Murphy and Department of Family and Community Services - [2000] AATA 1162

DECISION AND ORAL REASONS FOR DECISION [2000] AATA 1162

ADMINISTRATIVE APPEALS TRIBUNAL )

) No S2000/309

GENERAL ADMINISTRATIVE DIVISION       )
           Re      CHRISTOPHER MURPHY
  Applicant
           And    SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
  Respondent

DECISION

Tribunal Miss WJF Purcell (Senior Member)

Date12 December 2000
PlaceAdelaide

Decision      For the reasons given orally at the hearing of this matter, the Tribunal sets aside the decision under review, only insofar as it decided that the recoverable amount was $17,769.16 and remits the matter to the respondent for re-calculation of the preclusion period and recoverable amount on the basis that the lump sum compensation payment is $96,543.60 in lieu of $101,285.60.
  (Signed)
  WJF PURCELL
  (Senior Member)
CATCHWORDS
SOCIAL SECURITY – Overpayment –Compensation Payment - Preclusion Period - Whether the applicant's circumstances are so unusual and special that discretion should be exercised in his favour - whether there are special circumstances which would make it appropriate to disregard some or all of the compensation payment as not having been made.
Social Security Act 1991 Sections 1165, 1184 1237A1 and 1237AAD

Beadle v Director-General of Social Security (1985) 7 ALD 670
Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 3
Re Ivovic and Director-General of Social Services (1981) 3 ALN N95

ORAL REASONS FOR DECISION

12 December 2000 Miss WJF Purcell (Senior Member)

This is an application for review of a decision of the Social Security Appeals Tribunal (the SSAT) of 17 July 2000, which affirmed the decision of an Authorised Review Officer of 11 May 2000, to recover compensation affected payments from the applicant in the lump sum preclusion period from 21 July 1996 to 31 October 1998 totalling $17,769.16.
The evidence before the Tribunal comprised the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (the T Documents), together with the exhibits tendered by the applicant. Mr Davis, of Counsel, represented the applicant, who gave evidence. Ms Boylan, represented the respondent (the Department).
The parties tendered a Statement of Agreed Facts and Issues, which reads as follows:
"1. The applicant was in receipt of payments from Centrelink (and previously Department of Social Security) for the following periods:

Job Search Allowance 22 January 1996 to 6 September 1996
NEIS 14 June 1997 to 17 October 1997 (not recoverable)
Newstart Allowance 7 September 1996 to 13 June 1997
Sickness Allowance 20 October 1997 to 15 October 1998
Newstart allowance 16 October 1998 until after 31 October 1998
2. The applicant was injured in a motor vehicle accident on 21 July 1996. He claimed compensation in relation to these injuries.
3. On or about 15 October 1999, the applicant, through his lawyer sought an estimate of the preclusion period he would have to serve if he were to receive a compensation payment of $96,360 (T8/42). A compensation preclusion period of 113 weeks was calculated as was an estimated charge amount of $8296.55 (T8/42). The respondent's solicitor was advised of the estimated preclusion period and the estimated charge amount on 18 November 1999 (T8/41-42).
4. On 17 January 2000 the applicant's claim was settled for $101,285.60 in a lump sum compensation payment (T9/46-47).
5. On 21 January 2000 the delegate determined that the applicant was subject to a lump sum preclusion period for the period 21 July 1996 to 31 October 1998 and that an amount of $17,769.16 paid to Mr Murphy in that period was recoverable (T10/48). The respondent's solicitor was advised of the preclusion period in a letter dated 21 January 2000 (T11/49).
6. On 28 March 2000 the applicant, through his solicitor, sought review of the decision to recover $17,769.16 (T11/49-52). On 18 April 2000 the original decision maker affirmed the decision (T15/60-61). The matter was then referred to an Authorised Review Officer ("ARO") for review (T15/61).
7. On 11 May 2000 the ARO decided to affirm the decision (T18/68) and advised Mr Murphy by a letter dated that day (T18/69-74).
8. On 20 June 2000 the applicant lodged an appeal at the Social Security Appeals Tribunal ("SSAT") T20/77.
9. On 17 July 2000 the SSAT decided to affirm the decision under review and made a written decision dated 27 July 2000 (T2/9-16).
10. On 6 August 2000 the applicant lodged an appeal to the Administrative Appeals Tribunal ("AAT") in respect of the decision of the SSAT dated 27 July 2000.
ISSUES
(a) Whether there are "special circumstances" which would make it appropriate to disregard some or all of the compensation payment as not having been made using section 1184 of the Social Security Act 1991 (T2/32)."

