Nolan; Secretary, Department of Family and Community Services
[2000] AATA 361
•9 May 2000
DECISION AND REASONS FOR DECISION [2000] AATA 361
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q2000/157
GENERAL ADMINISTRATIVE DIVISION )
Re SECRETARY, DEPARTMENT OF FAMILY & COMMUNITY SERVICES
Applicant
And GRAEME VAUGHN NOLAN
Respondent
DECISION
Tribunal K L Beddoe (Senior Member)
Date9 May 2000
PlaceBrisbane
Decision The decision under review is affirmed.
Decision No. 361/2000 (Sgd) K L Beddoe
Senior Member
CATCHWORDS
SOCIAL SECURITY : Lump sum compensation payment – "Payment by way of compensation" – Compensation affected payment – Lump sum preclusion period and calculation of – Repaid Periodic Compensation Payment – "in settlement of a claim" – Discharge deed
Social Security Act 1947 – ss152(2)(a), (c), (d), s152(3)(b), s153(1)(a)
Social Security Act 1991 – ss17(1), (2), (3), (4), ss1165(2AA), (5), (8), (9), s1166, s1174, s1175, s1177-1182, s1184(1)
Workcover Queensland Act 1996 – s10, s249, s278(2)
DSS v Banks (1990) 20 ALD 19
Beadle v DSS (1985) 60 ALR 225
Re Beadle and DSS (1984) 6 ALD 1
Blunn v Cleaver (1993) 119 ALR 65
Kertland v Secretary, Department of Family and Community Services [1999] FCA 1596
REASONS FOR DECISION
9 May 2000 K L Beddoe (Senior Member)
In a decision dated 21 January 2000 the Social Security Appeals Tribunal decided that the amount of lump sum compensation payment awarded to the respondent should be reduced to $70,000. In doing so the Tribunal purported to exercise the discretion in section 1184(1) of the Social Security Act 1991 ("the Act"). The applicant seeks review of that decision.
Part 3.14 of the Act provides for, inter alia, recovery of certain social security payments where the recipient is also in receipt of a compensation payment. Section 17(2) of the Act relevantly defines "compensation" to mean, a payment of damages and a payment (with or without admission of liability) in settlement of a claim for damages provided the payment is made wholly or partly in respect of lost earnings or lost earning capacity.
Section 1165(2AA) relevantly provides that if a person receives a compensation affected payment, the person is a member of a couple and the person receives a lump sum compensation payment after 20 March 1997 no compensation affected payment is payable to the person for the new lump sum preclusion period.
By force of section 17(1) of the Act a disability support pension is a compensation affected payment.
Section 1165(5) of the Act provides that if periodic compensation payments are made in respect of the lost earnings or lost earning capacity the new lump sum preclusion period is the period that:
(a)begins on the day after the last day of the periodic payment; and
(b)ends after the number of weeks worked out under sub-sections 1165(8) and 1165(9).
Section 1165(8) provides that if a compensation lump sum (which I have assumed is the same as a lump sum compensation payment) is received on or after 20 March 1997 then the number of weeks in the preclusion period is the number worked out by dividing the compensation part of the lump sum by an amount known as the "income cut out amount". In the present case there is no dispute about the income cut out amount but there is a dispute about the amount to be regarded as the compensation part of lump sum.
By the operation of section 1166 of the Act an amount of disability pension paid during a lump sum preclusion period is a recoverable amount. The recoverable amount is the lesser of the compensation part of the lump sum compensation payment and the sum of the payments of the compensation affected payment made to the person for the new lump sum preclusion period.
Sections 1177 to 1182 of the Act contain provisions whereby the applicant may recover amounts previously paid as compensation affected payments from insurers who become liable to indemnify the person who has received the compensation affected payments. It is not necessary to set the provisions out in detail here.
