Re Secretary, Department of Family and Community Services and Zugul

[2005] AATA 425

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 425

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2003/1584

GENERAL ADMINSTRATIVE DIVISION		)
Re		SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Applicant

And NECLA ZUGUL  

Respondent

DECISION

Tribunal Ms N Bell, Senior Member

Date12 May 2005

PlaceSydney

Decision The decision under review is set aside and the Tribunal finds instead that a preclusion period should be imposed from 2 May 1999 to 25 May 2002 and that an amount of $25,087.69 was recoverable from Mrs Zugul’s compensation settlement.

...........................................

Ms N Bell
  Senior Member

SOCIAL SECURITY – Parenting Payment – Disability Support Pension – Unresolvable Grief Action – Compensation Received – Preclusion Period Imposed – Set Aside by Social Security Appeals Tribunal – Special Circumstances Considered – Centrelink was correct in imposing a preclusion period

Social Security Act (1991) section 1184K

Secretary, Department of Family and Community Services v Chamberlain (2002) 116 FCR 348

Secretary, Department of Family and Community Services v Smith (1991) 30 FCR 56;

Kertland v Secretary, Department of Family and Community Services (1999) 95FCR64;

REASONS FOR DECISION

12 May 2005   Ms N Bell, Senior Member

1.      Mrs Zugul’s eldest son was killed in a car accident in May 1999 and she suffered an unresolvable grief reaction.  She claimed damages and her claim was settled in the amount of $190,000 in April 2003.  Mrs Zugul had been receiving Parenting Payment and later Disability Support Pension.

2.      Centrelink imposed a preclusion period from 2 May 1999 to 25 May 2002 and recovered from the insurer, AAMI, an amount of $25,087.69 being the amount of Centrelink payments received by Mrs Zugul during this period. 

3.      Mrs Zugul obtained a review of Centrelink’s decision by the Social Security Appeals Tribunal.  That Tribunal decided to set aside Centrelink’s decision to impose a preclusion period and remitted the matter to Centrelink for reconsideration in accordance with directions that the preclusion period be recalculated on the basis that the compensation part of the lump sum is $35,000, instead of $95,000.  I note that the figure of $35,000 is the amount of past and future economic loss noted by the insurer on a “post settlement advice” form provided to Centrelink. 

4.      The Secretary of the Department of Family and Community Services applied to this Tribunal for review of the Social Security Appeals Tribunal decision.

5. There is no dispute about the calculation of the preclusion period or the amount received by Centrelink from Mrs Zugul’s settlement’s monies. The sole issue for me to determine is whether to exercise the discretion provided for in s1184K of the Social Security Act 1991 to treat some or all of the compensation payment as having not been made on the basis that it is appropriate to do so given the special circumstances of the case.

6.      Mrs Zugul confirmed the evidence given to the Social Security Appeals Tribunal.  In summary, that evidence was as follows:

·The circumstances of Mrs Zugul’s son’s death in a car accident are uncertain and Mrs Zugul suffered grave psychological trauma with unresolvable grief;

·Reports from Dr A Stephenson, Psychiatrist, dated 23 October 2001, Dr, T Cimenbicer, General Practitioner, dated 13 October 2001 and assessment report by Ms L Kelett, Consultant Occupational Therapist, dated 3 December 2001 were referred to and are contained in the T-documents;

·Mrs Zugul is currently receiving Disability Support Pension and is unable to work because of her condition;

·Mrs Zugul has separated from her husband and continues to reside with him but in separate rooms. 

·There was a delay in making a claim for compensation and the claim had taken an unusually long time to settle because it remained unclear for some time whether Mrs Zugul’s condition would improve.  The settlement amount included a special allowance for domestic assistance required;

·Mrs Zugul and her husband had sold their former family home because she was unable to live there any longer.  The proceeds of sale were used to pay off the mortgage and to purchase the unit in which she and her husband and remaining son now live.  They borrowed an additional $80,000 to purchase the unit;

·The legal costs in relation to this settlement were approximately $10,000 and Mrs Zugul paid approximately $10,000 for cleaning services;

·Mrs Zugul has nothing left from the compensation settlement from which she paid off personal debts, travelled with her family to Turkey on three occasions using borrowed funds, buried her son in Turkey and paid some $30,000 off her mortgage. 

7.      In oral evidence to the Tribunal Mrs Zugul said she is still taking medication for depression but has not seen a psychiatrist for some time because it upsets her a great deal. 

8.      Mrs Zugul said that when her son died she was working about one to one and half days per week doing clothing alterations at a friend’s shop, but since his death has been unable to work because she is too upset. 

9.      Mrs Zugul said that her three trips to Turkey were: first, accompanied by her husband and younger son, to bury her son; second, with her younger son to visit her son’s grave; and third, alone, to visit her son’s grave.

