Nuzzo and Secretary, Department of Family, Community Services and Indigenous Affairs
[2006] AATA 524
•16 June 2006
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2006] AATA 524
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2006/208
GENERAL ADMINISTRATIVE DIVISION ) Re ROCCO NUZZO Applicant
And
SECRETARY, DEPARTMENT OF FAMILY,COMMUNITY SERVICES & INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal The Hon R.N.J. Purvis A.M Q.C, Deputy President Date16 June 2006
PlaceSydney
Decision The decision under review is affirmed.
[Sgd] The Hon. R.N.J. Purvis AM, Q.C,
Deputy President
CATCHWORDS
COMPENSATION – preclusion from receiving age pension – cancellation – whether Applicant’s weekly payment from Worker’s Compensation Dust Diseases Board is compensation pursuant to subsection 17(2) of the Social Security Act 1991 – whether any special circumstances exists to allow for part or all of the periodic payment being treated as not having been made pursuant to s1184K of the Act – decision under review is affirmed.
Social Security Act 1991 – sections 17(1), 17(2), 1173(1), 1173(2), 1176m 1184K, 1184K(1), 1184K(2)
Administrative Appeals Tribunal Act 1975 – section 37
Worker’s Compensation (Dust Diseases) Act 1942 – section 8(1)(a)
Social Security Legislation Amendment (Budget and Other Measures) Act 1996
Re Beattie and Secretary, Department of Family and Community Services N1999/1710 and 171 of June 2000
Re Beadle and the Director-General of Social Security (1984) 6 ALD 1
Beadle v Director-General of Social Security (1985) ALR 225
Re Groth & Department of Social Security (1995) 37 ALD 797
McAliney and Secretary, Department of Family and Community Services (2005) AATA 96
REASONS FOR DECISION
16 June 2006 The Hon R.N.J. Purvis AM, Q.C, Deputy President the application
1. With effect from 29 October 1996 Mr Rocco Nuzzo (“the Applicant”) was awarded periodic compensation by the Worker’s Compensation Dust Diseases Board. On 3 November 2004 a Centrelink Delegate made a decision that the Applicant’s rate of compensation precluded payment to him of an age pension. An Authorised Review Officer affirmed the decision whilst indicating that the age pension should have been cancelled from 18 September 2002 but was not due to a Centrelink error.
2. The Applicant appealed to the Social Security Appeals Tribunal (“the SSAT”) against such decision which Tribunal in due course and on 25 January 2006 affirmed the decision. The present application is one seeking review of the decision of the SSAT.
the issues
3. The issues in this application as enunciated on behalf of the Respondent are:
· Whether the Applicant’s weekly payment from the Worker’s Compensation Dust Diseases Board is compensation pursuant to subsection 17(2) of the Social Security Act 1991 (“the Act”).
· Whether there are any special circumstances that would allow for part or all of the Applicant’s periodic payment from the Worker’s Compensation Dust Diseases Board to be treated as not having been made pursuant to section 1184K of the Act.
the hearing
4. At the hearing of the application before this Tribunal the Applicant was assisted by his son, Mr Anthony Nuzzo. The Secretary, Department of Family, Community Services and Indigenous Affairs was represented by Ms Susan Mantaring, Advocate, Legal Services Branch Centrelink.
5. The documents lodged with the Tribunal pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 were admitted into evidence and marked T1-T21. The Applicant was cross-examined with the assistance of an Italian interpreter.
relevant factual situation
6. The factual material in this application is not in dispute between the parties.
7. The Applicant was born in Italy on 30 September 1935. The date of his migration to Australia is not in evidence but in due course he obtained employment with the Sydney Water Board. In December 1967 on account of his ill health he resigned his employment. On 7 March 1968 it was accepted by the Dust Diseases Board that the Applicant was suffering from dust disease (“Silicosis”).
8. The Applicant was granted weekly compensation pursuant to section 8(1)(a) of the Worker’s Compensation (Dust Diseases) Act 1942 by the Worker’s Compensation Dust Diseases Board from 29 October 1996. The Applicant’s disability was assessed at 40 per cent.
