Monroe and Secretary, Department of Social Services (Social services second review)
[2020] AATA 366
•26 February 2020
Monroe and Secretary, Department of Social Services (Social services second review) [2020] AATA 366 (26 February 2020)
Division:GENERAL DIVISION
File Numbers:2020/0402
2020/0403
Re:Miriana Monroe
APPLICANT
Secretary, Department of Social ServicesAnd
RESPONDENT
DECISION
Tribunal:Member D Mitchell
Date:26 February 2020
Place:Brisbane
The decision under review to refuse the Applicant’s claim for Newstart Allowance (file 2020/0402) is set aside and the matter is remitted to the Respondent for reconsideration in accordance with the direction that, for the purposes of calculating the compensation preclusion period, so much of the compensation paid to the Applicant be treated as not having been made such that the lump sum preclusion period concludes on 21 September 2019.
The decision under review to cancel the Applicant’s Disability Support Pension (file 2020/0403) is affirmed.
............................................................
Member D Mitchell
CATCHWORDS
SOCIAL SECURITY – Newstart Allowance (NSA) - lump sum preclusion period – whether special circumstances exist – compensation lump sum – special circumstances exist – decision under review set aside
SOCIAL SECURITY – Disability Support Pension (DSP) cancellation - lump sum preclusion period – whether special circumstances exist – compensation lump sum – no evidence that special circumstances exist at date of DSP cancellation – decision under review affirmed
LEGISLATION
Social Security Act 1991 (Cth)
Social Security Legislation Amendment Bill (No 1) 1995 (Cth)
Social Security (Administration) Act 1999 (Cth)
CASES
Bruinger and Secretary, Department of Social Services (Social services second review) [2017] AATA 1244
Davis and Secretary, Department of Family and Community Services [1999] AATA 84
Department of Social Security v Smith (1991) 30 FCR 56; (1991) 23 ALD 277; (1991) 13 AAR 454
Groth and Secretary, Department of Social Security (1995) 40 ALD 541; [1995] FCA 1708
Lucas and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 914
Re Beadle and Director-General of Social Security (1984) 6 ALD 1; (1984) 1 AAR 362
Re Broad and Secretary, Department of Family and Community Services (2003) 77 ALD 523; [2003] AATA 1017
Re Davy and Secretary, Department of Employment Workplace Relations (2007) 94 ALD 693; [2007] AATA 1114
Re Ivovic and Director-General of Social Services (1981) 3 ALN No 61 at N95; [1981] AATA 57
Re Navratil and Secretary, Department of Family and Community Services (2002) 69 ALD 777; [2002] AATA 452
Re Secretary, Department of Families, Housing, Community Services and Indigenous Affairs and Whitlock (2010) 126 ALD 550; (2010) 54 AAR 1; [2010] AATA 816
Re Secretary, Department of Family and Community Services and Nolan (2000) 31 AAR 175; (2000) 4(5) SSR 65; [2000] AATA 361
Re Secretary, Department of Social Security and Winterbotham [1990] AATA 808
Re Vecchio and Secretary, Department of Education, Employment and Workplace Relations [2008] AATA 97
Secretary, Department of Employment and Workplace Relations v Homewood (2006) 91 ALD 103; (2006) 43 AAR 236; [2006] FCA 779
Secretary, Department of Family and Community Services v Chamberlain (2002) 116 FCR 348; (2002) 68 ALD 357; [2002] FCA 67
Spargo’s Case (1873) 8 LR Ch App 407 (In re Harmony and Montague Tin & Copper Mining Company)
Spark and Secretary, Department of Social Services (Social services second review) [2018] AATA 1456
Tavili and Secretary, Department of Social Services [2015] AATA 19
REASONS FOR DECISION
Member D Mitchell
26 February 2020
INTRODUCTION
Ms Miriana Monroe (the Applicant) is seeking review of a decision of the Social Services and Child Support Division (SSCSD) of this Tribunal made on 13 December 2019[1] to affirm the decisions made by the Respondent on:
(a)14 January 2019, to cancel the Applicant’s Disability Support Pension (DSP) on the basis she was subject to a compensation preclusion period; and[2]
(b)9 October 2019, to reject the Applicant’s claim for Newstart Allowance (NSA) on the basis she was subject to a compensation preclusion period.[3]
[1] Exhibit 1, T Documents, T2, pages 19-27, Decision of the SSCSD.
[2] The review of this decision relates to Tribunal file number 2020/0403.
[3] The review of this decision relates to Tribunal file number 2020/0402.
BACKGROUND
The Applicant sustained a personal injury in the course of her employment. As a result of a workplace injury which occurred on 14 December 2015 she made a claim for workers’ compensation.
The Applicant received periodic compensation payments from WorkCover Queensland during the period 29 February 2016 to 10 September 2017.[4]
[4] Exhibit 2, Secretary’s Statement of Facts & Contentions, Annexure 1, pages 37-41.
The Applicant was granted DSP with effect from 11 September 2017.[5]
[5] Exhibit 1, T Documents, T44, page 326, Centrelink pension status history.
On 11 December 2018, the Applicant settled her workers’ compensation claim.[6]
[6] Exhibit 1, T Documents, T7, page 65, Compensation Advice of Lump Sum Payment Form; T37, pages 176-178, Release and Discharge.
On 14 January 2019, the Respondent cancelled the Applicant’s DSP[7] having determined that the Applicant’s workers’ compensation settlement resulted in a preclusion period for the period 11 September 2017 to 29 January 2023.[8]
[7] Exhibit 1, T Documents, T9, page 69, Centrelink notice: Your Disability Support Pension (DSP) eligibility.
[8] Exhibit 1, T Documents, T44, page 329, Centrelink Compensation Management Summary.
The Applicant contacted the Respondent in relation to the preclusion period on 22 July 2019.[9]
[9] Exhibit 1, T Documents, T45, page 339, Centrelink customer contact file.
On 17 September 2019, an Authorised Review Officer (ARO) affirmed the decision to cancel the Applicant’s DSP due to the preclusion period.[10]
[10] Exhibit 1, T Documents, T27, pages 132-136, Decision and Notes of the Authorised Review Officer.
The Applicant made a claim for NSA on 22 September 2019.[11]
[11] Exhibit 1, T Documents, T28, pages 137-143, Claim for Newstart Allowance.
On 9 October 2019, the Respondent rejected the Applicant’s claim for NSA on the basis that she was subject to a preclusion period.[12] The Applicant sought review of that decision, which was subsequently affirmed by an ARO on 31 October 2019.[13]
[12] Exhibit 1, T Documents, T32, page 161, Letter from Department of Human Services – information about a recent decision.
[13] Exhibit 1, T Documents, T38, pages 196-204, Decision and Notes of Authorised Review Officer.
The Applicant sought a first-tier review of the Respondent’s decisions dated 17 September 2019 and 31 October 2019 by the SSCSD of this Tribunal. The SSCSD affirmed the decisions under review on 13 December 2019.[14]
[14] Exhibit 1, T Documents, T2, pages 19-27, Decision of the SSCSD.
Following this, the Applicant sought a second-tier review of these matters by the General Division of this Tribunal by way of an application dated 17 January 2020.[15]
[15] Exhibit 1, T Documents, T1, pages 1-18, Application for Review of Decision.
A Hearing was held by this Tribunal on 21 February 2020. At the Hearing, the Applicant was self-represented, appeared by telephone and gave evidence under affirmation. The Tribunal acknowledges the sensitivities in this matter for the Applicant and considers that she openly and honestly responded to questions from the Tribunal and Respondent.
