Robinson and Secretary, Department of Family and Community Services
[2002] AATA 1011
•24 October 2002
DECISION AND REASONS FOR DECISION [2002] AATA 1011
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2001/1492
GENERAL ADMINISTRATIVE DIVISION )
Re David Robinson
Applicant
And Secretary, Department of Family and Community Services
Respondent
DECISION
Tribunal Senior Member Lindsay
Date24 October 2002
PlaceSydney
Decision The decision under review is set aside. In lieu the Tribunal decides that pursuant to s.1184(1) of the Social Security Act 1991, it is appropriate in the special circumstances of the case to treat payment of $40,000 of the applicant's compensation payment as not having been made.
[SGD] P.J.Lindsay
Senior Member
CATCHWORDS
SOCIAL SECURITY – special circumstances – discretion – compensation payment – lump sum – preclusion period – decision under review set aside
Social Security Act 1991 – ss.17(2), 17(3), 1163, 1166(1), 1184(1), 1184(2)
Kertland v Secretary, Department of Family and Community Services (1999) 95 FCR 64
Secretary, Department of Social Security v Banks (1990) 95 ALR 605
Haidar v Secretary, Department of Social Security (1998) 157 ALR 359
Re Beadle and Director General of Social Security (1984) 6 ALD 1
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Commonwealth v Daniels (1994) 33 ALD 111
Re Secretary, Department of Social Security and Hill (1995) 39 ALD 667
Re Genat and Secretary, Department of Family and Community Services [1999] AATA 790
Secretary, Department of Family and Community Services v Edwards (2000) 105 FCR 220
REASONS FOR DECISION
Senior Member Lindsay
Mr David Robinson, the applicant, has applied for review of a decision by the Social Security Appeals Tribunal (SSAT) dated 30 August 2001. The original decision by Centrelink assessed the compensation part of lump sum compensation paid to Mr Robinson at $40,000, and calculated a preclusion period commencing on 22 February 1997 and ending on 10 July 1998. As a result of this preclusion period, Centrelink recovered $11,508.98 being social security benefits paid during the preclusion period. The SSAT affirmed the original decision.
At the hearing, Mr Robinson was represented by Mr M. O'Callaghan, solicitor, and the respondent was represented by Mr G. Lozynsky, an advocate with Centrelink. Mr Robinson gave evidence. The Tribunal had before it the documents lodged under s.37 Administrative Appeals Tribunal Act 1975 and an extract from the history of Centrelink benefits provided to Mr Robinson (Exhibit R1).
EVIDENCEMr Robinson is 29 years old. He has worked in the building industry for some time, having completed the practical part of a carpentry apprenticeship but not the TAFE requirements. He was a pedestrian at the time a car hit him on 22 February 1997. He suffered a fractured right forearm and abrasions and was in hospital for four days. For a number of months prior to the accident he had been unemployed. Mr Robinson said he had had a drug and alcohol problem from age 15. Over a period of years, that problem had made him an unreliable worker. By the time of the accident, employers, including his family, were no longer prepared to take him on.
Action was commenced in the District Court and damages were claimed in respect of his injuries sustained in the accident. On 5 December 2000, Judge Patten gave judgment in Mr Robinson's favour and awarded him damages of $54,271. That sum comprised $14,000 for non-economic loss under s.79A of the Motor Accidents Act and $271 for agreed out of pocket expenses. In respect of the balance, $40,000, Patten DCJ held "Within the terms of s.70A of the Motor Accidents Act I am satisfied that there is at least a 25 per cent likelihood that the plaintiff will sustain a diminution of future economic capacity. On that basis he is, I think entitled to an award by way of cushion or buffer which I assess at $40,000." (T16). There was no claim for loss of past earnings because Mr Robinson had been unemployed for some months at the time of the accident. Judge Patten noted that "It appears that his unemployment was wholly or partly related to the fact that at the time he was abusing alcohol and involved with illegal substances."
About four months after the accident Mr Robinson enrolled in Teen Challenge, a full-time, residential, drug and alcohol rehabilitation program. His sickness allowance money was paid over to Teen Challenge. Mr Robinson transferred to the Obediah rehabilitation program approximately six months later because Teen Challenge's funding terminated. Mr Robinson was a participant in this full-time, supervised, live-in rehabilitation up to about January 1999, when he resumed working as a carpenter. After a period, he fell back into his old ways. He entered another rehabilitation program for about nine months. It was a success. His evidence was that he has been working since as a carpenter on a contract basis. Apart from a period of four to five weeks in October 2001, Mr Robinson says he has been in work. The injury to his arm does not cause him problems in the type of work he does, being the construction of timber decks and pergolas. Mr Robinson said he is a changed person. He is involved as a volunteer with his church, as a driver, a member of the choir and also helping young people who have drug problems.