In calculating the amount of the lump sum compensation payment section 17(4) must be taken into account; it reads as follows:
17(4) Where a person:
(a) has received periodic compensation payments; and(b)after receiving those payments, receives a lump sum compensation payment (in this subsection called the "LSP"); and
(c)because of receiving the LSP, becomes liable to repay an amount (in this subsection called the Repaid 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 – RPCPSection 1184(1) of the Act vests a discretion in the applicant (and therefore the Social Security Appeals Tribunal and this Tribunal) to treat the whole or part of a compensation payment as not having been made, or, not liable to be made if appropriate to do so in the special circumstances of the case.
At the hearing Mr Walsh appeared for the applicant and the respondent conducted his own case. The respondent's written submissions were prepared by a Legal Aid Commission solicitor. The documents lodged in the Tribunal pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 were before the Tribunal as the T documents and further documents were tendered and marked as exhibits. Oral evidence was given by the respondent and an officer of WorkCover, Queensland.
I make the following findings of fact. The respondent suffered a work place injury in 1993 resulting in his incapacity for work and payment of periodic compensation by the Workers' Compensation Board of Queensland during 1993 and 1994. Those payments ceased in early 1995 and Disability Support Pension has been paid by the applicant since 9 February 1995.
Periodic payments of workers' compensation ceased at 27 January 1995 upon a decision by an Orthopaedic Assessment Tribunal that the incapacity was permanent with 10% loss of function and acceptance by the Workers' Compensation Board of liability for permanent partial disability.
On 11 February 1995 the applicant wrote to the respondent pointing out the effect of the Act in so far as it may require repayment of amounts paid for benefits in the event of a payment or payments of compensation. A similar letter was sent to the respondent's solicitor (T9 & T10).
In May 1995 the respondent's solicitors applied to the applicant on the standard forms for estimates of the lump sum preclusion period and recoverable amount based on gross settlement amounts of $50,000, $75,000 and $100,000. The applicant supplied the estimates on 17 May 1999 (T12-T14).
In response to the respondent's common law claim against his employer and by deed dated 8 June 1999 (Exhibit C) the respondent, his employer and WorkCover, Queensland, (I was told it is the successor in law to the Workers' Compensation Board of Queensland) agreed, inter alia, as follows:
"1.In consideration of the payment by WorkCover on its own behalf and on behalf of MASTERCARE to NOLAN of the sum of SEVENTY THOUSAND DOLLARS $70,000.00 NOLAN does hereby forever completely release and discharge WorkCover and MASTERCARE from any liability howsoever arising out of the facts and circumstances the subject of the aforesaid proceedings.
2.In addition to the payment referred to in clause 1 hereof, WorkCover shall also pay on its own behalf and on behalf of MASTERCARE, NOLAN's reasonable party and party costs of and incidental to the proceedings with such costs in accordance with the District Court scale of fees where the amount recovered exceeds the sum of $50,000.00 to be agreed between the solicitors for NOLAN, Messrs KEITH J. HUNTER & ASSOCIATES, and the solicitors for WorkCover and MASTERCARE, Messrs Tutt & Quinlan, and failing agreement such costs shall be taxed.
3.WorkCover acknowledges that it shall not be entitled to a refund out of the payments referred to in clauses 1 and 2 hereof in respect to Workers' Compensation benefits paid in relation to the injuries the subject of the proceedings in the sum of FORTY EIGHT THOUSAND, SEVEN HUNDRED AND SIXTY SIX DOLLARS AND SEVENTY SIX CENTS ($48, 766.76).
4.NOLAN warrants that apart from possible refunds due to or charges in favour of Centrelink (Department of Social Security) and/or the Health Insurance Commission, that there are no other refunds due to or charges in favour of any governmental or semi-governmental authorities and in the event of there being any such refund or charge including any refund or charge in favour of the Department of Social Security and/or Health Insurance Commission NOLAN hereby agrees to indemnify and keep indemnified WorkCover and MASTERCARE against any such refund or charge."
Neither Mastercare nor WorkCover admitted liability and the discharge was entered into for the purpose of settling the respondent's claim against Mastercare.
