Storey and Secretary, Department of Social Services (Social services second review)
[2022] AATA 60
•18 January 2022
Storey and Secretary, Department of Social Services (Social services second review) [2022] AATA 60 (18 January 2022)
Division:GENERAL DIVISION
File Number(s): 2020/8648
Re:Derek Storey
APPLICANT
AndSecretary, Department of Social Services
RESPONDENT
DECISION
Tribunal:L Rieper, Member
Date:18 January 2022
Place:Sydney
The Tribunal sets aside the decision under review and substitutes a decision that Mr Storey is subject to a preclusion period starting on 29 July 2016 and ending on 26 September 2024.
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L Rieper, Member
CATCHWORDS
SOCIAL SERVICES – preclusion period – lump sum compensation payment – start date for preclusion period – whether the preclusion period had been incorrectly calculated – decision set aside and substituted
LEGISLATION
Social Security Act 1991 (Cth): s 17, 1169, 1170, 1171
CASES
Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634
HGMZ v Secretary, Department of Social Services [2021] FCA 280
Marchant and Secretary, Department of Social Services [2021] AATA 3568
Secretary, Department of Social Service and Mills [2019] AATA 753
Secretary, Department of Social Services and Viscuso [2021] AATA 3811Wakefield and Secretary, Department of Social Services [2020] AATA 573
SECONDARY MATERIALS
Guide to Social Security Law: 4.13.2.60
REASONS FOR DECISION
L Rieper, Member
18 January 2022
Mr Storey seeks a review of a decision made in the Social Security and Child Support Division of this Tribunal (“AAT1”) on 17 November 2020.
The issues to be determined relates to a preclusion period imposed on Mr Storey.
A hearing was held on 6 January 2022 via Microsoft Teams. Mr Storey appeared on his own behalf, and the Secretary was represented by Dr Thompson of Sparke Helmore.
Mr Storey says that the start date of the preclusion period has been incorrectly determined. He previously sought to argue that there are special circumstances that mean that the preclusion period should be shortened or disregarded but he did not press that argument during the hearing. The Secretary says that the way in which the ‘compensation part of lump sum’ has been calculated for the purposes of determining the length of the preclusion period is incorrect and that the start date has been incorrectly determined.
PRECLUSION PERIOD
Part 3.14 of the Social Security Act 1991 (Cth) (“the Act”) provides for the imposition of a preclusion period in certain circumstances where a person has received a lump sum compensation payment.
Mr Storey settled a workers compensation claim with Aristocrat Technologies Australia Pty Limited (“Aristocrat”) and its insurer on 21 December 2018, relating to a psychiatric injury suffered on 29 July 2016.[1] As a result of the injury, he was awarded lump sums of $55,550 on 11 October 2017 and $800,000 in the workers compensation settlement.
[1] T29, p. 148-167
On 29 January 2019, Mr Storey and his lawyers had been notified that a preclusion period had been imposed from 29 July 2016 to 26 September 2024.[2]
[2] T30, p.168-9 and T31, p.170-1
Mr Storey signed a settlement authority on 12 February 2019 acknowledging that his lawyers had advised him about the preclusion period and had estimated that it would likely be for a period of approximately 432 weeks.[3]
[3] Exhibit R1, p. 3
On 15 June 2020, a claim for Disability Support Pension made by Mr Storey[4] was rejected by a delegate of the Secretary on the basis that Mr Storey was subject to a preclusion period which did not end until 26 September 2024.[5] Mr Storey sought a review, and the decision was affirmed by an authorised review officer on 21 August 2020.[6] That decision was varied by AAT1 which determined that the preclusion period applied from 1 October 2015 to 23 March 2023.[7]
[4] T37, p. 183
[5] T38, p.253-4
[6] T43, p.276-280
[7] T3, p.7
START DATE
The length and timing of preclusion periods must be determined in accordance with section 1170 of the Act which, relevantly, says:
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 subsections (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).
Mr Storey contends that the proper start date for the preclusion period is 20 February 2012.[8]
[8] Exhibit A1, p.2
AAT1 determined that the proper start date was 1 October 2015.[9]
[9] T3, p.7
The Secretary contends that the proper start date is 29 July 2016.
