Moran and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs

[2008] AATA 951

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 951

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2007/3051

GENERAL ADMINISTRATIVE  DIVISION		)
Re		KAREN MORAN

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Dr I Alexander, Member

Date24 October 2008

PlaceSydney

Decision The decision under review is set aside and in substitution the Tribunal decides, pursuant to subsection 1184K(1) of the Social Security Act 1991, that the whole of the Applicant’s compensation payment be treated as not having been made, with the result that her compensation preclusion period be reduced to nil.

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

Dr I Alexander
  Member

CATCHWORDS

SOCIAL SECURITY – disability support pension – compensation affected payment – compensation part of a lump sum compensation payment – lump sum preclusion period – special circumstances – Secretary may disregard the whole or part of a compensation payment – the decision under review is set aside

Social Security Act 1991 – Sections 17, 1184K

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

Beadle v Director-General of Social Security (1985) 7 ALD 670

Groth v Secretary, Department of Social Security (1995) 40 ALD 541

Boscolo v Secretary, Department of Social Security (1999) 90 FCR 531

Secretary, Department of Social Security v Hales (1998) 82 FCR 154

REASONS FOR DECISION

24 October 2008 Dr I Alexander, Member    

INTRODUCTION

1.Ms Moran seeks review of a decision of the Social Security Appeals Tribunal (“SSAT”) dated 21 June 2007 to affirm a determination of Centrelink dated 10 May 2007 to recover a charge of $9,789.59 with regard to a compensation lump sum preclusion period from 27 June 2002 to 9 July 2003.

2.The recovery charge arose as a result of a compensation lump sum payment of $95,000 following the settlement of a medical negligence claim in September 2006.

3.Ms Moran has been receiving disability support pension (“DSP”) payments since October 1994 and does not dispute that these payments are compensation affected payments as defined by s 17(1) of the Social Security Act 1991 (“the Act”).

4.Ms Moran also does not dispute that her lump sum payment is “compensation” within the meaning of s 17(2) of the Act and that the methods used by the Respondent to calculate the lump sum preclusion period and the amount recovered were in accordance with the relevant sections of the Act.

5.Ms Moran contends, however, that the circumstances of her case are such that it would be appropriate for the Respondent to exercise the discretion under s 1184K(1) of the Act and disregard the whole of her compensation payment.

6.After having considered all the available evidence, and for reasons that follow, I am satisfied that the circumstances of Ms Moran’s case are “special circumstances” within the meaning of the Act, and that it is appropriate to disregard the whole of her compensation payment. This means that her application for review has been successful.

ISSUES

7.Subsection 1184K(1) of the Act allows the Secretary to treat the whole or part of any compensation payment as not having been made “if the Secretary thinks it is appropriate to do so in the special circumstances of the case”.

8.Therefore the only issues to be decided are whether the circumstances in Ms Moran’s case are ”special circumstances” within the meaning s 1184K(1) of the Act and if so, whether it is appropriate to disregard the whole or part of her lump sum compensation payment as not having been made.

PRELIMINARY FACTS (NOT DISPUTED)

9.Ms Moran is 30 years of age and was granted DSP in October 1994 because of intellectual impairment.

10.Ms Moran’s son Kyle died on 27 June 2002 at the age of 4 months from meningococcal septicaemia.

11.Following Kyle’s death, Ms Moran and her partner Mr Porter commenced an action for compensation due to medical negligence. This claim was settled by agreement on 12 September 2006.

12.Ms Moran’s agreed settlement was for a gross amount of $95,000 inclusive of costs.

13.Mr Porter agreed to a separate settlement on the same day. In oral evidence he stated that he had received a gross sum of $110,000, but was uncertain about costs.

14.Deductions from Ms Moran’s settlement totalled $57,408.90 and included:

·$9,500 paid to Medicare Australia;

·$16,109.5 + $330 counsel’s fees;

·$825 for a medical report;

·$30,644.4 solicitor’s costs /disbursements.

15.On 23 October 2006 Centrelink determined that a compensation charge of $12,401.89, representing DSP in the period 27 June 2002 to 15 October 2003, was to be recovered from the lump sum payment.

