Smith and Secretary, Department of Social Services (Social services second review)

Smith and Secretary, Department of Social Services (Social services second review) [2019] AATA 796 (3 May 2019)
Division:GENERAL DIVISION
File Number:2018/2320
Re:Leanne Smith
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Member D Mitchell
Date:3 May 2019
Place:Brisbane

The Tribunal affirms the decision under review.
.....................................[SGD].........................
Member D Mitchell
CATCHWORDS
SOCIAL SECURITY – lump sum preclusion period – compensation charge – whether special circumstances exist – compensation lump sum – no evidence that special circumstances exist – decision under review affirmed
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth)
Social Security Act 1991 (Cth)
CASES
Groth and Secretary, Department of Social Security [1995] FCA1708
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Re Ivovic and Director-General of Social Services (1981) 3 ALN N95
Re Secretary, Department of Social Security and Winterbotham [1990] AATA 808
REASONS FOR DECISION
Member D Mitchell
3 May 2019
INTRODUCTION

Mrs Leanne Smith (the Applicant) sustained personal injuries in the course of her employment with Kalwun Development Corporation Ltd on 20 December 2011.[1]
[1] Exhibit 1, T Documents, T15, page 48, Notice of compensation claim from Shine Lawyers and enclosures.
The Applicant was paid $38,290.88 in Carer Payments in the period 8 April 2013 to 22 November 2015.[2]
[2] Exhibit 1, T Documents, T20, pages 69-72, Debt information – Debt ID: 91554882.
On 31 October 2017, the Applicant’s solicitors notified the Respondent that the Applicant’s compensation claim was settled for $300,000 on 11 October 2017.[3]
[3] Exhibit 1, T Documents, T15, page 47, Notice of compensation claim from Shine Lawyers and enclosures.
By letter dated 16 November 2017, the Respondent notified the Applicant that as a result of her lump sum compensation payment it had decided that she had a preclusion period that started on 11 February 2013 and ending on 22 November 2015. As the Applicant, had already received $38,290.88 in Centrelink payments in this period, the Respondent determined this amount must be repaid[4] (compensation charge). The Respondent sought the recovery of the amount directly from QBE Insurance.[5]
[4] Exhibit 1, T Documents, T22, page 75, Centrelink Notice: Compensation Payment.
[5] Exhibit 1, T Documents, T23, page 78, Centrelink Notice to QBE insurance: Compensation recovery notice.
The Applicant sought review of the decision and on 25 January 2018, an ARO affirmed the decision,[6] making the following key findings:[7]
·You suffered an injury on 20 December 2011 and an aggravation of the injury on 26 November 2012.
·The department was informed by Shine Lawyers on 31 October 2017 that on 12 October 2017 you obtained a lump sum compensation payment for the sum of $300,000.00.
·Periodic compensation payments that were paid to you were refunded to the insurer – the amount of $15,274.80.
·The lump sum payment was determined as $284,725.20 ($300,000 less $15,274.80).
·The lost earnings or lost capacity to earn component of your settlement was determined as $142,362.60 ($284,725.20 x 50%).
·The department calculated that you are subject to a preclusion period (and that an income support payment is therefore not payable to you) from 11 February 2013 to 22 November 2015.
·As you were paid $38,290.88 in Carer Payment in the period 8 April 2013 to 22 November 2015 that amount was recovered directly from your compensation settlement. The charge was recovered on 10 January 2018.
[6] Exhibit 1, T Documents, T 29, pages 89-93, Decision and notes of Authorised Review Officer.
[7] Exhibit 1, T Documents, T29, page 90, Decision and notes of Authorised Review Officer.
The Applicant sought a first-tier review of that decision by the Social Services and Child Support Division of this Tribunal (SSCSD), who on 19 March 2018, affirmed the decision.[8]
[8] Exhibit 1, T Documents, T 2, pages 3-7, Decision of the Social Security and Child Support Division.
Following this, the Applicant sought a second-tier review of this matter by the General Division of this Tribunal, by way of an application dated 27 April 2018.[9]
[9] Exhibit 1, T Documents, T 1, pages 1-2, Application for Review.
On 8 November 2018, a Hearing was held for this application. At the Hearing, the Applicant appeared by telephone and gave evidence under affirmation.
On 29 March 2019, Executive Deputy President Dr P McDermott RFD reconstituted the Tribunal[10] so that the matter would be determined by Member Mitchell. On 5 April 2019, a Directions Hearing was held. The parties did not wish to make further submissions.
