QNVG and Secretary, Department of Social Services (Social security second review) - [2025] ARTA 1028

QNVG and Secretary, Department of Social Services (Social security second review) [2025] ARTA 1028 (15 July 2025)
Applicant/s:  QNVG
Respondent:  Secretary, Department of Social Services
Tribunal Number:                2024/6139

Tribunal:Senior Member M Kennedy
Place:Adelaide
Date:15 July 2025
Decision:The decision under review is affirmed.

Statement made on 15 July 2025 at 5:28pm
Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been removed from this decision and replaced with generic information so as not to identify involved individuals as required by subsections 201(1A) - 201(1B) of the Social Security (Administration) Act 1999
Catchwords
SOCIAL SECURITY – disability support payment – rejection- compensation preclusion period – period correctly calculated - funds expended acquiring real estate – no special circumstances to disregard whole or part of compensation – decision affirmed
Legislation
Social Security Act 1991
Statement of Reasons

Mr QNVG applied for disability support pension on 26 January 2024. His application was rejected on 17 June 2024 because he was subject to a compensation preclusion period from 9 October 2021 to 29 September 2028 during which compensation affected payments would not be payable to him.
Mr QNVG applied for review, and on 1 July 2024 an authorised review officer affirmed the decision. Mr QNVG applied to the Administrative Appeals Tribunal (AAT) on 1 July 2024. The AAT also affirmed the decision on 30 July 2024.
In doing so, the AAT identified that Mr QNVG had received an impairment payment of $57,750 on 10 July 2018 and then a compensation settlement of $890,000 on 24 August 2021 in respect of personal injury through a workplace acquired infection. Part of the compensation sum ($187,179.61) was to be applied to repayment of periodic payments of compensation, and so the AAT identified that Mr QNVG’s aggregate settlement amount was $760,570.39. The AAT identified that the amount of $380,285.19 was taken to be the economic loss component, and this translated to a compensation preclusion period commencing on the day after the last day of the periodic payments period and ending on 29 September 2028, in accordance with the formula provided for by section 1170 of the Social Security Act 1991 (the Act). The AAT considered Mr QNVG’s circumstances, but declined to disregard any part of the compensation in the special circumstances of the case.
Mr QNVG applied to the AAT for second review on 5 August 2024.
On 14 October 2024, the AAT was abolished and the Administrative Review Tribunal commenced operations. Under the transitional provisions in the Administrative Review Tribunal (Consequential and Transitional Provisions No. 1) Act 2024 (the Transitional Act), applications for review that were not finalised by the Administrative Appeals Tribunal before 14 October 2024 were taken to be applications for review to the Administrative Review Tribunal (hereafter the Tribunal). The Transitional Act gives the Tribunal the authority to continue and finalise any aspect of the review not already completed.
The documentary evidence before the Tribunal consists of the Tribunal papers prepared pursuant to section 37 of the former Administrative Appeals Tribunal Act 1974, a bundle of Supplementary Tribunal documents, and a further letter from Mr QNVG’s treating General Practitioner dated 18 November 2024.
CONSIDERATION
Does Mr QNVG have a compensation preclusion period?
Disability support pension is a ‘compensation affected payment’: subsection 17(1) of the Social Security Act 1991 (the Act). A compensation affected payment is not payable to a person in relation to any day in a compensation preclusion period: section 1169 of the Act.
The calculation of a compensation preclusion period is regulated by provisions in Division 3 of Part 3.14 of the Act.
Mr QNVG did not advance any specific arguments in relation to Centrelink’s identification or calculation of the compensation preclusion period. He said he doesn’t really understand how the calculation was performed, but considers the outcome is wrong generally because the period was so long and he had only received $480,000 in hand.
Mr QNVG suffered personal injury on 1 June 2015 when he acquired a Q fever infection during his work in an abattoir. Unfortunately, the infection progressed to chronic Q fever causing a range of disabilities including pain, fever, and fatigue. Mr QNVG explained he has subsequently had a heart attack and has liver disease, which the doctors say may also be a consequence of the Q fever.
I have examined the evidence regarding Mr QNVG’s receipt of compensation. I find, on the basis of the records at T12, T13 and T14 of the papers, that Mr QNVG:
(a)received periodic compensation up to and including 8 October 2021 in the total amount of $187,179.61;
(b)received $57,750 as an impairment lump sum in relation to the compensable event on 10 July 2018;
(c)received $890,000 by consent judgment of the Supreme Court of New South Wales dated on or about 24 August 2021, with that sum being made up of $250,000 paid by his employer and $640,000 by a medical practitioner;
(d)had claimed compensation for lost earnings and lost capacity to earn.
An amount is ‘compensation’ if it is a payment in settlement of a claim for damages that is made wholly or partly in respect of lost earnings or lost capacity to earn: paragraph 17(2)(c) of the Act.