16.This decision was based on the application of s 17(3)(a) of the Act, which determines that 50% of the compensation lump sum payment is deemed to be “compensation” under s 17(2) of the Act, and represents the amount of compensation paid with respect of lost earnings. This amount then formed the basis of the calculation of the preclusion period for the payment of DSP.

17.On 21 December 2006 Centrelink decided to reduce the preclusion period from 27 June 2002 to 9 July 2003 and refunded $2,612.30. This decision was based on the fact that Ms Moran had received less than 50% of the lump sum settlement and, as this was considered to be an unforseen or unusual circumstance, it was decided that it was appropriate to disregard part of her compensation pursuant to s 1184K of the Act.

18.The preclusion period was recalculated on an amount of $37,591.10, which was the sum of the original Centrelink charge and the actual net amount Ms Moran had received.

19.Therefore, Ms Moran was left with a net payment of $27,801.51, or about 30% of the gross settlement.

20.Centrelink applied a similar preclusion period to the Parenting Payment that her partner, Mr Porter, had been receiving at the relevant time. Mr Porter sought review of that decision and on 20 March 2007 the SSAT, in accordance with s 1184K of the Act, decided that in the special circumstances of his case it was appropriate to reduce his preclusion period to nil.

MS MORAN’S  EVIDENCE

21.Ms Moran provided a written statement dated 7 May 2008 and also gave oral evidence at the hearing.

22.Ms Moran has been receiving DSP since just after she left school at about 16 years of age because she had “learning disabilities” that were considered significant enough to prevent her from obtaining appropriate stable employment. After leaving school she completed a TAFE course in Child Studies and has undertaken occasional volunteer work in child care centres.

23.Ms Moran has three children aged 2, 4 and 8 years and is currently pregnant with twins due to be delivered some time in October 2008.

24.Her second child, Kyle, was born in March 2002, but died at the age of 4 months from meningococcal septicaemia. Ms Moran claimed that Kyle was initially misdiagnosed and that this formed the basis of the medical negligence claim that was settled in 2006.

25.In the first 12 months after Kyle’s death both Ms Moran and her partner had difficulties with coping and their relationship suffered to the extent that Mr Porter left the family home for a period. Although they eventually got back together, Ms Moran indicated that things have not been the same since Kyle’s death and that there are frequent arguments.

26.Ms Moran described Mr Porter as a person who tends to anger and frequently “blows his top” after which he simply takes off and leaves home for variable periods of time.

27.The difficulties for the couple have been aggravated by the manner in which Ryan, the eldest son, appears to have reacted to his brother’s death. Ryan’s behaviour started to change not long after Kyle died and over the ensuing years it has deteriorated to the extent that he was expelled from his first school at 6 years of age. Amongst other difficult behaviour, Ryan exhibits frequent anger and aggression, often directed at both adults and children, including his mother and siblings. He has been diagnosed as suffering from ‘oppositional defiance disorder’. Following his expulsion from his first school, Ryan was eventually enrolled in a special behavioural class in another school and although, with the aid of counselling, he has shown some improvement in recent times, his behaviour continues to be a significant problem and results in frequent temporary suspensions.

28.Ms Moran also indicated that Ryan’s behaviour has had an effect on the behaviour of her two younger children who now are frequently more ”naughty themselves”.

29.Another matter raised by Ms Moran in her evidence was the family finances, which she claimed will be significantly stretched by the arrival of the twins, particularly as the family will need a larger house and a motor vehicle that can safely transport five young children.  She commented that the situation has been made worse by the fact that since Kyle’s death Mr Porter has found it hard to hold down a job.

30.Ms Moran claimed that prior to agreeing to the settlement of the compensation claim she had been advised by her solicitor to contact Centrelink. As a result of this advice, she and her partner spoke to Centrelink staff on several occasions and were told that they would not be required to pay back any money. There is, however, no documentary evidence to corroborate these conversations.

