Re John Singer and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
[2010] AATA 181
•17 March 2010
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2010] aata 181
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2009/3572
GENERAL ADMINISTRATIVE DIVISION ) Re JOHN SINGER Applicant
And
SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal Senior Member A K Britton Date17 March 2010
PlaceSydney
Decision The decision under review is affirmed. .....................[SGD]....................
Senior Member
CATCHWORDS
SOCIAL SECURITY – Age pension – reduction in amount of age pension due to receipt of compensation payments – whether payments initially received under predecessor to the Safety, Rehabilitation and Compensation Act 1988 constituted “compensation” for the purposes of the Social Security Act – whether payments were made partly or wholly in respect of lost earnings or lost capacity to earn resulting from personal injury.
Social Security Act 1991 – ss 17, 1173, 1184K
Safety, Rehabilitation and Compensation Act 1988 – ss 131, 134
Compensation (Commonwealth Employees) Act 1971 – ss 45Beadle v Director-General of Social Security (1985) 60 ALR 225
Boscolo v Secretary, Department of Social Security (1999) 90 FCR 531
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Secretary Department of Social Security v Hodgson (1992) 37 FCR 32
REASONS FOR DECISION
Senior Member A K Britton 1.In October 2007 Mr John Singer, then 73 years of age, made a claim for an age pension. His claim was refused by the respondent, the Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs on the ground that his combined income and assets exceeded the “allowable limit”. Mr Singer unsuccessfully applied to the Social Security Appeals Tribunal for review of that decision. He now applies to the Administrative Appeals Tribunal for review.
2.Mr Singer was a senior lecturer at the ACT TAFE until compulsorily retired on medical grounds in 1988, at age 54. Since then, he has been receiving fortnightly payments from the Commonwealth insurer, Comcare, in respect of a debilitating work-related condition. On his 65th birthday those payments were reduced by about half, to just under $300 per fortnight.
3.Under the Social Security Act 1991 (Cth) (the Act), if a person receives “compensation”, their age pension is reduced on a dollar-for-dollar basis: s 1173. Applying that provision, and taking into account Mr Singer’s other income and assets, the Secretary calculated his pension rate to be Nil.
4.Whether Mr Singer has an entitlement to an age pension turns on two key issues:
(a)Do the fortnightly Comcare payments made to Mr Singer constitute “compensation” as defined by the Act?
(b)If so, does this effect Mr Singer’s pension entitlement, and in what way?
5.If, as the Secretary contends, Mr Singer does not have an entitlement to an age pension because of the negativing effect of the Comcare payments, I must consider whether the power under s 1184K of the Act to disregard some or all of those payments should be exercised.
do the Comcare payments constitute “compensation”?
6.Section 17(1)(aa) of the Act characterises the age pension as a “compensation affected payment”. Section 17(2) defines “compensation” to mean:
(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
…
(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. [emphasis added]
7.It is agreed that the Comcare payments made to Mr Singer fall within paragraph (b) because they constitute payment of compensation under a Commonwealth law. However, it is not agreed that the other criterion in s 17(2) is met — that is, that the payments were made “wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury”.
8.In these proceedings, Mr Singer said he was unsure of the status of the Comcare payments. He stated that there was considerable confusion surrounding his entitlements when he was medically retired over 20 years ago, and that he was provided with scant information at the time. He claimed that he has not been provided with any documents that shed light on the nature of these payments. He said the fortnightly payments he had been receiving since retirement were probably for lost earnings but he could not be sure.
9.Whether the Comcare payments received by Mr Singer included a component for lost income is critical to the decision under review. At the hearing neither party was able to provide any documentation to clarify the nature of these payments. I therefore decided it was necessary to make enquiries of Comcare.
10.With the parties’ consent, Comcare was requested to provide any material it held about the compensation payments that had been made to Mr Singer. In answer to that request, Comcare provided, among other things, a copy of the “Initial Determination” dated 4 May 1988 which set out the basis of Mr Singer’s compensation payments for the period 2 March 1988 to 2 September 1988. Comcare advised that there were a number of subsequent determinations which adjusted the rate of payment and the like, but they did not change the underlying basis for the making of those payments. At my request, Comcare was requested to provide determinations relevant to the claim period, which it did. Each party was provided with the original and supplementary material provided by Comcare and invited to comment. Both parties made written submissions.
11.To understand the documents provided by Comcare, it is necessary to sketch in some detail about the legislative scheme under which the Comcare payments have been made.
