Sousa and Secretary, Department of Employment and Workplace Relations

[2005] AATA 1268

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 1268

ADMINISTRATIVE APPEALS TRIBUNAL        Nº V2005/543

GENERAL  ADMINISTRATIVE DIVISION

Re:         MANUEL SOUSA

Applicant

And:       SECRETARY,

DEPARTMENT OF EMPLOYMENT

AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal:       Dr P.D. Fricker, Member

Date:             20 December 2005

Place:            Melbourne

Decision:The Tribunal affirms the decision under review.

(sgd) P.D. Fricker

Member

SOCIAL SECURITY - lump sum compensation - preclusion period - whether special circumstances exist

Social Security Act 1991   as 17(1), (2), (3) 1170(1), (4), (5), 1184K

Re Beadle and the Director General of Social Security (1984) 6 ALD 1

Re Green and Secretary, Department of Social Security (1990) 21 ALD 772

REASONS FOR DECISION

20 December 2005  Dr P.D. Fricker, Member

1.      This is an application by Manuel Sousa (the applicant) for review of a decision made by the Social Security Appeals Tribunal (SSAT) on 19 May 2005.  The SSAT affirmed a decision of a Centrelink delegate of the Secretary to the Department of Employment and Workplace Relations (the respondent) dated 25 January 2005. The delegate decided to raise and recover $25,250.40 representing overpayment of social security payments made to Mr Sousa between 26 December 2002 and 19 January 2005.

2.      At the hearing on 8 November 2005 Mr Sousa represented himself. Mr Perdon, a Centrelink advocate, appeared on behalf of the respondent.

3.      The Tribunal was assisted by an interpreter in the Portuguese language. The hearing was conducted for the most part in English.

4.      The Tribunal received into evidence the documents lodged under s 37 of the Administrative Appeals Tribunal Act 1975 (T1‑T39), together with a Centrelink file note tendered by the respondent (Exhibit R1).

BACKGROUND

5.      The applicant was injured at work on 1 February 2000 and received periodic compensation payments until 22 August 2002.  He received social security payments from 26 December 2002 until 19 January 2005.  This was paid as sickness allowance until 30 October 2003, after which time it was paid as disability support pension (DSP).

6.      On 5 January 2005 the applicant's common law claim was settled for $265,000. On 25 January 2005 Centrelink advised him that, as part of the compensation settlement was for lost earnings or capacity to earn, he was not entitled to receive DSP for a certain period. This preclusion period applied to him from 23 August 2002 to 29 June 2006. As he had already been paid DSP until January 2005, he was therefore liable to repay Centrelink $25,250.40.  Centrelink also advised him that further disability support payments were to cease. On 2 February 2005 Centrelink recovered the $25,250.40 from the applicant's insurance agent.

7.      A letter received by Centrelink on 31 January 2005 from the applicant's solicitor requested that the decision be reviewed by an Authorise Review Officer (ARO).  The ARO affirmed the decision with a minor amendment on 18 March 2005 and later corrected the amendment on 12 April 2005.  The applicant lodged an appeal to the Social Security Appeals Tribunal (SSAT) which affirmed Centrelink's decision on 19 May 2005.  On 17 June 2005 the applicant lodged an application with the Tribunal for review of the SSAT decision.

8.       The issues before the Tribunal are whether the applicant was subject to a preclusion period; if so, what should the length of the preclusion period have been; and whether there are grounds to waive part or all of that preclusion period due to special circumstances.

EVIDENCE

9.      At the hearing the applicant accepted that his disability support pension had been correctly cancelled at the time he was awarded his compensation payment.  However, the applicant argued that he was not liable to repay Centrelink any of the social security payment he had received while he was awaiting the outcome of his compensation claim for the following reasons.

·   The lump sum payment of $265,000 was to compensate him for the loss of his profession; it was to compensate him for his injury; and it did not represent weekly payments.

·   He was completely unaware of Centrelink's advice that he may have to pay back a portion of the compensation.

·   From the time he arrived in this country, nearly 18 years ago, until his injury, he had worked productively.

·   He has tried to spend the lump sum responsibly, paying off his debts and buying a house.  He expected to be able to keep $25,000 in reserve for future needs such as supporting his partner until their child was old enough for her to resume work or for the children's education.