Mr Robinson's evidence was that, after the accident, he received sickness allowance. Mr Robinson thinks that his doctor certified him unfit for work due to his drug dependency and his attending drug rehabilitation. He said there was no mention of his arm in the certificates provided. An extract from Centrelink's history of allowances and benefits paid to Mr Robinson showed that he received sickness allowance immediately after the accident until 4 June 1997. Newstart allowance was paid thereafter until he resumed work around September 2000 (Exhibit R1).
Mr Robinson received about $51,000 of the judgment money, and from that $11,508.98 was paid to Centrelink. With the balance he bought a car, tools, clothing and personal effects including about $1,000 on CDs. He gave approximately $6,000 to friends in need and also lent money to others, which he said he will not get back. He admitted he was generous with his compensation money. He pays $150 a month to a church fund to provide support to a group of five children. He has weekly commitments of $70 rent and instalments of $50 in respect of a compensation debt arising from a motor vehicle collision. When there is a gap between contract work, he finds it difficult to meet his commitments for food, rent, children's payments, general living expenses and the amounts due in relation to the collision. He has exhausted his savings. On occasions, he has had to approach welfare agencies for help. He is not receiving any treatment currently for the injuries he suffered in the accident.
CONSIDERATION AND FINDINGSSubsection 17(2) of the Social Security Act 1991 (the Act) provides:
Compensation
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.Also relevant is s.17(3) of the Act which provides:
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 judgment 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 of 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 judgment 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.
Part 3.14 of the Act deals with compensation recovery. Section 1163 outlines the general effect of Part 3.14, and relevantly provides:
1163(1) If a person is or may be entitled to or receives compensation, payments of a compensation affected payment to the person or the person's partner might be affected under this Part.
…
1163(3) If the compensation is a lump sum payment, the compensation affected payment might cease to be payable for a period (based on the amount of the lump sum) and some or all of the payments of the compensation affected payment might be repayable.
…
1163(9) This Part operates in certain specified circumstances to affect a person's compensation affected payment because of compensation received by the person or the person's partner. This Part is not intended to contain any implication that, in addition to those specified circumstances, there needs to be some connection between the circumstances that give rise to the person's qualification for the payment and the circumstances that give rise to the person's or the partner's compensation.
Section 1166(1) provides for repayment of social security benefits:
If:
(a) a person receives a lump sum compensation payment; and
(b) the person receives payments of a compensation affected payment for 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.
In Kertland v Secretary, Department of Family and Community Services (1999) 95 FCR 64 Merkel J described the object of Part 3.14 as follows (at 65):
The Social Security Act 1991 (Cth) ("the Act") provides for the Secretary, Department of Family and Community Services, to reduce and, where appropriate, recover certain social security benefits payable under the Act to a person who receives personal injury compensation which includes payment for loss of earnings or earning capacity. The statutory scheme is designed to prevent a person from being entitled to receive social security benefits in respect of a period during which the person receives, or is entitled to receive, personal injury compensation for loss of earnings or earning capacity. The relevant provisions operate to prevent "double payment" by depriving a person of an entitlement to social security benefits payable under the Act during the relevant period ("the preclusion period").
The Tribunal considers Mr Robinson to be an honest witness and accepts his evidence.
The statement of facts and contentions filed by the applicant argued that the amount of damages awarded was not a "lump sum". The Tribunal rejects the contention and notes the following passage in the judgment of von Doussa J in Secretary, Department of Social Security v Banks (1990) 95 ALR 605, (at 611):
The words 'lump sum' are not defined. They are not words of art. In the Macquarie Dictionary a 'lump sum' is defined as a sum "including a number of items taken together or in the lump." In my opinion the words bear that meaning in the section. The words are used in part XVII of the Act to distinguish 'lump sum payments by way of compensation' from 'periodical payments by way of compensation' … A 'lump sum' payment is simply one which includes a number of items. Where a payment by way of compensation consists of the aggregate of several amounts which could have been paid separately or at different times the payment is one of a lump sum. A payment the total of which is arrived at by adding amounts for different heads of loss would also be a lump sum payment.