12.On 1 December 1988 the Commonwealth Employees’ Rehabilitation Act Compensation Act 1988 came into effect, and was renamed the Safety, Rehabilitation and Compensation Act 1988 (Cth) (the SRC Act) in 1992. For convenience I will refer to both as the “SRC Act”. The predecessor to the SRC Act, the Compensation (Commonwealth Government Employees) Act 1971 (Cth) (the 1971 Act), was repealed with effect from 1 December 1988.
13.Comcare’s records show that prior to 1 December 1988, Mr Singer received weekly compensation under s 45 of the 1971 Act (see Original determination dated 4 May 1988). They also state that from 1 December 1988 — the date of repeal of the 1971 Act — Mr Singer’s fortnightly payments were paid under s 131 of the SRC Act. Section 131 is contained in Part X of the SRC Act —“Transitional Provisions Consequential Amendments and Repeals”. Part X covers “former employees” namely persons who, immediately before the commencing day of the SRC Act, were receiving weekly payments of compensation under the 1971 Act. Section 131 applies to a person such as Mr Singer who, on the commencing day, was under 65 and in receipt of a pension under a superannuation scheme, and not capable of engaging in any work. Mr Singer satisfied these criteria. As a consequence of the transitional provisions of the SRC Act, Mr Singer’s entitlement under s 45 of the 1971 Act was transformed into one under s 131 of the SRC Act.
14.When he turned 65, Mr Singer’s rate of fortnightly payment was modified by the operation of s 134 of the SRC Act. This amounted to a proportional reduction of the rate he had previously been receiving under s 131.
15.In written submissions the Secretary contended that the documents provided by Comcare confirm its original contention that Mr Singer’s fortnightly payments constitute compensation within the meaning of s 17 of the Act. In written submissions dated 3 March 2010, Mr Singer pointed out that the Comcare documents do not expressly state that the fortnightly payments made to him were for “lost earnings or lost capacity to earn” and contends that they are in the nature of “an annuity arising from total incapacity to work”. In later submissions received by the Tribunal on 15 March 2010, he made a number of submissions which did not — as far as I can see — address the question of the nature of the fortnightly payments he has been receiving from Comcare since 1 December 1988.
16.Taken together, the material provided by Comcare reveals that the fortnightly payments made to Mr Singer since March 1988 were originally made under s 45 of the 1971 Act and then, from 1 December 1988, under s 131 and s 134, of the SRC Act. As Mr Singer points out, these provisions do not expressly state that any payments made under them constitute compensation “wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury”. However, a reading of them in context demonstrates that payments made under them are for lost earnings or economic loss caused by a worker’s incapacity resulting from injury. Section 45 of the 1971 Act refers to “compensation being payable during the period of [total] incapacity” and the rate of compensation payable throughout that period being based on the worker’s pre–injury earnings. Read together with other provisions of the 1971 Act such as s 39, which provides for lump sum payments in respect of permanent loss (sometimes referred to as “non-economic loss”), it is apparent that compensation payable under s 45 compensation was for loss of earnings. It follows that payments made under s 131 and subsequently under s 134 of the SRC Act, a scheme which in effect grandfathered s 45 of the 1971 Act, also constitute compensation for loss of earnings.
17.I note that there is no record of Mr Singer being awarded compensation for non-economic loss under either the SRC or 1971 Acts. I understand that Mr Singer believes that he was entitled to compensation of that type but that is irrelevant to determining the nature of the payments he in fact received.
18.I find that the fortnightly Comcare payments made to Mr Singer when he made a claim for Age pension were made “wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury”. As all other criteria are met, it follows they constitute compensation within the meaning of s 17 of the Act.
effect of Comcare payments on Mr Singer’s Pension entitlement
19.Under the Act, the age pension is treated as a “compensation affected payment”. Section 1173 sets out the effect of the receipt of compensation on a “compensation affected payment”:
1173 Effect of periodic compensation payments on rate of person's compensation affected payment
(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).
(2) The person's daily rate of compensation affected payment is reduced by the amount of the person's daily rate of periodic compensation.
…
20.If it is necessary to consider whether the three criteria set out in s 1173(1) are satisfied.
21.Paragraph (a) of s 1173(1) is satisfied because, for the reasons given above, Mr Singer was receiving periodic compensation payments at the date he made a claim for age pension — namely 18 October 2007, . Paragraph (c) is also satisfied because Mr Singer made a claim for a compensation affected payment, namely the age pension, in the relevant period.
22.The parties disagree as to whether paragraph (b) is satisfied. Mr Singer will not satisfy this provision if he was qualified for, and receiving, a “compensation affected payment” at the relevant time, which is somewhat clumsily expressed to be “the time of the event that gave rise to the entitlement of the person to the compensation”.
