SHANDELLE LEE and SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS
[2009] AATA 372
•22 May 2009
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2009] AATA 372
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2008/1717
GENERAL ADMINISTRATIVE DIVISION ) Re SHANDELLE LEE Applicant
And
SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS
Respondent
DECISION
Tribunal Senior Member M D Allen Date22 May 2009
PlaceSydney
Decision The decision under review is AFFIRMED ..................[sgd]........................
M D Allen
Senior Member
CATCHWORDS
SOCIAL SECURITY: Imposition of preclusion period - preclusion period calculated on 50% of a settlement for damages following a motor vehicle accident - actual economic loss component not able to be calculated but would have been very small - disparity between economic loss component and 50% settlement sum not a special circumstance.
LEGISLATION
Social Security Act 1991: S 17, 1169
CASE LAW
Secretary, Department of Social Security v Ellis (1996-7) 24 AAR 535
Secretary, Department of Social Security v a’Beckett (1990) 26 FCR 349
Secretary, Department of Family and Community Services v Chamberlin [2002] FCA 67Secretary, Department of Family and Community Services v Edwards [2000] FCA 1645
REASONS FOR DECISION
Senior Member M D Allen 1. By Application made the 23rd day of April 2008, the Applicant sought review of a decision by a Social Security Appeals Tribunal (“SSAT”) that affirmed a prior determination by the Respondent that a preclusion period be imposed upon any social security benefit paid to the Applicant for a period of 101 weeks from 15 March 2003 to 18 February 2005 and, as a consequence of that determination, that the Applicant had been over paid Youth allowance and Newstart allowance in the sum $11,660.14.
2. The Applicant was injured in a motor vehicle accident on 3 February 2003 and as result lodged a claim for third party damages. That claim was settled for the sum of $150,000.00 inclusive on 6 July 2007.
3. As the Respondent determined that the settlement sum included an amount for economic loss, a preclusion period was imposed during which period the Applicant was prevented from accessing social security benefits.
4. That preclusion period was imposed pursuant to section 1169 of the Social Security Act 1991 (“SS Act”). That section reads inter alia:
(1) If :
(a) A person receives or claims a compensation affected payment and
(b) the person receives a lump sum compensation payment;
the compensation affected payment is not payable to the person in relation to any day or days in the lump sum preclusion period.”
5. The term “compensation affected payment” is defined in subsection 17(1) SS Act as including “ a social security benefit” which term is wide enough to include Youth allowance and Newstart allowance.
6. Subsection 17(2) of the SS Act states:
“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 payments;
(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”
Whereas paragraph 17(3)(a) SS Act states:
“Subject to subsection (4), for the purposes of this Act, the compensation part of the 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 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…”
7. In these proceedings the calculation of the actual preclusion period was not disputed by the Applicant. The Applicant did, however, maintain that she should be entitled to relief pursuant to section 1184K(1) SS Act, which states:
“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.”
8. The term “special circumstances” was discussed by Carr J in Secretary, Department of Social Security v Ellis (1996-7) 24 AAR 535 at 539, namely:
“ In Beadle v Director-General of Social Security (1985) 7 ALD 670, a Full Court of this Court had to consider whether the Administrative Appeals Tribunal had erred in its interpretation of s 102(1)(a) of the Act which provided for an extension of time in which to claim a family allowance...in special circumstances… At 673-674 the Full Court said:
“Presumably in the context special circumstances must include events which would render the six months unfair or inappropriate…it would depend upon the circumstances of the particular case whether these constituted special circumstances. We do not think it is possible to lay precise limits or precise rules. The matter is one for the Director-General bearing in mind the purpose for which the power is given. The phrase “special circumstances”, although lacking precision, is sufficiently understood in our view not to require judicial gloss.”
In Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545, Kiefel J, after referring to Beadle, said:
“…for present purposes it is sufficient to observe that it would require something to distinguish Mr Groth’s case from others, to take it out of the usual or ordinary case. That was, I consider, the only enquiry to be undertaken in this 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. The enquiry I have referred to would involve considering what would be the effect, if the provision in question or the principle of liability it creates, is applied.”