Exhibit D and the evidence of the WorkCover officer satisfies me that WorkCover and/or its predecessor had made payments under the respondent's claim for compensation as follows:
Weekly Compensation Payments $24,293.00
Hospital Payments 4,632.00
Medical Expenses 9,689.00
Other Expenses 854.00
Rehabilitation 2,070.00
Disability Settlements 7,268.00
______________
(cents have been ignored) $48,807.00
=============On the evidence WorkCover was entitled under its enabling legislation to be indemnified by the respondent out of common law damages subsequently awarded to the respondent. The WorkCover officer said in evidence that the total amount of the settlement was $70,000 plus $48,766. The discrepancy of $40 is apparent but the officer could only speculate as to the reason for this discrepancy. He further explained that the amount of $7,268 was the amount paid by the Workers' Compensation Board in respect to the liability for permanent partial disability being a payment for loss of function and not for pain and suffering.
The applicant calculated the lump sum compensation payment as follows:
Payment on settlement $ 70,000
ADD
WorkCover Amount 48,807
____________
$118,807
DEDUCT
Weekly payments 24,293____________
$ 94,514
============
The compensation part of the lump sum compensation payment in accordance with section 17(3) of the Act is $47,257 on this basis of calculation. That is the figure used by the applicant to determine a preclusion period of 113 weeks resulting in a charge amount of $16,714 (T18 to T20).
Section 278(2) of the WorkCover Queensland Act 1996 provides that an amount paid as compensation to a person for an injury, to which there is an entitlement to payment of damages at a time or for a period before the person becomes entitled to payment of damages by an employer or another person, is a first charge on any amount of damages recovered by the person to the extent of the amount of compensation paid to the person. "Compensation" is defined in section 10 to mean in essence amounts paid under Chapters 3 and 4 by WorkCover. Chapter 3 covers compensation payments and Chapter 4 covers injury management payments. The latter covers hospitalisation, medical treatment and rehabilitation payments. In regard to the latter I note that section 249 in particular places an obligation on the injured worker to participate in rehabilitation with a sanction of suspension of compensation for failing to so participate.
Both the respondent and his partner have each been in receipt of a disability support pension at all relevant times. Neither is presently in receipt of the full amount per fortnight because they are repaying advances obtained from Centrelink.
It is clear on the material that the respondent and his wife suffer significant and debilitating problems with their physical and psychological health. Both are addicted to morphine and are presently attempting to overcome the drug addiction through a methadone program. Much was said by the respondent about the high cost of private health care and the lack of relevant public health care. I accept that both have serious health problems and those problems cause them extra expenditure on healthcare over and above that provided by the public health system and their health care cards.
The respondent also gave evidence about significant financial problems but was unable to explain how the proceeds of the compensation payment had been dealt with. He agreed that there was $11,000 still on hand in January 2000 at the time of the hearing before the Social Security Appeals Tribunal. He said that $5,000 was subsequently paid to relatives and friends for repayment of loans but did not provide any details. He said that approximately $900 was spent on a trip to Sydney by his wife and $1,500 on a trip provided for their daughter and her two children. He also said that $700 was spent on car repairs and $1,000 on medical expenses. The only documentation supporting this expenditure is two medical accounts corroborating two payments of $64.85 net of medicare refund. I am satisfied that other medical and pharmaceutical expenses would have been incurred but they have not been quantified other than for the respondent's estimate of $1,000.
Exhibit 10 includes documents which suggest a quite different picture. An electricity account for $72 due for payment on 10 January 2000 was satisfied in part by vouchers for $60 supplied by the Society of St Vincent De Paul. The telephone service account payable to Telstra was overdue in an amount of $156.40 on 4 February 2000 and by 28 April 2000 the service was cancelled and the debt due was $261.85. Rent was in arrears in an amount of $142.86 at 17 February 2000 after payment of $200 on that day. The respondent has since been served with a notice to quit. Goods have been charged or sold to pawnbrokers to raise $920 over the period December 1999 to February 2000.
When put to the respondent by the Tribunal he was unable to explain why it was necessary to borrow moneys from Centrelink and pawnbrokers and obtain vouchers from St Vincent De Paul Society at a time when he says that there was $11,000 in the bank account. I am left to speculate about the respondent's financial position and cannot therefore come to any conclusion as to whether the respondent is suffering financial hardship.