ISSUES
The issues before the Tribunal are whether:
1.the Applicant is subject to a lump sum preclusion period, and if so, for what period;
2.there are special circumstances that justify treating part, or all, of the Applicant’s compensation payment as not having been received; and
3.as a result of the answers to questions 1 and 2, the decisions to cancel the Applicant’s DSP and refuse her claim for NSA correct.
THE LAW
The relevant law in relation to this matter is found in the Social Security Act 1991 (Cth) (the Act) and the Social Security (Administration) Act1999 (Cth) (the Administration Act). The following is a summary of the key requirements which relate to the Applicant.
Part 3.14 of Chapter 3 of the Act deals with compensation recovery. Section 1160 of the Act sets out the general effect of Part 3.14 as follows:
1This Part operates in certain specified circumstances to do one or more of the following:
(a) reduce a person’s compensation affected payment;
(b) render a person’s compensation affected payment not payable;
(c) require the repayment of some or all of the person’s compensation affected payment;
because of the receipt of compensation by the person or the person’s partner.
2This Part applies whether or not there is any connection between the circumstances that give rise to the person’s qualification for the compensation affected payment and the circumstances that give rise to the receipt of compensation by the person or the person’s partner.
Division 3 of the Act relates to persons receiving or claiming a compensation affected payment and receiving a lump sum compensation payment regardless of whether the lump sum payment was received before or after the person received or claimed the compensation affected payment.[16]
[16] Section 1168 of the Act.
Section 17 of the Act provides compensation recovery definitions. The definition of ‘compensation affected payment’ set out in section 17(1) of the Act includes DSP and NSA payments.[17]
[17] Section 17(1) of the Act – compensation affected payment means … (a) a disability support pension; … and (c) a social security benefit …. Section 23 of the Act provides that a social security benefit means … (a) newstart allowance …..
Section 17(2) of the Act defines ‘compensation’ as:
(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 and whether it is made within or outside Australia) that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury.
Section 17(3) of the Act relevantly defines ‘compensation part of a lump sum compensation payment’ as subject to subsection (4), for the purposes of the 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 judgement being entered in respect of the settlement or otherwise;
Section 17(4) of the Act provides that where a person:
(a)has received periodic compensation payments; and
(b)after receiving those payments, receives a lump sum compensation payment (in this subsection called the LSP); and
(c)because of receiving the LSP, becomes liable to repay an amount (in this subsection called the Repaid Period Compensation Payment––RPCP) equal to the periodic compensation payments received;
then, for the purposes of subsection (3), the amount of the lump sum compensation payment is:
LSP - RPCP
Section 17(5) of the Act provides that a person receives compensation whether he or she receives it directly or whether another person receives it, on behalf of, or at the direction of the first person.
Section 1169 of the Act provides that if a person receives or claims a compensation affected payment, and the person receives a lump sum compensation payment, the compensation affected payment is not payable to the person in relation to any days in the lump sum preclusion period. Section 1169 is effectively a bar against eligibility for certain social security payments.
Section 1170 of the Act sets out the calculation method of a lump sum compensation preclusion period and relevantly provides:
1Subject to subsection (2), if a person receives both periodic compensation payments and a lump sum compensation payment, the lump sum preclusion period is the period that:
(a) begins on the day following the last day of the periodic payments period or, where there is more than one periodic payments period, the day following the last day of the last periodic payments period; and
(b) ends at the end of the number of weeks worked out under subsections (4) and (5).
2If a person chooses to receive part of an entitlement to periodic compensation payments in the form of a lump sum, the 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 at the end of the number of weeks worked out under subsections (4) and (5).
3If neither of subsections (1) and (2) applies, the lump sum preclusion period is the period that:
(a) begins on the day on which the loss of earnings or loss of capacity to earn began; and
(b) ends at the end of the number of weeks worked out under subsections (4) and (5).
4The number of weeks in the lump sum preclusion period in relation to a person is the number worked out using the formula:
Compensation part of the lump sum
Income cut out amount
5If the number worked out under subsection (4) is not a whole number, the number is to be rounded down to the nearest whole number.
Section 1171 of the Act sets how multiple lump sum payments are dealt with as follows:
1171 Deemed lump sum payment arising from separate payments
1If:
a. a person receives 2 or more lump sum payments in relation to the same event that gave rise to an entitlement of the person to compensation (the multiple payments); and
b. at least one of the multiple payments is made wholly or partly in respect of lost earnings or lost capacity to earn;
the following paragraphs have effect for the purposes of this Act and the Administration Act:
c. the person is taken to have received one lump sum compensation payment (the single payment) of an amount equal to the sum of the multiple payments;
d. the single payment is taken to have been received by the person:
i.on the day on which he or she received the last of the multiple payments; or
ii.if the multiple payments were all received on the same day, on that day.
2A payment is not a lump sum payment for the purposes of paragraph (1)(a) if it relates exclusively to arrears of periodic compensation.
Section 1184 of the Act provides that the Respondent may send a recovery notice to a compensation payer or insurer under which the insurer is liable to pay the Commonwealth the amount specified in the notice.
Section 1184K of the Act provides that the Respondent may treat the whole or part of a compensation payment as not having been made or not liable to be made if the Respondent thinks it is appropriate to do so in the special circumstances of the case. This effectively allows the preclusion period to be reduced.
Section 36 of the Administration Act requires the Respondent to determine a claim for NSA, either granting or rejecting the claim.
Section 80 of the Administration Act requires that, if the Respondent is satisfied that DSP is being, or has been, paid to a person who is not, or was not qualified for the payment or to whom the payment is not, or was not, payable the Respondent is to determine that the payment is to be cancelled or suspended.
CONSIDERATION
The evidence before the Tribunal in this matter consisted of:
Exhibit 1 – Section 37 T-Documents (pages 1-355)
Exhibit 2 – Secretary’s Statement Facts & Contentions with annexures, dated 18 February 2020
Oral evidence provided by the Applicant[18]
Oral evidence provided by Ms Mavis Derman, Clinical Psychologist[19]
Oral evidence provided by Dr Khaldoon AlSaee, Psychiatrist and Pain Specialist[20]
Oral evidence provided by Ms Kerry Stingel, Occupational Therapist[21]
[18] Transcript, pages 7-23; 48-62; 68-77.
[19] Transcript, pages 23-30.
[20] Transcript, pages 34-42.
[21] Transcript, pages 43-47.
A significant amount of this evidence has not been available to previous decision makers in these matters.
Was the Applicant’s compensation preclusion period correctly applied?
In Litigation Settlement Instructions dated 11 December 2018, the Applicant provided instructions to her solicitors to settle her workers’ compensation claim for the “sum of $425,000 being an amount of $425,000 for damages”, on the basis that she understood she would not have to repay WorkCover Queensland in relation to benefits they had already paid, that she would need to repay amounts to Medicare, her private health insurer and Centrelink and that she would be precluded from receiving benefits under the Act until 10 April 2023.[22]
[22] Exhibit 1, T Documents, T6, page 64, Litigation settlement instructions; T37, pages 180-182, Litigation settlement instructions dated 11 December 2018.
On 11 December 2018, the Applicant settled her workers’ compensation claim. The Deed of Settlement (titled Release and Discharge) relevantly provides:[23]
1. The Settlement Sum
1.1WorkCover on its own behalf and on behalf of the Employer shall pay to the [Applicant] the sum of FOUR HUNDERED AND TWENTY FIVE THOUSAND DOLLARS AND ZERO CENTS ($425,000) (“the settlement sum”) in full and final settlement of the claim and proceedings.
[23] Exhibit 2, Secretary’s Statement of Facts & Contentions, Annexure 1, pages 5-7, Release and Discharge.
