STILL and SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNTY SERVICES AND INDIGENOUS AFFAIRS
[2010] AATA 248
•9 April 2010
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2010] AATA 248
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2009/1414
GENERAL ADMINISTRATIVE DIVISION ) Re JENNIFER KAYE STILL Applicant
And
SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNTY SERVICES AND INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal Senior Member R W Dunne Date9 April 2010
PlaceAdelaide
Decision The Tribunal affirms the decision under review.
..............................................
R W DUNNE
(Senior Member)
CATCHWORDS
SOCIAL SECURITY – pensions, benefits and allowances – injuries suffered in a motor vehicle accident – compensation – preclusion period as a result of lump sum compensation payment – overpayment of disability support pension and raising of debt – whether special circumstances exist to warrant treating all or part of the lump sum compensation as not having been made – special circumstances found not to exist – decision under review affirmed
Social Security Act 1991 (Cth), ss 17(1), (2) and (3), 1160(1), 1168, 1169(1), 1170(3), (4) and (5) and 1184K(1)
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Re Fuller and Secretary, Department of Family and Community Services [2004] AATA 615
Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25Clark v Secretary, Department of Employment and Workplace Relations [2007] FCA 1076 Secretary, Department of Family and Community Services v Chamberlain [2002] FCA 67
REASONS FOR DECISION
9 April 2010 Senior Member R W Dunne introduction
1. Jennifer Still (“applicant”) suffered various injuries in a motor vehicle accident in January 2006. At the time, she was receiving Disability Support Pension (“DSP”) for a heart condition. She claimed compensation from the Motor Accident Commission for her injuries. On 26 August 2008 she settled her claim for an all in lump sum of $26,250. The lump sum included $1,660 for past loss of earnings and $2,500 for loss of future earnings. As a result of the settlement, the respondent (“Centrelink”) calculated a preclusion period of 17 weeks from 20 January 2006 (the day after the accident) to 18 May 2006. During that period, Ms Still was paid $4,271.61 in DSP and Centrelink raised a debt in that amount. At Ms Still’s request, the decision was reviewed and affirmed by a Centrelink officer, an Authorised Review Officer and the Social Security Appeals Tribunal (“SSAT”). Ms Still has applied to this Tribunal for review of the decision of the SSAT.
2. At the hearing, Ms Still was represented by her brother, Mr Holder, and Centrelink was represented by Ms Julie Okmasich (from Centrelink Advocacy Branch). The Tribunal received into evidence the T documents (Exhibit R1) lodged pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (Cth), together with the following documents:
·applicant’s outline of argument, together with Annexure “A” (Instructions to Settle), Annexure “B” (Statutory Declaration) and Annexure “C” (Solicitor’s Tax Invoice) (Exhibit A1);
·letter to applicant from her solicitor dated 1 August 2008 providing details of settlement amount (Exhibit A2);
·Secretary’s Statement of Facts and Contentions, with Annexure “A” (Instructions to Settle) (Exhibit R2); and
·letters from the respondent to the applicant dated 30 November 2007 (Exhibit R3), 2 May 2008 (Exhibit R4), 25 July 2008 (Exhibit R5) and 17 October 2008 (Exhibit R6).
issues for the tribunal
3. The issues for the Tribunal are:
(a) Whether the applicant is subject to a compensation preclusion period as a result of the lump sum compensation payment received by her and, if so, for what period?
(b) If the applicant is subject to a compensation preclusion period, are there “special circumstances” that make it appropriate to disregard all or part of the lump sum compensation payment, pursuant to s 1184K of the Social Security Act 1991 (“Act”)?
legislative scheme
4. Part 3.14 of the Act provides for the effect of compensation recovery on certain social security benefits. Section 1160(1) of the Act provides for the general effect of that Part of the Act. It reads as follows:
“1160 General effect of Part
(1)This 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 a person’s compensation affected payment;
because of the receipt of compensation by the person or the person’s partner.