[10] Section 19D of the Administrative Appeals Tribunal Act 1975 (Cth).
The issue to be determined by the Tribunal is whether the compensation preclusion period has been correctly applied and whether there are special circumstances which would make it appropriate to treat part or all of the Applicant’s compensation payment as not having being made.
THE LAW
The relevant law in relation to this matter is found in the Social Security Act 1991 (Cth) (the Act).
Part 3.14 of Chapter 3 of the Act deals with compensation recovery. Section 1160 of the Act sets out the general effect of Part 3.14 as follows:
1This Part operates in certain specified circumstances to do one or more of the following:
(a)reduce a person’s compensation affected payment;
(b)render a person’s compensation affected payment not payable;
(c)require the repayment of some or all of the person’s compensation affected payment;
because of the receipt of compensation by the person or the person’s partner.
2This 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.
Division 3 of the Act relates to persons receiving or claiming a compensation affected payment and receiving a lump sum compensation payment regardless of whether the lump sum payment was received before or after the person received or claimed the compensation affected payment.[11]
[11] Section 1168 of the Act.
Section 17 of the Act provides compensation recovery definitions. The definition of ‘compensation affected payment’ set out in section 17(1) of the Act includes a carer payment.[12]
[12] Section 17(1) of the Act – compensation affected payment means (f).
Section 17(2) of the Act defines ‘compensation’ as:
(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.
Section 17(3) of the Act relevantly defines ‘compensation part of a lump sum compensation payment’ as 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 be consent judgement being entered in respect of the settlement or otherwise;
Section 1169 of the Act provides that if a person receives or claims a compensation affected payment, the compensation affected payment is not payable to the person in relation to any days in the lump sum preclusion period.
Section 1170 of the Act sets out the calculation method of a lump sum compensation preclusion period and relevantly provides:
1Subject to subsection (2), if a person receives both periodic compensation payments and a lump sum compensation payment, the lump sum preclusion period is the period that:
(a)begins on the day following the last day of the periodic payments period or, where there is more than one periodic payments period, the day following the last day of the last periodic payments period; and
(b)ends at the end of the number of weeks worked out under subsection (4) and (5).
2If a person chooses to receive part of an entitlement to periodic compensation payments in the form of a lump sum, the lump sum preclusion period is the period that:
(a)begins on the first day on which the person’s periodic compensation payment is a reduced payment because of that choice; and
(b)ends at the end of the number of weeks worked out under subsections (4) and (5).
3If neither of subsections (1) and (2) applies, the lump sum preclusion period is the period that:
(a)begins on the day on which the loss of earnings or loss of capacity to earn began; and
(b)ends at the end of the number of weeks worked out under subsections (4) and (5).
4The number of weeks in the lump sum preclusion period in relation to a person is the number worked out using the formula:
Compensation part of the lump sum/income cut out amount
5If the number worked out under subsection (4) is not a whole number, the number is to be rounded down to the nearest whole number.
Section 1184 of the Act provides that the Respondent may send a recovery notice to a compensation payer or insurer under which the insurer is liable to pay the Commonwealth the amount specified in the notice.
Section 1184K of the Act provides that the Respondent may treat the whole or part of a compensation payment as not having been made or not liable to be made if the Respondent thinks it is appropriate to do so in the special circumstances of the case. This effectively allows the preclusion period to be reduced.
ISSUES
The issues for the Tribunal to consider are:
1.Whether, the compensation preclusion period has been correctly applied; and
2.Whether there are special circumstances which would make it appropriate to treat part or all of the Applicant’s compensation payment as not having been made.
CONSIDERATION
Was the Applicant’s compensation preclusion period correctly applied?