9. As at 1 October 2005 the rate of the Applicant’s fortnightly benefit was $452.60 gross.
10. It was on 5 December 1996 that the Applicant lodged a claim for the Disability Support Pension. This was granted to him from 12 December 1996 and his rate of pension took into account his weekly compensation payment. On 30 September 2004 the Applicant turned 65 years of age. His Disability Support Pension was cancelled and he was granted the age pension. His compensation was then $436.60 per fortnight. His age pension was cancelled effective from 3 November 2004.
11. On 9 April 2005 a Centrelink officer reconsidered and affirmed the decision to cancel the Applicant’s age pension. On 6 December 2005 an Authorised Review Officer affirmed the decision to cancel the age pension. Due to a computer problem at Centrelink the Applicant’s compensation was incorrectly assessed and he and his wife had been wrongly overpaid since September 2002. His age pension should have been cancelled on 19 September 2002 because his compensation payment was set to be more than the rate of age pension at the time. Due however to the computer problem his payment continued until the review conducted in August 2004 which resulted in the cancellation of the age pension in November 2004.
legislative provisions
12. The provisions of the Act relevant to this application are as follows:
“Section 17(1) periodic payments period means:
(a) the period to which a periodic compensation payment, or a series of periodic compensation payments, relates; or
…
17(2) Subject to subsection (2B), for the purposes of this Act, compensation means:
(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 1173(1) If:
(a) a person receives periodic compensation payments; and
(b) the person was not, at the time of the event that gave rise to the entitlement of the person to the compensation, qualified for, and receiving, a compensation affected payment; and
(c) the person receives or claims a compensation affected payment in relation to a day or days in the periodic payments period;
The rate of the person’s compensation affected payment in relation to that day or those days is reduced in accordance with subsection (2).
1173(2) The person’s daily rate of compensation affected payment is reduced by the amount of the person’s daily rate of periodic compensation.
1176
Periodic compensation not counted as ordinary income
If an instalment of a compensation affected payment payable to a person is reduced under section 1173 because of the receipt of periodic compensation payments, those payments are not to be regarded as ordinary income of the person for the purposes of a provision of this Act, other than point 1071A-4.
1184K
Secretary may disregard some payments
1184K(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.
1184K(2) If:
(a) a person or a person's partner receives or claims a compensation affected payment; and
(b) the person receives compensation; and
(c) the set of circumstances that gave rise to the claim for compensation is not related to the set of circumstances that gave rise to the person's or the person's partner's receipt of, or claim for, the compensation affected payment;
the fact that those 2 sets of circumstances are unrelated does not alone constitute special circumstances for the purposes of subsection (1).”
arguments on behalf of the applicant
13. The principal argument advanced on behalf of the Applicant is as stated at the time of his appeal to the SSAT (T20/75) namely:
“We believe that the Centrelink decision is discriminating against a group of people who have a shortfall from compensation payments. These people are unable to keep their benefits between pension amount (weekly) and the added monies other pensioners may earn per week.”
14. Particulars of the Applicant’s contentions are contained in a statement tendered to the SSAT (T21/76-77). It was there stated amongst other matters that:
“…
3. An Aged pensioner is able to earn a further $220 (approx/couple) before losing any benefits. The legislation seems to discriminate against the ‘Workers Compensation Pensioner’, who is unable to go over the age pension amount without losing benefits. As these people have been pensioned due to ill health via a work related incident. It seems to be a double blow in having their work life cut short and losing their benefits. If not for the dust disease contracted while at work with the Sydney Water Board, Mr Nuzzo would have worked till his retirement age of 65 years. Therefore he has already suffered a significant lose of health and income due to this disease.
….
5. As stated in a letter from the DDB dated 06/10/05.’The rate of Mr Nuzzo’s compensation is set as per the Workers Compensation Act 1987, in relation to his rate and the indexation of that rate. The compensation payed is fixed and arguably not sufficient. The recipient has no say over the rate of his/her compensation payments. Mr Nuzzo was lead to believe these payments would leave him in the same position as any other pensioner. This is not the case but Mr Nuzzo is powerless to alter the situation. This is proof that some are not able to settle on an agreement that fully compensates them. Therefore they do need further assistance in the form of part pension payments and benefits. These people have fallen through the cracks of the system and of the safety nets.