Section 1171 of the Act deems multiple lump sum payments made in relation to the same event that gave rise to an entitlement to compensation to be aggregated as single payment. If at least one of those payments was made wholly or partly in respect of lost earnings or lost capacity to earn, then the deemed lump sum will be a payment of compensation for the purpose of the Act.
However, where a person becomes liable to repay periodic compensation upon receiving a lump sum, then the amount of the lump sum will be reduced by an amount equal to the periodic compensation payments received: subsection 17(4) of the Act.
In Mr QNVG’s case, I am satisfied that he received multiple payments in relation to the same event that gave rise to compensation, and these payments are to be aggregated. I am further satisfied that the aggregated payment is compensation for the purposes of the Act. The amount of the aggregated payment is to be reduced by an amount equal to the periodic compensation payments received by Mr QNVG.
The calculation of the compensation preclusion period turns on the identification of the ‘compensation part of a lump sum compensation payment’. Where, as here, a claim has been settled by consent judgment, 50% of the payment will be the compensation part of the lump sum: paragraph 17(3)(ab) of the Act.
In this regard, the consent order makes provision for $100,000 to be paid to the statutory worker’s compensation insurer pursuant to sections 151A and 151Z of the Workers Compensation Act 1987 (NSW), however as mentioned above an amount of $187,179.61 was in fact paid to Mr QNVG as periodic compensation. The Secretary states that the higher amount was deducted as part of a beneficial calculation. I agree that the full amount of periodic compensation is to be deducted in working out the aggregated compensation amount having regard to the text of subsection 17(4) of the Act.
I find therefore that the compensation part of the aggregated lump sum is $380,285.19.[1]
[1] $57,750 + $890,000 = $947,750; $947,750 - $187,179.61 = $760,570.39; 50% of $760,570 is $380,285.19
Section 1170 of the Act provides that if a person receives both periodic compensation and a lump sum, the preclusion period begins on the day following the last day of the period they were paid periodic compensation for. In Mr QNVG’s case, this day is 8 October 2021.
The duration of the compensation preclusion period is calculated by dividing the compensation part of the lump sum by the ‘income cut out amount’, which is an amount also worked out using a formula at subsection 17(8) of the Act. It is essentially reflective of the amount of income above which no pension would be payable under the ordinary income test. In Mr QNVG’s case, I am satisfied the income cut out amount is $1042.70.
The number produced by the formula at section 1170 (rounded down) is the number of weeks in the compensation preclusion period. In Mr QNVG’s case this means that his compensation preclusion period begins on 8 October 2021 and continues for 364 weeks until Friday 29 September 2028.
Subject to the considerations below, no compensation affected payment is payable to Mr QNVG, and the decision to reject his claim for DSP would be correct.
Should any part of the compensation payment be treated as not having been made?
Section 1184K of the Act provides that I may treat the whole or part of a compensation payment as not having been made if it is appropriate to do so in the special circumstances of the case. Where that discretion is exercised, it will reduce the compensation preclusion period accordingly.
Mr QNVG said that he needed help because he does not have any money left. He asks the Tribunal to exercise the discretion in his favour and reduce the preclusion period. Other than running out of funds, Mr QNVB did not articulate any particular circumstances to be taken into account.
I have turned my mind to Mr QNVG’s generalised concern that he feels the compensation preclusion period was too long by examining the circumstances of his receipt of settlement funds. The Tribunal papers demonstrate that Mr QNVG received $401,341.88 in hand after legal costs and disbursements of $309,658.12, repayments to the worker’s compensation insurer of $100,000 and payments to Medicare of $79,000 were deducted. Medicare refunded $73,421.30.
Although Mr QNVG has not expressly argued that the legal costs constitute special circumstances justifying treating the whole or part of the compensation as not having been made, I have turned my mind to that issue in light of the detailed breakdown of the disbursement of the compensation funds. I do not consider that the legal expenses as a proportion of the overall settlement sum, having regard to the 50% rule, are so unusual as to constitute a special circumstance in themselves. Similarly, I have not found the proportion of the settlement funds Mr QNVG received in hand to be so unusual as to amount to or contribute to special circumstances that may justify disregarding the receipt of all or part of the compensation funds.
I have furthermore considered all the circumstances of Mr QNVG’s settlement, including the circumstances giving rise to his entitlement to compensation and the practical operation of the 50% rule in his circumstances. I have not identified any aspect of the scheme in the social security law that imposes the compensation preclusion period, or in relation to the calculation of the length of the compensation preclusion period that creates an injustice or has produced an unusual or unexpected result in Mr QNVG’s circumstances.
I note that at the time of the decision of the AAT, Mr QNVG said he had $23,000 but I accept Mr QNVG’s evidence that he now has little if any of those funds left. However, and essentially, Mr QNVG finds himself in this predicament because he has expended a substantial proportion of the settlement funds he received on the purchase of a property in rural central Victoria which he now owns unencumbered.
