Rofouzos and Secretary, Department of Social Services (Social services second review)
[2024] AATA 2081
•27 June 2024
Rofouzos and Secretary, Department of Social Services (Social services second review) [2024] AATA 2081 (27 June 2024)
Division: GENERAL DIVISION
File Number: 2023/8830
Re:Anastasios Rofouzos
APPLICANT
AndSecretary, Department of Social Services
RESPONDENT
DECISION
Tribunal:Mrs J C Kelly, Senior Member
Date:27 June 2024
Place:Sydney
The reviewable decision made on 6 November 2023 is affirmed.
.................................[sgd].......................................
Mrs J C Kelly, Senior Member
CATCHWORDS
SOCIAL SECURITY – disability support pension cancelled – compensable workplace injury – compensation charge debts – compensation preclusion period – whether there are special circumstances – whether the compensation charge debts can be written-off or waived – reviewable decision affirmed
LEGISLATION
Social Security Act 1991 (Cth)
CASES
Clark v Secretary, Department of Employment and Workplace Relations [2007] FCA 1076
Dranichnikov and Centrelink [2003] FCAFC 133
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Re Hajar and Secretary, Department of Social Security (1988) 16 ALD 716
Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190
SECONDARY MATERIALS
Department of Social Services, ‘Social Security Guide’ Guides to Social Policy Law
REASONS FOR DECISION
Mrs J C Kelly, Senior Member
27 June 2024
The reviewable decision
On 16 February 2023, Mr Rofouzos settled a workplace injury claim for $550,000. Consequently, on 4 April 2023, Services Australia (the Agency) cancelled his disability support pension (DSP) and imposed a compensation preclusion period (CPP) from 9 April 2020 to 18 December 2024, which means he cannot receive DSP during that period. Those are the matters about which Mr Rofouzos sought review. The decision also raised a debt of $64,068.64 which has been recovered from the insurer involved in the workplace injury claim.
On 1 August 2023, an authorised review officer (ARO) affirmed the cancellation and preclusion period decision and on 6 November 2023 the Social Services and Child Support Division of the Tribunal (AAT1) affirmed the ARO’s decision. Mr Rofouzos seeks to have that decision set aside.
The relevant law
The relevant law is found in Part 3.14 of the Social Security Act 1991 (Cth) (the Act).
Subsection 1184K(1) of the Act allows all or part of the compensation payment to be disregarded or treated as though it had not been made at all if special circumstances exist.
Policy guidance is found in the Guide to Social Security Law (the Guide).
Facts
The following facts are not contentious.
Mr Rofouzos is 59 years old. He settled in Australia with his wife in 2014. He worked as a window installer.
In 2018 he and his wife moved into their present residence so his wife could care for her mother who subsequently died. His wife inherited the residence from her mother. Mr Rofouzos is not on the title. It was a single storey three bedroom dwelling. Adjoining it is what is referred to as the log cabin. There is no direct access between it and the residence.
Mr Rofouzos was granted Jobseeker payment (JSP) on 23 March 2020.
On 9 April 2020, he suffered the compensable workplace injury, a trip and fall injury which resulted in injuries predominantly to the right knee and lower back and aggravation of pre-existing degenerative changes in the left knee, and consequential disability and the need for medications.
On 9 February 2022 his wife executed a will in which she allows Mr Rofouzos to live in her principal place of residence at the time of her death as long as he wishes or to receive rental from the house if he chooses to live elsewhere, subject to some conditions. He is not listed on the title of the property. The two children are the beneficiaries under the will.
An Activities of Daily Living Report dated 4 April 2022 was prepared by an occupational therapist who carried out an assessment at Mr Rofouzos’s home on 3 March 2022. It was prepared for use as evidence in the proceedings relating to the compensable injury. His wife and daughter were present. At that time, Mr Rofouzos was residing with his wife and daughter in the house and his son lived in ‘a self-contained flat on the property’ (the log cabin). He had been preparing an area to install the log cabin for additional accommodation at the time of his accident.
