day to ask why her parenting payment “had been affected so much when [her] compensation payments are only 485 per f/n”.  She had further conversations over the following days along the same lines.

33. On 6 July 2010, the Authorised Review Officer affirmed the decision to reduce Ms Richards’ parenting payment by the full amount of her compensation payment and found there was insufficient evidence of the existence of special circumstances that would make it appropriate to disregard those payments.  On 5 September 2012, the SSAT affirmed that decision.

    Ms Richards’ financial position

34. After paying her rent, Ms Richards has just $300 a fortnight for all other expenses.  In October 2010, she was issued with an eviction notice on account of unpaid rent.  After borrowing $3,000 from her parents, she has now paid her rent up to 30 November 2012 and paid the registration on her car.  She has also borrowed $3,200 from one friend and $1,920 from another. 

35. Ms Richards has approximately $10,000 in debts to power and telephone companies, and other creditors, a substantial part of which was incurred jointly with her husband,  Because his whereabouts are unknown, she is being pursued for the full payment.  She has arranged to see a financial counsellor to see if she can reach some agreement about payment.  In the meantime, her main concern is that she cannot sustain rent payments and will have to move her children again after what she says has already been a traumatic move away from their father, and they have settled into a new school.  She relies on charitable organisations for emergency food and financial support.

36. The Child Support Agency has determined that Ms Richards’ husband is liable to pay child support but, until he can be located, payment cannot be enforced.

37. According to a report from Ms Richards’ general practitioner, her hand surgeon has advised that, due to her history of psoriasis, healing of the tendon in her wrist following surgery may be delayed, and she is to see a rheumatologist.  Ms Richards gave evidence that she is still to have injections, which may avert the need for surgery.  In the meantime, she is unable to work because of her injury and cannot perform most household tasks.

    ARE THE SPECIAL CIRCUMSTANCES THAT MEAN SOME OR ALL OF MS RICHARDS’ COMPENSATION PAYMENTS SHOULD BE DISREGARDED?

38. The Act does not define “special circumstances” and gives no guidance as to its meaning in s 1184K.  It has been observed many times by the Courts and this tribunal that the expression is “by its very nature incapable of precise or exhaustive definition” and will depend on the particular case.  In Re Beadle and Director-General of Social Security (1984) 6 ALD 1 Toohey J said at 3:

    An expression such as “special circumstances” is by its very nature incapable of precise definition.  The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional.  Whether circumstances answer any of the descriptions must depend on the context in which they occur.  For it is the context which allows one to say that the circumstances are markedly different from the usual run of cases.  That 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.        

39. In Groth v Secretary, Department of Social Security (1995) 40 ALD 541 Kiefel J observed regarding the phrase “special circumstances” that:

    … it would require something to distinguish Mr Groth’s case from others, to take it out of the usual or ordinary 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.

40. There is no dispute that Ms Richards is in very difficult financial circumstances.  However, financial hardship alone does not constitute special circumstances.  As Shepherd J observed in Director-General of Social Security v Hales (1983) 78 FLR 373 (at 412):

    The legislation provides for the payment of a variety of benefits to different classes of people who will usually have one thing in common: they will be impecunious and in straitened circumstances.

41. The fact that compensation payments have a disproportionate effect on parenting payment when compared with ordinary income is not a special circumstance.  As the Tribunal stated in Haughey and Secretary, Department of Social Security (1994) 36 ALD 653, whatever unfairness it might have created, Parliament plainly intended to treat compensation payments differently from ordinary income.

42. All that said, I think there are special circumstances in this case which warrant some part of Ms Richards’ compensation payments being disregarded.  As a starting point, there is no suggestion that she attempted to mislead Centrelink or conceal the fact that she was receiving weekly payments.  I am satisfied she has at all times disclosed her financial circumstances as she understood she was required to.

43. I think it is fair to say that the Centrelink forms, which did not directly ask anywhere about periodic compensation payments, were not helpful.  As noted above, it is true that the Income and Assets form asks about income “from any other source” but, as set out above, it is understandable that Ms Richards was not alerted by that question.

44. I note that the Centrelink Claim for Parenting Payment form available on line specifically asks, at questions 125 and 126, about workers compensation payments, and directs a claimant from there to the Mod C Compensation and Damages form.  Had Ms Richards completed that form, there could have been no misunderstanding on her part.

45. In any event, before she signed the lease, Ms Richards took steps to confirm her rate of payment.   As the SSAT noted, her claim that she believed her compensation payments would not affect her parenting payment is supported by her subsequent action in moving, thereby increasing her expenses substantially.  I have no reason to doubt her claim that she would not have undertaken the move and disrupted her children without confirming what her financial position would be.

46. The Secretary submits that, after inquiring with the officer about her payment, Ms Richards entered into the lease before receiving notice of a decision about the effect of her weekly compensation payments.  That is a fair point.  The prudent decision would have been to wait on a final determination.  However, two things happened which, in my view, gave Ms Richards reason to believe that, at worst, her payment would be affected by what she considered an affordable amount. 

47. The first was the officer’s reference to the fact that Ms Richards had been receiving parenting payment without adjustment since 8 March 2012, suggesting the rate was correct.  The second was giving her the Income Test form which showed that, if her payment was reduced, it would be by what Ms Richards considered an affordable amount.  It was not unreasonable, in my view, for her to proceed to sign the lease on the assumption that this was the worst that might happen.  However, that form, and the rates it showed, had no application in a case of periodic compensation payments.  Without intending any criticism of the officer, that information was misleading. 

1. It is clear from her evidence that Ms Richards’ financial position was difficult even before she moved back to Sydney.  It is now very serious.  Her injury prevents her from working at least until she can have injections and possibly until she can have surgery.  She has had one eviction notice already.  I accept that the move from Inverell has been very difficult for her children.  They have had to change school and have not seen their father.  I accept that a further move would add to their difficulty.

2. On the other hand, Ms Richards must carry some responsibility for the information she gave Centrelink.  She is in the process of seeing a financial counsellor who should be able to negotiate an arrangement with her creditors.  Although it would be far from ideal, she acknowledged at the hearing that she could look for cheaper accommodation.  There is also the prospect that, before too long, her hand will improve with injections and she will be able to find some employment.

3. It is very difficult to determine a fair period for which Ms Richards’ periodic payments should be disregarded.  I do not think it should be open-ended.  On balance, I consider it fair to disregard her compensation payments up until the date of this decision.

4. The decision under review is set aside and in substitution the Tribunal decides that Ms Richards’ periodic compensation payments from 4 May 2012 to the date of this decision should be disregarded in calculating the parenting payment to which she is entitled.

I certify that the preceding 51 (fifty -one) paragraphs are a true copy of the reasons for the decision herein of Senior Member J F Toohey.

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

Associate

Dated 12 December 2012

Date(s) of hearing	3 December 2012
Applicant	In person
Solicitors for the Respondent	Department of Human Services, Program Litigation and Review Branch