Proberts and Secretary, Department of Family and Community Services
[2005] AATA 567
•15 June 2005
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2005] AATA 567
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q2005/84
GENERAL ADMINISTRATIVE DIVISION ) Re BRIAN PROBERTS Applicant
And
SECRETARY, DEPARTMENT
OF FAMILY AND COMMUNITY SERVICESRespondent
DECISION
Tribunal Dr KS Levy, Member Date15 June 2005
PlaceBrisbane
Decision The Tribunal affirms the decision under review. Therefore, the applicant’s appeal is not successful.
...................[Sgd]...........................
KS Levy
Member
CATCHWORDS
SOCIAL SECURITY – benefits and entitlements – age pension – whether applicant is liable for a compensation lump sum preclusion period – calculation of 50% net lump sum payment is deemed to be compensation for lost earnings – preclusion period applicable – “special circumstances” not satisfied – decision under review affirmed.
Social Security Act 1991 ss 17, 1169, 1170, 1178, 1184K
Department of Social Security and Banks (1990) 20 ALD 19
Secretary, Department of Family and Community Services v Mourilyan [2001] FCA 1583; (2001) 67 ALD 347Re Secretary, Department of Family and Community Services and Doyle (2002) 70 ALD 130
Secretary, Department of Family and Community Services v Hulls and Ors (1991) 22 ALD 570
Secretary, Department of Family and Community Services v A’Beckett (1990) 21 ALD 79
Beadle v Director-General of Social Security (1985) 60 ALR 255; (1985) 7 ALD 670
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Department of Social Security v Smith (1991) 30 FCR 56; (1991) 23 ALD 277Haidar v Department of Social Security (1998) 28 AAR 288; (1998) 52 ALD 255
REASONS FOR DECISION
15 June 2005 Dr KS Levy, Member The application
1. The applicant, Brian Proberts, received workers’ compensation benefits for a period following a motor vehicle accident. He was subsequently granted age pension. His claim for injuries resulting from the motor vehicle accident was settled on 30 June 2004.
2. As a result of this settlement, Centrelink determined that a lump sum preclusion period should apply to Mr Proberts for the period commencing on the date at which age pension was approved. This resulted in the recovery of $20,263.49 in compensation affected payments in respect of the preclusion period calculated. The decision was challenged by Mr Proberts and the matter was reviewed by an Authorised Review Officer of Centrelink. That officer affirmed the original decision.
3. Mr Proberts subsequently appealed that decision to the Social Security Appeals Tribunal on 8 December 2004. That Tribunal affirmed the original decision on 1 February 2005. The applicant now appeals to this Tribunal under section 29(1) of the Administrative Appeals Tribunal Act 1975.
Appearances
4. The applicant appeared for himself. He had some hearing problems and also a medical problem which required an adjournment approximately hourly. The Tribunal indicated at the outset that an adjournment or any further assistance required in repeating or understanding evidence would be made available to assist the applicant.
5.The respondent was represented by Ms Suzy Dole.
Issues
6.The issues for determination by the Tribunal are as follows:
(a)Is Mr Proberts liable for a compensation lump sum preclusion period with respect to the settlement of his claim?
(b)If a preclusion period is applicable, has any charge relating to that period been correctly calculated? and
(c)In the event that a preclusion period is applicable and that the amount calculated is correct, are there “special circumstances” which would make it appropriate to deem the compensation payment lump sum, or any part of it, as not having been made, with a resultant reduction in the preclusion period?
Background
7.The facts in this matter are as follows:
(a)Mr Proberts was involved in a motor vehicle accident on 15 January 2002. He subsequently received Workers’ Compensation payments until 22 July 2002;
(b)Mr Proberts was granted the age pension from 24 July 2002;
(c)On 30 June 2004 Mr Proberts, through his solicitors, settled a claim for injuries suffered in the motor vehicle accident in January 2002. He received a settlement of $135,000 in total ($120,000 in damages, $15,000 in agreed costs);
(d)In accordance with the legislation, a preclusion period was calculated based on the amount of the payout in damages. This preclusion period was calculated to be 91 weeks, commencing on the date of commencement of age pension. The period of the preclusion period was 24 July 2002 to 19 April 2004.