2. …
3. Deductions and Refunds
3.1 WorkCover shall deduct $NIL from the settlement sum in respect of benefits overpaid, fines or other monies owing in relation to statutory claim number […]….
3.2 WorkCover acknowledges that it is not entitled to a refund of statutory benefits paid under claim number […] in relation to the injuries the subject of the claim totalling $236,037.28.
….
A WorkCover Payments/Recoveries History Report sets out that the statutory benefits referred to in the Deed of Settlement consisted of:[24]
(i)Hospital costs totalling $30,872.00;[25]
(ii)Rehabilitation costs totalling $60,927.00;[26]
(iii)Travel costs totalling $4795.01;[27] and
(iv)Weekly benefits and lump sums totalling $97,053.74 for periodic compensation payment between 29 February 2016 and 10 September 2017.[28]
[24] Exhibit 2, Secretary’s Statement of Facts & Contentions, Annexure 1, pages 8-42, Payments/Recoveries History Report.
[25] Exhibit 2, Secretary’s Statement of Facts & Contentions, Annexure 1, page 8, Payments/Recoveries History Report.
[26] Exhibit 2, Secretary’s Statement of Facts & Contentions, Annexure 1, pages 8-30, Payments/Recoveries History Report.
[27] Exhibit 2, Secretary’s Statement of Facts & Contentions, Annexure 1, pages 30-32, Payments/Recoveries History Report.
[28] Exhibit 2, Secretary’s Statement of Facts & Contentions, Annexure 1, pages 32-41, Payments/Recoveries History Report.
In a Centrelink Compensation Advice of Lump Sum Payments form dated 12 December 2018, WorkCover notified the Respondent that a settlement had been reached in relation to the Applicant’s claim for workers’ compensation on 11 December 2018.[29] Relevant responses provided by WorkCover on the form are as follows:[30]
8.Has the claimant received periodic compensation in respect of this claim? Yes
9.What is the total gross lump sum settlement amount? Includes costs, medical costs, Medicare, periodics and rehabilitation costs. $661,037.28
10. Will there be a payback of periodic compensation payments required to be made from the gross lump sum amount? No response provided.
…
12. Were other components paid with this lump sum (e.g, pain and suffering, medical costs, interest)? No
[29] Exhibit 1, T Documents, T7, pages 65-67, Compensation Advice of Lump Sum Payments form.
[30] Exhibit 1, T Documents, T7, pages 65-67, Compensation Advice of Lump Sum Payments form.
In a letter dated 12 December 2018, the Applicant’s solicitors provided:[31]
Settlement of your claim finalises all of your rights to all forms of compensation for all injuries arising out of the accident. Your claim for damages was settle for the sum of $425,000.00, clear of the refund to WorkCover of $236,037.28.
[31] Exhibit 1, T Documents, T37, page 174, Letter from Maurice Blackburn to the Applicant dated 12 December 2018.
After repaying all required amounts and her legal fees the Applicant had received $116,376.19 in her hand.[32]
[32] Exhibit 1, T Documents, T37, page 195, Letter from Maurice Blackburn to Applicant dated 3 July 2019 – trust account statement.
The Applicant contended that her compensation payment was for damages, not for lost earnings or lost capacity to earn, and that the preclusion period is therefore incorrect.[33]
[33] Exhibit 1, T Documents, T37, page 193, Undated letter from the Applicant.
At Hearing the Applicant put forward the following three main contentions in relation to the calculation of the preclusion period:
·The legal documents make it clear that the $425,000.00 was for damages only and was clear of the $236,037.28 statutory benefits. She said that the lawyers in the matter had told her that her payout was for damages only as they were not prepared to pay for capacity to earn because at that time she was hoping she would be able to return to some form of work. She believes that if the $236,037.28 is included in the amount used to calculate the preclusion period that the total should be reduced by the $308,000.00 that she had to pay out of the $425,000.00 for medical and Centrelink reimbursement and legal costs.
·She believes that the DSP should not have been stopped. The lawyers made an incorrect disclosure as the compensation payment was for damages only. She said she did not agree to a settlement of $662,178.56, she agreed to a settlement of $425,000.00 and she understood that she was allowed to have assets of $437,000.00 before the DSP is cancelled. She said she disagreed with the letters she had received from the Respondent in relation to the preclusion period.
·She believes that if there should be a preclusion period it should be calculated on the $116,376.19 that she received and that she should not have lost her DSP or have had to pay any monies back to Centrelink. The amount received was for damages not loss of income. She said the legislation is not realistic, what is realistic is what you get in your account.
The Respondent drew the Tribunal’s attention to the second reading speech for the Social Security Legislation Amendment Bill (No 1) 1995 (Cth) which noted in part that:[34]
The compensation recovery provisions of the Act protect the social security system from ‘double dippers’, that is, those who might receive social security payments, as well as compensation, for the same period.
[34] Exhibit 2, Secretary’s Statement of Facts & Contentions, page, 6, paragraph 39.
The Respondent contended that the Applicant should be subject to a preclusion period from 11 September 2017 to 8 January 2024,[35] relying upon the following:[36]
[35] Exhibit 2, Secretary’s Statement of Facts & Contentions, page 7, paragraph 46.
[36] Exhibit 2, Secretary’s Statement of Facts & Contentions, pages 7-12, paragraphs, 47-64.
(i)The Applicant was appropriately subject to a compensation preclusion period as she received a gross payment of $662,178.56 which is a lump sum compensation payment as defined in subsection 17(2) of the Act;
(ii)The Applicant ceased receiving periodic compensation from WorkCover Queensland on 10 September 2017 and therefore by operation of section 1170(1) of the Act, the compensation preclusion period commences from 11 September 2017;
(iii)In accordance with section 17(3) of the Act, the compensation part of the Applicant’s lump sum compensation payment is deemed to be 50% of $662,178.56, being $331,089.28;
(iv)The compensation part is subjected to the formula in section 1170(4) of the Act to calculate the length of the preclusion period, with the relevant income cut out amount as at the date of settlement being 12 December 2018 being $1,002.30;[37]
(v)Having regard to the formula in section 1170(4) of the Act, the preclusion period is 330 weeks (331,089.28/1,002.30);
(vi)The preclusion period is from 11 September 2017 to 8 January 2024, it does not end on 23 January 2023;
(vii)The original decision maker, ARO and SSCSD incorrectly subtracted the sum of $97,053.74 (being the periodic compensation the Applicant previously received from WorkCover Qld) from the total payment resulting in them using a lower figure of $282,562.41 as the lump sum compensation payment amount than what should have been used;
(viii)The decisions in the cases of Re Secretary, Department of Family and Community Services and Nolan [2000] AATA 361, Re Navratil and Secretary, Department of Family and Community Services [2002] AATA 452, Re Broad and Secretary, Department of Family and Community Services [2003] AATA 1017, Re Vecchio and Secretary, Department of Education, Employment and Workplace Relations [2008] AATA 97, Re Secretary, Department of Families, Housing, Community Services and Indigenous Affairs and Whitlock [2010] AATA 816, and Lucas and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 914 are noted, however, they are of limited assistance in the interpretation of section 17(4) of the Act;
(ix)The approach taken in the case of Tavili and Secretary, Department of Social Services [2015] AATA 19 is consistent with the Guide to Social Security Law at Instruction 4.13.2.30 and should be applied so that based on the terms of the compensation settlement that the Applicant did not become liable to repay the periodic compensation payments and as such section 17(4)(c) of the Act is not met and an amount cannot be deducted from the lump sum compensation payment; and
(x)Relying on the decisions in Vecchio and Secretary, Department of Employment and Workplace Relations [2008] AATA 97, Tavili and Secretary, Department of Social Services [2015] AATA 19 and Spark and Secretary, Department of Social Services (Social services second review) [2018] AATA 1456 the entire amount of statutory benefits should be included in the total amount of funds received by the Applicant for the purposes of calculating the compensation preclusion period.