The Tribunal finds that the verdict awarded by Patten DCJ in the sum of $54,271 is compensation as defined under s.17(2) and is a lump sum. As the payment of the compensation was not made by way of a settlement or consent judgment, s.17(3)(b) applies. The Secretary has determined that the amount of $40,000 was paid in respect of lost capacity to earn (T26). That is, the Secretary's opinion about the compensation part of the lump sum compensation payment has been determined having regard to Judge Patten's finding that Mr Robinson's future earning capacity has been impaired and assessing $40,000 damages in that respect. The Tribunal agrees with the approach taken by the Secretary. Further, the Tribunal notes that there was no claim for lost earnings as a result of the accident and no award of damages therefor.
The preclusion period in this case is calculated by reference to a formula in s.1165. The compensation part of the lump sum, $40,000, is divided by an amount of weekly earnings above which pension at the single rate is not payable, $552.63. The period was thus calculated as 72 weeks. The applicant's solicitor did not dispute (T14) that in these circumstances, the commencement of the preclusion period is the date of the accident giving rise to the entitlement to compensation, 22 February 1997, and the end is 10 July 1998. The Tribunal agrees with this calculation. Under s.1166 of the Act, the Secretary may require a person to pay an amount to the Commonwealth where the person received compensation affected payments during the preclusion period. Both newstart allowance and sickness allowance are included in the definition of a "compensation affected payment". The Tribunal is satisfied that Mr Robinson received $11,508.98 in such compensation affected payments in the preclusion period (T19) and the Secretary requested its repayment, which was recovered from the relevant insurer (T9).
Given the above findings, the remaining issue is whether it is appropriate for the Secretary, or this Tribunal on appeal, to exercise the discretion in s.1184 of the Act having regard to any special circumstances of the case. The provision ameliorates any unfairness or harshness that could result from a strict application of Part 3.14: Haidar v Secretary, Department of Social Security (1998) 157 ALR 359, 367, Hill J. If the discretion is exercised in Mr Robinson's favour, all or part of the compensation payment can be treated as not having been paid. Section 1184(1) provides as follows:
Secretary may disregard some payments
1184(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.1184(2) If:
(a) a person receives or claims a compensation affected payment; and
(b) the person's partner receives compensation; and
(c) the set of circumstances giving rise to the compensation are not related to the set of circumstances that give rise to the person's receipt of or claim for the compensation affected payment;
the fact that those 2 sets of circumstances are unrelated does not in itself constitute special circumstances for the purposes of subsection (1).Note: Subsection (2) is in response to comments made in the decision of the Administrative Appeals Tribunal in Re Secretary, Department of Social Security and Lee (S92/155) to the effect that the Social Security Act is aimed at reducing pensions in situations where a social security recipient's entitlement is somehow connected with the fact that the recipient's partner is in receipt of compensation payments and not wages.
The following passage from a decision of the Tribunal comprising Toohey J, Mr. I.A. Wilkins and Dr. J.G. Billings (Members) has been cited with approval in many subsequent cases:
An expression such as 'special circumstances' is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special. (Re Beadle and Director General of Social Security (1984) 6 ALD 1 at 3)
More recently, Kiefel J in Groth v Secretary, Department of Social Security (1995) 40 ALD 541 (at 545) has said of the expression "special circumstances" that " … it would require something to distinguish [an applicant's] 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."
In Mr O'Callaghan's submission, the special circumstances of the case are that Mr Robinson had not been working in the months prior to his accident and after the accident he was unable to work due to his drug dependency problem. He emphasised that there was no award of special damages in respect of lost earnings up to the date of Judge Patten's verdict. Mr O'Callaghan submitted that there had not been any double dipping by the applicant because there was no causal connection or relationship between the social security allowances he received following the accident and the injuries sustained in the accident. In the applicant's statement of facts and contentions it was contended that "During the preclusion period … of 22 February 1997 to 10 July 1998 the Appellant [sic] was not entitled to compensation and therefore Centrelink are not entitled to recover the amount paid as the Appellant would have been on Social Security payments notwithstanding the accident." Mr O'Callaghan referred to the judgment of Neaves J in Commonwealth v Daniels (1994) 33 ALD 111, and to Re Secretary, Department of Social Security and Hill (1995) 39 ALD 667 and Re Genat and Secretary, Department of Family and Community Services [1999] AATA 790. Mr Lozynsky submitted that strict adherence to the statutory framework of Part 3.14 is mandatory and to do so would not amount to a special circumstance, as there is nothing unfair or unjust in following the process laid down in the legislation. Further, he submitted that the discretion in s.1184 should not be exercised as Mr Robinson's circumstances were not unusual.