He was reliant ‘on a walking aid at times’. He avoided using stairs where possible and used the rail for support and safety, taking the stairs slowly and one at a time. Ascending was more problematic than descending. There were 14 steps at the front of the house and 8 steps at the back.
He suffers from frustration and anger and depressed mood.
On 31 May 2022, Mr Rofouzos was transferred from JSP to DSP.
The Agency sent Mr Rofouzos a letter dated 21 October 2022 which advised him that if he received payment of weekly compensation or a lump sum compensation payment, some or all of the Centrelink payments paid since the date of the injury may have to be paid back and any compensation received may also stop him from receiving Centrelink payments in the future. The letter referred to information on the back of the letter about when you have to tell Centrelink about compensation payments and provided information about how to access Centrelink’s compensation estimator service which gives the amount expected to be recovered and the period of preclusion weeks which will apply. The letter stated that Centrelink has Financial Information Service Officers who can help customers make informed decisions about their investment and financial issues and provided a contact number. It also provided contact information if you have any questions or would like more information.
On 16 February 2023, he settled his workplace injury claim for $550,000, inclusive of costs and clear of workers compensation payments made to date. In fact, he had not received any workers compensation periodic payments. Legal costs were $138,632.67.
On 4 April 2023 his DSP was cancelled. On the same day, the Agency sent Mr Rofouzos a letter advising him that his preclusion period starts on 9 April 2020 and will end on 18 December 2024, he would not be able to receive income support, $64,068.64 must be repaid, and that the insurer had been asked to repay it.
Also on 4 April 2023, the Agency sent the insurer a Compensation Recovery Notice advising that it was proposing to recover $64,068.64, being the amount of recoverable Centrelink payments Mr Rofouzos received from 9 April 2020 to 31 March 2023.
On 14 April 2023 his solicitor wrote to him advising that he would receive a total of $342,677.34 in two payments. The first would be $292,298.69 and the second would be made by Medicare in the sum of $50,378.65. The payments would be made by direct deposit into the same account.
The sum of $292,298.69 was paid into his account on 14 April 2023.
On the same day, he withdrew sums of $75,000 and $200,000 and transferred $10,000 to his son. About $200,000 was used to construct a second floor on the family home. The amount of $75,000 was used by his wife to repay her mortgage. The $10,000 was repaid to his son for medical reports he had paid for. Mr Rofouzos had $7,301.57 after making the payments to his wife and son.
At the time of the hearing, the second floor addition had been completed. Mr Rofouzos said he lives with his daughter on the ground floor and his wife and son live on the top floor which has its own access.
Issues
Mr Rofouzos’s contention is that all or part of the compensation payment is to be disregarded or treated as though it had not been made at all because special circumstances exist, under section 1184K of the Act. However, the Respondent also addressed two preliminary matters which it is appropriate to deal with.
First, had Mr Rofouzos received a lump sum compensation payment? That is, did the payment include an amount for lost earnings in accordance with subsection 17(2) of the Act? That was explicitly acknowledged by Mr Rofouzos’s legal representative in answer to question 15 in the Compensation Advice of Lump Sum Payments sent to the Agency.
Next, the Respondent considered the calculation of the lump sum preclusion period in accordance with section 1170 of the Act. The ARO correctly summarised the position. The preclusion period is calculated by dividing 50% of the lump sum payment by the income cut out amount, that is the amount above which no pension is payable to a single person under the ordinary income test. That was $1121.50 when the lump sum was received. The result is therefore 245.20 weeks from 9 April 2020, the date of the compensable injury, to 18 December 2024.
A decision-maker has no discretion to vary the 50% figure, which is relevantly the compensation part of a lump sum compensation payment as defined in section 17(3) of the Act, even if the result is unfair, because:
that result flows from a deliberate policy decision of the legislature favouring simplicity and efficiency of administration and reduction in administrative costs over attaining a fair result in each case considered on its individual merits.[1]
[1] Clark v Secretary, Department of Employment and Workplace Relations [2007] FCA 1076, [44].
