Memen and Secretary, Department of Family and Community Services
[2004] AATA 125
•29 January 2004
Administrative
Appeals
Tribunal
DECISION AND ORAL REASONS FOR DECISION [2004] AATA 125
ADMINISTRATIVE APPEALS TRIBUNAL )
) No S2003/519
GENERAL ADMINISTRATIVE DIVISION ) Re AARON MEMEN Applicant
And
SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION
Tribunal Senior Member WJF Purcell
Mr DJ Trowse (Member)Date29 January 2004
PlaceAdelaide
Decision For the reasons given orally at the Hearing of this matter, the Tribunal affirms the decision under review.
(Signed)
WJF PURCELL
(Senior Member)
CATCHWORDS
SOCIAL SECURITY – pensions, benefits and allowances – Newstart Allowance – lump sum payment of compensation – preclusion period – discretion to disregard whole or part of payment – special circumstances – decision affirmed
Social Security Act 1991 ss 17, 1165, 1166, 1184
Workers’ Rehabilitation and Compensation Act 1986 ss 32, 42, 43
Social Security (Administration) Act 1999 s 237Acts Interpretation Act 1901 ss 29, 289A
Colaiacolo and Secretary, Department of Social Security (AAT 2109, 24 April 1985)
ORAL REASONS FOR DECISION
29 January 2004 Senior Member WJF Purcell
Mr DJ Trowse (Member)1. This is an application for review of a decision of the Social Security Appeals Tribunal (the SSAT) of 11 August 2003, which affirmed the decision of an Authorised Review Officer of 21 July 2003, to recover an amount of $4,892.44 paid to the applicant in the form of Newstart Allowance during a compensation preclusion period from 16 January 1999 to 6 August 1999.
2. The evidence before the Tribunal comprised the documents lodged pursuant to s 37 of the Administrative Appeals Tribunal Act1975 (the T Documents), together with an exhibit tendered by the respondent (the Department). The applicant appeared on his own behalf and gave oral evidence. Ms Pugsley represented the Department.
3. On 10 June 1998 the applicant suffered an injury to his left knee during his employment with Bridgestone Australia Limited. He was paid periodic compensation payments up until 15 January 1999, and from 16 January 1999 he received Newstart Allowance. On 26 July 1999 he received a lump sum compensation payment of $14,867.78.
4. On 6 August 1999 Centrelink received a request, by telephone, for an estimate of any lump sum preclusion period, based on a lump sum compensation settlement payment of $25,000. On 11 August 1999 the Department’s estimate, in writing, was forwarded to the applicant at 30 Taunton Avenue, Enfield, SA 5085. This notice advised of an estimated preclusion period from 16 January 1999 to 6 August 1999, with a recoverable amount of $4,890.60.
5. On 10 September 1999 the applicant signed a redemption of weekly payments and medical expenses agreement in relation to s 42 of the South Australian Workers’ Rehabilitation and Compensation Act 1986 (the Compensation Act) for a further $10,132.22. The agreement stated, in part, that the exempt employer’s undischarged liability to make weekly payments of income maintenance was to be redeemed by capital payment of $9,632.22, and liability for medical and other expenses after the date of agreement was to be redeemed by payment of $500. The applicant acknowledged, at paragraph 4, that on receipt of the payment of $10,132.22, less any payments required to the Health Insurance Commission and Centrelink, the employer was discharged from any further liability.
6. Annexure “A” to the agreement “Professional Advice”, signed by the applicant and his solicitor on 3 August 1999, acknowledges that he had received professional advice relating to the consequences of receiving a redemption payment, including advice in relation to the “Department of Social Security implications in relation to the redemption payment, if any” [T4/29].
7. Centrelink was not notified by the applicant, or his solicitor, that settlement had taken place on 10 September 1999. On 3 November 1999 the solicitors for the applicant's former employer, Bridgestone, provided details of payments to Centrelink – a payment on 26 July 1999, pursuant to s 43 of the Compensation Act, in the amount $14,867.78; a payment on 10 September 1999, pursuant to s 42 of the Compensation Act, of $9,632.22; and a payment on 10 September 1999, pursuant to s 32 of the Compensation Act, of $500.00, a total of $25,000.00.
8. On 3 November 1999 a delegate decided that a lump sum preclusion period applied to the applicant for the period 16 January 1999 to 6 August 1999, and to raise a charge of $4,892.44 for Newstart Allowance received by him during the period 27 January 1999 to 6 August 1999. As the Department had not been advised that the lump sum payment of compensation was to be made, the recovery of the payment notice was forwarded directly to the applicant in a letter of advice dated 3 November 1999.
9. On 2 July 2003 the applicant requested a review of the decision, and on 21 July 2003 this decision was affirmed by an Authorised Review Officer, and by the SSAT on 11 August 2003.
10. Section 17 of the Act, as far as is relevant for the purposes of this review, provides:
“(1) …
compensation has the meaning given by subsection (2).
