Michael Allsopp and Secretary, Department of Social Services

[2014] AATA 903

[2014] AATA 903

Division	GENERAL ADMINISTRATIVE DIVISION
File Number(s)	2014/0003
Re	Michael Allsopp
APPLICANT
And	Secretary, Department of Social Services
RESPONDENT

DECISION

Tribunal	The Hon. Brian Tamberlin, QC, Deputy President
Date	8 December 2014
Place	Sydney

The decision under review is affirmed.

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

The Hon. Brian Tamberlin, QC, Deputy President

CATCHWORDS

SOCIAL SECURITY – pensions – lump sum preclusion period – discretion to treat the whole or part of a compensation payment as not having been made – whether special circumstances – decision affirmed

LEGISLATION

Social Security Act 1991 ss 17, 1169, 1170, 1184K

CASES

Clark v Secretary, Department of Employment and Workplace Relations (2007) 161 FCR 451

Haidar v Secretary, Department of Social Security (1998) 52 ALD 255
Re Beadle and Director-General of Social Security (1984) 6 ALD 1

Secretary, Department of Family and Community Services v Chamberlain (2002) 116 FCR 348

SECONDARY MATERIALS

Guide to Social Security Law

REASONS FOR DECISION

The Hon. Brian Tamberlin, QC, Deputy President

8 December 2014

1. The Applicant seeks review of a decision of the Social Security Appeals Tribunal (SSAT) affirming a decision to recover $10,023.88 for payments of Newstart Allowance made between 16 June 2009 and 13 May 2010, and $32,929.65 for payments of Age Pension paid from 14 May 2010 to 11 April 2012 while the Applicant was subject to a lump sum preclusion period.

   ISSUES

2. There are two issues, namely:

   (a)whether the Applicant was subject to a lump sum preclusion period from 2 April 2009 to 11 April 2012; and

   (b)whether the discretion to treat the whole or part of a compensation payment as not having been made pursuant to s 1184K of the Social Security Act 1991 (the Act) may be exercised to reduce the length of the lump sum preclusion period.

   BACKGROUND

3. On 2 April 2009, the Applicant sustained a compensable injury.

4. The Applicant was granted Newstart Allowance from 16 June 2009. On 14 May 2010, he was transferred to and has remained continuously in receipt of Age Pension.

5. On 26 April 2013, the Applicant settled his claim pursuant to which he received a lump sum payment of $280,000. Pursuant to the settlement, costs were to be paid by the Defendant and were to be agreed or assessed. They were subsequently agreed at $120,000. The Court ordered a verdict for the plaintiff in the sum of $280,000.

6. On 7 May 2013, the Defendant’s solicitor advised Centrelink that the Applicant was to receive $280,000 pursuant to the settlement of the claim and that the claim included a claim for economic loss. The amount attributable to the claim for economic loss was not specified.

7. On 17 May 2013, Centrelink wrote to the Applicant advising him that he was subject to a preclusion period from 2 April 2009 to 11 April 2012. He was informed that the amount of $42,953.53, reflecting the amount of Centrelink payments he received during the preclusion period, would be recovered from the Defendant before they pay him the balance of the compensation payment.

8. On 31 May 2013, the Applicant requested internal review of the decision to recover the amount.

9. On 26 June 2013, the amount was recovered from the Applicant’s compensation payment.

10. On 12 August 2013, the Authorised Review Officer (ARO) decided that the preclusion period had been correctly assessed and affirmed the decision to raise and recover the Newstart Allowance debt of $10,023.88 and Age Pension debt of $32,929.65.

11. The Applicant then applied for review by the SSAT.

12. On 27 November 2013, the SSAT decided to affirm the ARO’s decision. The SSAT gave consideration to whether the discretion in s 1184K of the Act should be exercised in the Applicant’s favour. The SSAT concluded that the Applicant’s circumstances did not have a particular quality of unusualness so as to take the matter out of the usual ordinary case and did not warrant an exercise of the discretion in s 1184K.

13. On 2 January 2014, the Applicant applied to this Tribunal for review of the SSAT’s decision.

    RELEVANT LEGISLATION

14. Section 1170 of the Act provides that if a person receives a lump sum compensation payment, the person is subject to a lump sum preclusion period with the consequence that he or she is not eligible to receive a compensation affected payment in respect of that period pursuant to s 1169.

15. The Guide to Social Security Law (the Guide) is a policy manual to assist in the application of the legislation. In considering this matter, I have taken into account the Guide. The Guide, at 4.12.1.30, describes the rationale for the lump sum preclusion provisions as follows “[i]t is a fundamental principle of the social security system that people who are unable to work because of a compensable injury are prevented from receiving income support from both the social security and compensation systems for the same period. These rules are designed to ensure that people who find themselves in this situation receive income support from those with the primary responsibility to provide the support i.e. statutory compensation schemes and insurers.”

16. Section 1184K of the Act provides in substance that the Secretary has a discretion to treat the whole or part of a compensation payment as not having been made or as not being liable to be made if the Secretary thinks it is appropriate to do so in the special circumstances of the case.

17. The Guide, at 4.13.4.10, referring to the application of the special circumstances discretion identifies a number of matters which generally would not constitute special circumstances for the purposes of exercising the discretion. These include circumstances where the person has sufficient liquid assets to support themselves during the preclusion period or acquired realisable assets after notification of the preclusion period; where the person’s periodic compensation payments are reduced due to tax laws, and this is the only ground for consideration; where the only special circumstance is a legal deduction from a social security payment and a Department of Veterans’ Affairs payment or where the only special circumstance is the perceived unfairness of the 50% rule. The reference to the 50% rule is a reference to the definition of the compensation part of a lump sum compensation payment in s 17 of the Act which defines it as 50% of the payment in circumstances where payment is made in settlement of a claim that is in whole or in part related to a disease, injury or condition and where the claim is settled by consent judgment, as in the present case.