It is common ground that it is subsection 1170(3) of the Act which is relevant as Mr Storey never received periodic payments. That means the start date must be the date when Mr Storey’s loss of earnings or loss of capacity to earn began.
Mr Storey ceased his employment with Aristocrat on 28 July 2016 as a result of a redundancy[10] and made his claim for workers compensation on or about 1 August 2016.[11] Aristocrat’s insurer notified Centrelink of the settlement by way of a notice dated 27 December 2018.[12] The date the loss of earnings was said to have commenced was 29 July 2016.
[10] T10, p. 64
[11] T40 , p.262-264
[12] T28 , p. 137-9
Mr Storey says that the start date should be 20 February 2012 because that was when he first lost capacity to work at a senior level, having resigned from his employment with the Department of Defence on that day. He gave evidence that he commenced working for Aristocrat on 19 March 2012.
Whilst it is not in dispute that Mr Storey suffered an injury in his previous employment, that fact is not relevant to the determination of the start date of the preclusion period. The loss of earnings or loss of capacity to earn referred to in subsection 1170(3) of the Act must be a result of the injury which led to the payment of compensation. The two are inextricably linked in the way in which a preclusion period is calculated. The Tribunal accepts the submissions of the Secretary which in short were:
(a)The benefit Mr Storey seeks to receive, being Disability Support Pension, is a ‘compensation affected payment’ (see section 17(1) of the Act).
(b)Section 1169 of the Act says that if a person receives or claims a compensation affected payment and receives a lump sum compensation payment, then the compensation affected payment is not payable to the person in relation to any day or days in the lump sum preclusion period.
(c)“Compensation” is defined in subsection 17(2) of the Act:
Compensation
(2) … 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 … ) that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury.
(d)The lump sum payments Mr Storey received on or about 11 October 2017 and 21 December 2018 were payments “in settlement of a claim for damages” under paragraph 17(2)(c) of the Act.
(e)The payments were made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury suffered while Mr Storey was employed exclusively by Aristocrat and no part was related to his employment with the Department of Defence.
(f)There is absolutely no nexus between an injury suffered in 2012 and the lump sum payments.
(g)In addition, section 1171 of the Act applies to Mr Storey because he received two lump sum payments “in relation to the same event that gave rise to an entitlement of the person to compensation.” The event in question is the injury suffered at Aristocrat and not any event which occurred in 2012.
(h)To take into account the impact of an injury suffered many years prior is entirely inconsistent with the policy rationale for a preclusion period which is that, in general, a person who has been compensated for loss of income is expected to live on that money for the duration of the preclusion period and not receive income from the social security system.[13]
[13] See paragraph 4.13.2.60 of the Guide to Social Security Law
Even if the Tribunal were wrong with respect to the interpretation of Part 3.14 of the Act, there is no evidence that Mr Storey suffered a loss of earnings or loss of capacity to earn in 2012. The Tribunal accepts that Mr Storey resigned from the Department of Defence because of “ongoing mental and physical health problems.”[14] However Mr Storey’s evidence was that he earned a “similar” income at Aristocrat; the difference being that benefits such as leave and pension were less generous at Aristocrat. Mr Storey gave evidence that it was his choice to accept a more junior role and he confirmed he has no medical opinion which says that he suffered a loss of earning capacity in 2012.
[14] Exhibit A10
The Tribunal is therefore satisfied that the start date of the preclusion period cannot be 20 February 2012.
AAT1 determined that the start date was 1 October 2015 on the basis that Mr Storey did not achieve a bonus he would have otherwise been entitled to receive. However, the evidence establishes that Mr Storey was paid the bonus. Mr Storey submitted an “Income and Assets” form to Centrelink on 18 October 2018, in which he advised that he had received a “late bonus payment” from Aristocrat of $14,106 in August 2017.[15] Whilst Mr Storey argued during the hearing that it was merely part of a settlement he received after making an unfair dismissal claim, there is no corroborating evidence of that, and Mr Storey conceded that he thought that was what the payment was when he completed the claim. It was not clear to the Tribunal why he held a different view by the time of the hearing. Even if that were not the case the Tribunal would not accept, in the absence of other evidence, that non-receipt of a bonus amounted to a loss of earnings or loss of capacity to earn given that bonuses are generally discretionary payments and Mr Storey’s evidence was that he did not initially receive the bonus because his manager said his performance did not warrant it.
