Morgan and Secretary, Department of Social Services (Social services second review) - [2020] AATA 322

Morgan and Secretary, Department of Social Services (Social services second review) [2020] AATA 322 (26 February 2020)
Division:GENERAL DIVISION
File Number(s): 2019/8305
Re:Gregory Morgan
APPLICANT

Secretary, Department of Social ServicesAnd
RESPONDENT

DECISION
Tribunal:Member D Mitchell
Date:26 February 2020
Place:Brisbane

The Tribunal affirms the decision under review.
.................................[SGD]........................................
Member D Mitchell
CATCHWORDS
SOCIAL SECURITY – Disability Support Pension and Newstart Allowance - lump sum preclusion period – whether special circumstances exist – compensation lump sum – no evidence that special circumstances exist – 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
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
Director-General of Social Security v Hales (1983) 78 FLR 378; 47 ALR 281
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 Krzywak and Department of Social Security (1988) 15 ALD 690; (1988) 9 AAR 275
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 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 91 ALD 103; (2006) 43 AAR 236; [2006] FCA 779
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

Mr Gregory Morgan (the Applicant) is seeking review of a decision of the Social Services and Child Support Division (SSCSD) of this Tribunal made on 11 December 2019[1] to affirm the decision of the Respondent to refuse his claims for Disability Support Pension (DSP) and Newstart Allowance (NSA) on the basis that he is subject to a compensation preclusion period.
[1] Exhibit 1, T Documents, T2, pages 3-6, Decision of the SSCSD.
BACKGROUND
The Applicant sustained personal injuries in the course of his employment. As a result of a workplace injury on 17 May 2016, he made a claim for workers’ compensation.[2]
[2] Exhibit 1, T Documents, T12, pages 65-68, Release and Discharge.
The Applicant received periodic compensation payments from WorkCover Queensland during the period 18 July 2016 to 16 May 2018.[3]
[3]Exhibit 1, T Documents, T11, pages 59-63, Compensation Advice of Lump Sum Payments attaching WorkCover Queensland Payments/Recoveries History Report.
The Applicant notified the Respondent about his claim for workers’ compensation on 27 June 2018.[4]
[4] Exhibit 1, T Documents, T4, pages 31-33, Compensation for Damages form dated 27 June 2018.
The Respondent, subsequently wrote to the Applicant on 6 July 2018 advising him that:[5]
If you receive any payment of weekly compensation or a lump sum compensation payment, some or all of the Centrelink payments paid to you since the date of injury may have to be paid back.
Any compensation you receive may also stop you from receiving Centrelink payments in the future.
[5] Exhibit 1, T Documents, T6, pages 36-37, Centrelink notice: lump sum compensation payment.
The Respondent also wrote to the Applicant’s solicitors on 6 July 2018 providing similar information.[6]
[6] Exhibit 1, T Documents, T7, pages 38-39, Letter: from Centrelink to Shine Lawyers – recovery of lump sum compensation payments.
On 25 January 2019, the Applicant lodged a claim for DSP.[7]
[7] Exhibit 1, T Documents, T28, page 170, Centrelink document list.
The Applicant settled his workers’ compensation claim at the end of March 2019.
On 17 May 2019, the Respondent calculated that the Applicant’s lump sum compensation payment resulted in a preclusion period running 17 May 2018 to 12 August 2020.[8] That same day, the Respondent subsequently sent a recovery notice to WorkCover Queensland requiring them to pay, $12,714.37,[9] and letters to the Applicant[10] and his solicitors[11] advising them in relation to the recoverable charge and the preclusion period that had been imposed.
[8] Exhibit 1, T Documents, T28, page 177, Centrelink document list.
[9] Exhibit 1, T Documents, T14, page 80, Letter from Centrelink to WorkCover Queensland – Compensation Recovery Notice.
[10] Exhibit 1, T Documents, T16, page 84, Centrelink notice: Request for contact.
[11] Exhibit 1, T Documents, T15, page 82, Letter from Centrelink to Shine Lawyers – effect of compensation payment on Centrelink entitlements.
On 23 October 2019, the Applicant lodged a claim for NSA.[12]
[12] Exhibit 1, T Documents, T28, page 187, Centrelink document list.
On 7 November 2019, the Respondent rejected the Applicant’s claims for DSP and NSA on the basis that he was subject to a compensation period.[13] The Applicant sought review of those decisions,[14] which were subsequently affirmed by an Authorised Review Officer (ARO) on 19 November 2019.[15]
[13] Exhibit 1, T Documents, T20, page 96, Letter: from Department of Human Services to the Applicant – rejection of your claim for Disability Support Pension; T21, page 98, Centrelink notice: Rejection of your claim for Newstart Allowance.
[14] Exhibit 1, T Documents, T23, page 112, Letter: from Department of human Services to the Applicant – information about a recent decision.
[15] Exhibit 1, T Documents, T24, pages 113-121, Decision and Notes of Authorised Review Officer.
The Applicant sought a first-tier review of the Respondent’s decision by the SSCSD of this Tribunal. The SSCSD affirmed the decisions under review on 11 December 2019.[16]
[16] Exhibit 1, T Documents, T2, pages 3-6, 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 15 December 2019.[17]
[17] Exhibit 1, T1, pages 1-2, Application for Review of Decision.
A Hearing was held by this Tribunal on 24 February 2020. At the Hearing, the Applicant was self-represented, appeared by telephone and gave evidence under affirmation.
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 refuse the Applicant’s claims for DSP and NSA were 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.[18]
[18] 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.[19]
[19] 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 this Act, the compensation part of a lump sum compensation payment is:
(a)50% of the payment if the following circumstances apply:
(i) the payment is made (either with or without admission of liability) in settlement of a claim that is, in whole or in part, related to a disease, injury or condition; and
(ii) the claim was settled, either be 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 payment, 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 Periodic 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:
1……...
2……...
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:
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 DSP and NSA, either granting or rejecting the claim.
CONSIDERATION
Was the Applicant’s compensation preclusion period correctly applied?
In a Centrelink Compensation Advice of Lump Sum Payments form dated 2 April 2019, WorkCover notified the Respondent that a settlement had been reached in relation to the Applicant’s claim for workers’ compensation, with the date the settlement was signed being 28 February 2019.[20] Relevant responses provided by WorkCover on the form are as follows:[21]
…
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. $328,551.35
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
[20] Exhibit 1, T Documents, T11, pages 49-51, Compensation Advice of Lump Sum Payments form.
[21] Exhibit 1, T Documents, T11, page 50, Compensation Advice of Lump Sum Payments form.
The Deed of Settlement (titled Release and Discharged) relevantly provides:[22]
1.    The settlement sum
WorkCover on its own behalf and on behalf of the Kooralbyn shall pay to the Claimant the sum of two hundred and twenty-five thousand dollars ($225,000.00) (“the settlement sum”) in full and final settlement of the claim.
2.    …
3.    Deductions and refunds
WorkCover acknowledges it is not entitled to a refund of statutory benefits under claim number …. in relation to the injuries the subject of the claim totalling $103,551.35.
…..
[22] Exhibit 1, T Documents, T12, pages 65-68, Release and Discharge.
A WorkCover Payments/Recoveries History Report sets out that the statutory benefits referred to in the Deed of Settlement consisted of:[23]
(i)Hospital costs totalling $966.00[24]
(ii)Medical costs totalling $9,872.24[25]
(iii)Rehabilitation costs totalling $1,796.59[26]
(iv)Travel costs totalling $219.20[27]
(v)Weekly benefits and lump sums totalling $90,697.32 for periodic compensation payment between 18 July 2016 and 16 May 2018.[28]
[23] Exhibit 1, T Documents, T11, pages 52-64, Compensation Advice of Lump Sum Payments form.
[24] Exhibit 1, T Documents, T11, page 52, Compensation Advice of Lump Sum Payments form.
[25] Exhibit 1, T Documents, T11, pages 52-54, Compensation Advice of Lump Sum Payments form.
[26] Exhibit 1, T Documents, T11, pages 54-55, Compensation Advice of Lump Sum Payments form.
[27] Exhibit 1, T Documents, T11, page 55, Compensation Advice of Lump Sum Payments form.
[28] Exhibit 1, T Documents, T11, pages 55-63, Compensation Advice of Lump Sum Payments form.
After repaying all required amounts and his legal fees the Applicant received $85,032.13 in his hand.[29]
[29] Exhibit 1, T Documents, T22, pages 101-102, Extract of Applicant’s trust account and screen capture of trust remittance advice.
At Hearing the Applicant told the Tribunal that he agrees he received a compensation payment and that he would be subject to a preclusion period. He said, however, that he disagreed with the calculation. The Applicant said that the calculation used an amount different to the amount he actually received and that his solicitor had told him that approximately $180,000 of his settlement was for economic loss and he believes it is 50% of this amount that should be used to calculate his preclusion period.
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:[30]
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.
[30] 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 17 May 2018 to 25 May 2021,[31] relying upon the following:[32]
[31] Exhibit 2, Secretary’s Statement of Facts & Contentions, page 7, paragraph 44.
[32] Exhibit 2, Secretary’s Statement of Facts & Contentions, pages 6-12, paragraphs, 40-64.
(i)The Applicant was appropriately subject to a compensation preclusion period as he received a gross payment of $329,058.55[33] 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 16 May 2018 and therefore, by operation of section 1170(1) of the Act, the compensation preclusion period commences from 17 May 2018;
(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 $329,058.55, being $164,529.27;
(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 2 April 2019 being $1,012.20;[34]
(v)Having regard to the formula, the preclusion period is 162 weeks (164,529.27/1,012.20);
(vi)The preclusion period is from 17 May 2018 to 25 May 2021, it does not end on 12 August 2020;
(vii)The previous decision makers incorrectly subtracted the sum of $90,697.32 (being the periodic compensation the Applicant previously received from WorkCover Qld) from the total payment, resulting in them using a lower figure of $119,180.61 as the lump sum compensation payment amount than what should have been used;
(viii)The release and discharge settlement document notes that WorkCover is not entitled to a refund of statutory benefits. Therefore, the Applicant was not liable to repay the periodic compensation payments and section 17(4) of the Act cannot apply;
(ix)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 (relying on the decisions in Re 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).
[33] The Tribunal notes that the Respondent’s figure of $329,058.55 has been calculated using the incorrect amount in relation to the statutory benefits and this error carries through the Respondent’s calculations. The Respondent used the incorrect figure of $104,058.55 rather than the actual figure of $103,551.35. This error was also made by the ARO and the calculation of the preclusion period was not considered by the SSCSD beyond accepting the calculation of the ARO. The different is $507.20 and does not change the outcome of the calculation.
[34] Exhibit 1, T Documents, T27, page 145, Compensation Management Summary.