[37] Exhibit 1, T Documents, T44, page 332, History Summary.
The Respondent further contended that under section 1169(1) of the Act, NSA and DSP are not payable to the Applicant in relation to any day or days in the lump sum preclusion period and therefore the decisions to cancel the Applicant’s DSP and refuse her application for NSA were correct.[38]
[38] Exhibit 2, Secretary’s Statement of Facts & Contentions, pages 12-13, paragraphs 66-67.
For the reasons following, taking into consideration the intent and provisions of the Act, the Tribunal finds that as a result of the Applicant receiving a compensation payment in the terms set out earlier in this decision, the Applicant is subject to a preclusion period. That preclusion period impacts the Applicant’s ability to receive DSP and NSA commencing on 11 September 2017 and ending on 29 January 2023.
The settlement of the Applicant’s workers’ compensation claim is considered to be compensation for the purposes of section 17(2) of the Act as it related to a payment made under a State scheme of insurance or compensation and was made partly in respect of lost earnings resulting from personal injury. While it is accepted that the $425,000.00 component of the settlement related to damages, the $236,037.28 related to periodic payments for loss of income and medical expenses.
Pursuant to section 1171 of the Act the $425,000.00 and $236,037.28 components are deemed to be a single lump sum payment as they relate to the same event that gave rise to the Applicant’s entitlement to compensation and at least one of the payments was made partly in respect of lost earnings.
Section 17(4) of the Act is applied to the calculation of the lump sum compensation payment to reduce the lump sum of $661,037.28 by $97,053.74, being the periodic compensation payments received that the Applicant was liable to repay.
The Tribunal does not accept the contentions of the Respondent that the $97,053.74, being periodic compensation payment received by the Applicant should not be applied pursuant to section 17(4) of the Act to reduce the compensation part of the lump sum compensation payment on the basis of the terms of the Deed of Settlement are such that the Applicant does not need to repay an amount equal to the periodic compensation payments.
The Tribunal respectfully disagrees with the decisions of Tavili and Secretary, Department of Social Services [2015] AATA 19 and Spark and Secretary, Department of Social Services (Social services second review) [2018] AATA 1456 in relation to the calculation of a preclusion period.
To not apply the section 17(4) of the Act reduction for periodic payments received in relation to the Applicant in this matter would in effect apply a penalty to the Applicant due to the terms of the Deed of Settlement. The Deed of Settlement in effect provided an arrangement where book entries are done to mitigate the need for an increased payment being made upon which a recoupment would then need to be applied.
The Tribunal accepts that the terms of the Deed of Settlement are clear and provide that $425,000.00 is being paid as full settlement of the claim and that WorkCover has waived their right to seek a refund of the statutory benefits paid (which include the periodic payments). As required by the Act the settlement sum plus the forgone statutory benefits are correctly added together to constitute the lump sum compensation payment, this is reflected in the Centrelink Compensation Advice of Lump Sum form completed by WorkCover as the insurer. The Tribunal, however, considers that it is not appropriate for the Respondent to rely upon WorkCover’s failure to complete question 10 on that form and the forgoing of the statutory benefits in the Deed of Settlement to take the view that the periodic payments have not been required to be repaid.
The effect of the arrangement is that Work Cover is agreeing to settle the full claim for $661,037.28, with $425,000.00 being the cash payment and the remaining statutory benefits being recouped by WorkCover. The alternative arrangement would be for the Deed of Settlement to reflect settlement in the sum of $661,037.28 with a clause requiring that the statutory benefits be deducted ahead of payment.
The Tribunal considers that by including the grossed-up compensation amount at question 9 and leaving question 10 incomplete, WorkCover is inaccurately reflecting the true arrangement. This approach does not take into consideration the effective book entry offset.
The legislation and case law make it clear that the lump sum compensation payment is only reduced by periodic compensation payments, not the remainder of the statutory benefits.[39]
[39] See cases listed in paragraphs 54 and 55 of this decision.
The Tribunal considers that the issue in this matter relates to the application of section 17(4) and calculation required by section 17(3) of the Act and as such adopts the approaches taken in Re Navratil and Secretary, Department of Family and Community Services [2002] AATA 452, Re Broad and Secretary, Department of Family and Community Services [2003] AATA 1017, Re Vecchio and Secretary, Department of Education, Employment and Workplace Relations [2008] AATA 97, Re Secretary, Department of Families, Housing, Community Services and Indigenous Affairs and Whitlock [2010] AATA 816, and Lucas and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 914, in that periodic payment amounts must be deducted.
This Tribunal considers the correct calculation of a preclusion period under the Act in relation to deeds of settlement in Queensland in the terms reflected in the Applicant’s Settlement Deed is that outlined by Member Fisher in Re Vecchio. It is beneficial to extract the relevant part of that decision here. Member Fisher provided at [16]-[25]:
16. Mr McGhie (for the Applicant) submitted that there was no legislative basis for the practice of Centrelink adding back onto the lump sum the WorkCover Queensland refund of $58,701.64. This submission is technically correct, but it misses the point, having regard to the decisions of the Federal Court in Secretary, Department of Social Security v Banks (1990) 23 FCR 416 and Secretary, Department of Social Security v Hulls (1991) 22 ALD 570; 13 AAR 414; 60 SSR 834 concerning the meaning and operation of the “lump sum” element as part of the composite “lump sum compensation payment”. In both cases, the Federal Court proceeded to gross up all payments received that stemmed from the “settlement of a claim that is, in whole or in part, related to a disease, injury or condition” within a precursor to section 17(3) of the Act (in those cases, section 152(2)(c) of the Social Security Act 1947, which is materially identical to section 17(3) of the Act). In those cases, the Federal Court reasoned that it was immaterial that a component of a lump sum may have been notionally earmarked as a particular heads of damages or form of consequential loss, so long as it was attributable to settlement of a claim that is, in whole or in part, related to a disease, injury or condition”. This reasoning binds this Tribunal and in any event, this Tribunal is not inclined to rule otherwise. “Lump sum” means all of the items of sum that are taken together to form in aggregate a larger sum, providing those items can be traced back to a disease, injury or condition.
17. To recapitulate, the disputed item in this case is the “add back” onto the lump sum of $120,000 the WorkCover Queensland refund of $58,701.64. It is important to recall, however, that not every lump sum that a person receives constitutes a lump sum compensation payment. For that to be so, it must come within the meaning of one of paragraphs (a) to (d) of the definition of compensation in sub-section 17(2) of the Act” (Broad and Secretary, Department of Family and Community Services [2003] AATA 1017 at [20]). In this case, the WorkCover Queensland refund of $58,701.64 was foregone by WorkCover Queensland on its own account on behalf of its insured employer under clause 3.2 of the Deed of Release and Discharge dated 28 June 2006. The character of this WorkCover Queensland refund is that they are "statutory benefits" under clause 3.2 of the Deed of Release and Discharge. These payments comprise "a payment under a scheme of insurance of compensation under a... State... law" within section 17(2)(b) of the Act. Consequently, the WorkCover Queensland refund of $58,701.64 falls under the statutory rubric of "compensation", and so is subject to the restrictions under sections 1169 and 1170.