Later (on the same page) Kiefel J expressly approved the Tribunal’s reason in holding that Mr Groth’s circumstances were not out of the ordinary when Pt 3.14 of the Act had the same effect on him as it did on other persons qualified to receive a disability support pension. Her Honour added:
“ It [the Tribunal] went on to find that his circumstances and those of his family although difficult, did not constitute hardship and they could not be said to be different from other pension recipients.”
9. The Applicant maintained that no part of the damages settlement contained a component for economic loss. As pointed out by Von Doussa J in Secretary, Department of Social Security v a’Beckett(1990) 26 FCR 349 at 361:
“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.”
10. In a’Beckett supra, Von Doussa J stated that the evidence of the parties as to the course of negotiations leading to a settlement will often 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 to work.
11. However, His Honour went on to state at pages 361-2:
“ 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 be reasonably 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.”
12. In this matter Exhibit R3 contains as annexures the outline of the Applicant’s (Plaintiff’s) submissions in the third party damages action and the submissions of the then Defendant which were apparently prepared for compulsory arbitration proceedings.
13. In her submissions the Applicant claimed the sum of $22,000.00 for past economic loss and $300,000.00 to $537,000.00 for future economic loss. For its part the Defendant insurer assessed the Applicants past economic loss at $875.00 and denied completely any future economic loss.
14. The only inference that can be drawn from the above mentioned documents is that the settlement sum included $875.00 for past economic loss and some small sum for future economic loss. Any further breakdown is impossible but I do find that the settlement sum included a component (albeit small) for lost earnings.
15. The Applicant, quite understandably in my view, submits that given the small component of economic loss in the settlement, it is unfair to calculate the preclusion period having regard to 50% of the Applicant’s lump sum settlement.
16. The answer to this submission was given by Kiefel J (as she then was) in Secretary, Department of Family and Community Services v Chamberlin [2002] FCA 67. At paragraphs 33 and 34 Her Honour states:
“ In the present case the Tribunal considered that the application of the formulae 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 have 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 special circumstances, 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 the 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.”
17. The Applicant also pointed out that prior to her motor vehicle accident she had arranged to attend Wodonga College of Technical and Further Education. The payments now sought to be recovered covered the period she was attending that institution and, it would seem, a period being unemployed. In other words, the payments received did not have any relationship to unemployment caused by the motor vehicle accident.
18. Subsection 1160(2) SS Act states:
“This Part applies whether or not there is any connection between the circumstances that give rise to the person’s qualification for the compensation affected payment and the circumstances that give rise to the receipt of compensation by the person or the person’s partner.”
19. In Secretary, Department of Family and Community Services v Edwards [2000] FCA 1645, Drummond J referring to a similar provision to subsection 1160(2) SS Act said that the absence of a causal relationship between pensionability and compensability is a relevant consideration but by itself is not sufficient to require the finding of special circumstances (see paragraph 19).
20. The Applicant gave evidence of her current financial status. She is in employment but has ongoing expenses not only for ongoing medical and therapeutic treatment for her injuries but also there are domestic tasks which cannot undertake for herself.
21. So far as the Applicant’s personal circumstances are concerned, while I acknowledge that she has ongoing and not insubstantial expenditure as a result of the injuries she suffered in the motor vehicle accident, her circumstances could not be described as “special” in the sense that they are in some way out of the ordinary or unusual.
22. What I do agree is unusual and unfair is the effect of the arbitrary imposition of a 50% calculation figure in this particular Applicant’s case. It is clear that any economic loss component in her award of damages was small and as she, correctly in my mind, stated the balance of the sum was due to pay for her ongoing medical expenses.
23. As pointed out by Kiefel J in Chamberlin supra, any disparity between the 50% formulae and the Applicant’s actual economic loss cannot amount to a special circumstance. Free of that authority, I would hold that it did.
24. For the reasons stated above and in conformity with the judgment of Kiefel J in Chamberlin supra, the decision under review is affirmed.
I certify that the 24 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member M D Allen
Signed: ..........................[sgd]......................................................
M Corcoran, AssociateDate/s of Hearing 19 May 2009
Date of Decision 22 May 2009
Solicitor for the Applicant Appeared on own behalf
Solicitor for the Respondent Ms J Maclean, Centrelink Legal Services
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