6. If the Government concedes that a pensioner may not be able to live off the full age pension (approx $400) and allowing a pension the opportunity to earn a further income before losing any benefits. Then why not understand that some compensation recipients are in the same predicament.
…
8. Mr Nuzzo only asks that he be put on a level playing field with other age pensioners. To receive the same benefits that other age pensions are entitled to, such as the PCC. Such benefits as cheaper car registration, car licence fees, home & contents insurance, telephone, power, water, council rates and transport concessions. An estimated loss in the order of $1000 - $1500 per year. Keeping these benefits until his compensation payments exceed the combined age pension and allowable extra income. So treating his income over the age pension as ‘ordinary income’.
9…It puts them in an unfair and unjust position. It discriminating against a small group of pensioners caught up in the system…
10…the Act is unfair and unjust… the Act should be amended in some way, as it does not take into consideration the full impact and effects on a group of in the community.”
15. At the hearing before the Tribunal it was also contended that:
· The Applicant was told he was entitled to benefits and hence entered into the agreement to receive compensation.
· The Act would not have intended the above mentioned consequences.
· The Australian Taxation Office treats the compensation as income. Centrelink should treat it likewise.
the respondent’s submissions and decision
16. It was maintained on behalf of the Respondent that the Act requires the compensation received by the Applicant to be treated as a direct deduction and not as ordinary income.
17. The Social Security Legislation Amendment (Budget and Other Measures) Act 1996 had the effect of adding the age pension to the list of compensation affected payments effective from 20 March 1997. By this amendment Parliament clearly contemplated that aged pensioners who receive compensation be affected by the operation of the compensation recovery provisions of the Act in the same way as all other recipients of compensation affected social security payments. Reference to the Explanatory Memorandum published at the time of the Social Security Legislation Amendment (Budget and Other Measures) Bill 1996 being introduced stated:
“2. Background
Most social security payments are subject to the operation of the compensation recovery provisions of the Act. In the past, age pension has not been subject to the compensation recovery provisions because it was considered that age pensioners would not generally receive compensation for lost earnings or lost capacity to earn (economic loss). However, this assumption has been challenged by moves to prevent age discrimination in employment and to move away from compulsory retirement age so that people can work beyond pension age.”
18. In Re Beattie and Secretary Department of Family and Community Services N1999/1710 and 1711 of June 2000 it was stated:
“…
19. In the Tribunal’s opinion, it is clear from the above that Mrs Beattie’s continuing weekly compensation payments are made at least partly in respect of lost capacity to earn, thereby bringing them within the definition of compensation in s17(2) of the Act. The Tribunal notes the Federal Court’s interpretation of the words ‘in respect of an incapacity for work ’in this context in a ‘Secretary, Department of Social Security v Beckett (1990) 21 ALD 7’ as ‘for an incapacity for work’ which is the way the Tribunal construed s17(2)(e) in this case. The Tribunal’s opinion accords with the President of the Tribunal, Justice Mathews’ decision in Re Coward and Federal Commissioner of Taxation (1999) 54 ALD 83’ in which she stated, at paragraph 72, that weekly compensation payments paid to a person in similar circumstances after turning 65 ‘represented compensation for loss of earning capacity’.”
19. The Dust Diseases Board having determined the Applicant’s work disability at 40 per cent thereby assessed his periodic payments having regard to his lost capacity to earn. Accordingly the compensation payments fall within the definition of compensation under section 17(2) of the Act. As the payments are compensation payments section 1173 of the Act requires that the amount of the payment be not taken as ordinary income and be not assessed under the ordinary income test but be treated as a direct deduction from what would otherwise be received as an age pension.
20. The Tribunal agrees with the Respondent’s submissions. The legislative intent is explicit. A consequence of the provisions is that a person such as the Applicant is placed in a position different to that of an age pension recipient.
21. The Applicant says that this being so, he should be considered as entitled to the benefit of section 1184K of the Act, that is special circumstances exist such as to warrant the discretion being exercised in his favour.
22. The question now to be asked is what are special circumstances? In Re Beadle and the Director-General of Social Security (1984) 6 ALD 1 it was stated:
“…’special circumstance’ is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional.”
