Nash and Secretary, Department of Social Services (Social services second review)

[2016] AATA 345

Nash and Secretary, Department of Social Services (Social services second review) [2016] AATA 345 (27 May 2016)  

Division	GENERAL DIVISION
File Number(s)	2015/4309
Re	Joshua Nash
APPLICANT
And	Secretary, Department of Social Services
RESPONDENT

DECISION

Tribunal	Deputy President Bernard McCabe
Date	27 May 2016
Place	Brisbane

The decision under review is affirmed.

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

Deputy President Bernard McCabe

Catchwords

SOCIAL SECURITY – lump sum compensation – discretion to waive preclusion period – special circumstances – disability discrimination – no special circumstances existed – decision under review affirmed

Legislation

Social Security Act 1991 (Cth) ss 17, 1184K

Disability Discrimination Act 1992 (Cth) ss 3, 6, 29, 51

Cases

Secretary, Department of Family and Community Services v Chamberlain [2002] FCA 67; (2002) 116 FCR 348

REASONS FOR DECISION

Deputy President Bernard McCabe

27 May 2016

1. Mr Joshua Nash has a long-standing debilitating health condition called craniostenosis. He has been in receipt of the disability support pension (the DSP) since he was 18. In 2009, while he was in receipt of the pension, he injured his back in a motor vehicle accident. He also developed a psychiatric condition following the accident. He sued in respect of his personal injuries. He received a lump sum settlement which included a component in respect of economic loss. The Secretary imposed a charge equivalent to the amount of DSP Mr Nash was paid during the lump sum preclusion period. The compensation charge was recovered out of the settlement monies pursuant to the provisions in Part 3.14 of the Social Security Act 1991 (Cth).

2. The applicant does not dispute that the lump sum preclusion period was correctly calculated. He argues there are special circumstances that suggest part or all of the compensation payment should be treated as if it had not been made. As a practical matter, that would mean the preclusion period would be shorter, which would result in a refund of part or all of the compensation charge.

   The special circumstances discretion

3. Part 3.14 of the Act deals with a person who receives a lump sum compensation settlement which includes a component in respect of economic loss. The legislation proceeds on the assumption that a person who receives compensation in those circumstances is expected to rely on that compensation instead of looking to Centrelink for support through a range of compensation affected payments. (The DSP is a compensation affected payment: s 17.) To ensure that occurs, the Act provides for a lump sum preclusion period during which the applicant will be ineligible to apply for a compensation affected payment. The duration of the preclusion period is calculated using a formula set out in the Act. If the person was already in receipt of payments – whether as a consequence of the personal injuries sustained in an accident or otherwise – when the settlement is received, Centrelink will recover out of the settlement monies a charge equal to the amount of compensation affected payments the person received during the preclusion period.

4. Section 1184K of the Act permits the decision-maker to effectively waive the imposition of the charge in a case like the present where the Secretary (or the Tribunal upon review) is satisfied there are special circumstances which make it desirable to do so. The effect is achieved by disregarding the payment of some or all of the settlement monies. The reduced figure is fed into the calculation of the lump sum compensation preclusion period.

5. The expression “special circumstances” is not defined in the Act. That is no accident: the expression was inserted to give the decision-maker some latitude to adapt the rules to fit cases that were out of the ordinary. The discretion is enlivened when the decision-maker is able to identify something different, unusual or special about the case which suggests it would be appropriate to treat it differently from the usual run of cases.

   Mr Nash says there are special circumstances in his case

6. The applicant was represented at the hearing by Ms Neil, a lawyer. Ms Neil pointed out the discretion in s 1184K was designed to provide relief against the harsh operation of the compensation preclusion laws. Is this such a case?

7. Ms Neil says Mr Nash was already in receipt of the DSP because of his disability when he sustained the personal injuries that resulted in compensation. When he was compensated for the unrelated personal injuries, he was required to give up the DSP that he was otherwise entitled to receive. She says that is unfair.