Exhibits
8.The following documents were admitted as exhibits in this matter:
§Exhibit 1 Letter from McGillivrays, Solicitors, dated 9 May 2005
§Exhibit 2 Documents with Centrelink letter of 13 April 2005 (medical documents)
§Exhibit 3 Documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975;
§Exhibit 4 Statement of financial circumstances of the applicant of 10 January 2005 (with Centrelink letter dated 29 March 2005);
§Exhibit 5 Copies of medical etc expenses from Work Cover Queensland records.
9. The following provisions are relevant from the Social Security Act 1991 (“the Act”) in determining this matter:
“Compensation recovery definitions
17.(1) In this Act, unless the contrary intention appears:
"compensation" has the meaning given by subsection (2);
Note: See also section 1163B.
"compensation affected payment" means:
(aa) an age pension; or
(a) a disability support pension; or
(b) a parenting payment; or
(c) a social security benefit; or
(e) a disability support wife pension; or
(f) a carer payment; or
(g) a special needs disability support pension; or
(h) a special needs disability support wife pension; or
(i) mature age allowance; or
(j) mature age partner allowance; or
(k) a former payment type;
income cut-out amount, in relation to a person who has received a compensation payment, means the amount worked out using the formula in subsection (8), as in force at the time when the compensation was received.
'pharmaceutical amount for a single person' means the amount specified in column 3 of item 1 in the Pharmaceutical Allowance Amount Table in point 1064-C8.
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.
Compensation part of a lump sum
17.(3) 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 by consent judgement being entered in respect of the settlement or otherwise; or
(ab) 50% of the payment if the following circumstances apply:
(i)the payment represents that part of a person's entitlement to periodic compensation payments that the person has chosen to receive in the form or a lump sum; and
(ii)the entitlement to periodic compensation payments arose from the settlement (either with or without admission of liability) of a claim that is, in whole or in part, related to a disease, injury or condition; and
(iii)the claim was settled, either by consent judgement being entered in respect of the settlement or otherwise; or
(b)if those circumstances do not apply—so much of the payment as is, in the Secretary's opinion, in respect of lost earnings or lost capacity to earn, or both.
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 - RPCP
History
S.17(4)(a) amended by Act No. 104, 1995 by s.4 as set out in Schedule 16;
S.17(4)(b) amended by Act No. 104, 1995 by s.4 as set out in Schedule 16;
Compensation affected payment not payable during lump sum preclusion period
1169.(1) If:
(a) a person receives or claims a compensation affected payment; and
(b) the person receives a lump sum compensation payment;
the compensation affected payment is not payable to the person in relation to any day or days in the lump sum preclusion period.
1170.(1) Subject to subsection (2), if a person receives both periodic compensation payments and a lump sum compensation payment, the lump sum preclusion period is the period that:
(a)begins on the day following the last day of the periodic payments period or, where there is more than one periodic payments period, the day following the last day of the last periodic payments period; and
(b)ends at the end of the number of weeks worked out under subsections (4) and (5).
1170.(2) If a person chooses to receive part of an entitlement to periodic compensation payments in the form of a lump sum, the lump sum preclusion period is the period that:
(a)begins on the first day on which the person’s periodic compensation payment is a reduced payment because of that choice; and
(b)ends at the end of the number of weeks worked out under subsections (4) and (5).
1170.(3) If 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).
1170.(4) The 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 lump sum
Income cut-out amount
Repayment of amount where both lump sum and payments of compensation affected payment have been received
1178.(1) If:
(a)a person receives a lump sum compensation payment; and
(b)the person receives payments of a compensation affected payment in relation to a day or days in the lump sum preclusion period;
the Secretary may, by written notice to the person, determine that the person is liable to pay to the Commonwealth the amount specified in the notice.
