SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS And DANUTA SANDARS
[2007] AATA 2
•4 January 2007
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2007] AATA 2
ADMINISTRATIVE APPEALS TRIBUNAL )
) No W2005/377
GENERAL ADMINISTRATIVE DIVISION ) Re SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS Applicant
And
DANUTA SANDARS
Respondent
DECISION
Tribunal Deputy President S D Hotop Date4 January 2007
PlacePerth
Decision The Tribunal affirms the decision under review.
.....[Sgd S D Hotop]........
Deputy President
CATCHWORDS
SOCIAL SECURITY – compensation recovery – respondent sustained leg injury – respondent received lump sum payment in settlement of claim for damages – lump sum payment not made wholly or partly in respect of lost earnings or lost capacity to earn – lump sum payment not “compensation” – compensation recovery provisions not applicable – decision under review affirmed
Social Security Act 1991 (Cth), s 17(2)
Secretary, Department of Social Security v a’ Beckett (1990) 26 FCR 349
REASONS FOR DECISION
4 January 2007 Deputy President S D Hotop Introduction
1. On 20 December 1996 Danuta Sandars (“Ms Sandars”) was injured when she accidentally slipped and fell at a suburban shopping centre. She was, at that time, receiving a sole parent pension.
2. On 13 August 2002 Ms Sandars commenced proceedings in the District Court of Western Australia against the proprietor of the shopping centre (“the defendant”) claiming “damages for personal injuries sustained and losses suffered in and as a result of” the abovementioned accident. On 16 December 2004, however, Ms Sandars agreed to accept a lump sum payment of $65,000.00 (comprising damages of $50,000 and legal costs of $15,000) in full settlement of her claim.
3. On 10 March 2005 a Centrelink officer decided that, in accordance with Pt 3.14 of the Social Security Act 1991 (Cth) (“the Act”), sole parent pension was not payable to Ms Sandars for the period from 20 December 1996 to 27 November 1997, by reason of her receiving a lump sum compensation payment of $65,000.00, and that the total amount of sole parent pension which had been paid to her in that period (namely, $8,821.60) was to be repaid to Centrelink. That decision was affirmed by an Authorised Review Officer (“ARO”) within Centrelink on 12 August 2005.
4. On 7 October 2005, however, the Social Security Appeals Tribunal (“SSAT”) set aside the decision of the Centrelink officer as affirmed by the ARO and decided that the lump sum payment of $65,000.00 received by Ms Sandars was not “compensation” as defined in the Act, and was not caught by Pt 3.14 of the Act, and that she was not obliged to repay to Centrelink the abovementioned amount of $8,821.60 received by her by way of sole parent pension payments.
5. The Secretary to the Department of Employment and Workplace Relations (“the Secretary”) has applied to this Tribunal for review of the SSAT’s decision.
The Issues and the Tribunal’s Determination
6. The fundamental issue for the Tribunal’s determination is whether the lump sum payment of $65,000.00 received by Ms Sandars is caught by the “compensation recovery” provisions in Pt 3.14 of the Act, in which event the amount of $8,821.60 received by her by way of sole parent pension payments in the period from 20 December 1996 to 27 November 1997 will be repayable to Centrelink and recoverable from her by Centrelink.
7. If the Tribunal determines that the abovementioned payment of $65,000.00 is caught by Pt 3.14 of the Act, another issue will arise, namely, whether there are special circumstances in Ms Sandars’ case which make it appropriate, in effect, to disregard the whole, or part, of that payment for the purpose of determining whether sole parent pension was payable to her in the period from 20 December 1996 to 27 November 1997.
8. For the reasons which follow, the Tribunal has determined that:
·the payment of $65,000.00 received by Ms Sandars does not constitute “compensation”, as defined in the Act, and is therefore not caught by the “compensation recovery” provisions in Pt 3.14 of the Act; and
·the amount of $8,820.60 received by her by way of sole parent pension payments in the period from 20 December 1996 to 27 November 1997 is not repayable by her to Centrelink and is not recoverable from her by Centrelink.