8. During the course of the hearing, there was discussion of the concept of ‘double-dipping’. The provisions in Part 3.14 are sometimes explained as a legislative barrier to a person ‘double-dipping’ by being compensated for an injury or incapacity and then receiving income support through Centrelink because of the same inability to work. Ms Neil suggested it was the Secretary that was ‘double-dipping’ here. She said it would be unfair if the Secretary could avoid paying Mr Nash money the Secretary would otherwise be obliged to pay just because Mr Nash was unlucky enough to sustain unrelated injuries that led to a lump sum settlement. Ms Neil explained the outcome was particularly unfair to Mr Nash because the economic loss component of his lump sum settlement payment was really quite small: it was calculated with reference to the lost earnings from his part-time work. It did not take into account the loss he would sustain as a result of losing the DSP throughout the preclusion period.

9. There is a danger in focusing too much on expressions like ‘double-dipping’ because they can oversimplify the operation of the legislation. In this case, the applicant’s situation is indistinguishable from that of any DSP recipient who subsequently sustains a personal injury and receives a lump sum settlement that includes an economic loss component. The ordinary operation of the law means the Commonwealth will not be expected to provide support in the form of a compensation affected payment while that person is effectively being supported by someone else.

10. I acknowledge Mr Nash is in a difficult position if he was only compensated for the minimal work he was undertaking while in receipt of the DSP. The amount of the economic loss component in his settlement was likely to be quite small in those circumstances. The law assumes it was 50%: see s 17(3). This is not the first occasion on which an applicant has complained that the arbitrary attribution of 50% of the settlement to economic loss was unfair. Kiefel J dealt with just such a claim in Secretary, Department of Family and Community Services v Chamberlain [2002] FCA 67. In that case, her Honour concluded it would be inappropriate to give relief because the amount of money the applicant actually received in respect of economic loss was tiny when the statutory formulation assumes 50% of the component is attributable to economic loss. Kiefel J explained the whole purpose of the statutory deeming provision was to prevent the parties from arguing about the ‘true’ situation. The arbitrary operation of the deeming provision was not able to be regarded as a ‘special circumstance’: at [33]-[35]. It seems to me that observation applies here.

11. Ms Neil also referred to the provisions of the Disability Discrimination Act 1992 (Cth). That Act is designed to “eliminate, as far as possible, discrimination against persons on the grounds of disability” in a number of areas, including in “the administration of Commonwealth laws and programs”: s 3. Ms Neil suggested refusing to give special weight to Mr Nash’s circumstances may be impermissible indirect disability discrimination within the meaning of s 6 of the Act in the course of administering a law or program. That would contravene s 29 of the Act. Ms Neil says the discrimination arises because the applicant has not just lost his earning capacity. He has also lost access to a means of maintaining his dignity. She also referred to the danger that other people with a disability might think twice before taking up part-time work.

12. These are fair points. The circumstances of this case may suggest policy considerations which require further thought. But I do not see how these things constitute special circumstances since everyone who receives the DSP, by definition, suffers from a disability. I would add they are not special circumstances that would prompt me to exercise the discretion in all the circumstances of the applicant’s case.

13. I note in any event that s 51(2) of the Disability Discrimination Act 1992 expressly exempts discriminatory decisions made in relation to pensions, benefits and allowances inter alia under the Social Security Act1991.

14. The applicant is not in straitened financial circumstances. I was not told of any other matters or circumstances that might qualify as special circumstances.

    Conclusion

15. The decision under review is affirmed.

16.     I certify that the preceding 15 (fifteen) paragraphs are a true copy of the reasons for the decision herein of Deputy President Bernard J McCabe.

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

Associate

Dated 27 May 2016

Date of hearing	22 February 2016
Counsel for the Applicant	Ms L Neil
Advocate for the Respondent	Mr R McQuinlan, Department of Human Services