Note: See also section 1163B.
compensation affected payment means:
(aa) an age pension; or
(a) a disability support pension; or
(b) a parenting payment; or
(c) a social security benefit; or
(e) a disability support wife pension; or
(f) a carer payment; or
(g) a special needs disability support pension; or
(h) a special needs disability support wife pension; or(i) mature age allowance; or
(j) mature age partner allowance; or(k) a former payment type.
compensation part, in relation to a lump sum compensation payment, has the meaning given by subsections (3) and (4).
…
(2) 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
…
(2B) 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.
…
Compensation part of a lump sum
(3) 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
…
(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.
…”
11. Section 1165 of the Act, as far as is relevant for the purposes of this review, provides:
“Person not member of a couple—payment received before 20 March 1997
(1) Where:
(a) a person receives or claims a compensation affected payment; and
(b) the person is not a member of a couple; and
(c) the person receives a lump sum compensation payment (whether before or after the person receives or claims the compensation affected payment) before 20 March 1997;
a compensation affected payment referred to in paragraph (a) is not payable to the person for the old lump sum preclusion period.
Note 1: For old lump sum preclusion period see subsections (3) to (4).
Note 2: A series of lump sum payments can be taken to be one lump sum compensation payment under subsection 17(2B).
Person not member of a couple—payment received on or after 20 March 1997
(1A) If:
(a) a person receives or claims a compensation affected payment; and
(b) the person is not a member of a couple; and
(c) the person receives a lump sum compensation payment (whether before or after the person receives or claims the compensation affected payment) on or after 20 March 1997;
no compensation affected payment is payable to the person for the new lump sum preclusion period.
Note 1: For new lump sum preclusion period see subsections (5) to (8).
Note 2: A series of lump sum payments can be taken to be one lump sum compensation payment under subsection 17(2B).
…
(5)If periodic compensation payments are made in respect of the lost earnings or lost earning capacity, the new lump sum preclusion period is the period that:
(a)begins on the day after the last day of the periodic payment period; and
(b) ends after the number of weeks worked out under subsections (8) and (9)
Note: For periodic payments period see section 17.
(6)If a person chooses to receive part of an entitlement to periodic compensation payments in the form of a lump sum, the new lump sum preclusion period is the period that:
(a)begins on the first day on which the person's periodic compensation payment is a reduced payment because of that choice; and
(b)ends after the number of weeks worked out under subsections (8) and (9).
(7) If neither subsection (5) nor (6) applies, the new lump sum preclusion period is the period that:
(a)begins on the day on which the loss of earnings or loss of earning capacity began; and
(b)ends after the number of weeks worked out under subsections (8) and (9).
(8)If a compensation lump sum is received on or after 20 March 1997, the number of weeks in the preclusion period is the number worked out under he following formula:
Compensation part of lump sum
Income cut-out amount
Note 1: For compensation part of lump sum, see section 17.
Note 2: For income cut-out amount, see section 17.
(9)If the number worked out under subsection (4) or (8) is not a whole number, the number is to be rounded down to the nearest whole number.”
12. Section 1166(1) provides:
(1) If:
(a) a person receives a lump sum compensation payment; and
(b) the person receives payments of a compensation affected payment for the lump sum preclusion period;
the Secretary may, by written notice to the person, determine that the person is liable to pay to the Commonwealth the amount specified in the notice.
Note 2: A series of lump sum payments can be taken to be one lump sum compensation payment under subsection 17(2B).”
13. The applicant does not dispute Centrelink’s assertion that there is a debt payable in the light of his receipt of Newstart Allowance payments during a lump sum preclusion period. He submits that as his lump sum payments of compensation were received in two separate payments, the first payment, pursuant to s 43 of the Compensation Act, should be disregarded as it did not include any element of economic loss.
14. The applicant submits that he may not have received the estimate provided by Centrelink on 11 August 1999 as he had moved premises, and probably did not receive the letter, or if he did, he did not realise what it meant. He argues also that the advice he received from his solicitor related only to the redemption sum, the second payment on 10 September 1999, and he was not told that the first payment on 26 July 1999 would be taken into account. This advice indicated that the repayment would be a small amount. His final submission is that his financial circumstances are such that it would be appropriate in the circumstances to exercise the discretion in his favour, pursuant to s 1184(1) of the Act which provides:
“(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.”
15. The Department contends that, pursuant to s 17(1) of the Act, Newstart Allowance is a "compensation affected payment". In accordance with s 17(2) of the Act, the applicant received a payment of damages or a payment under a Commonwealth or State law which was made wholly or partly in respect of loss of earnings or capacity to earn for the purposes of the Act, and the payment was a payment of compensation. In accordance with s 17(2B) of the Act, where a person receives more than one lump sum payment in relation to injuries arising from the same event, and at least one of those payments is made wholly or partly in respect of loss of earnings or capacity to earn, the person is taken to receive one lump sum payment of compensation of an amount equal to the sum of the payments. The applicant received two lump sum payments, both of which were related to injuries arising from the same event. As the payment made on 10 September 1999 contained a component for loss of earnings or capacity to earn, the applicant is taken to have received a total lump sum compensation of $25,000.00.