[15] T25, p. 123
The Tribunal is satisfied that the correct start date must be 29 July 2016. That is because there is no evidence Mr Storey suffered any loss of earnings or loss of capacity to earn prior to ceasing his employment with Aristocrat on 28 July 2016. On 29 July 2016, Mr Storey was unemployed. His evidence, and the medical evidence before the Tribunal, indicates that at least by October 2016 Mr Storey was “markedly depressed”[16] and it would seem, unfit for employment. As already noted, it was also accepted by Aristocrat and its insurer that Mr Storey’s loss of earnings commenced on 29 July 2016.
[16] See the report of Mr Whelan, treating psychologist dated 28 November 2016 at T11 p.67
WHAT WAS THE ‘COMPENSATION PART OF LUMP SUM’?
The formula for determining the number of weeks in the preclusion period is set out in subsection 1170(4) of the Act. One of the elements is the ‘compensation part of lump sum’.
The Secretary contends that this is the total or gross compensation payment.
AAT1 reduced the total by $88,028, being amounts that were paid for legal fees and to reimburse Medicare and Centrelink on the basis they were not received by Mr Storey.[17]
[17] See paragraph 11 of the Decision and Reasons for Decision at T3
However, subsection 17(5) of the Act says:
(5) A person receives compensation whether he or she receives it directly or whether another person receives it, on behalf of, or at the direction of the first person.
Mr Storey signed a settlement authority on 12 February 2019 authorising and directing his lawyers to settle his claim “arising out of an accident on 29 July 2016 for the amount of $800,000…”[18] In doing so he acknowledged that there may be deductions from the lump sum of $800,000 including for legal fees, counsel’s fees, Centrelink and Medicare.
[18] Exhibit R1
The Tribunal is satisfied that Mr Storey “received” the entirety of the $800,000 within the meaning of subsection 17(5) of the Act because by signing the settlement authority, he directed his solicitors to receive the settlement money and to deduct various amounts from the settlement sum. He expressly acknowledged that he would be left with approximately $712,070.88.[19]
[19] Exhibit R1
Consistency in decision making is important and inconsistency is not merely inelegant: it brings the decision-making process into disrepute.[20] The Tribunal notes that its interpretation of subsection 17(5) of the Act is consistent with the way in which preclusion periods have been calculated in a considerable number of previous decisions of this Division of the AAT including: Secretary, Department of Social Services and Mills [2019] AATA 753, Wakefield and Secretary, Department of Social Services [2020] AATA 873, HGMZ and Secretary, Department of Social Services [2020] AATA 978, Marchant and Secretary, Department of Social Services [2021] AATA 3568 and Secretary, Department of Social Services and Viscuso [2021] AATA 3811. In HGMZ v Secretary, Department of Social Services [2021] FCA 280, Flick J of the Federal Court dismissed the Applicant’s appeal from the decision of the AAT, expressly finding that no error of law was disclosed in the AAT’s findings relating to the preclusion period.
[20] Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634
CONCLUSION
The Tribunal has reached the same conclusion as the authorised review officer. That means that the decision under review must be set aside and substituted with a decision that there is a preclusion period for the period 29 July 2016 to 26 September 2024.
DECISION
The Tribunal sets aside the decision under review and substitutes a decision that Mr Storey is subject to a preclusion period starting on 29 July 2016 and ending on 26 September 2024.
I certify that the preceding 30 (thirty) paragraphs are a true copy of the reasons for the decision herein of Member L Rieper
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Associate
Dated: 18 January 2022
Date of hearing: 6 January 2022 Applicant: Mr D Storey Solicitors for the Respondent: Dr S Thompson
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