31.I note that it became clear in the course of Ms Moran’s oral evidence that her memory and understanding of the process and detail of her compensation case was uncertain. It was also clear that she did not understand concepts such as a ‘preclusion period’, and gave the impression that she relied significantly on her partner.

MR PORTER’S EVIDENCE

32.Mr Porter provided a statement dated 7 May 2008 and also gave oral evidence at the hearing.

33.Prior to Kyle’s death in 2002 Mr Porter had been regularly employed, albeit with a variety of employers. After Kyle was born he stopped work temporarily to help Ms Moran at home, but when Kyle died he claimed that his perspective on everything, including work, had changed, so that he did not go back to work for about 12 months.

34.Eventually he started to work again more regularly until some time in 2004, when on a courier job he and his co-worker found a dead body lying by the side of the road. Mr Porter claimed that this incident caused him significant distress and led to an argument with his boss that resulted in his dismissal.  Eventually he found another job and worked without any problems until Ryan started school in 2005. After a few months he had to resign because he was taking off too much time to deal with the problems Ryan was having at school, and since then has only worked intermittently. He stated that he doesn’t have trouble getting jobs, but tends to get stressed and prefers to leave rather than get fired.

35.Mr Porter confirmed the difficulties with Ryan’s behaviour, particularly with regard to school, and indicated that currently Ryan gets suspended regularly and is at risk of being expelled from his second school.

36.Mr Porter also confirmed that the solicitor handling the compensation claim had advised him and Ms Porter to contact Centrelink with regard to any payment recovery. Mr Porter also supported Ms Moran’s claim that they had spoken to several Centrelink staff and were repeatedly told that no repayment would be required.

MEDICAL EVIDENCE

37.In a report dated 8 November 2005 Dr Smith, consultant psychiatrist, expressed the opinion that Ms Moran demonstrated diagnostic criteria for a Major Depressive Episode that had evolved from a complicated grief response linked to the death of her son Kyle and the circumstances in which he died.

38.Dr  Smith concluded that Ms Moran’s prognosis was guarded because she still suffered symptoms of depression almost three years after Kyle’s death, and commented that the loss of a child in such tragic circumstances was such a significant stressor that no other stressor “equates to the loss of a child in such an unexpected manner.”

39.In a report dated 11 January 2006 Dr Skinner, consultant psychiatrist,  expressed the opinion that “bereavement” was a more appropriate diagnosis than major depression, but commented that the death of a child “represents a significant loss for a parent, and is one of the most painful of all emotional experiences”.

40.Dr Skinner also noted that Ms Moran was experiencing problems in her relationship with Mr Porter, as well as difficulties in managing her young family.

41.Dr Anantharaman, PhD, psychiatric social worker, provided a report dated 17 April 2008 and also gave oral evidence.

42.In her report she noted Ms Moran attended for an individual assessment on 10 January 2008, having been referred by her general practitioner. Subsequently Ms Moran attended 8 individual sessions and 3 joint sessions with her partner. Mr Porter attended 4 individual sessions and Ryan also attended 4 individual sessions.

43.Dr Anantharaman diagnosed Ms Moran as suffering from prolonged grief reaction associated with physical symptoms of anxiety and depression. She listed a number of factors relevant to the diagnosis, including the loss of a child, conflicts with her partner, 3 young children, behavioural problems with her eldest son, her youngest child being hyperactive and financial difficulties.

44.In her oral evidence Dr Anantharaman stated that when Mr Porter attended she noted he was also suffering a grief reaction with depression and expressed the opinion that a significant problem for the couple was the fact that they continued to live in the same house where they lost their son.

45.She also noted that there was significant conflict between Ms Moran and her partner and that as result of their own impaired mental health they were unable to provide any effective discipline for their children, particularly Ryan.

46.Dr Anantharaman also expressed the opinion that Ryan continues to suffer from a prolonged grief reaction with symptoms of anxiety and depression. Also, that Ryan is very angry at the loss of his brother and that he expresses his anger through physical and verbal aggression.

CONSIDERATION

47.The term “special circumstances” is not defined in the legislation but has been considered on a number of occasions by the Administrative Appeals Tribunal (“AAT”) and the Federal Court.