18. The Applicant argued that the decision by WorkCover Queensland not to seek a specific refund of $58,701.64 meant that the Applicant had not received a payment within section 17(3)(a) of the Act. In opposition to this contention, Dr Spry for the Respondent argued that "payment" in section 17(3)(a) included a release. The Respondent referred to clause 3.2 of the Deed of Release and Discharge (which read "WorkCover acknowledges that it is not entitled to a refund of statutory benefits paid under claim number [not reproduced] totalling $58,701.64"). The Respondent invoked the principle in Spargo’s Case (1873) 8 LR Ch App 407 (In re Harmony and Montague Tin & Copper Mining Company ("Spargo's Case") (1873) 8 L.R. Ch. App. 407).
19. The principle in Spargo’s Case which the Respondent invoked was the statement at 414 where Lord Justice Mellish said:
"Indeed, it is a general rule of law, that in every case where a transaction resolves itself into paying money by A. to B., and then handing it back again by B. to A., if the parties meet together and agree to set one demand against the other, they need not go through the form and ceremony of handing the money backwards and forwards."
20. Using the springboard of the principle in Spargo’s Case, the Respondent said that it was not necessary for the Applicant to have physically paid over $58,701.64 to WorkCover Queensland, and then for WorkCover Queensland to refund the same amount in order to achieve the object of clause 3.2 of the Deed of Release and Discharge. The Respondent argued that "payment" included a release such as that documented in clause 3.2 of the Deed of Release and Discharge.
21. Ordinarily, the term "payment" denotes the transfer of money or the performance of some other act which discharges a monetary obligation: RM Goode, Payment Obligations in Commercial and Financial Transactions (Sweet & Maxwell, London, 1983). For the principle in Spargo’s Case to apply, there must be two concurrent present obligations: The Taxpayer and the Commissioner of Taxation [1997] AATA 91. This principle has not been applied in the Social Security context according to the research of the Tribunal. It has been, however, applied in a taxation context: see Whim Creek Consolidated NL v Federal Commissioner of Taxation [1977] FCA 19; (1977) 31 FLR 146; Federal Commissioner of Taxation v Steeves Agnew & Co. (Vict.) Pty. Ltd (1951) 82 CLR 408, 420 and Curran v Federal Commissioner of Taxation.
22. The principle in Spargo’s Case has been held to be applicable beyond the taxation and corporate law contexts. In East Finchley Pty Limited v Federal Commissioner of Taxation (1989) 20 ATR 1623, Hill J stated (at 1635) that the rule in Spargo’s case is not a principle confined merely to the company law context but that at its heart is the undeniable futility of two parties, each obligated to the other, passing cheques backwards and forwards to accomplish a transaction (see Jarrett & Ors v Perpetual Trustee Co Limited [2007] NSWSC 1231 at [164] per Hall J). The Tribunal considers that the principle in Spargo’s Case rests upon a concept of commercial convenience.
23. The Applicant disputed that Spargo’s Case applied to section 17(3) of the Act.
24. The Tribunal is satisfied that the principle in Spargo’s Case applies to section 17(3) of the Act. First, it is a general principle applicable to concurrent liabilities. Secondly, nothing in section 17(3) gives the term "payment" a narrow connotation embracing only the denotations of physical payments and excluding set off. Thirdly, the legislative intent behind the prevention of double dipping in the context of the operation of lump-sum preclusion periods would be subverted if the form of payment prevails over the substance of payment. Fourthly, the principle in Spargo’s Case is consistent with what von Doussa J said in Department of Social Security v Banks (1990) 20 ALD 19 at 25:
"The expression 'the lump sum payment...made...in settlement of a claim' is apt to describe the total amount which is payable as the monetary consideration passing from the party on whose behalf the payment is to be made to the recipient in exchange for a release from the claim."
25. The total amount payable is the consideration for the settlement of the Applicant’s claim for liability on the part of WorkCover Queensland (being subjugated to the position of her employer) to pay compensation which includes not only the settlement sum of $120,000 but also the concurrent release of her statutory liability to refund WorkCover Queensland statutory benefits.
The Tribunal notes that, pursuant to section 17(5) of the Act, the fact that the Applicant did not personally receive the full amount of the $236,037.28 statutory benefits component throughout the compensation process does not mean the full amount should not be included as part of the lump sum compensation payment amount. The Applicant is taken to have received it by virtue of the fact that the other parties received the payment on her behalf (for example, being for medical treatment provided to the Applicant).
Therefore, the compensation part of the Applicant’s lump sum compensation payment is 50% of $563,983.54,[40] being $281,991.77.
[40] In accordance with section 17(3) of the Act.
The preclusion period is than calculated in accordance with section 1170 of the Act as 281 weeks, calculated by $281,991.77[41]/$1002.30,[42] commencing on 11 September 2017[43] and ending on 29 January 2023[44].
[41] Compensation part of the lump sum being ($661,037.28 - $97,053.74) x 50%.
[42] Income cut out amount applicable in December 2018.
[43] Pursuant to section 1070(1)(a) of the Act, being the day following 10 September 2017, the last day the Applicant received a periodic payment.
[44] Pursuant to section 1070(1)(b) of the Act, 281 weeks later.
The Applicant’s reference to the asset threshold for receiving DSP may well be correct, however, it is not relevant in this matter. A lump sum compensation payment does not of itself constitute an asset for the asset threshold tests.
Are Special Circumstances present?
As the Tribunal has found that the compensation preclusion period was correctly applied, it must consider whether there are any special circumstances that would make it appropriate to treat part or all of the Applicant’s compensation payment as not having been received.
What does ‘special circumstances’ mean?
Section 1184K of the Act provides a discretion to treat all or part of the compensation payment as having not been made where special circumstances exist, which in turn would reduce the preclusion period.
The Act does not provide a definition of special circumstances. However, the general proposition, established by relevant Federal Court decisions, make it clear that ‘special’ means something different from the usual or ordinary.
In Re Beadle and Director-General of Social Security (1984) 6 ALD 1 the Tribunal held at page 3:
An expression such as “special circumstances” is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This 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.
In Re Ivovic and Director-General of Social Services (1981) 3 ALN No 61 at N95, the Tribunal stated at pages N96-N97:
Whilst it would be unwise, if not impossible, to attempt to lay down any precise delineation of what may amount to “special circumstances” …, the use of the word “special” is, we think, intended to allow the decision-maker the fullest opportunity to consider the particular circumstances of each case … In the exercise of the discretion …, the decision-maker must have regard to whether, by exercising the discretion in a particular case, he will be achieving or frustrating ends or objects which are conformable with the scope and purpose of the … Act.
In Groth and Secretary, Department of Social Security [1995] FCA 1708, the Federal Court stated at paragraph [12]:
The phrase “special circumstances”, it has been said, although imprecise is sufficiently understood not to require judicial gloss … it is sufficient to observe 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 ….
The legislative intention in relation to those who receive a lump sum compensation payment for lost earnings or lost capacity to earn is that they are expected to support themselves using their compensation payment before seeking support from the taxpayer. In Re Secretary, Department of Social Security and Winterbotham [1990] AATA 808, Deputy Present Burns explained at paragraph [19]:
This particular piece of legislation … was aimed specifically at preventing those people receiving compensation for loss of income because of incapacity for work from being able also to receive benefit from the public purse … Primary responsibility for the payment of such compensation lies at the feet of those responsible for the compensable injury. Once that responsibility has been met, by way of a settlement sum agreed to by both parties, it is inequitable for the recipient to seek supplementary funds from the taxpayer.
Von Doussa J remarked in Department of Social Security v Smith (1991) 30 FCR 56 at 61 that the Compensation Recovery scheme is intended to operate to provide “a fair balance of the interests of the recipient of the payment with the competing interests of others in the community whose needs must be met as far as possible from a finite budget allocation for social security measures.”