Mr QNVG explained that he made the decision to purchase the property as he was facing high rents and thought it best to secure a roof over his head. Mr QNVG said at the time he purchased the property his rent was $500 per week. In response to my questions as to whether he was aware that he was subject to a compensation preclusion period, Mr QNVG confirmed that he was. In response to my question as to how he had anticipated meeting his living expenses after he had expended most of his funds on the purchase of the property, Mr QNVG said that purchasing the property was the only option. Mr QNVB conceded it was his decision and was probably a poor decision. Mr QNVG concedes he probably didn’t really think about how he would be meeting his living expenses too much.
I note the property was purchased for $310,000 in October 2023, with settlement on 17 November 2023. I note Mr QNVB lodged his claim for DSP within 3 months of that date.
Although Mr QNVB does not contend to the contrary, it is quite clear that he was aware of the compensation preclusion period and its duration. In this regard, Centrelink’s records show he queried the calculations in October 2021 and requested an explanation which was given at that time.
As Mr QNVG holds this valuable unencumbered asset, I asked a number of questions of Mr QNVG about the asset and whether he could perhaps generate income from that asset to meet his living expenses.
Mr QNVG explained that the house in question requires repairs, and is some distance from the nearest major town. He hasn’t tried to secure a boarder, and sees himself as a private person who doesn’t like to have strangers around. Family member had stayed with him for six months but found the property to be too far from the nearest large town.
In response to questions put to him under cross-examination, Mr QNVB said that no modifications had been made to the house to address any disabilities.
I have noted medical letters provided by Mr QNVG suggesting that a forced sale of the residence would pose a significant risk to Mr QNVG’s physical and mental health as it will create stress that would increase the risk of another cardiac event, cause emotional and physical strain and that it would create a financial burden.
I note there is some dispute as to the current value of the property. Mr QNVB estimates its value to be approximately $275,000. He says it is an old weatherboard home on approximately 1 acre of land.
The Secretary contends that Mr QNVB’s circumstances are not special in relation to the purchase of the property because it was his choice to use his funds for that purpose, and it was foreseeable that he would then encounter difficulties in meeting his living expenses. The Secretary contends there is only limited evidence that the sale of the property would unreasonably destabilise the applicant. The Secretary further contends that should the property be sold funds well in excess of what would be paid to Mr QNVB in instalments of DSP during the remainder of the preclusion period would become available.
Noting the medical evidence predicting that a forced sale of the house would cause stress to Mr QNVB and that this in turn may exacerbate his symptoms of chronic Q-fever, I accept that a sale of the property is unpalatable to Mr QNVB, and would likely be a significant stressor even if ultimately it would release funds from which he could meet living expenses, including rent. Recognising that potential stressor however is not a complete answer to the question of whether the discretion should be exercised to disregard the receipt of whole or part of the compensation. Respectfully, in my view, where Mr QNVB decided to apply his funds to acquiring unencumbered property without adequate or any provision for meeting his living expenses, it would not be appropriate to exercise the discretion to disregard the whole or part of the compensation so that the social security system fills the gap.
I would further add that it appears to me that Mr QNVB has not yet fully tested whether he could generate sufficient income to meet living expenses while retaining the property through taking in a boarder. Ultimately however these are matters for Mr QNVB to explore and decide. If the only way forward is to sell the property, then as unfortunate and unwelcome as that may be, it is not in my view a special circumstance justifying disregarding the whole or part of the compensation.
Having examined all the circumstances known to me, including the circumstances of the settlement and distribution of funds, the application of the statutory scheme to Mr QNVB, why Mr QNVB finds himself without any funds, and his ownership of a valuable unencumbered asset, I do not consider Mr QNVB’s circumstances are special such that it is appropriate to treat the whole or part of the compensation as not having been made.
It follows that at the time of Mr QNVB’s application for DSP, he was subject to a compensation preclusion period and DSP was not payable to him. The decision to reject his claim was correct.
DECISION
The decision under review is affirmed.

I certify that the preceding forty-one (41) paragraphs are a true copy of the reasons for the decision herein of Senior Member M Kennedy.

.............................[SGND]...................................
Feng J, Associate

Date of hearing:  4 July 2025
Applicant:  Self-represented
Solicitor for the Respondent:  S Nguyen
(Services Australia)