The Relevant Legislation
9. Part 3.14 of the Act contains provisions regarding “compensation recovery”. Section 1169(1) provides that, in the event that a person receives a “lump sum compensation payment”, various forms of social security payments (including, relevantly, the former sole parent pension) are not payable to that person in the “lump sum preclusion period” whose commencement and duration are determined in accordance with s 1170.
10. Section 17 of the Act contains various “compensation recovery definitions”. In s 17(2) the word “compensation” is defined as follows:
“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.”
11. Part 3.14 of the Act also contains s 1184K which provides:
“(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.
(2) If:
(a) a person or a person's partner receives or claims a compensation affected payment; and
(b) the person receives compensation; and
(c) the set of circumstances that gave rise to the claim for compensation is not related to the set of circumstances that gave rise to the person's or the person's partner's receipt of, or claim for, the compensation affected payment;
the fact that those 2 sets of circumstances are unrelated does not alone constitute special circumstances for the purposes of subsection (1).”
The Evidence
12. The evidence before the Tribunal comprised:
·the “T Documents” (T1-T28, pp 1-87) lodged by the Secretary in accordance with s 37 of the Administrative Appeals Tribunal Act 1975 (Cth);
·the “Additional T Documents” (T29-T39, pp 88-240) tendered in evidence by the Secretary (Exhibit A1);
·the oral evidence of Ms Sandars and 2 documents tendered in evidence by her (Exhibits R1 and R2).
The T Documents and the Additional T Documents
13. The T Documents and the Additional T Documents contain various documents relating to Ms Sandars’ abovementioned claim for damages and the settlement of that claim. These documents are referred to below.
14. On 11 August 1999 Ms Sandars lodged with Centrelink a claim for disability support pension (which was subsequently rejected) and at that time she notified Centrelink that she was claiming compensation in respect of her injury sustained on 20 December 1996. (T 29, p 100)
15. By letters dated 17 August 1999 a Centrelink officer advised Ms Sandars and her solicitors of the effect a compensation payment may have on her social security payments. (T30)
16. On 13 August 2002 Ms Sandars’ solicitors filed a Writ of Summons in the District Court of Western Australia whereby Ms Sandars claimed against the defendant:
“damages for personal injuries sustained and losses suffered in and as a result of an incident that occurred on or about 20 December 1996 in the State of Western Australia when the Plaintiff suffered injuries as a result of a fall in the Defendant’s premises or premises over which the Defendant had control...” (T37, pp 169-170)
17. On 6 December 2002 Ms Sandars’ solicitors filed in the District Court a Statement of Claim, pursuant to the Writ issued on 13 August 2002, which included, inter alia, “Particulars of Loss of Earning Capacity” as follows:
“(a)At the time of the incident the Plaintiff was unemployed, having just finished a 4 month course called NOW (New Opportunities for Women), which ran from July 1996 to December 1996. The Plaintiff commenced studying to be a teachers’ aide in February 1996, which she subsequently achieved on or about May 1998. Between May 1998 and October 1999, the Plaintiff was employed in teacher’s aide duties for pre-primary, which, due to her injuries and residual disabilities, she has had to give up. The Plaintiff earned $559.74 gross ($471.00 net) per week in pre-primary. The Plaintiff now works as a teacher’s aide in a high school, earning $518.00 gross ($419 net) per week, a loss of $52.00 net per week.
(b)Prior to the incident, the Plaintiff had engaged in but, as a result of injuries and residual disabilities, is incapable of engaging in at pre-incident levels the following other occupations:
(i)pre-primary teaching aide;
(ii)child care;
(iii) aged care;
(iv)duties involving prolonged sitting, such as switchboard reception;
(v)waitressing;
(vi)used to work long hours (sic);
(vii)retail deli – stock handling rotation;
(viii)duties involving heavy lifting.