The Respondent contends that the preclusion period of 145 weeks, which was applied for the period from 11 February 2013 to 22 November 2015 is correct.[13] Accordingly the Respondent decided to recover a compensation charge in the sum of $38,290.88 representing the amount of carer payment that was paid to the Applicant during that preclusion period.[14]
[13] Exhibit 2, Secretary’s Statement of Issues, Facts & Contentions, paragraphs 22 to 25, page 5.
[14] Exhibit 2, Secretary’s Statement of Issues, Facts & Contentions, paragraph 6, page 2.
At the Hearing, the Applicant told the Tribunal that she agreed with the quantum of the preclusion period and the compensation charge raised.[15] The Applicant raised no issue with the calculation of the preclusion period or resulting compensation charge but rather contended that special circumstances exist so that the compensation charge amount should not have be applied.
[15] Transcript, page 3.
Based on the evidence before the Tribunal and the agreement of the parties, I am satisfied that the compensation preclusion period was correctly applied.
Are special circumstances present?
As I have found that the compensation preclusion period was correctly applied, I must consider whether there are any special circumstances that would make it appropriate to treat part or all of the Applicant’s compensation payment as not having been received.
Section 1184K of the Act provides a discretion to treat all or part of the compensation payment as having not been made where special circumstances exist, which in turn would reduce the preclusion period.
The Act does not provide a definition of special circumstances. However, the general proposition, established by relevant Federal Court decisions, make it clear that ‘special’ means something different from the usual or ordinary.
In Re Beadle and Director-General of Social Security (1984) 6 ALD 1 the Tribunal held at page 3:
An expression such as “special circumstances” is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to 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.
In Re Ivovic and Director-General of Social Services (1981) 3 ALN N95, the Tribunal stated at pages N96-N97:
Whilst it would be unwise, if not impossible, to attempt to lay down any precise delineation of what may amount to “special circumstances” …., the use of the word “special” is, we think, intended to allow the decision-maker the fullest opportunity to consider the particular circumstances of each case … In the exercise of the discretion …., the decision-maker must have regard to whether, by exercising the discretion in a particular case, he will be achieving or frustrating ends or objects which are conformable with the scope and purpose of the …. Act.
In Groth and Secretary, Department of Social Security [1995] FCA1708, the Federal Court stated at paragraph [12]:
The phrase “special circumstances”, it has been said, although imprecise is sufficiently understood not to require judicial gloss …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. … 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 Re Secretary, Department of Social Security and Winterbotham [1990] AATA 808, Deputy Present Burns explained at paragraph [19]:
This particular piece of legislation …. was aimed specifically at preventing those people receiving compensation for loss of income because of incapacity for work from being able also to receive benefit from the public purse … Primary responsibility for the payment of such compensation lies at the feet of those responsible for the compensable injury. Once that responsibility has been met, by way of a settlement sum agreed to by both parties, it is inequitable for the recipient to seek supplementary funds from the taxpayer.
The Respondent contends that the Applicant’s circumstances, when compared to those of other social security recipients, are not special to the extent that would warrant the exercise of the discretion conferred by section 1184K of the Act in her favour.[16]
[16] Exhibit 2, Secretary’s Statement of Issues, Facts & Contentions, paragraph 57 page 11.
The Respondent further contended that:
·of itself, perceived unfairness or a lack of causal connection, cannot amount to a special circumstance. Simply put, it would defeat the clear purpose and intent of the legislation if the Tribunal were to find that special circumstances exist simply because the Applicant was in receipt of Carer Payment. Furthermore, a recipient of Carer Payment who receives the payment in respect of the care they provide to a foster child should not be treated any differently, with respect to the application of the compensation recovery provisions, to a recipient of Carer Payment who is providing care to a variety of other care receivers including family members or friends.[17]