The Respondent further contended that under section 1169(1) of the Act, DSP and NSA are not payable to the Applicant in relation to any day or days in the lump sum preclusion period and therefore the decisions refuse his applications for DSP and NSA were correct.[35]
[35] Exhibit 2, Secretary’s Statement of Facts & Contentions, page 7, paragraph 49.
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 17 May 2018 and ending on 12 August 2020.
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 settlement sum of $225,000.00 was what was paid by way of settlement of the Applicant’s claim, a component of the settlement related to damages, and the $103,551.35 related to periodic payments for loss of income and associated medical expenses.
Pursuant to section 1171 of the Act the $225,000.00 and $103,551.35 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 $328,551.35 by $90,697.32, 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 $90,697.32, being periodic compensation payments 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 constituting 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 provides that $225,000.00 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 WorkCover is agreeing to settle the full claim for $328,551.35, with $225,000.00 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 $328,551.35 with a clause requiring that the statutory benefits be deducted ahead of payment.
The Tribunal considers 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 the periodic compensation payments, not the remainder of the statutory benefits.[36]
[36] See cases listed in paragraphs 49 and 50 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 1231at [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 $103,551.35 statutory benefits 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 his 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 $237,854.03.[37]
[37] In accordance with section 17(3) of the Act.
The preclusion period is then calculated in accordance with section 1170 of the Act as 117 weeks, calculated by $118,927.01[38]/$1012.20,[39] commencing on 17 May 2018[40] and ending on 12 August 2020[41].
[38] Compensation part of the lump sum being $328,551.35 - $90,697.32 x 50%.
[39] Income cut out amount applicable in April 2019.
[40] Pursuant to section 1070(1)(a) of the Act, being the day following the 16 May 2018, the last day the Applicant received a periodic payment.
[41] Pursuant to section 1070(1)(b) of the Act, 117 weeks later.
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 No61 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] FCA1708, 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:
1         Identify the circumstances of the case which it found to be ‘special’ and the reasons for which it arrived at that finding.
2         Explain 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.
3         Explain 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 told the Tribunal that his workplace injury resulted in him being diagnosed with Q fever fatigue syndrome and that this causes him to be fatigued all the time, to the point that sometimes he cannot get out of bed for 3 to 4 days. He said he has had a headache that has lasted for the past 4 years, he has muscle aches and pains and is sensitive to the sun. When asked what the treatment is for his condition, the Applicant told the Tribunal that he takes anti-depressants and he has been told that most people do not recover.