(c)As a result of injuries and residual disabilities, the Plaintiff’s areas of employment have been restricted and diminished and the value of the Plaintiff’s services to any potential employer and the length of the Plaintiff’s working life has been reduced and the Plaintiff is unlikely to be able to re-enter the workforce in the condition in which the Plaintiff had been prior to the incident.” (T31, pp 120-127)
18. On 19 February 2003 Ms Sandars’ solicitors filed a document entitled “Plaintiff’s Answers to Defendant’s Request for Further and Better Particulars of Statement of Claim” which particularised the amounts of losses claimed by Ms Sandars as follows:
Past Gratuitous Services $8,927.80
Future Gratuitous Services $20,445.60
Past Loss of Earnings $8,817.64
Future Economic Loss $22,037.60
Permanent Diminishment of Parameters of Employment $50,000.00
Loss of Superannuation Benefits $1,589.25
Future Surgery etc Expenses $18,000.00
Future Medical Expenses $25,557.00
Future Rehabilitation Services $5,000.00
Travelling Expenses $2,500.00.
(T32, pp 147-151)
19. On 9 April 2003 the defendant’s solicitors filed in the District Court a Statement of Claim against the contract cleaner of the relevant shopping centre premises (“the third party”), claiming from the third party an indemnity/contribution for any liability in damages and costs which the defendant may have to the plaintiff (Ms Sandars). (T33, pp 152-154)
20. On 12 May 2004 Ms Sandars’ solicitors filed in the District Court an Amended Statement of Claim. That document, however, did not contain any amendment of the “Particulars of Loss of Earning Capacity”, or of any other particulars of losses, set out in the original Statement of Claim. (T34)
21. By letter dated 21 December 2004 Ms Sandars’ solicitors wrote to Centrelink as follows:
“We act on the instructions of the abovenamed, our client, in respect of a personal injury claim. Our client was injured in a slip and fall accident in a shopping centre (public liability accident) on 20 December 1996.
We enclose the Estimate of Preclusion Period and Recoverable Amount Form for your completion and we advise as follows:
1.this is a claim in which there is no component for loss of earning capacity past or future;
2.if any debts are owed by our client, please confirm what debts and how much is owing (in addition to any refund arising as a result of the personal injury claim).
As this matter has been settled could you please provide us with the information so that the Defendant can release the cheque to us, as a matter of urgency.” (T7, p 40)
The enclosed Centrelink “Estimate of Social Security Charge/Preclusion” form contained the following information provided by Ms Sandars’ solicitors:
“Proposed gross lump sum amount $65,000
(including legal costs, medical expenses
and any payment for non-economic loss)
...
If no periodic compensation was paid, the N/A
day lost earnings or lost capacity to earn No award for past or(‘economic loss’) commenced future economic loss.”
(T7, p41)
22. By letter dated 30 December 2004, a Centrelink officer advised Ms Sandars’ solicitors as follows:
“We refer to your request of 21 December 2004 asking for an estimate of amount to be repaid and preclusion period for Danuta Mary Sandars.
Social security law provides that when a person receives a lump sum payment of compensation, part of the payment is considered to be for lost earnings or lost capacity to earn (compensation part). All estimates given by us use 50 per cent of the lump sum as the compensation part. The compensation part is then used to calculate a period of time when a person will not be eligible to receive Centrelink payments, with the exception of Family Payments, Carer Allowance and Mobility Allowance. This period of time is called the ‘preclusion period’ and, depending on a person’s circumstances, may affect past and/or future payments made to that person.
The settlement amount in this letter may vary from the figure you nominated. Any earlier lump sum settlement for the same event may have been added and past periodic compensation may have been deducted where it is required to be repaid from the settlement. Based on an estimated settlement amount of $65,000.00 and the compensation part amount of $32,500.00, the repayment amount is likely to be $8,821.60 and the preclusion period is likely to be 20 December 1996 to 27 November 1997. If your client is currently in receipt of Centrelink payments, or begins to receive Centrelink payments prior to the final settlement date, then these payments may also be recoverable if the preclusion period extends into the future.
From information supplied by you, we have calculated this estimate on the basis that the settlement was made on the date of this letter. It assumes that your client’s claim will settle by agreement, that it contains some compensation for lost earnings or lost capacity to earn and that the lump sum will not be solely for arrears of periodic compensation. You should note that if there is no provision for lost earnings or lost capacity to earn, then the compensation provisions do not apply to the settlement.