In Secretary, Department of Employment and Workplace Relations v Homewood [2006] FCA 779; 91 ALD 103, French J (as he then was) outlined how the Tribunal should address the question whether special circumstances in the context of section 1184K of the Act exist:
The decision before the tribunal in this case arose under s 1184K of the Act. It was necessary to the exercise of the power conferred by that section that the tribunal identified “special circumstances of the case” in which it thought it “appropriate” to treat the whole or part of the relevant compensation payment as not having been made. In giving its reasons for a decision under that section to treat the whole or part of a compensation payment as not being made it would be expected, consistently with s 43, that the Tribunal would:
1Identify the circumstances of the case which it found to be “special” and the reasons for which it arrived at that finding.
2Explain why, in the special circumstances so found, it thought it appropriate to treat the whole or part of the compensation payment as not having been made.
3Explain why it selected the particular quantum (that is the whole or part) of the compensation payment as not having been made.
Do special circumstances exist?
The Applicant sustained a workplace injury on 14 December 2015 in carrying out her duties as a car consultant. The Applicant had rolled her right ankle, “allegedly fracturing her 5th metatarsal bone”. She developed right foot complex regional pain syndrome (CRPS) and her pain worsened and became more widespread. She has since been diagnosed with functional neurological disorder.[45]
[45] Exhibit 1, T Documents, T5, pages 59-63, Report: Dr Khaldoon AlSaee.
Dr Khaldoon AlSaee, Specialist Psychiatrist and Pain Medicine Physician diagnosed the Applicant with:[46]
·Complex PTSD
·Recurrent Depressive Disorder
·History of CRPS – now presenting with wide-spread pain
·Fibromyalgia
·Functional Neurological Disorder
[46] Exhibit 1, T Documents, T41, page 210, Discharge Summary: Dr Khaldoon AlSaee.
In a Discharge Summary, dated 29 November 2019, Dr AlSaee provided information in relation to the Applicant’s admission to the Buderim Private Hospital between 12 August 2019 and 22 October 2019. Dr AlSaee described the admission as being long and difficult for the Applicant.[47]
[47] Exhibit 1, T Documents, T41, page 210, Discharge Summary: Dr Khaldoon AlSaee.
At the Hearing, the Applicant told the Tribunal that:
·She was injured at work on 14 December 2015 and returned to work on reduced hours. Her last day at work was 15 August 2016 and at that time she was working 9 hours a week.
·Since her injury her physical and mental health have quickly deteriorated.
·She was aware that there was a preclusion period, however she did not know that it was going to be calculated on an amount greater than $425,000.00. She agreed she had read the litigation settlement instructions, her solicitors’ letters and Centrelink letters which referred to a preclusion period, however, she maintained she did not agree with the calculation. She said that she went together with a support person to Centrelink on a number of occasions to discuss the issue.
·Her compensation payment was exhausted by July/August 2019.
·Details of how she spent her compensation payment are as follows:
o $3,000 – spinal cord stimulator surgery which effectively is like having a TENS machine inserted into her back and assists with her pain.
o $25,000 – loan repayment to Mr Valentino La Vista. Mr La Vista had lent her money during the time between when her work cover payments stopped and she was paid DSP up until her compensation payment. She needed to pay that back. Mr La Vista is like a brother to her. Mr La Vista had been transferring $200 per week into her bank account from 20 February 2019 as she wanted to hold onto the money in her account and she told him she would pay him back. At 25 October 2019, she owed Mr La Vista $7,000. Mr La Vista is no longer able to provide this assistance and has ceased doing so from early January 2020. She now owes him approximately $9,000.
o Her medication costs between $400-$500 per month.
o Her berthing fees were $1,000 a month and she had not paid them since September 2019. She now owes approximately $5,500.
o $200 a week for food.
o $4,800 for private health insurance for the year.
o $3,000 - $4,000 for dental work.
o Registration, insurance and maintenance on her car.
o $4,000 on accommodation in Cairns. In July 2019, she stayed in the Novotel with her daughter who was visiting. She was not in a good place at the time. She said they stayed at the Novotel as she could not stay on her boat.
o $1,000 for out of pocket expenses to have surgery on her nose to address a deviated septum in May 2019.
o $5,000 - $8,000 on a month long visit to see her mother in Victoria. She said she had not seen her mother in 4 years and her mother is not very well, having had a kidney removed. She said her mother needed things around the house to make life easier, for example a shower chair and she bought these for her.
o $10,000 gift to her youngest daughter. She said she gave her daughter this money as she was in financial hardship and needed a car. Her daughter lives in Victoria and works in the evenings and was travelling on public transport. This was making her, as a mother, anxious to the point that she was having panic attacks when she knew her daughter was going to work and returning late at night and required her to text when she arrived at each destination safely.
·She was living a great life prior to her injury.
·Her mental health was deteriorating during this period of time, she was having nightmares and panic attacks. She said she would wake up in the middle of the night from a nightmare and go on her computer and buy things – when she was working she could buy things to help make her feel better.
·She did not realise until July 2019 how quickly she had spent the money. She had been in ‘not a good place’.
·Up until December 2019 she was living on her boat. Her boat is now berthed at the marina as after her injury it is no longer safe for her to have it moored and use a dingy to get back to shore. The boat is her home and is worth approximately $10,500.
·After receiving the decision of the SSCSD in December 2019 she has been living with a friend. If it were not for her friend, she would have had nowhere to live and she would have ended her life. Her friend helps her with food and sometimes with getting her medication when she can, however her friend has her own family to take care of.
·She will be relocating from Cairns to the Sunshine Coast to be closer to her doctors and the person who can look after her spinal cord stimulator. She said the Cairns Base Hospital has told her they would not help as her case is too complex. She has friends who will sail her boat down to the Sunshine Coast and the costs to berth her boat there will be much cheaper. She said the National Disability Insurance Scheme (NDIS) has approved a ramp for her boat which will make it easier for her to get aboard. It is important for her to be close to her doctors and to be able to live on her boat for as long as possible.
·Up until December 2018, her eldest daughter was her carer. After that she moved to New Zealand. She said that her daughter does not have the means to help her.
·Her youngest daughter has lent her $2,000 however does not earn much and lives in Melbourne, so she is unable to provide her with financial assistance.
·Her mother is a pensioner and lives week to week and is unable to help her with financial assistance.
·She owns her own car but she cannot sell it as she needs to be able to get around. She said she is physically unable to use public transport as she can only mobilise using crutches, a walker or wheelchair.
·Non-government agencies have been assisting her with food and petrol vouchers and to get scripts filled however she has been told that since October 2019 she has exhausted her share of their resources.
·She was not happy with the legal advice she received throughout her compensation claim process. She takes issue with the conduct of her barrister and said she will take that further.
·Her CRPS started in her right foot and now is down her right side, across her shoulders to her head and both arms and hands. She has major pins and needles and pinched nerve pain. Her right-side trembles and she is only able to walk using crutches or a walker as otherwise she falls over.
·Her mental health has deteriorated badly, she cries constantly, does not want to go anywhere, does not eat regularly, does not shower or change her clothes regularly, since December 2019 she has been very suicidal. She has planned how she would end her life and has drafted an email that can be sent. She does not want to live as she does not recognise herself anymore, she has no purpose or reason to live. She was a high achiever with a good life and she sees that she has had a poor outcome. She said she does not know where or who she is a lot of the time.
·She is not able to take all of her prescribed medicine as she does not have any money and the agencies that offer assistance are not able to fill so many scripts. She takes her medication when she can.