…”
5. Section 1169(1) of the Act provides, in effect, that a compensation affected payment is not payable during a lump sum preclusion period. It reads as follows:
“1169 Compensation affected payment not payable during lump sum preclusion period
(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.
…”
6. Section 17(1) of the Act defines the expression “compensation affected payment”, and DSP is included in that definition. Section 17(2) of the Act then defines “compensation”. This includes a payment of damages “that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury”.
7. Section 1170(3) of the Act provides relevantly that the lump sum preclusion period is the period that begins on the day on which the loss of earnings or loss of capacity to earn began, and ends at the end of the number of weeks worked out pursuant to the statutory formula referred to in sub-sections 1170(4) and (5). That formula refers to the “compensation part of lump sum” and the sub-sections read:
“1170 Lump sum preclusion period
…
(4)The number of weeks in the lump sum preclusion period in relation to a person is the number worked out using the formula:
(5) If the number worked out under subsection (4) is not a whole number, the number is to be rounded down to the nearest whole number.”
8. Section 17(3) of the Act provides an artificial statutory formula for determining the “compensation part of a lump sum compensation payment”. The compensation part of the lump sum is 50 percent of the settlement amount. Section 17(3) provides relevantly as follows:
“Compensation part of a lump sum
(3)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 by consent judgment being entered in respect of the settlement or otherwise; or
…”
9. The above provisions must, however, be read subject to s 1184K of the Act. That section authorises the Secretary (and this Tribunal, standing in the shoes of the Secretary) to disregard the whole or part of a compensation payment in certain circumstances, referred to as “special circumstances”. Section 1184K(1) provides as follows:
“1184K Secretary may disregard some payments
(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.
…”
background and evidence
10. There is no dispute relating to the facts of this matter, which are largely contained in the reasons for decision of the SSAT. Prior to commencing to receive DSP, Ms Still was a TAFE lecturer. In 2001, she was diagnosed with a heart condition, cardiomyopathy. At the time of her accident in January 2006, she was receiving DSP and working part-time. Following her claim for compensation, Allianz Australia Insurance Limited (the MAC insurer) (“Allianz”) offered her $8,540 to settle the claim. She engaged a solicitor and the settlement offer was increased to $26,250 and accepted by Ms Still. The settlement amount comprised the following components:
Pain and Suffering
$15,090.00
Past Economic Loss
$1,660.00
Voluntary Services
$2,000.00
Future Care
$2,000.00
Loss of Chance
$2,500.00
Legal Costs
$3,000.00
Total
$26,250.00
11. Based on the amount of the settlement sum, Centrelink calculated a preclusion period of 17 weeks in accordance with the formula prescribed in s 1170(4) of the Act. The formula divided the total amount received by two, resulting in an amount of $13,125, which was the deemed economic loss component. This amount was divided by $759.75, being the income cut-out amount at the date of settlement, to produce the figure of 17 weeks (rounded down).
12. Although there was no dispute by Ms Still as to the determination of the preclusion period, it appears her solicitor had not obtained any estimate of the period. He had advised her by letter, after she had accepted the Allianz offer, that his policy was not to make enquiries on clients’ behalf, but to recommend that they make their own enquiries with Centrelink.
evidence of applicant
13. It was Ms Still’s evidence that she did not understand how the components of the settlement sum of $26,250 were worked out. She did not know about the preclusion period until she got a letter from Centrelink in November 2008. Her solicitor had not obtained any estimate of the preclusion period, nor had he told her before the settlement occurred about the existence of the preclusion period or the debt that would result from the settlement of her claim. She referred to the letter from her solicitor dated 1 August 2008 (Exhibit A2), which had enclosed a copy of the letter of offer from Allianz dated 29 July 2008 (Exhibit R1, T13 at page 77). Enclosed with the letter from her solicitor was a settlement instruction sheet for her to complete (Exhibit A1, Annexure “A”). Paragraph 1 of the instruction sheet read:
“I understand that as a result of that settlement, I may be precluded from obtaining Centrelink benefits for whatsoever period is designated by Centrelink. I understand I will also be required to pay back to Centrelink any monies paid to me by Centrelink since my motor vehicle accident, in the event I have been in receipt of such payments by reason of the injuries sustained in my accident. I understand I have been advised to contact Centrelink and make due enquiries as to the likely preclusion period, or whether monies are owing to Centrelink.”