...” (T10)
23. By letter dated 10 January 2005, a Centrelink officer wrote to the third party’s solicitors requesting details of the settlement of Ms Sandars’ claim. (T11, p 47)
24. By letter dated 3 March 2005, the third party’s solicitors provided to Centrelink a completed settlement details form which indicated that:
·the date of the settlement was 16 December 2004;
·the settlement was effected by a Deed of Release and dismissal of the action;
·the gross settlement amount was $50,000.00 plus legal costs of $15,000.00;
·there was no breakdown of the gross settlement amount; no amount for loss of earning capacity/economic loss was specified. (T12, p 50)
The solicitors also provided a copy of a Deed of Mutual Release dated 4 February 2005, executed by Ms Sandars, the defendant and the third party, which provided for the payment of $50,000.00 damages and $15,000.00 costs to Ms Sandars as follows:
·payment of $26,000.00 by the defendant to Ms Sandars;
·payment of $6,500.00 by the defendant to the Health Insurance Commission (“HIC”) at the request and direction of Ms Sandars;
·payment of $32,500.00 by the third party to Ms Sandars.
The Deed further provided that those payments were made in full satisfaction and discharge of, inter alia, all claims and demands made by Ms Sandars against the defendant. (T12, pp 51-55)
25. By letter dated 10 March 2005 a Centrelink officer informed Ms Sandars that, by reason of her lump sum compensation payment of $65,000.00, a “preclusion period” from 20 December 1996 to 27 November 1997 was applicable to her and that the amount of $8,821.60 received by her in social security payments in that period was required to be repaid to Centrelink. (T15)
26. By letter dated 24 March 2005 Ms Sandars’ solicitors wrote to Centrelink as follows:
“We refer to your letter dated 10 March 2005 relating to a Centrelink recovery.
We refer again (copy enclosed) to our facsimile dated 21 December 2004 when we made it clear that the settlement offer did not contain any component for loss of earnings, past or future.
We would be grateful if you could urgently review your position in this matter and issue a fresh Notice.” (T17, p 65)
Enclosed with that letter were copies of the letter and enclosure referred to in paragraph 21 above.
27. Ms Sandars’ solicitors wrote to Centrelink on 8 April 2005 requesting a response to their letter of 24 March 2005 (T18), and on 11 April 2005 they wrote a further letter to Centrelink as follows:
“We refer to your telephone call of 11 April 2005 in which it appears you have not received the correspondence we have previously forwarded to your office.
We now enclose copies of faxes we have sent to Centrelink dated 21 December 2004 and 24 March 2005 and we confirm that the settlement offer did not contain any component relating to economic loss, as we initially reported to you when first communicating with your office.
I (sic) would be grateful if you could give urgent attention to this letter as we are concerned to ensure that our client’s settlement is not jeopardised.” (T19)
28. On 31 May 2005 the third party’s solicitors wrote to Ms Sandars’ solicitors as follows:
“I refer to [third party’s solicitor’s] telephone conversation with [Ms Sandars’ solicitor] on 18 May 2005.
As discussed, my client’s contribution towards the settlement included an allowance for your client’s claim for loss of earning capacity. As you will recall, in your client’s amended statement of claim filed 12 May 2004, she was seeking, among other things, damages for loss of earning capacity. At the pre-trial conference on 16 December 2004, [Ms Sandars’ barrister] advised that your client was prepared to resolve her claim for $85,000, roughly comprising:
·damages $65,000
·costs $18,000
·disbursements $2,000
Our notes from the pre-trial conference do not suggest that [Ms Sandars’ barrister] or your client advised us that your client intended to withdraw her claim for damages for loss of earning capacity or that she intended to re-amend her statement of claim.” (T36)
29. On 18 July 2005 Ms Sandars’ solicitors wrote to Centrelink as follows:
“We refer to the telephone conversation between Simon at your office and the undersigned on 15 July 2005 and confirm the following:
1.[the third party’s solicitors] do not represent the Defendant in this matter, they represent the third party;
2.as there was no suit between our client and the [third party], [the third party’s solicitor] is not the appropriate person to ask as to the composition of the offer by the Defendant to the Plaintiff;
3....