Section 1184 of the Social Security Act 1991 (the Act) as far as is relevant for the purposes of this review, provides :
"Secretary may disregard some payments
1184(1)For the purposes of this Part, the Secretary may treat the whole or part of a compensation payment as:
(a)     not having been made; or
(b)   not liable to be made;
if the Secretary thinks it is appropriate to do so in the special circumstances of the case.
1184(2)    If:
(a)     a person receives or claims a compensation affected payment; and
     (b)     the person's partner receives compensation; and
(c)the set of circumstances giving rise to the compensation are not related to the set of circumstances that give rise to the person's receipt of or claim for the compensation affected payment;
the fact that those 2 sets of circumstances are unrelated does not in itself constitute special circumstances for the purposes of subsection (1).
Note: Subsection (2) is in response to comments made in the decision of the Administrative Appeals Tribunal in "Re Secretary, Department of Social Security and Lee (S92/155) " to the effect that the Social Security Act is aimed at reducing pensions in situations where a social security recipient's entitlement is somehow connected with the fact that the recipient's partner is in receipt of compensation payments and not wages."
Sections 1237A and 1237AAD of the Act, as far as is relevant, provide :
"Waiver of Debt arising from error
Administrative error
"1237A(1) Subject to subsection (1A), the Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt.
Note: Subsection (1) does not allow waiver of a part of a debt that was caused partly by administrative error and partly by one or more other factors (such as error by the debtor).
…"
"Waiver in special circumstances
1237 AAD The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:
(a) the debt did not result wholly or partly from the debtor or another person knowingly:
(i) making a false statement or a false representation; or
(ii) failing or omitting to comply with a provision of this Act or the 1947 Act; and
(b)there are special circumstances (other than financial hardship alone) that make it desirable to waive; and
(c) it is more appropriate to waive than to write off the debt or part of the debt.
…"
The applicant contends that he strove to comply with the requirements of the Department, and kept it fully informed of the ongoing status of his pending compensation claim. He relied on the Departmental estimate of compensation recovery in reaching the decision to settle his claim. Centrelink incorrectly advised his solicitors that the estimated charge was $8,296.55, based on a settlement sum of $96.360.00 Centrelink had failed to take into account payments made to the applicant in the period 21 July 1996 to 13 June 1997. Whilst the applicant could have expected some minor upward revision of the estimate, he did not expect an increase of $9,473.00 on the original estimate.
The applicant submits that the purpose of s1184 of the Act is to prevent or remedy the unfair, unjust, unreasonable or otherwise inappropriate application of Part 3.14 of the Act relating to compensation recovery He relies on the matter of Beadle v Director-General of Social Security (1985) 7 ALD 670. He maintains that it would not be fair for him to bear the burden of loss of expectations and benefit which arose from incorrect Departmental advice which he relied upon to his detriment. An unfortunate mistake was made and the applicant did not receive moneys that he should have received, and on the grounds of equity, in order to offset the detrimental effect directly attributable to the Departmental error, the recovery should be limited to the sum of the original estimate plus the amount due under the normal 50 per cent applied to the costs of $4,295.00, namely a total of $9,229.00. The applicant would be entitled therefore, to a refund of $8,540.00.
The applicant submitted also (in his written submissions which appear at T1) that if this were a case of waiver of debt, rather than disregard of compensation, then the Secretary would be bound to waive the debt in accordance with s1237A(1) of the Act, as there was sole administrative error made by the Department. He submitted that both section 1237A and 1184 have a similar purpose in effect, in that both relate to the abrogation of the Secretary's right to recover monies due to the taxpayer. While s1184 of the Act does not mandate the Secretary to waive debts in circumstances of Departmental error in good faith, the applicant argues that the two sections should be applied in the same manner, with the result that the Secretary must "waive a portion of the recovery".
The applicant submits finally that the question of financial hardship is not relevant, and the absence of financial hardship should not be held against him. In the applicant's mind he is being punished for being careful with the proceeds of the compensation claim. It was not his mistake, and he questions why he should be made to bear the brunt of the mistake.
The Department contends that the preclusion period of 119 weeks, commencing on 21 July 1996 and ending on 31 October 1998, was properly calculated pursuant to s1165 of the Act, and it is not appropriate to treat any part of the compensation payment received by the applicant as not having been made by utilising s1184 of the Act. For the discretion to be exercised, there must exist circumstances which justify the making of an exception to the principle of liability which the Act otherwise establishes. These circumstances would be "so unusual, uncommon or exceptional" in accordance with the decision in Beadle that strict enforcement of the liability would be unjust, unfair or otherwise inappropriate. The Department argues that the applicant's circumstances must be looked at in their entirety, and that relevant considerations would be:
(1)whether the applicant would have taken his claim further if he had been given a more accurate estimate of Centrelink's charge;
(2)that the applicant did receive inaccurate advice about the recoverable amount;
(3)the extent to which the applicant relied on the advice in settling his claim for compensation and whether the reliance materially influenced the course of action the applicanttook;
(4)that the applicant appears to have a capacity to work since the accident; and