·That the Centrelink and Tribunal processes have been traumatic torture.
·She was given advice that if she has less than 2 payments’ value of money in her bank account that Centrelink must reinstate her DSP regardless of the preclusion period.
·She believes that her DSP should never had been stopped.
·That when she received her compensation payment, she knew she could not live on $116,000 until 2023 and that she was not thinking straight. She said her mental health led to spending, she was not thinking about tomorrow. She said after receiving her settlement all she wanted to do was end her life, she felt she had been robbed of her independence, robbed of her quality of life, suffering and struggling and tormented and tortured with pain and that her injury and her life and body was only worth being paid $116,000 was a kick in the guts. She said she gave up and she can no longer live like this.
·She has been approved for the NDIS and has support from a carer for 30 hours a week, from around July. She said the NDIS does not assist with her medication. She said that her NDIS plan includes a full functional capacity assessment, walker, wheel chair and new crutches.
·She is seeking some kind of payment and payback.
·She is only asking for fairness and what she is entitled to.
Ms Mavis Derman, the Clinical Psychologist who has been treating the Applicant since February 2016, in addition to her written evidence,[48] gave evidence, under affirmation, by telephone at the Hearing.[49] Ms Derman gave evidence that the Applicant cannot walk properly, has chronic pain and is depressed and anxious. She said that the Applicant’s mental health since her injury has negatively impacted upon her decision-making ability.
[48] Exhibit 1, T Documents, T19, page 104, Report: Ms Mavis Derman; Exhibit 2, Secretary’s Statement of Facts & Contentions, Annexure 2.
[49] Transcript, pages 24-30.
Ms Derman told the Tribunal that the Applicant’s mental health has continued to deteriorate and is currently particularly affected due to her financial position. She said the Applicant has become desperate and this has affected her decision-making processes.
Ms Derman told the Tribunal that there was definitely no way the Applicant could work now or in the future due to her mental and physical conditions. She confirmed that the Applicant had expressed her suicidal feelings to her.
Dr Khaldoon AlSaee, the Specialist Psychiatrist and Pain Medicine Physician who has been treating the Applicant for at least the last two years, in addition to his written evidence,[50] gave evidence, under affirmation, by telephone at the Hearing.[51] Dr AlSaee told the Tribunal that the Applicant’s chronic pain syndrome and mental health conditions are linked and make each other worse.
[50] Exhibit 1, T Documents, T5, pages 59-63, Report: Dr Khaldoon AlSaee; T41, pages 210-212, Discharge summary: Dr Khaldoon AlSaee; T42, pages 314-315, Medical Report: Dr Khaldoon AlSaee.
[51] Transcript, pages 34-42.
Dr AlSaee told the Tribunal that the Applicant’s ability to make decisions has been decreased since her injury due to her mental health and physical conditions and her medication. Dr AlSaee said that he was aware of the medication prescribed to the Applicant and when asked what the impact is of the Applicant not being able to take her medication, he said:[52]
Well it’s very clear. When [the Applicant], for example, stopped one of her antidepressants a while ago and her condition deteriorated significantly. If she doesn’t take consistently her pain medication she’s going to go into like cycles of withdrawal symptoms followed by cycles of intoxication when she restarts the medication, so it’s not very ideal. In general, she needs stability with taking her medication. From my understanding, it’s that she has problems either getting the medicine or affording the medication and at times, you know, she either takes more than she should with regards to forgetting what she’s taken or she forgets that she’s taken the medication. It hasn’t been very easy for her.
[52] Transcript, page 37.
When asked if during periods of time when the Applicant is not taking all of her medication, whether that is going to further erode her ability to make good decisions, Dr AlSaee said:[53]
If she was not to take her medication on a regular basis I would be concerned for her decision making, her safety and her ability to manage.
[53] Transcript, page 37.
Dr AlSaee told the Tribunal that the Applicant’s mental health has continued to deteriorate.
Dr AlSaee told the Tribunal that the Applicant has expressed how suicidal she is and that it concerns him, he would say she needs to be in hospital. He said it is difficult as he is located on the Sunshine Coast and she is in Cairns.
Dr AlSaee told the Tribunal that the Applicant has no capacity to work ever again. He said she had tried to get back to work, but she has no chance of recovering to a point that would allow her to undertake any kind of work.
When asked how the Applicant’s situation was different to other people in similar situations with preclusion periods, Dr AlSaee told the Tribunal:[54]
So essentially first of all [the Applicant’s] condition has got complexity insofar as one, it is both severe and two, it’s widespread and in fact despite numerous attempts at treatments - this is before all of this started happening - both as an inpatient and as an outpatient, both in Townsville and the Sunshine Coast, both in psychiatric hospitals and general hospitals, all under my care there has been no major improvement to the extent that she can live an independent life without requiring a carer, without requiring some sort of support from an Allied Health perspective and without requiring, you know, substantial care beyond what other people expect or, you know, and conditions like that. It’s come to the extent that we have tried treatments that we don’t usually try with patients. It’s come to the extent that we’ve given her more time in hospital beyond what the capacity has been and it’s come to the point where we have even deemed that despite multiple hospitalisations, hospitalisations are not useful for her. This is not a usual type of case. We usually get positive outcomes or else we wouldn’t be doing what we’re doing and therefore, you know, in my view I think if you ask me out of my patients, you know, I receive in excess of 800 referrals a year and then out of all the patients that I’ve seen, you know, [the Applicant] would possibly be one of the most complicated patients that I have on my books, and this is no offence to [the Applicant], this is just how it is and we have spoken about this before. Insofar as we have not received a positive outcome from an analgesic perspective. We haven’t received positive outcomes from a functional perspective and the reality is, despite our attempts to cut down on the use of medications to assist her with her pain so that we can avoid, you know, things like (indistinct) intolerance and all that stuff, we haven’t really been able to make far strides from this, you know. So, that’s kind of in summary of why she’s complex more so than other patients….
[54] Transcript, page 38.
Ms Kerry Stingel, an Occupational Therapist and accredited hand therapist, who has been treating the Applicant since April 2016 gave evidence, under affirmation, by telephone at the Hearing.[55] Ms Stingel told the Tribunal that she was both treating the Applicant in relation to her injury and was her ‘return to work’ provider until her work cover claim ended in September 2017. She said she had treated the Applicant periodically since that time and is assisting with a functional needs assessment provided under the NDIS.
[55] Transcript, pages 43-47.
Ms Stingel told the Tribunal that there is no way in the foreseeable future, if ever, that the Applicant would work again. She said the Applicant’s conditions significantly impaired her and were difficult to predict. Ms Stingel said that there had been significant changes in the Applicant’s state of well-being.
Prior to the Hearing, the Respondent had contended that the Applicant’s circumstances, when compared to those of other social security recipients, are not special to the extent that would warrant the exercise of the discretion conferred by section 1184K of the Act in her favour.[56]
[56] Exhibit 2, Secretary’s Statement of Issues, Facts & Contentions, pages 11 and 17, paragraphs 57 and 96.
Having heard the evidence presented at the Hearing the Respondent conceded that there may be a basis to consider that special circumstances exist as the evidence at Hearing established that the Applicant’s decision making capacity was impaired as her mental health continued to deteriorate, things were dire for the Applicant, and the Respondent is not challenging that the Applicant is in a difficult position.[57]
[57] Transcript, page 67.
The Respondent contended, however, that it is not appropriate to remove the whole preclusion period as the Applicant was aware a preclusion period was in place, she did not budget effectively, and she did still have some support from friends. The Respondent contended that it would not be unreasonable to bring the preclusion period to an end around the date of the hearing based on the new evidence.