1178.(2) The amount to be specified in the notice is the recoverable amount under section 1179.
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).
History
S.1184K inserted by Act No. 71, 2001, by s.3, Schedule 1(19);”
Evidence
10. Mr Proberts provided oral evidence in addition to the documentary exhibits admitted. He stated that he was not allowed to claim expenses which were to his mind, legitimate and therefore, he asserted that these should have been deducted from the settlement amount before the calculation of any preclusion period. In particular, he referred to the expenses such as physiotherapy, hydrotherapy, solicitors’ costs, medical expenses and travelling expenses. He stated however, those expenses were on the record and were available to Centrelink, the authorised review officer and the initial decision-maker. He believed these should have been taken into account when it was worked out that he should have to repay an amount to Centrelink. Mr Proberts further argued that as his wages were taken into account, his expenses should also have been accounted for.
11. At the time of the accident, Mr Proberts indicated he had been on a pension until just prior to that date and that this was his first day back at work. Following the accident, he was on Work Cover benefits for 26 weeks after which time he was granted age pension.
12. Whilst under cross-examination, a statement of the applicant’s financial circumstances was presented to the Tribunal. He stated after paying his home insurance, he now had almost no money in the bank. He also stated that in addition to his age pension, his son paid his home phone bill and his daughter paid his mobile phone. He further pointed out to the Tribunal that in his assessment of expenses there were some things such as toiletries and clothing which had not been included. However, he stated that he did not have many needs for clothes and his daughter or son would occasionally buy a shirt for him such as the one he wore during the hearing. He agreed with the respondent’s advocate that there was not much other expenditure which would have been relevant and therefore there was really no change in his circumstances from previously.
13. In further cross-examination by Ms Dole, he confirmed that as a result of the settlement, he had paid off the debt on his house and no amounts were owing on that property. However, he said he now had credit card debts which continued to escalate and at the date of the hearing amounted to $12,500. These had arisen since settlement of damages claim on 30 June 2004, which resulted in payout of his house mortgage and other claims together with a cash amount being paid to the applicant.
Submissions
14. The applicant stated that he had little further to add than what he had put forward in evidence. However, he indicated that he believed that he was morally right in claiming that some of the expenses should have been excluded before calculation of the preclusion period.
15. Ms Dole, on behalf of Centrelink, explained the calculation of the preclusion period resulting from the settlement amount. This is set out in folio 43 of the T documents. These are as follows:
Total settlement for injuries received $120,000.00
Plus legal costs agreed $15,000.00
Total damages payout $135,000.00
Less total weekly compensation paid $16,617.23
(see Folio 31, T docs) __________
Total $118,382.77
Calculated economic loss – 50% of total above
(section 17(3) of the Act) $59,191.38
16. The preclusion period is calculated based on the divisor known as the income cut out amount as defined in section 17(8) of the Act. This amount was $647.50 and is intended by the legislation to be the amount which a person may earn before losing eligibility for the pension. Therefore, the calculation of the 50% of the total amount of economic loss, that is $59,191.38, when divided by the income cut-out amount of $647.50, results in a preclusion period of 91 weeks. That period commences on the date age pension was approved that is 24 July 2002 and runs for 91 weeks and concludes on 19 April 2004.
17. On questioning by the Tribunal, Centrelink’s advocate reconciled the amounts used in calculations and in a manner which would assist in an understanding of the distribution of the settlement monies. The disbursements from the settlement monies was $51,267.07 as follows:
Amount paid to Work Cover $26,461.07
Refund to Health Insurance Commission $24.05
Legal Fees $24,771.95Total $51,267.07
18. The reconciliation of the settlement monies (including $15,000 of legal costs is as follows:
Settlement monies $135,000.00
Less expenses disbursed $51,267.07
Sub Total $83,732.93Less refund to Centrelink for the amount
Equating to the preclusion period $20,263.49
Sub Total $63,479.04
Less mortgage payout on Mr Proberts’ house $45,721.29
Final Balance cash to Mr Proberts $17,757.75
Findings of Fact
19.The Tribunal made the following findings of fact:
§ Mr Proberts is 69 years old and was injured in a motor vehicle accident on 15 January 2002.