In his written submission accompanying his application for review to this Tribunal the Applicant wrote:
…I haven’t had any money since Sept 19, I am presently homeless, I bought a block of land on a financial advisors advice ($70,000) on what he believe to be the pain and suffering and ongoing medical expenses part of my payout. ….. It has been suggested that I sell my block of land and live off that $ but in todays economic climate it could take 6/12 months to sell then at least a month for settlement (it was originally for sale for over a year). I have no money to live or to move out to land. I am presently homeless sleeping on friends couches and they are feeding me but they …. [42]
[42] Exhibit 1, T Documents, T1, page 2, Application for Review.
At Hearing the Applicant told the Tribunal that:
-He agreed that he received a compensation payment and that a preclusion period would apply, however, he did not agree with the calculation of the preclusion period.
-He was aware that a preclusion period was going to be applied by Centrelink and it was at the time that he received notice of the preclusion period that he went to Centrelink to discuss the calculation.
-When he went to Centrelink an officer told him that if he spends 51% of his money on a tangible asset he would then be able to get Centrelink payments.
-He has had no money since September 2019.
-He spent his compensation payment as follows:
·$9,000 to pay out a personal loan.
·$5,000 to pay his credit card.
·$8,500 repaid to a friend who had lent him money during the period after this WorkCover payments ceased and when he got his payout. He had used this money to purchase a car for $6,000 and to live off ($2,500).
·$65,000 plus costs to purchase a block of land with a caravan and shed, which he intended to live on. The land was purchased on 15 September 2019 after he had received financial advice.
·$3,500 to replace a friend’s car, as he had borrowed their car and on 20 August 2019 he hit a kangaroo.
·Food, petrol and general living expenses.
-He was living with his best friend until September 2019 and then couch surfing until December 2019 when he moved to his block of land.
-A friend comes and drives him each week to get food from the food bank and church and pick up his medication.
-He has access to the PBS which assists him to afford his medication.
-His mother lives on the Central Coast of New South Wales and is not able to help him all that much, she gives him a little bit of money when she can.
-His car is still at the mechanics waiting to be fixed.
-He has his land, caravan and shed.
-His real estate agent said it would take between 6 and 24 months to sell the land.
-He purchased the land even though he knew about the preclusion period, as a lady from Centrelink had said to him “off the cuff” that if he spent 51% of his money he would get paid Centrelink benefits.
-He said he has no capacity to work.
-He says his situation is different because of how the preclusion period was calculated and the advice he was given by the Centrelink officer.
On cross-examination, the Applicant told the Tribunal:
-He was aware soon after he reached an agreement in relation to his claim for workers’ compensation that he would be subject to a preclusion period until August 2020. He said he received and understood the letters from Centrelink.
-When taken to the Centrelink file note recorded on 20 May 2019 that indicated he had attended a Centrelink office and spoke about his claim for DSP, but did not indicate he was given advice in relation to spending 51% of his payment, he agreed the file note did not mention this and that would be because the officer had said it was “off the cuff” – “in other words off the record”.
-When asked who provided him with the financial advice that he had previously mentioned he said it was his uncle, who was a retired qualified financial planner. He said that he had told his uncle about the advice provided to him by the Centrelink officer and he advised him to purchase the land.
-When asked how his uncle thought he would live if he spent most of his compensation payment, when he was subject to a preclusion period, he said he did not think the expenses related to the car would occur.
-When challenged that it did not make sense that a financial advisor would recommend spending 7/8th of his compensation payment on land with nothing to survive on, he said that the advice he received was that he would get Centrelink benefits if he spent 51% on a tangible asset.
-When asked why he spent more than 51% of his payment on the land, he said he could not find one at that price (being in the vicinity of $40,000).
-When asked if the advice was off the record, why he did not go back to Centrelink and check the advice, he said he just followed the officer’s advice.
-That he has not put his land on the market as his letter from his real estate says it can take anywhere from 6 months to 2 years to sell property at the moment.
-He agreed that his purchase of the land represents 7/8th of the net proceeds of his compensation payment, which he says he received in June 2019.