Section 1169(1) of the Act provides that a compensation affected payment is not payable to the person during the preclusion period. DSP and JSP are compensation affected payments (subsections 17(1)(b) and (c) of the Act). Therefore, the DSP was correctly cancelled from 9 April 2020. Consequently, a compensation charge debt of $64,068.64 was recovered from the insurer for the DSP, JSP and jobseeker coronavirus supplement received during the preclusion period.
The issue of whether Part 5.4 of the Act regarding the non-recovery of debts (write-off and waiver) is applicable to compensation charge debts under Part 3.14 of the Act and the consequences for this case is addressed after the principal issue of whether there are special circumstances under section 1184K of the Act.
Mr Rofouzos’s evidence
On 27 April 2023, Mr Rofouzos completed two forms, an Explanation or formal review of a decision and a Compensation Recovery Statement of Financial Circumstances. He wrote that he had special circumstances because ‘I need a decent roof over my head so as to live in dignity’. He attached photographs and a letter. He had spent his settlement monies on 14 April 2023 as follows: home loan paid off $75,000, 1st floor addition $200,000 and medical reports $10,000. The current balance of his account was $1,600.
In his letter, he claimed that he had an agreement with the insurance company that he would get $351,000 clear. A few days later, the insurance company informed him that he had to pay $9,300 back to Centrelink because he had received more money than had been calculated. He had received the $292,298.69 into his bank account and was expecting $50,000 back from Medicare, a total of $341,000. His right knee and back were destroyed by the accident. His whole life had changed. He lives on pain killers and is dependent on the assistance of others. As a result of the accident, he had separated from his wife and been ‘ostracised’ to a log cabin in the backyard. The log cabin was not suitable for two reasons. It is wooden and gets extremely hot during summer and extremely cold during winter, making it very difficult to live in. Secondly, two steps separate the loungeroom from the bedroom and bathroom which makes it difficult for him to move within the space. He can manage walking on a level surface but cannot manage steps.
After signing the agreement for $341,000, he suggested to his wife that he keep $11,000 and give her $330,000 of which $75,000 would go towards paying off the home loan and the rest to pay for a second storey to the house with a separate entrance where she could stay and he would stay on the ground floor. The agreement would take effect immediately after he received the money, which is what happened. His wife moved into the log cabin and he moved into the house. His quality of life has improved but he has no money. He needs food and medication. He deserves to live with dignity and not from the pity of others. He needed his DSP and Pensioner concession card which he needed for medications.
Photographs within the log cabin, confirm there are two steps from the loungeroom to both the bathroom and the bedroom. The bathroom and bedroom are on the same level and their doorways are at 90 degrees to each other. To enter the bathroom from the bedroom requires a person to walk down two steps, make a sharp turn to the right and walk up two steps. The return journey involves walking down two steps, making a sharp left hand turn and walking up two steps. I understood that the mobility difficulty was greatest at night when Mr Rofouzos was drowsy as a consequence of his medication and being half asleep. There are no rails to provide support.
Before AAT1, Mr Rofouzos claimed that he and his ex-wife agreed that she would move into the log cabin and he could move into the family home ‘under the condition that I would use my compensation money to build a first floor addition which she would move into (due to there being many stairs) just so I could live in the ground floor ... like a human being’. He often uses crutches to get around.
The following is additional or different evidence that he gave in writing or orally, during the present proceedings.
He provided his wife’s will in response to AAT1’s questioning the legal protection he has, having paid her $275,000. Further, he mentioned that he has been informed by a lawyer that if he ever wanted to get a divorce, given that they have been legally married for 30 years, he was entitled to half of the house. However, all he cares about is a better quality of life.
He expressed willingness to sign additional legal agreements ‘to contribute to a clearer understanding of the measures in place to protect’ his interests.
He provided a number of invoices and receipts for the construction of the second storey. The earliest one was dated 28 February 2023 for the deposit for architectural plans and Complying Development Certificate. I infer that Mr Rofouzos’s wife began to organise the construction of the second floor addition after she and her husband knew the amount of the settlement. The Construction Certificate dated 26 July 2023 was for ‘continuation of works with alterations and first floor additions to an existing dwelling $150,000’.