16. The Department maintains that s 17(3) of the Act provides that the compensation part of a lump sum is 50 per cent of the payment where it is made in settlement of the claim by consent judgment, entered into on or after 9 February 1988. The applicant's lump sum payment was made as the result of an agreement of redemption entered into on 10 September 1999, therefore the correct amount of the compensation part of the lump sum payment is $12,500, and in addition, he received Newstart Allowance during the lump sum preclusion period. As Newstart Allowance is a compensation affected payment, and the amount received by the applicant is the lesser of the two amounts referred to in s 1166 of the Act, the amount he is liable to pay the Commonwealth is $4892.44.
17. In our view, the two payments received by the applicant fall clearly within ss 17(2) and 17(2B) of the Act, being made in relation to an injury arising from the same event; and the preclusion period was calculated correctly in accordance with the legislation. The moneys paid to him during the preclusion period are recoverable therefore, pursuant to section 1166(1) of the Act.
18. In relation to the applicant's submission that he may not have received the estimate forwarded on 11 August 1999, a perusal of the Departmental record at Exhibit R1 discloses that the applicant advised of a change of address on 7 September 1999. The letter of 11 August 1999 was sent to the address which was currently in use by him for Centrelink purposes. For the purposes of s 237 of the Social Security (Administration) Act 1999 and ss 289A and 29 of the Acts Interpretation Act 1901 this notice is deemed to have been received.
19. The applicant agrees that he received advice from his solicitor, but asserts that the advice was to the effect that only the second payment would be taken into account. The Annexure “A” refers to the solicitor providing advice in relation to Social Security implications in relation to the “redemption payment”. No mention is made of the first lump sum payment, made some two weeks earlier. The applicant has recourse to redress for inadequate advice through a claim against his solicitor, and in our view, this inadequate advice cannot be seen to be a special circumstance.
20. In relation to the applicant's submission that he is, and was, in a straitened financial position, he had the following debts at the time he received his settlement monies:
Traffic fines $2,700.00
Legal fees $4,035.00
Medical expenses (associated
with the injuries for which he
was compensated $1,014.22
Loan with AGC $1,741.00
Loan from brother $1,500.00
Credit card debts $1,500.00Car loan $20,000.00
21. The applicant told the SSAT on 11 August 2003 that he was currently renting and sharing his accommodation with his brother and an uncle. His share of the rent was $114 a fortnight. He spent about $100 a fortnight on food and utilities. He had a $20,000 car loan. The car had now been re‑possessed and was awaiting sale. He anticipated that after the car was sold there would be a shortfall of about $8000 that he would have to repay. He had credit card debts totalling about $1,500, and was not making any repayment at that time. Centrelink was withholding $25 a fortnight in order to recover the debt, the subject of this application. The applicant further explained that he used the proceeds of his compensation settlement to change over vehicles at an additional cost of $6,000, and then he spent about $2,500 in repairing the new vehicle. He also purchased clothes, and paid off a number of personal bills - $1,500 to his brother, and $2,700 in traffic fines.
22. The applicant said in evidence that until his workers’ compensation payments (in relation to a later injury) ceased on 5 January 2004, he had been paying $200 to $300 a week towards his debts. He had subsequently obtained employment as a truck driver, but that employment ceased last Sunday, 25 January 2004. He is hopeful of obtaining further employment within weeks. He has paid off AGC and currently owes $3,000 on credit cards, of which he has two, and $13,000 to Esanda Finance regarding the repossession of his Statesman motor car. He anticipates receiving a lump sum compensation payment in August 2004, but he may need a knee reconstruction as a result of his compensable injury.
23. We accept the applicant's evidence that he is in straitened financial circumstances, but for his finances to be seen as "special circumstances" they must go beyond “straitened” to being truly exceptional as was held in Colaiacolo and Secretary, Department of Social Security (AAT 2109, 24 April 1985). The applicant's financial circumstances cannot be said to be truly exceptional, and at present he cannot be considered to be suffering from financial hardship. He is expecting to return to employment in the near future, and to receive settlement by way of a lump sum payment later in the year. We do not consider his circumstances so special as to warrant exercise of the discretion provided in s 1184(1) of the Act.
24. For these reasons 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 Senior Member WJF Purcell and Mr DJ Trowse (Member)
Signed: .......................................................................................
AssociateDate of Hearing 29 January 2004
Date of Decision 29 January 2004
Counsel for the Applicant In person
Solicitor for the Applicant -
Counsel for the Respondent Ms A Pugsley
Solicitor for the Respondent Centrelink Service Recovery Team
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