Ms Still said that she did not understand what her lawyer was talking about or the relevance of the enclosure he had sent to her. She acknowledged that she had signed the settlement instruction sheet after receiving it from her solicitor. However, she could not remember doing so as she was very stressed at the time because of the settlement proceedings. She said she did not have high blood pressure before November 2008, when Centrelink wrote to her and she was advised of the debt that had arisen. She said she suffered a deterioration in her health because of the preclusion period calculation and Centrelink’s involvement in requiring payment of the debt.
14. In cross-examination by Ms Okmasich, Ms Still said that she was still working, but to a reduced extent. Her medical condition and increased blood pressure had impacted upon her ability to work. When questioned about the settlement instruction sheet, she confirmed that she had signed it and dated it 4 August 2008. When questioned further about letters that had been sent to her by Centrelink about the receipt of the lump sum compensation payment (Exhibits R3, R4, R5 and R6), she said she had been to see Centrelink as soon as she had received her settlement cheque, but the Centrelink officer who she saw did not raise with her any issue about a possible preclusion period.
consideration
Is the applicant subject to a compensation preclusion period and, if so, for what period?
15. Section 17(2) of the Act states that “compensation” means various types of payment, including any compensation or damages payment. When a lump sum payment is made to a claimant, the compensation part of the lump sum payment is calculated pursuant to s 17(3) of the Act as 50 percent of the settlement amount. The duration of the compensation preclusion period is determined in accordance with s 1170 of the Act. Section 1170(4) states that the number of weeks in a lump sum preclusion period is calculated on the basis of the formula:
Compensation part of lump sum
Income cut-out amount
In Ms Still’s case, the compensation part of the lump sum was 50 percent of her settlement amount, namely $13,125. As can be seen from paragraph 11 of these reasons, the income cut-out amount was $759.75, the number of weeks in the lump sum preclusion period was 17 weeks (rounded down) and the start day of the preclusion period was 20 January 2006, ending on 18 May 2006. The Tribunal is satisfied that the compensation preclusion period was correctly determined.
If the applicant is subject to a compensation preclusion period, are there any “special circumstances” that make it appropriate to disregard all or part of the lump sum compensation payment?
16. Mr Holder argued that there were three instances of “special circumstances” in Ms Still’s case which should enable the Secretary, under s 1184K(1) of the Act, to treat the whole of her lump sum compensation payment as not having been made. With the first instance, as the Tribunal understood it, Mr Holder argued that Ms Still had no “earnings” during the preclusion period, 20 January 2006 to 18 May 2006. She was a sub-contractor during this period and was able to claim a tax deduction in respect of 5,000 kilometres of travel (at 69 cents per kilometre), which would reduce her assumed earnings (put at $60 a week) to nil. In these circumstances, as she had no earnings, there was no “double dipping” and thus no basis upon which a preclusion period could be determined. In the Tribunal’s view, Mr Holder has confused the manner in which the lump sum preclusion period is determined with Ms Still’s earnings (or net earnings) for tax purposes. Although she may not have received any earnings (assumed to be $60 per week) before tax deductions, which the Tribunal finds factually difficult to accept, these matters are simply not relevant in determining Ms Still’s lump sum preclusion period under s 1170(4) of the Act.
17. With the second instance, Mr Holder contended that the inadequate legal advice given to Ms Still by her solicitor, in relation to her potential preclusion period and the resultant debt that arose, amounted to special circumstances. This raises the issue of what can be taken into account as “special circumstances”. The concept of what constitutes “special circumstances” has been discussed in many cases in the Federal Court and in this Tribunal. In Re Beadle and Director-General of Social Security (1984) 6 ALD 1, the Tribunal was dealing with an application under a different section of the Act which also, however, involved a consideration of whether special circumstances existed. Toohey J said (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 that are unusual, uncommon or exceptional. Whether 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.” [Emphasis added]
18. In a later case, Groth v Secretary, Department of Social Security (1995) 40 ALD 541, Kiefel J, after referring to the Federal Court’s decision in Beadle, observed at page 545 that special circumstances:
“... 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.”