He told the Tribunal that the third bedroom in the house was very small. It could fit a bed but is currently used for storage. Their son was either living in the garage or with a girlfriend or in the log cabin which adjoined the house but has no direct entrance to it.
Sometime around the date of the will, March 2022, the difficulties in their relationship resulted in Mr Rofouzos moving from the marital bedroom to the couch.
Around April to June 2022, he moved into the log cabin where he stayed until about April 2023 when he moved into the family home because of his mobility issues and his wife moved into the log cabin.
Mr Rofouzos claimed that it was not possible to modify the log cabin to suit his needs. During cross-examination he cited low ceiling heights as a constraint on making modifications.
He denied that he moved out of the log cabin because it was uninsulated. He said that he had installed an upgraded air-conditioner and that was not the issue.
Adding a storey to the home was not a new idea. The family had discussed it for some time. The development consent for the addition had been issued in 2013. He was living in Greece at that time and had no involvement in that process. Around November 2022, Mr Rofouzos got a rough idea of the amount he would get. His wife decided to add a second floor to the home.
Are there special circumstances under section 1184K of the Act?
The phrase ‘special circumstances’ is not defined in the Act. There are numerous cases where the phrase has been considered.
In Re Beadle and Director-General of Social Security (1984) 6 ALD 1 the Tribunal (Toohey J presiding) said:
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 on 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.
In Dranichnikov and Centrelink [2003] FCAFC 133, the Full Federal Court considered the term ‘special circumstances’ and observed at [66]:
… Other cases which have considered analogous words such as ‘special reasons’ has tended to conclude, albeit in different contexts, that what is required will be circumstances which distinguish the case in consideration from the usual case. There will be a requirement that the circumstances are such that takes the case out of the ordinary ...
The Guide usefully states, in part, at Instruction 4.13.4.10:
The compensation recovery provisions of social security law are designed to ensure that people who receive compensation for a loss of income do not also receive income support from the Australian Government in respect of the same period of time.
Note: The special circumstances provisions should not be used to override this basic legislative intention.
In summary, Mr Rofouzos claims that the special circumstances in this case are that his injuries and consequential disability and marriage breakdown required him to use the compensation lump sum to fund repayment of his wife’s mortgage and construction of an additional storey on the family home in order for him to live in a space that accommodated his disability. Consequently, he is suffering financial hardship.
I am not satisfied that there are special circumstances in this case for the following reasons.
Mr Rofouzos has provided no evidence about the amount of the refund he actually received from Medicare. He was expecting $50,000. That is confirmed by the letter from his solicitor dated 14 April 2023. He also acknowledged that he had received $340,000 in the undated Statement of Financial Circumstances (Centrelink Review) document. Absent evidence that he received much less, I am not satisfied that he is suffering financial hardship, which of itself is not a special circumstance.[2]
[2] Re Hajar and Secretary, Department of Social Security (1988) 16 ALD 716 at 719.
That he was expecting to receive that amount supports an inference that paying $275,000 to his wife to construct the second storey and pay off the mortgage and repaying his son $10,000, were considered decisions. If he received $50,000 from Medicare, he would have had more than sufficient funds to meet his needs from 14 April 2023 until the end of the preclusion period, 21 months later, taking into account that he was paying no rent.
In the undated Statement of Financial Circumstances, Mr Rofouzos stated that his children provide for his household expenditure. At the hearing he seemed to deny that. In any event, his claimed monthly expenditure of $925 leads to the conclusion that his expenditure for the balance of the preclusion period from 14 April 2023 until December 2024 would be about $19,425, much less than the expected Medicare refund.
If the Medicare refund is not taken into account, Mr Rofouzos paid his wife and son $285,000 knowing that his DSP would be cancelled and he faced the preclusion period. He had been given the notice on 21 October 2022 which enabled him to make inquiries about the potential impact on him once he got a rough idea of the amount he would be receiving in November 2022, and then he was notified of the actual preclusion period on 4 April 2023, before he received the funds and made the payments. If that were the case, he made a deliberate decision to impoverish himself.