4.the third party’s solicitors... were not present in the pre-trial conference room where the Plaintiff’s solicitor put the offer to the Defendant’s solicitor. It is therefore not possible for them to accurately respond as to the composition of the settlement.” (T23)
30. On 9 August 2005 the defendant’s solicitors wrote to Ms Sandars’ solicitors as follows:
“We thank you for your correspondence of the 15th July. We confirm that for the purposes of negotiation there was no component fee for economic loss in the settlement amount offered.” (T24, p 77)
31. By letter dated 17 May 2006 the defendant’s solicitors wrote to Centrelink as follows:
“We refer to your correspondence of the 6th May and now provide you with the following information:
1.a copy of the statement of claim, defence and Deed of Settlement signed in this matter;
2.a statutory declaration confirming that when our Mr ... made his assessment of the potential quantum of the claim he did so on the basis that the plaintiff’s claim was a claim for general damages only.
...” (T31, p 112)
The contents of the enclosed statutory declaration, dated 18 May 2006, are as follows:
“1. I am partner of [the defendant’s solicitors]...
2.The action was settled on the 17th December 2004 on the basis that the plaintiff Danuta Sandars would accept:
2.1$50,000.00;
2.2$15,000.00 costs inclusive of disbursements (the settlement sum).
3.The settlement was recorded by way of a Deed of Release. Annexed hereto and marked with the letter ‘A’ is a copy of the Deed of Release.
4.When [I] assessed the potential quantum of the claim [I] did so on the basis that there was no allowance for future economic loss.
5.When the solicitors for Ms Sandars submitted their claim they did so by seeking initially $60,000.00 for general damages and then a component for economic loss. The component for economic loss however was not accepted and ultimately the action was settled for the settlement sum.” (T31, p 113)
The evidence of Ms Sandars
32. Ms Sandars’ evidence may be summarised as follows:
·in September 1992 she separated from her husband and, being unemployed and with 2 daughters to support, she claimed, and was granted, sole parent pension;
·she tried to find work at that tine in order better to provide for her daughters but she had no recent work experience or qualifications and her attempts to gain employment were unsuccessful;
·she then did voluntary work in order to gain experience and in July 1996 she commenced a “New Opportunities for Women” course at TAFE in order to enhance her self-esteem and self-confidence;
·on 20 December 1996 she accidentally slipped and fell at a shopping centre and she felt pain in her left leg down her thigh to her knee and thought that she may have pulled a muscle;
·she nevertheless completed a Teacher’s Assistant course in February- July 1997 and was placed at a primary school for work experience in June 1997, but she found that this work exacerbated her leg pain, and she consulted her general practitioner, Dr Calabro;
·she completed a Human Services course in July –December 1997 and was placed at a neighbourhood centre for work experience in December 1997;
·in 1998 she did some part-time work and some voluntary work, and she felt that her left leg pain was becoming worse;
·in 1999 she completed short courses in word-processing and telecommunications (call centre) and found work as a pre-primary teacher’s assistant but that work, which involved kneeling down, squatting and sitting on low chairs, exacerbated her left leg pain;
·in April 1999 she sought legal advice regarding her left leg injury and was referred to a rheumatologist, and to an orthopaedic surgeon who informed her that she had a damaged left femur and a hip problem and that her pain would increase over time and she would eventually require hip replacement surgery;
·on the advice of her orthopaedic surgeon she applied for disability support pension but her application was rejected and she was subsequently granted newstart allowance;
·her solicitors commenced proceedings on her behalf against the shopping centre proprietor;
·in October 2000 she commenced full-time employment as a high school teacher’s assistant;
·although the weekly income she earned in this position was slightly lower than the weekly income she earned as a pre-primary teacher’s assistant (when she was employed as a full-time casual employee), she had various employment benefits which she did not have in her former position, such as paid recreation leave and sick leave;
·she provided this information regarding her income to her solicitors for the purpose of including particulars of loss of earning capacity in her Statement of Claim;
·her solicitor advised her that, if the matter went to court, it would be difficult for them to establish past economic loss because of her employment history, and they would not be able to claim future economic loss because she was working;
·she was content to leave it to her solicitors to include in the Statement of Claim whatever they thought appropriate, and what she was “really concerned about” was that she would be able to pay their costs and recover “some damages for [her] operation”;
·she had a meeting with her solicitor and he informed her that their costs up to and including the pre-trial conference would be about $15,000 but that, if she went to court, the costs could be double or treble that amount and, furthermore, it would take another 3-4 years before she got to court;