§ The applicant received workers’ compensation for the period from the date of the accident until 22 July 2002.
§ The applicant was granted the age pension from 24 July 2002.
§ The applicant received a settlement for injuries claimed as a result of the motor vehicle accident amounting to $135,000 ($120,000 settlement plus $15,000 towards legal costs). These amounts were agreed by the applicant and the settlement agreement was concluded on 30 June 2004.
§ Mr Proberts received over $63,000 which was used to pay out his mortgage on a home loan of $45,721.29 and $17,757.75 was paid to him in cash. This latter amount was used to purchase a motor vehicle for $6000 and to retire debts to AGC and St. George Bank of $6200 (approximately).
§ Mr Proberts’ home is valued at approximately $250,000.
§ Mr Proberts currently has credit card debts of approximately $12,500.
§ The estimate initial settlement amount of $50,000. Ultimately Mr Proberts received $135,000. Included in this amount was $15,000 for legal costs. Mr Proberts was told by his solicitors that he should recover approximately 40-46% of his legal costs. Total legal costs amounted to $24,771.90. The amount received in legal costs is therefore well within the range which he reasonably expected.
Consideration
20. The Tribunal has taken into account all of the oral and the documentary evidence available to it in reaching a decision in this matter.
21. The facts were not disputed by either party to this matter, only the basis of calculations were disputed by the applicant. The applicant sustained an injury in a motor vehicle accident on 15 January 2002 and he received payments from Work Cover of $26,461.07 from the date of the accident until 22 July 2002. As from 24 July 2002 he received age pension.
22. The applicant signed a Deed of Discharge with Work Cover at the date of settlement on 30 June 2004. That Deed was an agreement between Centrelink and Mr Proberts of the amount of settlement monies and legal costs (see folio 39 – 42 of the T documents).
23. It is clear that a compensation affected payment is not payable to a person who receives a payment of lump sum compensation (section 1169(1)). Apart from compensation payments by WorkCover, the applicant has received age pension, which is deemed by section 17(1) of the Act to be a compensation affected payment. Therefore, the Act disentitles the applicant to any amount of age pension for a period equivalent to the preclusion period as defined in section 1170(4) of the Act.
24. The amount he would have received from WorkCover amounts for that period was $16,617.23. This amount is relevant for calculation of the 50% net lump sum compensation specified in section 17(3). The exclusion of this amount before calculation of the 50% of the balance of the lump sum for the purposes of determining the preclusion period is authorised by section 17(4) of the Act. In respect of the calculation of the preclusion period, the respondent relied upon the formula in section 1170(4) of the Act. In respect of the calculations outlined in paragraph 15 above, it applied the weekly compensation amount to the settlement amount to arrive at a total. I am satisfied that those calculations comply with the legislative provisions.
25. The basis of that calculation, apart from being embodied in statute, was described in Department of Social Security and Banks (1990) 20 ALD 19 which was to deem 50% of a lump sum to be made in respect of lost earnings so that there is some standard by which litigants’ compensation is made in respect of such matters. That calculation of 50% of a lump sum payment which is deemed to be compensation for lost earnings is provided by section 17(3)(b) of the Act (see Secretary, Department of Family and Community Services v Mourilyan [2001] FCA 1583 per Dowsett J. The purpose of the provisions is also, as submitted by Ms Dole for the Respondent, to avoid duplication of payment to a recipient of social security payments and also compensation payments, taking account of the balancing considerations of the taxpayer and the recipient.
26. Having considered the amounts in folios 41 and 43 of the T documents, I am satisfied that the respondent correctly calculated the compensation part of the lump sum by utilising the formula in section 1170(4). I am also satisfied that that formula was properly based on excluding the amount of periodic compensation amounts as prescribed by section 17(4) of the Act. Therefore, the applicant was subject to a preclusion period. Also, the charge repaid to Centrelink was correct.