18. In this case, his Honour treated the lump sum as being $280,000. Half of that amount was used to calculate the preclusion period that applied to the Applicant.

19. I now turn to the issues for consideration.

    ISSUE 1 – LUMP SUM PRECLUSION PERIOD

20. In relation to the first issue, the Applicant contends that the Respondent has wrongly calculated the lump sum preclusion period. The Applicant claims that the preclusion period applied by the Respondent was excessive by 12 weeks because it should have been taken to commence at 16 June 2009 when the first payment was made and not from 2 April 2009 which is the date adopted by the Respondent in making the calculations.

21. However, it became clear during the hearing that the Applicant had confused the period during which the Centrelink payments have been paid with the preclusion period. The lump sum preclusion period is defined in s 1170(3) of the Act as 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 under a formula in subsections (4) and (5) of that section. In this case, this period has been correctly applied in accordance with the Act as beginning on 2 April 2009.

22. I am not persuaded that any error has been shown on the part of the Respondent in relation to the calculation and application of the preclusion period in this case.

23. I now turn to the second issue.

    ISSUE – DISCRETION – SECTION 1184K

24. The Applicant says that there are special circumstances in this case which warrant the application of s 1184K.

25. In considering the exercise of the discretion, the Tribunal must have regard to the language of s 1184K of the Act. As stated above, the Guide provides guidelines for the application of special circumstances provisions. The Tribunal must also look at the whole of the circumstances and decide on the merits of the particular case whether the discretion should be exercised. The inquiry is a broad one.

26. The expression “special circumstances” is frequently used in legislation. The expression is incapable of precise or exhaustive definition and directs attention to each fact-specific context and to any circumstances that are unusual, uncommon or out of the ordinary: the Re Beadle and Director-General of Social Security (1984) 6 ALD 1; Haidar v Secretary, Department of Social Security (1998) 52 ALD 255. The question is cast in the broadest terms.

27. The Applicant says it is unfair that he should have to repay the amount claimed in respect of the period he received the Age Pension. He contends that the compensation paid should cease to preclude his entitlement to Centrelink payments once he reached Age Pension age because the Court only awarded compensation to this age.

28. The difficulty with this submission by the Applicant is that, firstly, as stated above, the preclusion period has been calculated in accordance with the Act and, secondly, s 17 of the Act defines the term “compensation affected payment” to include an “age pension” so that Age Pension is a payment not payable during the preclusion provision pursuant to s 1169.

29. As Kiefel J pointed out in Secretary, Department of Family and Community Services v Chamberlain (2002) 116 FCR 348 unfairness arising from the application of statutory formulae will not of itself be sufficient to constitute “special circumstances”. At [33]-[35] of her reasons, her Honour said:

    [33] In the present case, the Tribunal considered that the application of the formulae was unfair to the applicant because she would have to pay more than she had received by way of compensation for economic loss, indeed twice as much. That factor will however be present in most cases and is an aspect of the application of the formulae. In my view it cannot, by itself, amount to a special circumstance, one out of the ordinary.

    [34] The basis for the Tribunal’s view was its acceptance of what the parties to the settlement said had been offered and accepted for the economic loss component. It was far less than the statute assumed to be the case in applying the formulae. Again, however, this will be so in many, if not most, cases to which the Act applies. Further, the extent of the difference from the basis upon which the parties acted could not provide the necessary “special circumstance”. The statute has selected a figure which may operate in an arbitrary way.

    [35] The statutory objectives in utilising the formulae, referred to above, must also be borne in mind. It is not intended that a decision-maker be required to consider contentions about what part of the compensation reflected the economic loss component. That is so whether one has regard to the application of the formulae or the discretion under s 1184. The latter does not alter the objective and must be read in light of it.

30. This approach was applied by Lindgren J in Clark v Secretary, Department of Employment and Workplace Relations (2007) 161 FCR 451 at [72]-[78].

31. The Applicant has liquid assets of over $160,000 taking into account the settlement and his divorce arrangement. He owns a 2011 Ford Territory vehicle worth about $24,000 and he lives rent-free on a rural property and has no dependents. He claims that his accommodation circumstances may not be permanent but at present there is no clear indication that he may have to leave at any specific time. He carries out some work for the owners of the premises where he resides in return for his accommodation. I have taken into account the possibility that he may have to leave at some indeterminate time in the future.

32. He also receives the Age Pension. I have also taken into account the fact that he may be required to move to a retirement home which may require him to expend some or all of his liquid assets and pension entitlements. He has said that he has some health problems in relation to his knee but that he has no present plans for surgery, although this may arise in the future.

33. Considered overall, taking into account his submissions, and what he says is the unfair operation of the formula under the legislation, and having regard to the observations of Kiefel J in Chamberlain, I am not persuaded that there are any special circumstances which would justify the exercise of the discretion under s 1184K of the Act.

    CONCLUSION

34. For the above reasons, I affirm the decision of the SSAT under review.

I certify that the preceding 34 (thirty -four) paragraphs are a true copy of the reasons for the decision herein of The Hon. Brian Tamberlin, QC, Deputy President

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

Associate

Dated 8 December 2014

Date of hearing	28 August 2014
Applicant	In person
Advocate for the Respondent	Ms S Forrester and Ms S Mahony, Department of Human Services