-He goes to the foodbank every week. It costs him $20 to get a week’s worth of food. He said his Mum puts small amounts of money into his bank account each week to help with the food and $10 for his phone.
-His current bank balance was in the negative.
-If he had to he would sell his land, however, then he would have nowhere to live.
-He has spoken to financial advisors about advancing funds on his land, however, no one will as he has no income.
-He is living on his land, in a caravan, has solar power, his food is being provided by the food bank and the small deposits his Mum makes, his friend will come and collect him to take him to get food and medication.
-When asked if it was fair to say that his basic needs have been met until now and are likely to be met until 20 August 2020, he said “…not really. I am living on hardly anything”.
-That he agreed that he still has the majority of the proceeds of his compensation payment in the form of his land.
The Respondent contended that the following factors weigh against the exercise of the discretion under section 1184K of the Act:[43]
[43] Exhibit 2, Secretary’s Statement of Issues, Facts & Contentions, pages 7-13, paragraphs 50-85.
(a)There is no evidence that the Applicant’s ill health is unusual or out of the ordinary, nor is there any evidence in relation to what medical expenses have been required.[44]
(b)The Applicant was well aware that if he received compensation, then it would likely lead to him not being entitled to any Centrelink payments and that he should have taken steps to retain sufficient funds from his compensation settlement to meet his living expenses during the preclusion period.[45]
(c)The Applicant’s expenditure on repayment of debts, a block of land, and general living expenses, does not indicate that he lacks the capacity to make rational decisions.[46]
(d)Whilst the Applicant’s financial circumstances might be difficult, and he does not currently have available liquid funds, they are not dire in the sense that he still retains a considerable asset in the form of land purchased out of the compensation proceeds.[47]
(e)The availability of such an asset militates against a finding of special circumstances.[48] In Re Secretary, Department of Social Security and Winterbotham [1990] AATA 808, Deputy President Burns said at [25]:
As to the submission that the respondent should not be forced to sell his house, the Tribunal would compare his position with that of another recipient of a compensation award who chooses to expend his compensation moneys on investments. Should there be any difference between one who invests his money in stocks and shares and one who invests in real estate? Neither should expect the tax-payer to support him while he holds on to assets he could well realise and use to support himself. This is not to say that the Tribunal seeks to force the respondent to sell his house; or even recommends that course of action. It is not the Tribunal's role to do that. At the same time, the Tribunal cannot ignore the view that the selling of the house is one way by which the applicant could resolve his present difficulties. It is an evident cause of action, although not by any means the only one.
(f)The Applicant’s property should not be disregarded in consideration of his overall financial position and represents financial resources that many other social security recipients do not have access to.[49]
[44] Exhibit 2, Secretary’s Statement of Issues, Facts & Contentions, pages 8-9, paragraphs 56-59.
[45] Exhibit 2, Secretary’s Statement of Issues, Facts & Contentions, pages 9-10, paragraphs 60-65.
[46] Exhibit 2, Secretary’s Statement of Issues, Facts & Contentions, pages 10-11, paragraphs 66-71.
[47] Exhibit 2, Secretary’s Statement of Issues, Facts & Contentions, pages 11-13, paragraphs 72-85.
[48] Exhibit 2, Secretary’s Statement of Issues, Facts & Contentions, page 13, paragraph 82.
[49] Exhibit 2, Secretary’s Statement of Issues, Facts & Contentions, page 13, paragraph 84.
Having heard the evidence presented at Hearing, the Respondent further contended that the Applicant does not meet the requirements of special circumstances as:
(a)While the Applicant categorically stated that he was told by a Centrelink officer that if he spent 51% of his money he would be able to receive Centrelink payments and that this advice was “off the cuff” or “off the record”, and that he then sought financial advice from a retired financial planner, disclosing the advice he said he received from Centrelink, this seems unlikely.
(b)It is a doubtful story that a Centrelink officer would provide such advice, however, if the Applicant’s story was true, then a reasonable inference is that the Applicant knew it was not the right advice, as he sought further advice from a family member, but did not go back to Centrelink to check.
(c)Further, even if the Applicant did receive the alleged advice, he went further than the suggested $51% and spent 7/8^th of his payout on the block of land.
(d)The Applicant had been getting by until September 2019 when he purchased the block of land and since then he has had to rely on charity, friends and his mother so that his basic needs are met.