·that for financial hardship to qualify as a special circumstance the Applicant’s circumstances need to be severe and worse than the majority of social security recipients.[18]
·agrees that the Applicant’s financial situation is constrained, however when compared to the vast majority of social security recipients, the Applicant’s financial circumstances are comparably better. The Applicant is not currently in receipt of social security benefits, is in full-time employment, and has assets available to her. In those circumstances the Respondent submits the Applicant is not suffering financial hardship.[19]
·if the Applicant suffers from ongoing health issues this is no unusual or out of the ordinary for someone who has received compensation as a result of a compensable injury.[20]
·the requirement to undergo further treatment or receive ongoing care is not unusual or out of the ordinary for someone who has received compensation as a result of a compensable injury.[21]
·there is no evidence that the Applicant’s ill health is unusual or out of the ordinary, and this is a factor weighing against the exercise of the discretion under section 1184K of the Act.[22]
·there is no documentary evidence with respect to how the Applicant spent the lump sum payment and this is a factor weighing against the exercise of the discretion under section 1184K of the Act.[23]
·the Respondent made the Applicant and her solicitors aware of the potential impact of a future compensation payment on her Centrelink payments in a letter dated 29 April 2013 and this is a factor weighting against the exercise of the discretion under section 1184K of the Act.[24]
[17] Exhibit 2, Secretary’s Statement of Issues, Facts & Contentions, paragraph 41 page 8.
[18] Exhibit 2, Secretary’s Statement of Issues, Facts & Contentions, paragraph 42 page 8.
[19] Exhibit 2, Secretary’s Statement of Issues, Facts & Contentions, paragraphs 43-47 pages 8-9.
[20] Exhibit 2, Secretary’s Statement of Issues, Facts & Contentions, paragraph 49, page 9.
[21] Exhibit 2, Secretary’s Statement of Issues, Facts & Contentions, paragraph 49, page 9.
[22] Exhibit 2, Secretary’s Statement of Issues, Facts & Contentions, paragraph 50, page 10.
[23] Exhibit 2, Secretary’s Statement of Issues, Facts & Contentions, paragraph 55, page 11.
[24] Exhibit 2, Secretary’s Statement of Issues, Facts & Contentions, paragraph 56, page 11.
The Applicant outlined her reason for making an application to the Tribunal was that: [25]
I claim that the decision is incorrect as my accident therefore my compensation payment has no relevance to the fact I am a foster carer and received carer payments.
[25] Exhibit 2, T Documents, T1, page 2, Application for Review.
In a submission dated 29 September 2018 the Applicant outlined the following summarised factors that she contended demonstrate special circumstances: [26]
·whilst caring from the two high needs complex foster children both her and her husband’s health deteriorated. She was diagnosed with a heart condition, requiring fortnightly injections and her diabetes is now insulin dependent.
·she had increased stress.
·as she was not informed that she would be affected by the preclusion period she was unable to modify her home to meet the needs for her ongoing medical issues. This would include rails in the bathroom and a heated tub to assist with the intense pain she experiences daily.
·she works full time however her husband is unable to work due to health reasons. Although she may earn more than someone on Centrelink she has higher outgoing costs to meet on a weekly, monthly and fortnightly basis.
·during the preclusion period, she had to alter her career path to care for the children, who were complex and high needs and required 24-hour care. Due to this they struggled financially and after the children left their care they were not able to maintain their house payments and other debts and were at risk of losing everything. Friends and family assisted them on the condition they would be paid back when the compensation was received. She is still paying those debts due to the amount that was taken from the payout and paid to Centrelink.
·she was not given any advice regarding the preclusion period. She was told by her solicitors just before she received her compensation payout in January 2018 that there may be an issue with Centrelink and that she could be liable to pay back money that she had received for the children in her care. This did not give her the opportunity to find out more information or to discuss her options with Centrelink as the preclusion period had already expired.
[26] Exhibit 3, Applicant’s Statement of Special Circumstances.