(5)that the applicant had the use of the monies paid during the preclusion period; the preclusion period is now over, and the applicant is not in financial hardship due to the lump sum repayment. In all the circumstances of the matter, it is not appropriate that the discretion be exercised in his favour.
The applicant gave evidence that the accident in which he suffered injury to his thigh, was a single vehicle accident on the Hume Highway in Victoria. He and another passenger were in the rear of the van. In the course of settlement negotiations, he discussed with his solicitor a range of possible awards from $70,000.00 to $120.000.00; the problems of venue for a possible Court trial; probable delays of up to two years in the setting of a trial date; the fact that he was not wearing a seat belt, and the money to be recovered by the Department. He was informed that on the incorrect Centrelink estimate he would receive a net sum of $83,700.00. He says that he had decided that $80,000.00 was "about the mark". He wanted to move on with his life and was prepared to "walk away" from the situation for that amount, but would have gone to trial if the offer would have netted him less than $80,000.00. He says that he received, in fact, only $77,000.00. He retained $70,000.00 of that money and works 25 to 30 hours per week in a CD retail shop and about 2 days per week in his blacksmithing ironwork business. He does not claim that he is suffering financial hardship.
I have examined the evidence carefully and in detail, and I have taken into account the parties' submissions. On the applicant's evidence, he gave very serious consideration to the amount the Department estimated it would recover from the settlement money. In my view, however, this was but one of the considerations that led to a compromise of his claim. The matters of lack of wearing of a seat belt, venue, delay in coming to trial, and a range of possible outcomes, were all matters to be taken into account in reaching a commercial decision that provided the applicant with a compensation payment in January 2000, rather than a trial some two years later, with a range of possible outcomes. The applicant, because of the Department's miscalculation, received a net figure of $77,000.00; some $6,700.00 less than he could have expected. The miscalculation or "administrative error" however, had no effect on the amount recoverable from the applicant. The recoverable sum of $17,769.00, was raised by force of law pursuant to section 1165 of the Act, and none of the debt was attributable to administrative error. Section 1237A(1) of the Act is not relevant therefore in my view.
As to s 1184 of the Act, the Secretary, and hence this Tribunal, must consider it appropriate in the special circumstances of the case to exercise a discretion to treat the whole or part of a compensation payment as not having been made. The authorities relied upon by the parties are consistent in their approach to the expression "special circumstances", a term which by its very nature is incapable of precise or exhaustive definition. As the Tribunal said in Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 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 N95, the Tribunal said at N97:
"The reference to special circumstances 'by reason of which' a person liable 'should be released' requires, in our view, that there must exist in the circumstances of the case, a factor or factors which justify the making of an exception in whole or part to the principle of liability which the Act otherwise establishes. In the exercise of the discretion which s 115(4A) confers, 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 Social Services Act 1947: cf Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492 at 505 per Dixon J. Thus whilst keeping the dominant principle of s 115 in mind, he must nevertheless be prepared to respond to the special circumstances of any particular case by reason of which strict enforcement of the liability created by the section would be unjust, unreasonable or otherwise inappropriate."
In my view, the "administrative error" upon which the applicant relies, the miscalculation which has led to him recovering a lesser net sum than he anticipated, is a question of possible maladministration, a matter for investigation by the Commonwealth Ombudsman and/or a request to the Secretary of the Department for an ex gratia payment. It is not this Tribunal's role to rectify the Department's miscalculations, which in no way have led to any error in the quantum of the debt properly calculated as recoverable in accordance with the Act.
It is the applicant's submission in effect, that although he received a variety of Social Security benefits over a little more than a two-year period (disregarding the four months when he was in receipt of NEIS), he should repay less than half the amount he received from the Department during that period. In my view it would not be an appropriate exercise of discretion in this matter for the Tribunal to frustrate the purpose of the legislation preventing "double-dipping", by acceding to the applicant's submission. I do not consider that the applicant's circumstances are so unusual and special that the discretion provided in s1184 of the Act should be exercised in his favour.
During the course of the hearing Ms Boylan received instructions from the Departmental officers who were present at the hearing. On these instructions the Department will deduct from the compensation lump sum the legal costs and disbursements set out in T9 (46-47). This would result in the lump sum compensation payment being reduced to $96,543.60 (namely $96,360.00 plus HIC $183.60). The preclusion period and recovery debt will be recalculated and will lead to a reduction of some $750.00.
For these reasons, the Tribunal sets aside the decision under review, only insofar as it decided that the recoverable amount was $17,769.16, and remits the matter to the Department for re-calculation of the preclusion period, and the recoverable amount, on the basis that the lump sum compensation payment is $96.543.60 in lieu of $101,285.60.
I certify that the 18 preceding paragraphs are a true copy of the reasons for the decision herein of Miss WJF Purcell (Senior Member)
Signed:         .....................................................................................
  Personal Assistant
Date of Hearing  12 December 1999
Date of Decision  12 December 2000
Counsel for the Applicant        Mr T Davis
Solicitor for the Applicant         -
Counsel for the Respondent    Ms M Boylan
Solicitor for the Respondent    Centrelink