10.     Mrs Zugul said that in Turkey there are traditional obligations to be discharged when burying a relative.  For example, she had to feed the people attending the service and had to do it with dignity for herself, her family and her deceased son. 

11.     She said she also spent some of the settlement monies on the upkeep of her third son’s grave and in repaying other debts not related to her trips to Turkey, which had arisen because her husband stopped working for some 18 to 24 months.  He eventually went back to work part-time and then full-time.  She said the remaining amount of $20,000 or $30,000 was paid towards her mortgage.

12.     Mrs Zugul said that she is still living separately and apart from her husband under the same roof.  He works as a computer teacher but does not support her financially except to pay the mortgage.  She said she contributes to household bills and they only communicate about their younger son.  She also said that Centrelink is currently withholding $60.00 per fortnight from her Disability Support Pension because when her husband went back to work Centrelink did not alter her payment rate and she was overpaid.  She said her husband helps support her younger son financially but he also receives student payments from Centrelink. 

13.     Mrs Zugul also provided to the Tribunal a letter from her General Practitioner, Dr Cimenbicer dated 1 March 2005, to the effect that Mrs Zugul is still suffering from severe reactive depression and her condition has only minimally improved despite ongoing treatment and the passage of time. 

Special Circumstances

14.     There are a number of circumstances in Mrs Zugul’s case that could be argued as special.  One such circumstance is that she needed to bury her late son in Turkey.  This was expensive, not only because of the need to transport his body there and to fund the funeral but, according to her evidence, local custom required that she provide a particular level of hospitality to those who attended the funeral.  Mrs Zugul’s further visits to Turkey could also be regarded as special given that her goal was to visit her son’s grave. 

15.     It may also be argued that another consequence of Mrs Zugul’s son’s death was the breakdown of her marriage.

16.     I do not consider that Mrs Zugul’s ongoing grief over her son could be considered a special circumstance given that it is that grief itself that she was compensated for and so it is not unusual or extraordinary that she still suffers.

17.     The other circumstances noted above are directly related to and could be considered natural consequences of the tragedy for which Mrs Zugul received compensation.  On balance, I consider that is the better view. 

18.     A further circumstance that was urged as special by Mrs Zugul’s legal representative before the Social Security Appeals Tribunal is the clear isolation of $35,000 of the settlement monies by both parties in respect of past and future economic loss and how much less it is than the amount yielded by the application of the formula in the Act for the calculation of the compensation part of the lump sum settlement ($95,000).

19.     I note the decision in Secretary, Department of Family and Community Services v Chamberlain (2002) 116 FCR 348. The Federal Court considered whether the size of the economic loss component of a settlement amount could be considered as a special circumstance, thereby “looking behind” the settlement amount.  Kiefel J said:

In the present case the Tribunal considered that the application of the formula was unfair to the Applicant because she would have to pay more than she had received by way of compensation for economic loss, indeed twice as much.  That factor will however be present in most cases and is an aspect of the application of the formulae.  In my view it cannot, by itself, amount to a special circumstance, one out of the ordinary.

The basis for the Tribunal’s view was its acceptance of what the parties to the settlement said had been offered and accepted for the economic loss component.  It was far less than the statute assumed to be the case in applying formulae.  Again, however, this will be so in many, if not most, cases to which the Act applies. Further, the extent of the difference from the basis upon which the parties acted could not provide the necessary "special circumstance". The statute has selected a figure which may operate in an arbitrary way.

20.     I note that in her decision Kiefel J, distinguished the decisions in Secretary, Department of Family and Community Services v Smith and Kertland v Secretary, Department of Family and Community Services on the basis of the particular circumstances in each of those cases.  In each of those cases, a payment for economic loss was prevented from being claimed either by operation of statute or because of compensation or payments already received.  In this case Mrs Zugul did receive an amount for economic loss, albeit considerably less than the compensation amount produced by the application of formula.

21.     While in this case there is the documentation from the insurance company stating that the economic loss component of the settlement was $35,000, the decision in Chamberlain makes it clear that the mere existence of a discrepancy between the amount paid for economic loss and the amount produced by the application of the formulae does not constitute a special circumstance within the meaning of s1184K.

22.     It follows that Mrs Zugul has no special circumstances to justify disregarding all or any of the compensation lump sum received by her.

Decision

23.     The decision under review is set aside and the Tribunal finds instead that a preclusion period should be imposed from 2 May 1999 to 25 May 2002 and that an amount of $25,087.69 was recoverable from Mrs Zugul’s compensation settlement.

I certify that the 23 preceding paragraphs are a true copy of the reasons for the decision herein of Ms N Bell, Senior Member.

Signed:         ..............[Linda Blue].......................................
  Associate

Date of Hearing  1 April 2005
Date of Decision  12 May 2005
Solicitor for the Applicant          Mr Andrew Zhang
Solicitor for the Respondent     Self-represented but with the assistance of an interpreter.