(e)As the Applicant has somewhere to live, has solar electricity, his mother furnishes him with small amounts of money that assists him in getting food from the foodbank and his medication, on any assessment the Applicant’s basic needs are met.
(f)There is nothing out of the ordinary about the Applicant’s circumstances.
For the reasons that follow, having considered the evidence before the Tribunal and the contentions of the Applicant and Respondent, the Tribunal considers that special circumstances for the purposes of section 1184K of the Act have not been established in this matter.
The evidence before the Tribunal is clear that the Applicant was aware of and understood the operation of the preclusion period and should have budgeted appropriately to ensure he would be able to support himself until the end of the preclusion period.
While the Applicant sought to rely on advice he says was provided by a Centrelink officer in relation to expending his compensation payment on the purchase of his land, there is no evidence before the Tribunal that this advice was given. The Tribunal notes that there was no mention in the decisions of the ARO or SSCSD of the Applicant previously having made this contention. The Tribunal considers that even if the suggested conversation occurred it would have been reasonable for the Applicant to confirm the advice and obtain it in writing to ensure that he did not in fact end up in the situation he currently finds himself.
The evidence before the Tribunal indicates that the Applicant is experiencing financial hardship on the basis that he has no liquid assets and is reliant on assistance from his mother and non-government agencies. The Applicant does, however, still possess the majority of the value of his compensation lump sum payment as he owns his land, caravan and shed.
Having straitened financial circumstances do not of themselves constitute special circumstances, as the majority of people seeking social security benefits are in a similar position.[50] Considerations in relation to the general administration of the social security system[51] and the circumstances out of which the hardship arose and the degree of the hardship are also both relevant.[52] In the present circumstances the Applicant is experiencing financial hardship because of his decision to spend the majority of his compensation payment on the purchase of land. As contended by the Respondent, previous decisions lead to a position that holding such an asset militates against a finding that the Applicant’s financial difficulty amounts to special circumstances.
[50] Director-General of Social Security v Hales (1983) 78 FLR 378; 47 ALR 281.
[51] Re Davy and Secretary, Department of Employment Workplace Relations (2007) 94 ALD 693; [2007] AATA 1114.
[52] Re Krzywak and Department of Social Security (1988) 15 ALD 690; (1988) 9 AAR 275; Davis and Secretary, Department of Family and Community Services [1999] AATA 84.
With the support of his friends, mother and non-government charitable organisations, and access to the PBS the Applicant’s basic living needs have been and continue to be met. He has a roof over his head, albeit with basic facilities, he has access to food and medication.
While the evidence demonstrates that the Applicant expended all of his compensation payment within a few months of receiving it, there is no evidence that this expenditure was a result of diminished decision making capacity. Rather, the Applicant has provided evidence that he sought financial advice in relation to purchasing land and he sought to repay his debts first when dealing with his compensation payment, indicating that he was able to rational decisions.
It is accepted that the Applicant has a medical condition which impacts on his ability to function, however, there is no evidence before the Tribunal that his condition is unusual or out of the ordinary for someone who has received a compensation payment as a result of a compensable injury.
Was the decision to refuse the Applicant’s claim for DSP and NSA correct?
As the Tribunal has found that a preclusion period applied to the Applicant for the period 17 May 2018 to 12 August 2020 and that special circumstances do not exist to shorten the period, by virtue of the operation of section 1169 of the Act, the Applicant was not entitled to DSP or NSA from 17 May 2018 and the Respondent was required to refuse his claims for DSP and NSA.
CONCLUSION
The Tribunal finds that the Applicant is subject to a preclusion period running from 17 May 2018 to 12 August 2020 and that special circumstances, which may allow the whole or part of the compensation payment as not having been made, have not been established.
The Tribunal affirms the decision under review.

I certify that the preceding 79 (seventy-nine) paragraphs are a true copy of the reasons for the decision herein of Member D Mitchell

.................................[SGD].......................................
Associate
Dated: 26 February 2020

Date of hearing: 24 February 2020

Applicant: By Phone

Advocate for the Respondent:

Solicitors for the Respondent:

Mr Rick McQuinlan

Department of Human Services