27. However, the applicant also maintained that there were medical expenses of the order of $10,000 which should have been allowed. However, the Work Cover records presented to the Tribunal (Exhibit 5) show that the amount paid by Work Cover in respect of medical expenses was of the order of $2,851.07. Of the amount paid in settlement costs, and the circumstances of the applicant, there does not seem to be a case to be made that any specific deduction should be made for those expenses. Nor would it be appropriate to go behind the settlement agreement. This principle was set out clearly by Senior Member BJ McCabe in the case of Re Secretary, Department of Family and Community Services and Doyle (2002) 70 ALD 130. The Tribunal agrees with the submissions of the respondent and the authorities made.
28. In addition, it must be noted that the amount of legal expenses were within the parameters originally estimated by the solicitors for the applicant and the amount of legal expenses recovered ($15,000) is within the scope of the amount which was estimated by the applicant’s solicitors. Those expenses should be included as part of the lump sum amount when determining the 50% calculation relevant to the preclusion period (see Secretary, Department of Family and Community Services v Hulls and Ors (1991) 22 ALD 570; and Secretary, Department of Family and Community Services v A’Beckett (1990) 21 ALD 79 ).
Are There “Special Circumstances”?
29. Section 1184K of the Act makes provision for part of the compensation payment to be treated as if it were not made. The effect of this provision would be to reduce the amount upon which the preclusion period is calculated and consequently, reducing the preclusion period itself. There is no definition of the term “special circumstances” in the Act. Reliance must therefore be had on authorities such as Beadle v Direction-General of Social Security (1985) 60 ALR 255 where the Federal Court held that it could not lay down precise rules about the meaning of this term but it would depend on the circumstances of each case.
30. Also, Kiefel J in Groth v Secretary, Department of Social Security (1995) 40 ALD 541, referred to Beadle’s case above and further amplified the meaning of “special circumstances”. There, Her Honour stated that 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”. Also in Department of Social Security v Smith (1991) 30 FCR 56, Von Doussa J, in dealing with what might constitute unfairness as a relevant factor in “special circumstances”, said that the legislature must have recognised that an unfair, unreasonable or unjust result could sometimes occur, by including provisions such as consideration of “special circumstances” in the Act. But at the same time, it is clear that the purpose of the legislation is to avoid a claimant having access to both Social Security benefits and concurrently, benefits in the nature of income through lump sum payments as compensation for economic loss (see Hill J in Haidar v Department of Social Security (1998) 28 AAR 288.
31. The Tribunal has examined the calculation of the amounts from settlement monies as to whether any unfairness is evident and that might justify invoking section 1184K because of any “special circumstances”. No improper basis for the calculations could be ascertained. The Tribunal has also taken account of the medical reports at Exhibit 2 where the applicant has been reviewed by specialist medical practitioners and an occupational therapist. Nothing is revealed in those reports that would indicate that his conditions provide any grounds for determining that there are any “special circumstances” which might justify treating any payment of compensation amount (or age pension) as not having been made.
32. A decision-maker considering these statutory provisions concerning “special circumstances”, must be satisfied that, on an objective view of the facts, an unjust result would occur if a discretion is not exercised in the applicant’s favour having regard to the purpose of the legislation. In the present circumstances, the Tribunal cannot be so satisfied. Therefore, special circumstances cannot be seen to exist in this case.
33. In the circumstances of this case, the decision under review is affirmed. Therefore, the applicant’s appeal is not successful.
I certify that the 33 preceding paragraphs are a true copy of the reasons for the decision herein of Dr KS Levy, Member
Signed: Jenny Tran
Associate
Date/s of Hearing 16 May 2005
Date of Decision 15 June 2005
The Applicant was unrepresented and appeared in person
For the Respondent Susie Dole, Departmental Advocate
1
5
0