·   Although he has been doing very light work since March 2005, putting foam in furniture, he is unable to work normal hours.  A change in the weather can increase the pain in his back.  He works only 20 to 25 hours a week and sometimes as few as 15 hours.  His doctors have recommended that he not push himself.

·   His family has had to separate because he is unable to support them.  He cannot survive on his current income and support five people; a partner, their baby and her two children from a previous relationship.

·   He had paid all his debts and bought a house after he received the balance of the compensation payment, after Centrelink had recovered its debt, because he was not told that he would never be able to recover the money from Centrelink.

10.     During the hearing the applicant acknowledged the receipt of letters from Centrelink which he opened and passed on to his solicitor.  He said he believed that if any of these letters had contained advice about debt repayment, his lawyers would have told him.  He also acknowledged that he was aware in January 2005 that Centrelink was to deduct the $25,250.  He said he had not been able to do anything about it.  He said that was why his solicitor had written to object to the decision.

11.     The applicant confirmed that he had used the compensation money to repay a credit card debt of $11,000 and $7000 that he owed to his brother.  He said that his brother had lent him the money to assist with legal fees incurred when he was divorced in 2002 or 2003.  His brother had not demanded repayment but lent it to him on the understanding that he would pay it back when he received his settlement.  The applicant said that he did not like having any debts.  He said that he had bought the house in March 2005 by private sale and had settled on it about 14 days after paying the deposit.  He was not able to get a bank loan and went to a mortgage broker.  He has a $130,000 mortgage with interest only payments of $840 per month for 12 months.  The broker wanted to lend him only $120,000 but he managed to obtain $130,000 because he liked and wanted that house.

12.     The applicant was asked to confirm that his income was $561.25 per week as stated on a Statement of Financial Circumstances dated 19 May 2005 (T35).  He said that his income was between $220 and $350 a week and the $561.25 represented an estimate, or what he would like to be able to earn.  The applicant was asked to comment on a Centrelink file note that referred to the receipt of a letter from his employer dated 4 July 2005, stating that the applicant earned $561.26 gross per week working for Morgan Furniture (Exhibit R1).  He said that Centrelink had asked him to provide a letter from his employer stating what he would be earning on full hours, although he could not work full hours.  He was asked to comment on the following statement in the Statement of Facts and Contentions for Applicant document, completed on his behalf by Victoria Legal Aid, that had been received by the Tribunal on 4 November: "…At present he earns approximately $300 to $400 per week".  He said he did not know who had written this, and that he had never met anyone from Legal Aid.  He said he spoke to a woman on the telephone but had not been able to understand what was being said.  He said he had had the use of an interpreter.  He confirmed that his living expenses were as itemised in the same document.  He said that on only two occasions had he ever earned as much as $350 a week.

13.     The applicant said he had been in a marriage‑like relationship for two years.  His partner and her children had left and were living with her mother.  He said he did not know if his partner had any health problems.  She looked healthy.  He only has telephone contact with them.  The only contact was because of the baby. There was no relationship.  He did not know whether she would come back if there were a change in his circumstances. 

CONSIDERATION OF THE ISSUES

14.     The relevant legislation is the Social security Act 1991 (the Act).  Section 17(1)(a) of the Act provides that compensation affected payments  include disability support pension.  Section 17(2) of the Act defines the term "compensation:.

17.(2)      Subject to subsection (2B), for the purposes of this Act, compensation means:

(a)a payment of damages; or

(b)a payment under a scheme of insurance or compensation under a Commonwealth, State or Territory law, including a payment under a contract entered into under such a scheme; or

(c)a payment (with or without admission of liability) in settlement of a claim for damages or a claim under such an insurance scheme; or

(d)any other compensation or damages payment;

(whether the payment is in the form of a lump sum or in the form of a series of periodic payments and whether it is made within or outside Australia) that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury.

15.     Under s 17.(3) of the Act, 50 percent of a lump sum settlement for a compensation claim is held to be the compensation part of the payment.  Section 1170 of the Act sets out the method of calculating a compensation preclusion period, which commences on the day following the last day of periodic payments (s 1170(1)(a)).  Section 1170(4) and s 1170(5) provide that the length of the preclusion period is calculated by dividing the compensation part of the payment by the income cut out amount.  The income cut out amount is defined in s 17(1)(t), according to a formula set out in s 17(8).  I find that the lump sum payment received by the applicant falls within the definition of compensation in s 17(2) of the Act.  I am satisfied that the SSAT correctly calculated the preclusion period as being 201 weeks, commencing on 23 August 2002, the day after the applicant ceased to receive periodic compensation payments, and ceasing on 29 June 2006.