·she then decided that she did not want the matter to go to court, and a pre-trial conference was set down for 16 December 2004;
·prior to the commencement of the conference she did not discuss with her solicitor or barrister the amount of damages she should claim, and she did not participate in, and was not present at, the conference;
·during the conference negotiations her barrister informed her that the defendant had offered $45,000 but that he would try to negotiate a higher offer, and he subsequently informed her that the defendant’s final offer was $50,000 plus $15,000 costs which he considered to be a “good deal”, and she agreed to accept that offer;
·her solicitors’ fees were in fact $27,000 and her barrister’s fee was $1,000, and she ultimately received a net amount of about $25,000 in March 2005, and subsequently a refund of about $5,000 from the HIC;
·she was unaware that the amount of $8,821.60 had been deducted from her settlement amount and paid to Centrelink until March 2005 when she was so informed by Centrelink;
·at the time when she agreed to settle her claim on 17 December 2004 she was unaware that any part of the settlement amount would be recovered by Centrelink, nor was she advised of this by her solicitors prior to the recovery of the sum of $8,821.60 by Centrelink in March 2005;
·she expects that she will require a hip replacement operation in the near future and she has kept the net settlement amount she ultimately received (about $30,000) in the bank to pay for that operation;
·her major asset is a house, which is unencumbered, and her only liability (as at the date of the hearing) was a credit card debt of about $1,000 which she intended to pay in full by the due date;
·her income is $951.00 (after tax) per fortnight which she earns in her full-time employment as a high school teacher’s assistant;
·she has about $5,000 in a bank account, and also $6,000- $7,000 in a bank account which she has kept aside in order to pay for remodelling her kitchen.
Analysis and Findings
Does the lump sum payment of $65,000.00 received by Ms Sandars constitute “compensation” (as defined in s 17(2) of the Act)?
33. The only matter in dispute, in terms of the definition of the word “compensation” in s 17(2) of the Act, is whether the lump sum payment of $65,000.00 received by Ms Sandars was “made wholly or partly in respect of lost earnings or lost capacity to earn”.
34. In Secretary, Department of Social Security v a’ Beckett (1990) 26 FCR 349 the Federal Court of Australia (von Doussa J) considered the corresponding definition of the word “compensation” in s 152(2)(a) (in Pt XVII) of the Social Security Act 1947 (Cth) in a context similar to that of the present case. The Court said (at 361-362):
“...The task of the delegate, and of the Tribunal, was to apply in a sensible way the words of the definition to the primary facts as found, drawing such inferences as fairly arose from those facts. Where a claim for damages or compensation is settled after negotiation between the parties for a global sum it will frequently be impossible to dissect that sum into component parts in any meaningful way. It will frequently be impossible to determine as a matter of hard fact that a particular amount, or even an approximate amount, was included for a particular head of loss. A claimant may have one belief about the merits, or the lack of them, of a particular head of claim put forward on his behalf, whilst the party paying might have quite another view. Where liability is in issue a claimant might accept a modest offer believing (perhaps on facts unknown to the other side) that a particular head of loss will not be proved if the matter proceeds to trial. On the other hand the party making the payment might provisionally allocate a substantial sum to that particular head when calculating an offer, and then markedly discount the calculation to reflect a view that the claimant could fail altogether, or in a negligence action, is partly to blame. These considerations, in my opinion, render an exercise of the kind undertaken by the Tribunal in the present case where primary consideration is given to the beliefs of the claimant and his advisers, an unhelpful one.
In the present case the evidence of the respondent and his solicitor could throw little light on the defendant's reasons for making the payment. There is no reason arising from the objects of Pt XVII of the Social Security Act which would make the views of the pensioner and his solicitor any more significant than those of the party making the payment in settlement of the claim. On the contrary, in many cases there may be reason to suspect that the pensioner's evidence could be less than objective about the component parts of a settlement. The difficulties which may arise if primary attention is given to the pensioner's statements as to the components of a global settlement, or even to statements formally recorded in documents signed by both sides to the settlement, have been adverted to in the secondary material connected with the Bills to amend the Social Security Act introduced in Parliament in 1979 and 1988 to which reference is made in Secretary, Department of Social Security v Banks [(1990) 23 FCR 416]. Unfortunately experience has shown that such statements are at times incapable of rational explanation and are the product of ‘manipulation’ by the parties to obscure the true position.
