MOHSEN ALIREZAI and SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
[2012] AATA 64
•7 February 2012
[2012] AATA 64
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2011/4493
Re
MOHSEN ALIREZAI
APPLICANT
And
SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
RESPONDENT
DECISION
Tribunal Dr P McDermott, RFD, Senior Member
Date 7 February 2012 Place Brisbane The Tribunal affirms the decision under review.
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Dr P McDermott, RFD, Senior Member
CATCHWORDS
SOCIAL SECURITY – Age Pension – Periodic payments of compensation – Rate of age pension reduced on a dollar for dollar basis – Insurance contributions made by employer only – Periodic compensation payments not considered ordinary income – No special circumstances – Decision under review affirmed
LEGISLATION
Social Security Act 1991 (Cth) ss 17, 1071A, 1173, 1176, 1184
Workers’ Compensation Act 1926 (NSW) ss 7, 18
Workers' Compensation (Amendment) Act 1984 (NSW)
CASES
Mohsen Alirezai v Toongabbie Bus Service and General Motors Holden (Determination No. 12713 of 1981, delivered 14 February 1984)
Secretary, Department of Family and Community Services v Chamberlain [2002] FCA 67
Re Vernon and Secretary, Department of Education, Employment and Workplace Relations [2008] AATA 513REASONS FOR DECISION
Dr P McDermott, RFD, Senior Member
7 February 2012
INTRODUCTION
On 15 November 2010, Centrelink made a decision to grant Mr Mohsen Alirezai (the applicant) age pension at a reduced rate because he was already receiving periodic compensation payments for a workplace injury. I consider that the decision of Centrelink was correct for the reasons which follow.
BACKGROUND
On 23 June 1975, the applicant was injured whilst he was working as an employee on an assembly line in a General Motors Holden motor vehicle factory in New South Wales. The applicant sought compensation for his workplace injury and, in 1984, a determination was made to grant him compensation, by which he receives periodic payments. As at 4 October 2011 he was receiving periodic compensation payments at the gross rate of $347.80 per week.
The applicant qualified for age pension on 25 November 2010. Centrelink granted age pension from that date but at a reduced rate to account for the periodic compensation payments. On 11 July 2011, Centrelink notified the applicant of an immediate payment of an arrears amount owing to him, for the period 25 November 2010 to 29 June 2011, as well as a regular payment of pension supplement that would commence on 15 July 2011.
On 10 August 2011, the applicant sought a review of the rate of age pension that was to be paid to him on the basis that it was unfair to consider his periodic compensation payments as income reducing the rate of pension as a direct reduction (i.e. on a dollar for dollar basis).
PRIOR DECISIONS
On 12 August 2011, Centrelink made a decision that the applicant would be paid age pension at the rate that was previously notified to him. That letter contained the following explanation:
... periodic compensation is assessed as dollar for dollar rate reduction against the rate otherwise payable, if the compensation recipient was not qualified for AND receiving a compensation affected payment at the time of the compensable event. As you were not qualified and in receipt of a compensation affected payment at the time of your injury, your periodic compensation is assessed as a dollarfor [sic] dollar deduction.[1]
[1] Exhibit A, T-document 5, folio 36.
The applicant then sought an internal review of the decision of 12 August 2011. On 8 September 2011, an Authorised Review Officer affirmed the decision. On 4 October 2011, the Social Security Appeals Tribunal (SSAT), after an appeal by the applicant, also affirmed the decision.
On 14 October 2011 the applicant sought further review by this Tribunal.
ISSUES
I have to determine whether the periodic payments which are made to the applicant are properly treated as compensation under social security law. This involves a consideration of whether there is probative evidence that the payments were made under an insurance policy for which the applicant paid the premiums.
I also have to determine whether income received from a periodic compensation payment is to be treated as ordinary income when determining a rate of age pension. The applicant contends that the income that he receives from compensation should not be assessed on a dollar for dollar basis but should instead be treated as ordinary income.
If I determine that the periodic payments are properly treated as compensation, and not as ordinary income, under social security law, I then have to consider whether the applicant has special circumstances so that the whole or part of those payments should be disregarded when determining what rate of age pension should be paid to the applicant.
RELEVANT LEGISLATION
Section 17 of the Social Security Act 1991 (Cth) (the Act) defines a compensation affected payment to include an age pension.
Subsection 17(2) of the Act defines compensation as a payment made “whether … in the form of a lump sum or in a series of periodic payments … that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury”.
Subsections 1173(2) and 1173(3) of the Act provide how a compensation affected payment (such as age pension) is affected by the periodic payment of compensation. Subsection 1173(2) provides that the “daily rate of a compensation affected payment is reduced by the amount of the person’s daily rate of a periodic compensation” payment. There is no issue that the respondent has correctly calculated the rate of age pension payable to the applicant under that provision.
Section 1184K of the Act enables the Secretary to “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”.
CONSIDERATION
Whether the periodic payments are payments of “compensation”
The respondent submits that the payments that the applicant receives are periodic payments of compensation pursuant to the definition of compensation in section 17 of the Act and that he should be, and has been, paid age pension on the basis of that definition and the requirements stated in section 1173. The applicant submits that the periodic compensation payments that he receives should be treated as ordinary income.