At Hearing, the Applicant told the Tribunal: [27]
[27] Transcript, pages 12-16.
·in relation to fairness of the law, she understands what the Act is and does not respect the Act however understands that she needs to talk to ministers about the unfairness towards foster parents.
·in relation to health she does not believe she is better off than other people going through this stuff. She suffers extreme pain every day, where at times she cannot walk on her leg and has to wear a brace. She goes to work each day because that is what she has to do.
·her doctors have said she should not be working and should be on a disability pension. She said: “Well that’s what my life isn’t about at 47 years of age, so I choose to go to work every day, although I’m – I suffer extreme pain and, you know, like also I have a heart condition, I’m a diabetic, insulin diabetic, so I don’t believe that my health is much better than anyone else’s. The hardship, yes, I work full-time, but my – now my financial situation has changed. My husband doesn’t receive anything whatsoever from Centrelink, so no Health Care Card, nothing. So, both of us are on bucket loads of medication to keep us alive, I have to somehow pay that out of my wage because we’re not on any sort of Centrelink at all.”
·she is a social worker.
·her husband had not received Centrelink payments since October (being October 2018).
·she believes they are worse off and she does not feel that she should have to sell her family home to compensate for the fact that she works and that they cannot take care of their medical health due to the extremities of it and the fact that they do not receive anything to assist with that.
·her and her husband’s monthly medical cost is about $400.
·she had a history of depression and working helps keep her mind off things. It has been stressful caring for the foster children and having to deal with this issue.
·in relation to insufficient legal advice there was never any direct notification that because she was a foster parent and that she was claiming this money that she would be affected. Both the Applicant and her solicitors thought it would be ridiculous for her to have to repay monies she received in connection with being a foster parent.
·she was at the time of the Hearing supporting her husband and a foster child. Her compensation payment was to be used for her therapy in regards to her injury so she could continue working. She now cannot take care of her health, she now has to have surgery to assist with her weight as she cannot afford to put a pool in at home to help her exercise.
·she did not get financial advice when she received her compensation payment.
·she feels she is being disadvantage for being a foster carer and for working.
Upon cross-examination, the Applicant told the Tribunal: [28]
[28] Transcript, pages 17 to 22.
·she had not taken any steps against her solicitors in regards to this matter.
·she received the notices regarding the possibility of having to repay monies should she be successful in her compensation claim.
·she also has loans to family and friends which were not included in her statement of financial circumstances totalling $8,000. She is repaying these slowly as she can.
·she had expended the compensation payment monies on:
omuch needed home repairs.
obuying a reliable car.
ocaught up on bills including her mortgage and rates.
ofurther repairs to her home which included new hot water systems, repairs to the kitchen roof.
·she still has approximately $8,000 cash.
·her home’s current value is $350,000 with an outstanding mortgage of $285,000.
·her husband does not receive any support from Centrelink because her wages are too high.
While the Tribunal accepts that the Applicant’s financial situation is strained and that she has health issues of which are of concern to her and add to her financial difficulties, there is no evidence before the Tribunal that demonstrates that her circumstances are unusual or uncommon in comparison to others who would find themselves in a similar situation.
The Applicant acknowledges the receipt of Centrelink notices in relation to her compensation claim and possible effect on her Centrelink payments, however did not think she would be affected. She did not think that her carers payment would be effected as she was receiving the payment as a result of providing foster care to two special needs children. While the contention put forward by the Applicant is not an unreasonable thought process, especially in a situation where she is acting benevolently by providing care to children in need, the Act defines a compensation affect payment to include a carer payment[29] and specifically provides at section 1160(2) of the Act that:
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.
[29] Section 17(1) of the Act.
The rate of carer payment paid is affected by a person’s income, there is no distinction in relation to whom the care is provided to. As such it would not be consistent with the intent of the Act to find that the provision of care to foster children create a situation that is unfair, unintended or unjust that is out of the ordinary.
There is insufficient evidence before the Tribunal to make an assessment in relation to the basis upon which the Applicant spent her settlement amount.
In considering the evidence before the Tribunal holistically, I do not consider that the Applicant’s circumstances are sufficiently special or unusual to warrant the exercise of the discretion in section 1184K of the Act to treat part or all of the Applicant’s compensation payment as not having been received.
CONCLUSION
I find that the:
(a)The compensation preclusion period has been correctly applied; and
(b)There are no special circumstances which would justify treating part or all of the Applicant’s compensation payment as not having been made.
Accordingly, the decision under review is affirmed.

I certify that the preceding 44 (forty-four) paragraphs are a true copy of the reasons for the decision herein of Member D Mitchell

.............................[SGD]...................................
Associate
Dated: 3 May 2019

Dates of hearing: 8 November 2018

Applicant: By Phone

Advocate for the Respondent: Mr Nicholas Warren

Solicitors for the Respondent: Department of Human Services

[2019] AATA 796

3 May 2019

Key Legal Topics

Areas of Law

Administrative Law

Statutory Interpretation

Legal Concepts

Judicial Review

Statutory Construction

Procedural Fairness

Remedies

Jurisdiction

Dates of hearing:	8 November 2018
Applicant:	By Phone
Advocate for the Respondent:	Mr Nicholas Warren
Solicitors for the Respondent:	Department of Human Services