On appeal (1985) 60 ALR 225 it was said that:
“…special circumstances must include events which would render [a happening or eventuality]… unfair or inappropriate… We did not think it is possible to lay down precise limits or precise rules… The phrase ’special circumstances’ although lacking precision, is sufficiently understood in our view not to require judicial gloss”.
23. In Re Groth & Department of Social Security (1995) 37 ALD 797 it was stated:
“…[Special circumstances] would require something to distinguish… [the] 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”.
24. The Respondent maintains that it cannot be said that the position in which the Applicant now finds himself was an unintended outcome. His position is “no different from other recipients of compensation affected payments”. [see McAliney and Secretary, Department of Family and Community Services (2005) AATA 96]. The Applicant is not financially worse off than other social security recipients. He receives an Italian pension in the amount of $603.35 per annum, owns his own home, has money in a joint account of approximately $15,000 and investments of approximately $7,000. His wife is on a Disability Support Pension in the amount of $10,922.60 per annum.
25. Thus it is contended that the Applicant’s circumstances cannot be said to be “unusual, uncommon or exceptional” or “unfair or inappropriate” or “unfair, unintended or unjust”.
26. The Tribunal is appreciative of the position in which the Applicant found and finds himself. However it is not able to say that the delegate of the Secretary of the Department of Family, Community Services and Indigenous Affairs has misconstrued the relevant legislation. Nor is it able to say, that the 1996/1997 amendments to the Act did not intend the consequences demonstrated in this application. It is not open to the Tribunal to conclude that the circumstances of the Applicant are “Unusual, uncommon or exceptional”, that they are “unfair or inappropriate” or that they are “unfair, unintended or unjust”. Clearly a person in the position of the Applicant is to have his entitlement assessed differently to that of an age pensioner. The explanatory memorandum earlier identified clearly anticipates this consequence of the legislative amendments. Indeed the Explanatory Memorandum in paragraph 1 states:
“The compensation recovery provisions of the Social Security Act will be amended so as to include age pension as compensation affected payment. The proposal will only apply to age pensioners who receive compensation for economic loss. Age pensioners who receive compensation for non-economic loss only would not be affected. The proposal would only affect an age pension if the compensation is received on or after 20 March 1997 and the person’s provisional commencement day for age pension is on or after 20 March 1997.”
The latter mentioned circumstances apply to the Applicant.
27. Whilst there is a clear distinction to be drawn between those receiving compensation which has a loss of earnings ingredient and an age pensioner it cannot be said that this evidences discrimination. It is a result of legislative intent as seen in the 1997 amendment. A distinction is drawn. The Applicant received the disability pension and more recently the Worker’s Compensation Award Payment, the latter to continue beyond the age of 65 years and able to be described as an income ingredient compensation payment. It is true to say that the Applicant receives compensation which is determined in accord with the Workers Compensation Act but it has not been established that the Applicant is in need of further assistance in a form of “part pension payments and benefits”.
28. The current amount received by the Applicant is in excess of the amount that he would receive by way of age pension. The Tribunal is not satisfied that the circumstances applicable to him put him in an “unfair and unjust position”.
29. The Tribunal is satisfied that the legislation did intend the consequences as illustrated in this application. The fact that the Australian Taxation Office treats the compensation receipts as income does not impinge upon the legislative intent as stated in the Explanatory Memorandum and the Act.
30. For the reasons set forth above the Tribunal is satisfied that the construction placed on the legislative provisions by the Respondent is correct and proper. The Tribunal is also satisfied that the circumstances in which the Applicant now finds himself are not special, in that they are not unintended, unfair or inappropriate and do not take the matter “out of the usual or ordinary case”. Many compensation recipients would be in the same position as the Applicant.
31. The decision under review is affirmed.
I certify that the 32 preceding paragraphs are a true copy of the reasons for the decision herein of The Hon R N J Purvis A.M, Q.C. Deputy President:
Signed: Associate
Date of Hearing 31 May 2006
Date of Decision 16 June 2006
Representative for the Applicant Mr Anthony Nuzzo
Solicitor for the Respondent Ms Susan Mantaring,
Centrelink Legal Services
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