This is not to say that the evidence of the parties as to the course of negotiations is irrelevant. It is not, but it is only a part of the total picture, and often it will be of little assistance in determining if any part of a payment made in settlement of a claim is in part a payment in respect of an incapacity for work.
Usually the more objective evidence available about the nature and extent of the injury, and the events which followed it, for example the duration of absences from work, actual loss of wages, changes in work activity and the like, will provide a more reliable guide than the asserted beliefs of the claimant as to how the settlement sum was arrived at. Ordinarily, statements by the claimant asserting a loss resulting from an impaired capacity for work made in circumstances where those statements can reasonably be regarded as having been made to influence a defendant to pay will be entitled to substantial weight. Foremost amongst such statements will be formal particulars of claim. The formal particulars of claim identify the subject matter of the claim presented by the pensioner.
…”
35. The evidence before the Tribunal, which is relevant to the issue whether the abovementioned lump sum payment was “made wholly or partly in respect of lost earnings or lost capacity to earn”, may be summarised as follows:
·the Statement of Claim, and the Amended Statement of Claim, filed by Ms Sandars’ solicitors on 6 December 2002, and on 12 May 2004, respectively, which included “Particulars of Loss of Earning Capacity” (see paragraphs 17 and 20 above);
·the document entitled “Plaintiff’s Answers to Defendant’s Request for Further and Better Particulars of Statement of Claim” filed by Ms Sandars’ solicitors on 19 February 2003 (see paragraph 18 above);
·the letter dated 21 December 2004 from Ms Sandars’ solicitors to Centrelink, and the completed Centrelink “Estimate of Social Security Charge/ Preclusion” form enclosed therewith, which indicated that in the proposed gross lump sum amount of $65,000 there was “no component for loss of earning capacity past or future” and “no award for past or future economic loss” (see paragraph 21 above);
·the letter dated 3 March 2005 from the third party’s solicitors to Centrelink and the enclosed completed settlement details form which indicated that the date of the settlement was 16 December 2004 and that there was no breakdown of the gross settlement amount of $50,000 plus costs of $15,000 – no amount for loss of earning capacity/ economic loss was specified (see paragraph 24 above);
·the letters dated 24 March 2005 and 11 April 2005 from Ms Sandars’ solicitors to Centrelink reiterating that the settlement offer did not contain any component for loss of earnings, past or future (see paragraphs 26-27 above);
·the letter dated 31 May 2005 from the third party’s solicitors to Ms Sandars’ solicitors stating that the third party’s contribution towards the settlement included an allowance for Ms Sandars’ claim for loss of earning capacity, as claimed in the Amended Statement of Claim filed on 12 May 2004 (see paragraph 28 above);
·the letter dated 9 August 2005 from the defendant’s solicitors to Ms Sandars’ solicitors confirming that, for the purposes of negotiation, there was no component for economic loss in the settlement amount offered (see paragraph 30 above);
·the letter dated 17 May 2006 from the defendant’s solicitors to Centrelink, and the enclosed statutory declaration made by the solicitor who negotiated the settlement offer on behalf of the defendant at the pre-trial conference on 16 December 2004, which indicated that the plaintiff’s claim for economic loss was not accepted by the defendant and that the settlement amount of $50,000 plus costs of $15,000 represented general damages only and did not include a component for economic loss (see paragraph 31 above);
·Ms Sandars’ evidence to the effect that:
- at the time when she sustained the relevant left leg injury (December 1996) she was unemployed and had no recent work experience or qualifications but was undertaking a TAFE course in order to enhance her self-esteem and self-confidence with a view to gaining employment;
- notwithstanding her injury, she completed various vocational courses, obtained work experience placements, undertook part-time and voluntary work, and in 1999 obtained employment as a pre-primary teacher’s assistant on a full-time casual basis;
- by reason of an exacerbation of left leg pain which she experienced in that employment, she changed her employment to that of a full-time high school teacher’s assistant in October 2000;
- although in her new job she earned a “slightly lower” weekly income than she earned in her previous job, her new job provided her with various benefits that she did not have in her previous job, such as paid recreation leave and sick leave;
- her solicitor advised her that, if her action for damages went to court, it would be difficult for her to establish past economic loss because of her employment history, and she would not be able to claim future economic loss because she was working.