The respondent's explanation was that he was "confused". In my view that is an apt description of his evidence which means that I can give no weight to his oral evidence where it is not corroborated by other material.
There is no dispute that the income cut out amount is $416.80.
The Applicant's CaseThe applicant submitted that the Tribunal should accept that the respondent had $11,000 at the time of the hearing before the Social Security Appeals Tribunal. The lump sum compensation payment is determined by adding the $70,000 paid to the respondent and the $48,766 forgone by WorkCover Queensland as set out in the discharge deed (Exhibit C). It says that the fact of the WorkCover recovery because of its first charge does not thereby reduce the amount of the lump sum. The applicant acknowledges the operation of section 17(4) of the Act but is ambivalent about how the calculation is made.
In particular the applicant relies on dicta of Von Doussa J in DSS v Banks (1990) 20 ALD 19 at 24-25. His Honour was there dealing with similar provisions in the Social Security Act 1947.
The applicant says the facts of this case do not raise special circumstances and relies on the Tribunal's decision in Re Beadle and DSS (1984) 6 ALD 1.
The Respondent's CaseThe respondent made detailed submissions in writing to support the decision of the Social Security Appeals Tribunal. The essence of those submissions is that the respondent's circumstances are special as explained in Re Beadle and Kertland v Secretary, Department of Family and Community Services [1999] FCA 1596 at para 37.
In so far as the submission suggests it was reasonable to keep money in reserve for emergencies that submission is not supported by the evidence. In any event I would not regard it as reasonable to keep money in reserve while obtaining vouchers from a charity such as the Society of St Vincent De Paul as is the evidence in this case.
ConsiderationAs I understand the applicant's case it says, in effect, that the Chapter 4 injury management expenses covering medical expenses, hospital expenses, rehabilitation expenses and "other expenses" incurred by WorkCover Queensland or its predecessor while the respondent was on periodical compensation payments represent part of the payment in settlement of the claim for damages. It is not suggested that the respondent had any entitlement to payment but that there was a first charge on any damages awarded to the respondent and WorkCover's charge was satisfied by the deed of discharge. It should therefore be implied that the amount of the payment in settlement includes the first charge amount waived by WorkCover under the terms of settlement.
In particular the applicant relies on dicta of Von Doussa J included in the following paragraphs at 20 ALD 24 and 25:
"Section 152(2)(c) applies where there is "a lump sum payment by way of compensation". The expression "payment by way of compensation" is defined in s152(2)(a). The words "lump sum" are not defined. They are not words of art. In the Macquarie Dictionary a "lump sum" is defined as a sum "including a number of items taken together or in the lump". In my opinion the words bear that meaning in the section. The words are used in Pt XVII of the Act to distinguish "lump sum payments by way of compensation" from "periodical payments by way of compensation" (see, eg, ss152(2)(d), (3)(b) and 153(1)(a)). A "lump sum" payment is simply one which includes a number of items. Where a payment by way of compensation consists of the aggregate of several amounts which could have been paid separately or at different times the payment is one of a lump sum. A payment the total of which is arrived at by adding amounts for different heads of loss would also be a lump sum payment.
A "payment by way of compensation" as defined in s152(2)(a) includes periodic payments. A "payment by way of compensation" need not be a final payment. There could be a "lump sum payment by way of compensation" attracting the provisions of s152(2)(c) which did not have the characteristic of a final payment intended to conclude the liability of the party on whose behalf the payment is made. Thus, the provisions of s152(2)(c)(ii) could apply to an interim assessment of damages made under s30b of the Supreme Court Act 1935(SA).
A notion of finality however is introduced in s152(2)(c)(i) by the requirement that the lump sum payment be one "in settlement of a claim…". 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. The reference to a judgment by consent in cl (A) of subpara (i) provides a further guide to the broad meaning of the expression "the lump sum payment". Where a judgment is entered, the underlying claim or cause of action merges in the judgment. The judgment sum in the case of a payment by way of damages on a claim that includes a claim related to disease or injury, will usually be a once and for all amount paid in discharge of all legal liability of the defendant. In subpara (i) a "lump sum payment…in settlement of a claim" is a compendious expression encompassing the total amount paid in settlement of the claim. However the expression "settlement of a claim" in s152(2)(a)(i) does not necessarily require that the payment be in settlement of all claims between the recipient of the payment and the party on whose behalf it is made."