19. On the evidence, Ms Still received certain legal advice, but failed to act on that advice. In paragraph 1 of the settlement instruction sheet sent to her by her solicitor, which she signed on 4 August 2008, she had been advised to contact Centrelink to make enquiries about her likely preclusion period and whether any debt would be owed to Centrelink. Mr Holder’s position was that Ms Still’s solicitor should have been more prudent in arriving at the components of the lump sum compensation payment. He referred to the decision of the President of the Tribunal, Downes J in Re Fuller and Secretary, Department of Family and Community Services [2004] AATA 615. In paragraph 27, Downes J said:
“27. … I do not see any reason why in a case in which an agreed sum of costs is a genuine assessment of those costs the applicant should not be treated in the same way as an applicant who is a party to a settlement where costs are to be subsequently agreed or assessed. Indeed, well advised applicants would probably seek to negotiate a figure with costs to be agreed on assessed in the future even if those costs were agreed very shortly after the settlement was reached.”
20. It seems clear that the President of the Tribunal was recognising what a well advised applicant should be seeking in negotiating the components of a settlement sum. However, this is not to say that, where inadequate advice is given or where an applicant does not act on any advice, this amounts to special circumstances. In the Tribunal’s view, if there was inadequate legal advice in Ms Still’s case, or if she failed to act on the advice given to her, this does not constitute “special circumstances”.
21. Finally, Mr Holder contended that Ms Still’s medical conditions, particularly her cardiomyopathy and her high blood pressure, constituted special circumstances. The Tribunal notes that, when she suffered her injuries in the motor vehicle accident in January 2006, she was in receipt of DSP at that time for her heart condition. Moreover, on her evidence, Ms Still’s high blood pressure has occurred since November 2008 when her dispute arose with Centrelink. She said there had been a clear deterioration in her general health since the accident. However, there was no clear evidence from her in support of this contention. As was said by Besanko J in Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25, an applicant’s circumstances must be “unusual” or “uncommon”. In the Tribunal’s view, Ms Still’s medical conditions do not constitute special circumstances to reveal something out of the ordinary that would justify the exercise of the discretion contained in s 1184K(1) of the Act.
22. Mr Holder also argued that it was unfair on Ms Still for Centrelink to adopt the approach it did in determining the preclusion period of 17 weeks. In Clark v Secretary, Department of Employment and Workplace Relations [2007] FCA 1076, Lindgren J referred to the judgment of Kiefel J in Secretary, Department of Family and Community Services v Chamberlain [2002] FCA 67. In analysing the judgment of Keifel J, Lindgren J said (at paragraph 75):
“I respectfully agree with the approach that was taken by Keifel J. The expression ‘special circumstances’ in s 1184K does not embrace the circumstance that the 50 percent rule will yield a preclusion period beginning on a certain date that will or may be excessive, even grossly excessive, having regard to the component included in a lump sum settlement for loss of earnings or of earning capacity, to the age of the injured person, and perhaps to other circumstances.”
In the Tribunal’s opinion, the adoption of the formula in s 1170(4) of the Act to determine the preclusion period in Ms Still’s case does not, in itself, constitute special circumstances.
conclusion
23. For the reasons outlined above, Ms Still’s circumstances do not amount to “special circumstances” and it is not appropriate to exercise the discretion in s 1184K(1) to treat the whole or part of the lump sum compensation payment she received as not having been made, so as to reduce the compensation preclusion period.
decision
24. 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 R W Dunne
Signed: .....................................................................................
AssociateDate of Hearing 1 December 2009
Date of Decision 9 April 2010
Advocate for the Applicant Mr Holder (applicant's brother)Advocate for the Respondent Ms J Okmasich
Centrelink Advocacy Branch
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