36. In the opinion of the Tribunal Ms Sandars presented as a credible witness who gave her evidence in a candid and forthright manner, and the Tribunal accepts her evidence. The Tribunal notes that none of the legal representatives, who participated in the pre-trial conference on 16 December 2004 at which the final settlement amount of $65,000.00 was negotiated, was called as a witness or required for cross-examination at the hearing.
37. Having regard to Ms Sandars’ evidence regarding her employment history both before, and after, the left leg injury which she sustained on 20 December 1996, the Tribunal is reasonably satisfied that the claims of loss of earning capacity included in the Statement of Claim and the Amended Statement of Claim filed by her solicitors on 6 December 2002 and 12 May 2004, as particularised by her solicitors on 19 February 2003, were part of an ambit claim, and may, or may not, have been maintained in pre-trial negotiations. The Tribunal accepts Ms Sandars’ evidence that, prior to the pre-trial conference which was held on 16 December 2004 and at which the settlement amount was arrived at, her solicitor had advised her of the weakness of her case for claiming past or future loss of employment earnings – advice which she apparently accepted. In those circumstances, the Tribunal is prepared to accept the statements made by Ms Sandars’ solicitors, and by the defendant’s solicitors, which are contained in the documentary evidence (set out above) which is before it, to the effect that the settlement amount of $50,000.00 damages plus $15,000.00 costs, which was reached at the pre-trial conference on 16 December 2004, did not include any amount for either past or future lost employment earnings.
38. The Tribunal notes the statement by the third party’s solicitors (contained in their letter of 31 May 2005, set out in paragraph 28 above) that the third party’s “contribution towards the settlement included an allowance for [Ms Sandars’] claim for loss of earning capacity”. The Tribunal understands, however, that the third party’s solicitors were not present in the conference room at the abovementioned pre-trial conference when the final total settlement amount of $65,000.00 was negotiated by Ms Sandars’ barrister and the defendant’s solicitor, and it notes, furthermore, that the third party’s solicitors’ abovementioned letter refers to a claim by Ms Sandars for a total amount of $85,000.00 – an amount $20,000.00 greater than the amount which she ultimately accepted in full settlement of her claim. In these circumstances, the Tribunal does not accept that the third party’s solicitors’ understanding that the settlement amount included an allowance for Ms Sandars’ claim for loss of earning capacity was correct as regards the final total settlement amount of $65,000.00 which was negotiated by Ms Sandars’ barrister and the defendant’s solicitor.
39. Accordingly, the Tribunal, on the basis of the whole of the evidence before it, is satisfied, and finds, that the abovementioned lump sum payment of $65,000.00, received by Ms Sandars in full settlement of her claim against the defendant, was not “made wholly or partly in respect of lost earnings or lost capacity to earn”, within the meaning of s 17(2) of the Act.
40. It follows that that lump sum payment does not constitute “compensation” (as defined in s 17(2) of the Act), and that it is not caught by the “compensation recovery” provisions in Pt 3.14 of the Act, and the Tribunal so finds.
41. In the light of the abovementioned findings, the issue whether, for the purposes of s 1184K(1) of the Act, there are special circumstances in Ms Sandars’ case, which make it appropriate, in effect, to disregard the whole, or part, of that lump sum payment for the purpose of determining whether sole parent pension was payable to her in the period from 20 December 1996 to 27 November 1997, does not arise.
Decision
42. For the above reasons, the Tribunal affirms the decision under review.
I certify that the 42 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President S D Hotop
Signed: ....[Sgd S da Motta]...........................
AssociateDate of Hearing 12 October 2006
Date of Decision 4 January 2007
Counsel for the Applicant Ms N Owen-Conway
Representative of the Respondent In person
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