48.In Re Beadle and Director-General of Social Security (1984) 6 ALD 1 the Tribunal (Toohey J presiding) said:

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.

49.In Beadle v Director-General of Social Security (1985) 7 ALD 670 the Full Federal Court in considering the earlier decision said:

… It would depend upon the circumstances of the particular case whether these constituted special circumstances. We do not think it is possible to lay down precise limits or precise rules. The matter is one for the Director-General bearing in mind the purpose for which the power is given. The phrase “special circumstances”, although lacking precision, is sufficiently understood in our view not to require judicial gloss.

50.In Groth v Secretary, Department of Social Security (1995) 40 ALD 541 Kiefel J considered an appeal from a decision of the AAT in which the essential point was whether there were “special circumstances” in that case that rendered it appropriate to disregard the whole or part of compensation payments in the assessment of a pension entitlement as per the former s 1184 of the Act.

51.After an extensive review of cases the AAT had concluded “that a consideration of whether or not there are special circumstances must be undertaken in the context in which the discretion is given… It seems to me that the purpose of the provisions is to ensure that a person is not paid from two sources in respect of the same period of time. What are special circumstances must be considered against that background.”

52.Kiefel J approved  the approach of the AAT and after referring to the decision of the Full Federal Court in Beadle said:

… for present purposes 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.  That was, I consider, the only enquiry to be undertaken in this 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 enquiry I have referred to would involve considering what would be the effect, if the provision in question or the principle of liability it creates, is applied.

53.Later Kiefel J approved the AAT’s reasoning in finding that “his circumstances and those of his family although difficult, did not constitute hardship and they could not be said to be different from other pension recipients.”

54.In Boscolo v Secretary, Department of Social Security (1999) 90 FCR 531 at 536 French J, as he then was, said:

The core of the requirement for “special circumstances” or “special reasons” is that there be something unusual or different to take the matter the subject of the discretion out of the ordinary course... But that does not require that the case be extremely unusual, uncommon or exceptional…

55.It is clear from the above authorities that the question I must consider is whether there is something unusual or different about Ms Moran’s case when compared to other cases so that it would be appropriate to disregard some or all of her compensation payments as allowed by s 1184K(1) of the Act.

56.In order to address this question it is helpful to examine the overall context of Ms Moran’s situation as well as the individual factors that have contributed to the circumstances of her case.

57.Ms Moran is a 30 year old intellectually impaired woman who will soon be responsible for the care of 5 young children, including recently born twins.  She is living in a relationship with her partner that can best be described as stressful and unstable.

58.Her partner is currently unemployed and also receiving Centrelink payments.

59.Although I do not intend to analyse the family's financial situation in any detail, I am satisfied that the evidence before me is sufficient to describe their financial circumstances as significantly stressed.

60.The central issue in this case, however, is the death of Ms Moran’s second child, Kyle, from meningococcal septicaemia – a tragic occurrence, which the evidence clearly demonstrates has had a significant effect on Ms Moran and her family, including her involvement in unforeseen litigation.

61.The unfortunate circumstances of Kyle’s death led to a successful medical negligence claim which resulted in a monetary outcome that from Ms Moran’s perspective could best be described as less than satisfactory.  Ms Moran received only 30% of the gross settlement as a result of various deductions, including a Centrelink charge and legal costs that amounted to almost half of the gross settlement.

62.It was clear from her evidence that Ms Moran considered the Centrelink repayment to be unfair, particularly as she claimed that on several occasions Centrelink staff had told both her and her partner that there would be no repayment required. Notwithstanding the fact that there was no documentary evidence to support her claim, it was clear at the hearing that Ms Moran was resolute in her belief that the conversations had occurred.

63.As already noted above, Centrelink acknowledged that Ms Moran had actually received less than half of the gross settlement amount and considered this to be an unusual circumstance, warranting the application of the discretion pursuant to s 1184K(1). It appears, however, that the methodology used in the recalculation had the effect of exposing Ms Moran’s entire actual lump sum payment to the calculation of the preclusion period, an outcome that in her case could be seen as unfair.