23.Mr Singer contends that he does not satisfy paragraph (b) because, for about 10 weeks before he was medically retired, he was receiving a “compensation affected payment” which he described as a “statutory income support payment from the Commonwealth via AGBRO [Australian Government Retirement Benefits Office]”.
24.I do not accept that submission for these reasons. First, AGBRO was not empowered to make a “compensation affected payment”. Section 17 of the Act defines a “compensation affected payment”, to include an age pension; and a “former payment type”. The latter is in effect a pension or benefit payable under the Social Security Act 1947 (Cth) (the 1947 Act). The role of AGRBO, the predecessor to the Commonwealth Superannuation Administration (ComSuper), was among other things, to provide superannuation services to public sector employees, it did not have power to make “compensation affected payments” under the 1947 Act. Even if as Mr Singer claims the AGRBO payments were his sole source of income in the period immediately before he retired, this does not, as I understand him to argue, convert them into a “compensation affected payment”. Second, “the event which gave rise” to Mr Singer’s entitlement to compensation — namely the “work injury” — predated the period he was in receipt of AGBRO payments.According to documents produced by Comcare the date of injury was deemed to be 2 March 1988. AGBRO payments did not commence until some six months later.
25.It follows that Mr Singer satisfies paragraph (b) of s 1173(1) because he was not receiving a “compensation affected payment” at the time of the “event” that gave rise to the entitlement to payment of compensation.
26.All criteria specified by s 1173(1) are thus satisfied. Accordingly, by the operation of s 1173(2), the rate of pension payable to Mr Singer must be reduced by the amount of Comcare payments he received which at the date of claim, were $284.98 per fortnight.
Calculation of pension rate
27.It is agreed that as a consequence of his combined income and assets Mr Singer’s notional rate of age pension as at October 2007, was just over $6600 per annum (see pension rate calculator at s 1064 of the Act). As the annual payments he received from Comcare ($7408.96) exceed his notional pension rate ($6600), Mr Singer’s pension rate is calculated to be Nil.
Special Circumstances
28.Section 1184K of the Act provides that a decision maker may treat the whole or part of a compensation payment as not having been made if s/he thinks it is appropriate to do so in the special circumstances of the case. Accordingly it is necessary to decide whether “special circumstances” exist in this case and, if so, whether the discretion to treat the Comcare payments as not having been made, should be exercised.
29.The meaning of the term “special circumstances” has been the subject of exhaustive consideration by the AAT and the Federal Court.
30.In Beadle v Director-General of Social Security (1985) 60 ALR 225 at 228 a Full Court observed that:
We do not think it is possible to lay down precise limits or precise rules ... The phrase, although lacking precision, is sufficiently understood not to require judicial gloss.
31.In Boscolo v Secretary, Department of Social Security (1999) 90 FCR 531 at 535, French J, observed that:
It is generally futile to search for its meaning in terms of other words. It is in essence instrumental, a direction to the decision-maker that the discretion it is not likely to be enlivened... If helpful to speak in terms of its meaning almost all of it comes from context.
32.In Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545, Kiefel J said:
The words require something which distinguishes [the claimant’s] case from others, to take it out of the usual or ordinary case.
33.In Secretary Department of Social Security v Hodgson (1992) 37 FCR 32 at 42 Hill J observed that the term special circumstance” carried with it:
[N]o requirement that the case be extremely unusual, uncommon or exceptional. [emphasis added]
34.Mr Singer contends that the circumstances he now faces can only be properly understood if the “chain of circumstances” and their unintended consequences are carefully examined. These include: his compulsory retirement; the actions of the Medical Board; the poor advice given to him about his compensation entitlements; and various changes to social security and workers compensation legislation that he claims adversely affected his pension entitlement. The following is a summary of the matters Mr Singer believes to be relevant to an understanding of his current circumstances.
35.Medical retirement In the early 1980’s Mr Singer left a lucrative career in the private sector to take up a position in ACT TAFE and quickly established an enviable reputation among students and colleagues alike. Problems emerged when a teacher was sentenced to a period of imprisonment for an offence committed prior to their appointment at TAFE. According to Mr Singer this revelation placed members of his Department under “tremendous pressure”. He claims that he was especially troubled as he had been assured that the teacher’s references had been scrutinised. Mr Singer also claims that two senior staff who had been close to the incarcerated teacher proceeded to make his life “hell” in an effort to disguise the negligent processes employed in the selection process.