Section 152(2) of the Social Security Act 1947 was essentially the same as section 17(2) of the Act. In particular sub-paragraph 152(2)(a)(iii) read as follows:
152(2) In this Part –
(a) a reference to a payment by way of compensation is a reference to –(i) …..;
(ii) …..;
(iii)a payment, whether with or without admission of liability, in settlement of a claim under such a scheme or a claim for damages; or
(iv)….
………………..that is, in whole or in part, in respect of an incapacity for work;
(The reference to "such a scheme" is a reference to a scheme of insurance or compensation provided for by a law of the Commonwealth or of a State or Territory).
Here the respondent sued his former employer for damages. As to why WorkCover Queensland was a party to the proceedings is not clear but I assume it was the successor of the insurer.
I have a different view of the dicta of Von Doussa J to that put for the applicant. When his Honour said at page 25 that the expression 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 his Honour was referring to, on the facts of this case, the $70,000 payable under the deed of discharge. By referring to monetary consideration I do not understand his Honour to be referring to a waiver of a charge. Nor, with respect, do I think the words "payment in settlement of a claim" can embrace waiver of a charge not involving a payment to, in this case, the respondent.
Even if I be wrong in this I take the view that it would be contrary to the intention of the legislation that expenses for medical, hospital and rehabilitation treatment incurred by WorkCover Queensland during the period the respondent was on periodical compensation payments and in respect of which WorkCover has a right to recover from an award of damages etc should be deemed to be a portion of a compensation payment to the respondent. There is no question of any payment to the respondent or on behalf of the respondent; the expenditure relates to a period outside any lump sum preclusion period because of the operation of section 17(4) of the Act and the expenditure was incurred by the Workers' Compensation Board in the course of performing its statutory functions and because the respondent was injured in the course of his employment. While there is a benefit to the respondent that the expenditure was incurred it was incurred for the purpose of statutory obligations. Different considerations apply in relation to the disability settlement payment. That is a separate lump sum compensation payment for the purposes of the Act and for which a lump sum preclusion period would apply if the payment included compensation for lost earnings or economic loss. It did not. It follows that no issues arises in relation to the payment of that amount to the respondent by the Workers' Compensation Board in 1995. To now seek to take that amount into account again, as the applicant does, must be seen to be "double dipping".
If it was necessary to do so I would follow the Social Security Appeals Tribunal and exercise the discretion under section 1184(1) of the Act so as to treat any amount in excess of $70,000 as not having been made; being satisfied that to include an amount not paid would be both unfair and inappropriate in the circumstances of this case (Beadle v DSS (1985) 60 ALR 225 at 228).
However I take the view that the payment in settlement of the claim for damages in the circumstance of the respondent's case was the amount of $70,000 payable under the deed of discharge and this is the amount of the lump sum compensation payment for the purposes of section 17(3), section 17(4) having no application in this case.
In coming to that conclusion I have taken into account the operation of sections 1174 and 1175 of the Act as explained by the Federal Court in Blunn v Cleaver (1993) 119 ALR 65. Clearly the applicant had the right to recover amounts of disability support pension paid to the respondent during the lump sum preclusion period and these reasons for decision do not suggest otherwise. The question at issue here is the calculation of the lump sum preclusion period under section 1165(8). Combining the operation of sections 17(3) and 1165(8) the calculation is as follows:
$70,000 x 1 = 83 weeks$416.80
For these reasons I am satisfied that the decision of the Social Security Appeals Tribunal should be affirmed.
I certify that the 43 preceding paragraphs are a true copy of the reasons for the decision herein of K L Beddoe (Senior Member)
Signed:
T G Lowther
AssociateDate/s of Hearing 2 May 2000
Date of Decision 9 May 2000Representative of the Applicant An officer of the Department of Family & Community Services
Representative of the Respondent In person
2
2
0