On 7 September 2011, the applicant telephoned Centrelink and stated that the periodic payments are made under an insurance policy and that he had made contributions towards that policy. If the applicant has made payments towards the insurance policy then the payments that are made to the applicant could not be treated as “compensation” by virtue of the operation of s 17(2A) of the Act. That section provides that s 17(2)(d) of the Act “does not apply where the recipient has made contributions (for example, by way of insurance premiums) towards the payment”. The tenor of the remarks of the applicant in giving evidence was that a portion of his wages, which were then paid in cash in an envelope, were deducted and that he was informed that the money was for his insurance. The applicant did not produce any records such as payment receipts or the insurance policy.
Centrelink has investigated the allegation of the applicant that he made payments towards the insurance policy under which he receives periodic payments. Centrelink have been advised by the insurance company that the payments under the insurance policy would have been payable by the employer of the applicant (in this case, General Motors Holden Ltd.). The insurance company also advised Centrelink that it would be unusual, if not illegal, for the company to make deductions from the customer's pay each week for the workers' compensation insurance.
During the hearing I advised the applicant that prior to the hearing I had reviewed the workers’ compensation legislation which was in force at the time when he sustained the workplace injury. The Workers’ Compensation Act 1926 (NSW) provided for a scheme of “compulsory insurance by employers against their liabilities in respect of injuries to workers”. That Act imposed a statutory obligation upon an employer to obtain a policy of insurance (s18), which had to include all workers (s 18(3A)) and whereby the employer was to pay the premium (e.g. see ss 18(7B)) and 18(7C)).
During the hearing a determination[2], dated 14 February 1984, in the form of a judgment by “Coleman J”[3] was admitted into evidence: that determination did not, on its face, indicate in which court it was made. At the hearing I advised the applicant that this determination would have been issued by a judge of the Compensation Court of New South Wales: in 1984 this court replaced the functions of the Workers' Compensation Commission.[4] During the hearing I advised the applicant that the Compensation Court would only have jurisdiction over statutory workers' compensation matters. The Compensation Court also had jurisdiction to make a final award (s 7B(2))[5]. In the case of the applicant the court made a final award for him to be paid weekly payments.
[2] Mohsen Alirezai v Toongabbie Bus Service and General Motors Holden (Determination No. 12713 of 1981).
[3] At the relevant time His Honour Judge Coleman was a judge of the Compensation Court of New South Wales: see New South Wales Law Almanac 1988 at p. 49.
[4] Workers’ Compensation (Amendment) Act 1984 (NSW).
[5] Workers’ Compensation Act 1926 (NSW).
I am satisfied that the applicant did not pay the premiums for the insurance policy. At the hearing I advised the applicant that if he had paid those premiums then the Compensation Court would not have jurisdiction over any claim under the policy and that any claim under a personal insurance policy would have been brought before the ordinary courts.
I am satisfied that the periodic payments that the applicant receives are periodic payments of “compensation” pursuant to the definition of compensation provided by s 17 of the Act. Before the SSAT, the applicant conceded that the periodic compensation that he receives is received wholly or partly in receipt of lost earnings. The payments come within the definition of compensation in s 17(2) of the Act because they are made “under a scheme of insurance or compensation under a … State … law” (s 17(2)(b)) and the payments are for “lost earnings”. His Honour Judge Coleman made the final award of weekly payments because of the incapacity of the applicant; he also made it clear that an order for payments would be made only where the applicant had incurred economic loss.
Whether the compensation payments are ordinary income
I cannot accept the submission of the applicant that the payments be treated as ordinary income. This is because s 1176 of the Act expressly provides that periodic compensation payments “are not to be regarded as ordinary income … for the purposes of a provision of [the] Act, other than point 1071A-4”.[6]
[6] Point 1071A-4 defines income for the purposes of income testing in regard to Health Care Cards issued under the Act. It is therefore not relevant to this application.
Whether special circumstances are present
I have considered whether s 1184K of the Act might be used to provide the applicant some relief. However, I am not satisfied that there are any special circumstances present which take this case out of the ordinary. In Secretary, Department of Family and Community Services v Chamberlain [2002] FCA 67 at [19], Kiefel J indicated that there must be circumstances “apart from the usual or ordinary case”. I accept that the applicant has limited means but so are many recipients of social security. Having regard to the limited means of the applicant, I have taken account that, in giving evidence, he mentioned that the insurer pays for all of the costs of medical treatment of his condition that was the subject of his claim for compensation: cf., Vernon and Secretary, Department of Education, Employment and Workplace Relations [2008] AATA 513. It is my opinion that there are no special circumstances in this case.
DECISION
I affirm the decision under review.
I certify that the preceding 24 (twenty four) paragraphs are a true copy of the reasons for the decision herein of Dr P McDermott, RFD, Senior Member .
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Associate
Dated 7 February 2012
Date(s) of hearing 19 January 2012 Applicant In Person
Advocate for the Respondent Mr B Hamilton, Departmental Advocate
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