A compensation preclusion period is intended to ensure that people support themselves from the compensation payment during an appropriate period rather than receiving taxpayer funded payments. The compensation was paid for the injury which had resulted in Mr Rofouzos’s disability.
Making a deliberate decision that improved the financial and living circumstances of the family, leaving Mr Rofouzos with no assets or income, would not constitute special circumstances.
In his letter seeking review of the cancellation decision, it appears that paying his wife the money for the second storey was his idea. Before AAT1 and this Tribunal, he gave the impression that it was his wife’s demand in return for her moving into the log cabin in about April 2023 and him returning to live in the home.
I am not persuaded that Mr Rofouzos’s wife demanded that he pay her the funds in return for him moving out of the log cabin and her moving in. Further, initially he was planning to pay her $330,000 but that figure changed to $275,000, apparently his decision. No contract for the construction of the additional storey was provided. Receipts that were provided total about $162,000. The Construction Certificate stated the value of the work was $150,000.
I understand that Mr Rofouzos provided his wife’s will to show that he had legal protection. It provides no legal protection for him during her lifetime. I accept that he has had ‘informal’ legal advice that he is entitled to half the house if they divorce. He referred to a family agreement that protects him.
The evidence indicates that the log cabin was constructed after Mr Rofouzos was injured as additional accommodation. It was constructed without making it habitable for someone with his disability.
I am not satisfied that any steps were taken to find out if the log cabin could be modified to meet his needs. Rather, it is obvious that adding a second storey to the family home would benefit all family members, particularly the children who would inherit the property or any subsequent home their mother bought.
Mr Rofouzos said that his son had lived in the garage at some stage. Modifying the garage to meet Mr Rofouzos’s needs was an option that was apparently not considered at all.
I am not persuaded that no other accommodation option was available to Mr Rofouzos at much less cost than the addition of a storey to the family home. Further, he had lived in the log cabin for about 10 months without incident, although I accept that he would have to be careful, particularly when walking from the bedroom to the bathroom and back at night. However, to enter or exit the residence where he now lives, he has to walk up or down eight or fourteen stairs. While he may do so carefully and holding a rail, negotiating the two steps in the log cabin does not seem such a major barrier for him.
While the emphasis in the proceeding was on the second floor addition, it is not apparent that there was any pressing need to fund repayment of his wife’s mortgage or repay his son $10,000. Those matters support a finding that there are no special circumstances.
I did not understand Mr Rofouzos to claim that his legal costs constituted special circumstances. For certainty, I do not accept that they do. They were incurred in the course of pursuing a compensation claim. Any complaint about legal costs should be addressed through the appropriate process. Mr Rofouzos’s complaint is essentially about how his payment to his wife should be considered.
There are no special circumstances under section 1184K of the Act.
Should the compensation charge debts be written-off, or waived?
Mr Rofouzos did not question the debt of $64,068.64 that has been recovered. He did not challenge its calculation.
However, as the Respondent addressed the application of Part 5.4 of the Act about non-recovery of debts applying to compensation charge debts that arise under Part 3.14 of the Act, I consider the matter and I accept that Part 5.4 applies.[3]
[3] Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190.
The compensation charge debts cannot be written-off under section 1236(1A) of the Act because none of the provisions apply. They have been fully recovered.
There has been no administrative error made by the Commonwealth. The debts cannot be waived pursuant to subsection 1237A(1) of the Act.
Conclusion
Mr Rofouzos received a lump sum compensation payment. It has been correctly calculated. The compensation preclusion period has been correctly calculated. His DSP payment was correctly cancelled retrospectively. There has been no error in the calculation of the compensation charge debt. It was properly recovered.
There are no special circumstances under section 1184K of the Act.
DECISION
The reviewable decision made on 6 November 2023 is affirmed.
I certify that the preceding 73 (seventy-three) paragraphs are a true copy of the reasons for the decision herein of Mrs J C Kelly, Senior Member
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Associate
Dated: 27 June 2024
Date of hearing:
17 April 2024
Applicant:
By video
Solicitors for the Respondent:
Ms S Navaratnam, Services Australia
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