It is clear to the Tribunal that the Applicant is extremely unwell, and will be impacted by her conditions indefinitely. The evidence before the Tribunal indicates that both the Applicant’s physical and mental health have deteriorated to a severe and chronic state since she sustained her injury in December 2015.
The discretion in section 1184K of the Act in relation to special circumstances is broad and as described by Senior Member Sosso (as he then was) in Bruinger and Secretary, Department of Social Services (Social services second review) [2017] AATA 1244 at [61]:
There have been a number of Federal Court and Tribunal determinations which have dealt with the many factors that can be taken into account when exercising the special circumstances discretion. Clearly, any attempt to enumerate such factors can only be indicative at best. Whilst a checklist of factors based on previous decision and determinations is helpful as a guide, the discretion vested in the Tribunal is broad and not subject to statutory limitation. Consequently, any attempt to arbitrarily limit or restrain the exercise of this discretion would not only be futile but legally impermissible.
The evidence before the Tribunal demonstrates that the Applicant is experiencing straitened financial circumstances. The Applicant has limited assets, being her boat which is her home and her motor vehicle, the financial support being offered by Mr La Vista has ceased, she is unable to afford her medication and has no ability to be able to work or seek assistance from her family.
The usual factors that may outweigh straitened financial circumstances constituting special circumstances include the consideration of the general administration of the social security system[58] and whether the Applicant had been reckless in expending her lump sum compensation payment,[59] however these do not in the Tribunal’s view do not apply in the Applicant’s case, to weigh against the finding that special circumstances exist.
[58] Re Davy and Secretary, Department of Employment Workplace Relations [2007] AATA 1114.
[59] Davis and Secretary, Department of Family and Community Services [1999] AATA 84.
While the Tribunal acknowledges that the Applicant was aware that a preclusion period was to apply and in that circumstance the onus was on her to budget to ensure that she could support herself for as long as possible with her compensation lump sum compensation payment, she was unable to do so as a result of her mental and physical health.
The evidence provided to the Tribunal by Dr AlSaee and Ms Derman, makes it clear that the Applicant’s conduct in relation to her management of her lump sum payment was negatively impacted upon by her mental and physical health conditions which feed off each other. The Applicant gave evidence that she had not been thinking clearly or looking to the future, in a sense the Applicant’s mental health was deteriorating towards her current state of questioning whether there was any point in continuing.
Dr AlSaee gave evidence that the Applicant’s mental and physical conditions are significantly different to his other patients.
The Applicant and her medical practitioners have provided evidence that the stress of her financial situation is severe.
The Tribunal is satisfied that the enforcement of the full preclusion period would result in further severe stress for the Applicant with potentially serious health ramifications which would require public health and support intervention.
The Applicant contended that the calculation of the preclusion period was unfair and that the incorrect amounts were used. The calculation of a preclusion period is set out in the Act and it is not open for the Applicant to challenge the efficacy of the 50% rule which extends to the deeming provisions. While the fact that the actual amount received by an applicant is less than the deemed economic loss is not a special circumstance on its own, that does not mean the Tribunal can never take into consideration circumstances of the particular case. However, it is noted that, judicial authority leans against finding special circumstances merely on this point.[60]
[60] Kiefel J (as she then was) in Secretary, Department of Family and Community Services v Chamberlain (2002) 116 FCR 348 at 353-355.
In this case the Applicant received less than 20% of the compensation awarded. While this is not enough alone to make a finding of special circumstances, in conjunction with the other factors outlined above it is open to the Tribunal to factor in the minimal nature of the final payout figure in finding that special circumstances exist.
Conclusion
Based on the evidence before the Tribunal, the Tribunal considers that special circumstances for the purposes of section 1184K of the Act exist in this matter. Those circumstances are as follows:
(a)the Applicant is in straitened financial circumstances;
(b)the Applicant is in ill-health;
(c)the Applicant’s conduct in relation to the expenditure of her compensation payment was impaired by her mental and physical health;
(d)application of the full preclusion period will result in a further decline in the Applicant’s health; and
(e)the Applicant received a net payout considerably less than the deemed economic loss.
As the Tribunal, has found that special circumstances exist, it must consider why those circumstances justify treating the whole or part of the compensation payment as not having been made.
As set out above, the Applicant is currently in a situation where she has exhausted or at least has limited access to support from non-government welfare organisations, and from her family and friends, she has no income, limited assets and a genuine need to be able to access medical and pharmaceutical treatments. The Applicant’s medical conditions continue to deteriorate and prolonging the preclusion period will achieve nothing.
The Tribunal notes that this finding is not inconsistent with the contentions made by the Respondent at Hearing.
Finally, the Tribunal must decide when the preclusion period should cease. The Respondent contended that the preclusion period should not be reduced to a date before the date of the Hearing. The Applicant contended that the preclusion period should not have been applied at all, or at the very least should not apply past when she applied in September 2019 for NSA.
Based on the evidence before the Tribunal, it is likely that the Applicant had expended all of her compensation payment by August/September 2019 and has been living since then solely on outside assistance and by forgoing medication that she requires. In these circumstances the Tribunal considers it appropriate to treat so much of the Applicant’s compensation payment as not having been made so that her preclusion period ends on 21 September 2019, being the day before the Applicant made an application for support payments from the Respondent.
Was the decision to cancel the Applicant’s DSP correct?
As the Tribunal has found that a preclusion period applied to the Applicant for the period 11 September 2017 to 29 January 2023, and is shortened, due to special circumstances, to 21 September 2019, by virtue of the operation of section 1169 of the Act and section 80 of the Administration Act, the Applicant was not entitled to DSP from 11 September 2017 and the Respondent was required to cancel her payment.
The Tribunal therefore affirms the decision to cancel the Applicant’s DSP.
Was the decision to refuse the Applicant’s claim for NSA correct?
As the Tribunal has found that special circumstances exist for the purposes of section 1184K of the Act, to the extent that so much of the compensation payment received by the Applicant should be treated as not having been made so that the preclusion period ends on 21 September 2019, the Applicant’s application for NSA should be reconsidered by the Respondent accordingly.
The Tribunal therefore sets aside the decision to refuse the Applicant’s claim for NSA.
The Tribunal notes that at Hearing the Applicant said that the application she made on 22 September 2019[61] was for DSP and that she had ‘ticked a box’ that indicated she wanted to be paid NSA during the period required to assess her DSP application.
[61] Exhibit 1, T Documents, T28, pages 137-143, Claim for Newstart Allowance.
Upon review of the application the Applicant has responded to standard DSP questions, however, there is no information before the Tribunal in relation to a claim for DSP having been made, accepted or assessed by the Respondent and as such there is no decision in that regard under review by this Tribunal. It is open to the Applicant to raise this matter with the Respondent and seek to have the application considered to also be a DSP application and have that application assessed for eligibility.
CONCLUSION
The decision under review to refuse the Applicant’s claim for NSA (file 2020/0402) is set aside and the matter is remitted to the Respondent for reconsideration in accordance with the direction that, for the purposes of calculating the compensation preclusion period, so much of the compensation paid to the Applicant be treated as not having been made such that the lump sum preclusion period concludes on 21 September 2019.
The decision under review to cancel the Applicant’s DSP (file 2020/0403) is affirmed.
I certify that the preceding 112 (one-hundred and twelve) paragraphs are a true copy of the reasons for the decision herein of Member D Mitchell
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Associate
Dated: 26 February 2020
Date of hearing: 21 February 2020 Applicant: By phone Advocate for the Respondent: Mr Rick McQuinlan
Solicitors for the Respondent: Department of Human Services
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