Even though Mr Robinson has been able to resume his carpentry work, the Tribunal accepts that, at times, he has experienced financial difficulties. It is not unusual, however, for contract workers to experience periods of unemployment between jobs. For those in the building industry it would be no different. The Tribunal notes that it was Mr Robinson's decision to disburse the large part of his verdict money in the manner in which he did. The Tribunal is not satisfied that there is anything in Mr Robinson's financial circumstances that is unusual or uncommon. But consideration of an applicant's circumstances is not restricted only to their financial circumstances. In Daniels' case, Neaves J said regarding earlier legislation (at 120):
In my view, it cannot be an irrelevant matter that the unemployment in respect of which unemployment benefit was claimed in September 1990 was totally unconnected either with the injuries which the respondent suffered in 1981 and 1982 or with any incapacity arising from those injuries.
Similarly, the decision of Drummond J in Secretary, Department of Family and Community Services v Edwards (2000) 105 FCR 220 examined whether the lack of a causal relationship between a person's pensionability and compensability, can be properly taken into account under s.1184(1). His Honour noted that ss.1163(9) and 1184(2) had been amended with the aim of narrowing the operation of s.1184(1) " … by providing that the absence of such a connection was not by itself sufficient to require the Secretary to apply s.1184(1) to such a case." However, the effect of the amendments was not to prohibit the Secretary from taking into account any absence of a causal relationship between a person's social security entitlements and a payment of compensation, as a matter relevant to the exercise of the discretion in s.1184(1). Drummond J said in Edwards' case (at 229):
That it may be a relevant consideration is supported by the fact that the legislation requires compensation to affect a pension entitlement only if the compensation includes some component for past or future lost earnings. Given this, it might be thought that, in a case where the particular pension entitlement is based on an incapacity wholly unrelated to that attracting compensation, there may be no "double dipping" of the kind which precursors to Part 3.14 sought to prevent. It has been said of precursors to Part 3.14:
"The object of the legislation [is] to avoid double payments for an inability to exercise an earning capacity. It would be contrary to this object to deprive a person otherwise entitled to a pension during a period when there was no coincidence (or presumed coincidence) between payments from the two sources. In such cases there would be no overlapping of benefit."
See Secretary, Department of Social Security v a'Beckett (1990) 26 FCR 349 at 359.
The Tribunal finds that Mr Robinson had been unemployed prior to the accident in February 1997 and that it was his unreliability as a worker that caused him to be unemployed. The Tribunal accepts Mr Robinson's evidence that his drug and alcohol problem contributed to the unreliability. Mr Robinson was confused in relation to the kind of social security benefit he received during the preclusion period. He thought he received sickness allowance throughout, but the Centrelink records (Exhibit R1) show that from June 1997 on, he was receiving newstart allowance. The Tribunal is satisfied, however, that following his accident Mr Robinson spent approximately 27 months in residential, drug and alcohol rehabilitation clinics. In view of Mr Robinson's uncontradicted evidence, which the Tribunal accepts, the Tribunal is satisfied that neither the sickness allowance nor the newstart allowance that he received during the preclusion period was causally related to the injuries suffered in the February 1997 accident, the incapacity arising therefrom or the compensation awarded in December 2000. The Tribunal finds that the social security payments Mr Robinson received during the preclusion period were by reason of his alcohol and drug dependency and his attendance at rehabilitation therefor. The Tribunal is mindful that Patten DCJ's verdict did not include any assessment for a component of special damages being earnings lost as a result of the injuries received in the accident, as opposed to the $40,000 awarded for diminution in future earning capacity. As there is no causal relationship between the social security payments and the incapacity for which the compensation was awarded, there is no double dipping. In these circumstances the Tribunal considers it to be "unfair, unintended or unjust" to recover the compensation affected payments received during the preclusion period.
Accordingly, the Tribunal finds that there are special circumstances in the case. The special circumstances warrant the repayment to Mr Robinson of the charge amount of $11,508.98.
The decision under review should be set aside. In lieu the Tribunal decides under s.1184(1) of the Act, that it is appropriate in the special circumstances of the case that payment of $40,000, being part of the applicant's compensation payment, should be treated as not having been made.
I certify that the 22 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member Lindsay
Signed: .....................................................................................
AssociateDate of Hearing 23 May 2002
Date of Decision 24 October 2002
Solicitor for the Applicant Mr M O'Callaghan
Advocate for the Respondent Mr G Lozynsky
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