36.Subsequently Mr Singer unsuccessfully applied for appointment to the position of Head of Business Studies at Canberra College of TAFE. A number of unsuccessful applicants commenced proceedings under the Administrative Decisions (Judicial Review) Act 1977 (Cth). According to Mr Singer, a subsequent inquiry made “damning findings” about the selection process employed in that appointment.
37.According to Mr Singer what followed was a period of unprecedented turmoil within his Department. He found himself with an increased work load and little support. He contracted RSI and the veracity of his complaints was questioned. He claims that from that point on the Head of School was determined to “get rid of him”. Ultimately his position became untenable, he was under great stress and eventually, the Medical Board found him unfit to continue to work. On his account, his condition was labelled incorrectly as “personality decompensation”, and this stymied his ability to obtain future employment.
38.Compensation benefits Mr Singer claimed that after a gruelling process and the intervention of his local member of Parliament, the Commonwealth accepted liability for his medical condition. He was medically retired in November 1988 — shortly before the commencement of the SRC Act.
39.According to Mr Singer, the Comcare officer delegated the task of providing him advice about his compensation entitlements told him he had three options:
1. Retire after 1 December 1988 and be subject to the provisions of the SRC Act;
2. Retire after 1 July 1988 and before 1 December 1988 and be subject to the “grandfather provisions” contained in the SRC Act; or
3. Retire before 1 July 1988 and be subject to the provisions of the “old Act”, the Compensation (Commonwealth Government Employees) Act 1971.
40.Mr Singer claims that because of his debilitating condition and the complexity of the legislative changes, he took advice under pressure and delayed retirement until 11 November 1988. He claimed that the officer who gave him advice knew little about the changes brought about by the repeal of the 1971 Act. Mr Singer contends that had he retired at an earlier date he would have been subject to the 1971 Act and among other things, the fortnightly payments he now receives could have been commuted into a lump-sum payment. Mr Singer contends that had this occurred his fortnightly Comcare payments would be treated as “income” not “compensation” and his pension rate not reduced dollar-for-dollar by the operation of s 17(2) of the Act.
41.Legislative changes MrSinger outlined various changes to the Act that occurred after he turned 65, which he contends adversely affected his pension entitlement.
Findings and Conclusions
42.A review of the authorities makes clear that a “one size fits all” approach should be avoided when applying s 1184K of the Act.
43.Had Mr Singer not been prevented from working until retirement age on account of his work related medical condition or had he not been given what he now believes to be poor advice about his compensation entitlements, it may be that he would not be in the position he now faces — that is, not entitled to the age pension. It goes without saying that the amount and type of compensation a person receives who has been medically retired will impact on their future financial security. Mr Singer understandably feels aggrieved by his current situation, especially given his significant contribution to the Australian community made over an extended period.
44.While a person’s financial position throughout the relevant period is not determinative, it is nonetheless highly relevant. As Mr Singer points out he and his wife are not “well off” and his relatively comfortable albeit modest financial position might deteriorate in the future. Nonetheless, their circumstances could not be described as impecunious — Mr Singer and his wife own their own home and an investment property. They have no dependents or outstanding debts or liabilities. There is no evidence that they are in need of any medical treatment they are unable to afford.
45.Even if, the many factual assumptions on which Mr Singer’s contention that he would have qualified for payment of an age pension but for a series of unfortunate events, are accepted, this in my view, would not establish that his circumstances are “special” in the sense of being unusual or out of the ordinary. At the heart of his argument, it seems that his contention is that he was badly advised about his retirement options and now regrets having taken that advice.
46.If, as he contends, that advice placed in him in a less advantageous financial position than he might otherwise have been in had he taken different or better advice, that is indeed unfortunate. One can sympathise with Mr Singer without interpreting his situation as “special circumstances”. Regrettably, his situation is not at all unusual. In my view, s 1184K was not intended to be applied as a safety net for people in circumstances such as Mr Singer’s. I am not satisfied that his circumstances can be described as special or that his circumstances warrant the exercise of the power to treat the whole or part of the Comcare payments as not having been made.
47.For these reasons I have decided to affirm the decision under review.
I certify that the 47 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member A K Britton
Signed: .................................[SGD].....................................
Associate to Senior Member BrittonDate of Hearing: 5 February 2010
Date of final submissions: 15 March 2010
Date of Decision: 17 March 2010
Counsel for the Applicant: The Applicant was self-represented
Counsel for the Respondent: Mr K Bullock
Solicitor for the Respondent: Centrelink Legal Services
0
3
0