16.     Section 1184k(1) of the Act gives the decision‑maker discretion to treat the whole or part of a compensation payment as not having been made or not liable to be made, if the decision‑maker thinks it is appropriate to do so in special circumstances.  Special circumstances are not defined in the Act. In Re Beadle and the Director General of Social Security (1984) 6 ALD 1 Toohey J held that:

An expression such as "special circumstances" is by its very nature incapable of precise exhaustive definition.  The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional.

In Re Green and Secretary, Department of Social Security (1990) 21 ALD 772, the Tribunal held that:

·   The decision-maker must have regard to whether, by exercising the discretion in a particular case he/she will be "achieving or frustrating ends or objects which are comfortable with the scope and purpose of the Social Security Act".

·   The decision maker must be prepared to respond to special circumstances of any particular case by reason of which strict enforcement of the liability created by the section would be unjust, unreasonable or otherwise inappropriate.

17.     Mr Perdon argued that the intention of the legislation was to ensure that a person is not paid compensation for a period during which they are receiving Social Security.  A person was not expected to be unsupported while waiting to receive a compensation payment, but during the period they are receiving social security payments, they are served with notices that they will have to pay an amount back when their compensation claim is settled.  He contended that on 20 September 2002 (T10) and on 3 January 2003 (T11) the respondent advised the applicant in writing to that effect; and on 25 January 2005 he and his solicitor were informed of the details of the charge.  Mr Perdon further argued that the applicant retains a substantial portion of his settlement in the form of equity in a home.  He may have the capacity to redraw on his mortgage or take out a personal loan.  The applicant has a capacity for work and has been working.  The financial position of the applicant would not, of itself, constitute special circumstances.

18.     The applicant did not deny that he received letters from Centrelink, only that he was unaware of their contents.  He did acknowledge that by January 2005 he was aware of the repayment claimed by Centrelink and that the decisions as to how he would use the lump sum were made after he received the balance of the compensation lump sum.

19.      The question that the Tribunal must address is whether the applicant's circumstances are indeed unusual, uncommon or exceptional and whether enforcing this liability, which in the applicant's case is an amount of $25,250.40, would be unjust, unreasonable or otherwise inappropriate.

20.     The evidence has established that the applicant, as a result of a back injury, is no longer able to work in his previous occupation as a carpenter and as a result his earning capacity has been reduced.  Although unfortunate, this is a circumstance common to many injured workers.  The circumstances of the applicant's particular situation are that he is debt-free, has assets in the form of equity in a home and a car and is able to earn an income.  He entered into his current obligations after the debt to Centrelink had been repaid.  It is unfortunate for him that he no longer has a relationship with the mother of his child.  His evidence is that the relationship has broken down but that were he to have a relationship he would not be able to support a family of five.  The applicant currently acknowledges earning $250 to $300 a week, but all the documentary evidence points to his earning more.  The evidence is that the applicant does not have any unusual commitments and that his ex-partner and the children do not have any particular health problems.  Mr Perdon submitted that, were they living together, any Social Security entitlement she would have would not be affected by the preclusion period.  He also submitted that an income of $300 a week was double the pension rate.

21.     After considering all the relevant matters and carefully looking at the applicant's particular circumstances, I was not satisfied that the matters raised by him are such as to make his situation unusual, uncommon or exceptional.  Nor was I satisfied that enforcement of the liability would be unjust, unreasonable or otherwise inappropriate. Therefore, there are no grounds for the Tribunal to exercise the discretion under s 1184K(1) of the Act.

DECISION

22.     The Tribunal affirms the decision under review.

I certify that the twenty‑two [22] preceding paragraphs are a true copy of the reasons for the decision of:

P.D. Fricker, Member

signed:   Catherine Lake

Clerk

Date of hearing:  8 November 2005

Date of decision:  20 December 2005
Solicitor for applicant:                  Nil – self represented

Advocate for respondent:            Mr D. Perdon