64.The next issue confronting Ms Moran was the decision of the SSAT that her circumstances did not justify any further reduction in her preclusion period, whereas a differently constituted SSAT had considered that Mr Porter’s circumstances were sufficiently “special” to justify a reduction of his preclusion period to nil.

65.Without any inference as to correctness of the decisions of either Tribunal, it is not difficult to conclude that Ms Moran, an intellectually impaired woman, who finds herself in at least the same, if not worse, circumstances as her partner, would have had some difficulty in understanding the vagaries of the Tribunal process and easily come to the belief that she had been treated unfairly.

66.The consequences of Kyle’s death have not been restricted to the difficulties Ms Moran has experienced with lawyers and tribunals. She continues to suffer symptoms of a prolonged grief reaction and also struggles to cope with similar difficulties experienced by her partner and in particular her eldest son, Ryan.

67.Ryan, who is now 8 years old, began to exhibit significant behavioural problems soon after his brother’s death. His behaviour deteriorated over the ensuing years to the extent that he has already been expelled from one school and is at risk of being expelled from his current school.

CONCLUSION

68.It is clear from the evidence that a number of individual factors or circumstances have contributed to Ms Moran’s situation and it is arguable whether all or some of these circumstances could individually satisfy the threshold of being ‘a special circumstance’.

69.I note that s 1184K(1) refers to “special circumstances of the case” and I read nothing in the section or the relevant authorities that requires each ‘circumstance’ in a set of circumstances of a case to satisfy the test of being ‘special’.

70.In my view the preferred approach, and in particular in this case, is to consider all the circumstances of the case as a whole and then decide whether the set of circumstances can be described as unusual or different. 

71.In doing so I am mindful of the decision of French J, as he then was, in   Secretary, Department of Social Security v Hales (1998) 82 FCR 154 where in deciding an issue with reference to s 1237AAD of the Act his Honour made some general observations with regard to the concept of ‘special circumstances’. His Honour said:

The concept of special circumstances is broad. A constellation of factors, including financial circumstances, may fall within it…

The evident purpose of s 1237AAD is to enable a flexible response to the wide range of situations which could give rise to hardship or unfairness in the event of a rigid application of a requirement for recovery of debt. It is inappropriate to constrain that flexibility by imposing a narrow or artificial construction upon the words…

... to anticipate the limits of the categories of possible cases by imposing on the language of the section a fetter upon its application which is not mandated by its words, is to erode its useful purpose.

72.In my view, it is arguable that Ms Moran’s experience of the death of her 4 month old son from meningococcal septicaemia, and the predictable consequences of such a tragic occurrence, could in itself be seen as sufficiently out of the ordinary to justify the application of the discretion allowed by s 1184K(1) of the Act. However, when added to Ms Moran’s particular personal situation, the unforeseen and dramatic impact on her eldest son Ryan, and her unhappy experiences with the vagaries of litigation, I find it difficult not to conclude that the constellation of circumstances present in her case was different or unusual, and probably very unusual or even exceptional.

73.Therefore, I find that Ms Moran’s circumstances are special circumstances within the meaning of s 1184K(1) of the Act, and sufficiently special to disregard the whole of her compensation payment, thus reducing her compensation preclusion period to nil.

DECISION

74.For the above reasons I have decided that:

(i)Pursuant to s 1184K(1) of the Social Security Act 1991 it is appropriate in the special circumstances of Ms Moran’s case that the whole of her compensation payment be treated as not having been made, with the result that her compensation preclusion period be reduced to nil.

(ii)The reviewable decision is set aside.

.

I certify that the 74 preceding paragraphs are a true copy of the reasons for the decision herein of Dr I Alexander, Member.

Signed:         ................[sgd]................................................................
  Mr T Aviram, Associate

Date/s of Hearing  22 September 2008
Date of Decision  24 October 2008 
Solicitor for the Applicant          Mr B Gerogiannis, Legal Aid
Counsel for the Applicant         Ms M Tibbey   
Solicitor for the Respondent     Mr A Cox, Centrelink Legal Services