TLKB and Secretary, Department of Social Services
[2013] AATA 759
[2013] AATA 759
Division GENERAL ADMINISTRATIVE DIVISION File Number
2013/2772
Re
TLKB
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Senior Member Bernard J McCabe
Date 24 October 2013 Place Brisbane The decision under review is affirmed.
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Senior Member Bernard J McCabe
CATCHWORDS
SOCIAL SECURITY – Benefits and allowances – Lump sum settlement – Compensation affected payment – Preclusion period – Special circumstances – Not appropriate to exercise discretion – Decision affirmed
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth) s 35(2)
Social Security Act 1991 (Cth) ss 17, 1184K
CASES
Grothv Secretary, Department of Social Security (1995) 40 ALD 541
Haidar v Secretary, Department of Social Security (1998) 52 ALD 255
REASONS FOR DECISION
Senior Member Bernard J McCabe
24 October 2013
The applicant, whom I shall call Ms Smith, is unable to work because she looks after her two teenage sons. Ms Smith has been receiving carer’s payments and a range of other benefits for many years. In 2011, she was injured in a car accident. One of her sons was driving. She commenced proceedings against the insurer. The claim included a component in respect of economic loss. The proceedings concluded in 2012 with a lump sum settlement in the amount of $20,000. Ms Smith paid her lawyers and refunded monies she had received from Medicare. She was also required to pay $4359.73 to Centrelink. Centrelink had imposed a charge because it said a preclusion period applies pursuant to Part 3.14 of the Social Security Act 1991 (Cth) (“the Act”). She was left with just $6539.20 in the hand.
Ms Smith argued Centrelink should pay back the money it recovered pursuant to the charge. She relies on s 1184K of the Act which, in effect, permits the Secretary (or the Tribunal, standing in the Secretary’s shoes) to shorten the preclusion period because of special circumstances. The Secretary and the Social Security Appeals Tribunal disagreed. Ms Smith has now come to the Tribunal.
I do not think Ms Smith can succeed in her application. I explain my reasons below.
THE IMPOSITION OF A PRECLUSION PERIOD
A preclusion period is imposed where a person receives a lump sum settlement that includes a component in respect of economic loss. The Act assumes 50% of the settlement sum is attributable to economic loss, regardless of what the parties may actually have agreed. That amount is used to calculate the period of time during which the person will be ineligible to receive a compensation affected payment, which includes carer’s allowance: s 17 of the Act. The person is expected to live off the settlement monies instead of relying on social security benefits. If the settlement payment is large, the preclusion period can be lengthy: the person may not be eligible to receive benefits from Centrelink for many years. In some cases, like the present, the preclusion period is quite short because the amount of the settlement was comparatively small.
The preclusion period in this case had already passed by the time the settlement occurred.
Ms Smith continued receiving compensation affected payments during that period because the preclusion period had not been imposed until the details of the settlement became known. Once the settlement occurred, Centrelink was able to calculate the preclusion period and recover an amount equal to what it paid during the preclusion period. It is this amount – the so-called charge – which is in dispute. The applicant says she should have that money back from the respondent.I note there is no dispute over Centrelink’s calculation of the length of the preclusion period. Ms Smith said she felt the law was unfair, but she did not dispute it had been correctly applied. The hearing focused on whether to exercise the discretion to shorten the preclusion period and consequently refund part or all of the charge.
THE SPECIAL CIRCUMSTANCES DISCRETION
The respondent has the power under s 1184K to proceed as if part or all of the compensation payment has not been made so as to reduce the duration of a preclusion period if there are special circumstances. The expression special circumstances is not defined in s 1184K, but it has been discussed in many reported decisions of the
Federal Court and the Tribunal. Section 1184K requires that I identify features or aspects of Ms Smith’s case that suggest it should be treated differently to the ordinary run of cases – most obviously because there is something unusual or extraordinary about the situation that leads to an outcome that is harsh or unfair: see, for example, Groth v Secretary, Department of Social Security (1995) 40 ALD 541.
Most of the reported cases under s 1184K deal with a situation where the preclusion period has not expired when the matter comes before the Tribunal. The applicant in those cases typically refers to special circumstances that prevail at the time the application is being considered. The focus of the Tribunal’s inquiry may be different in cases where the preclusion period has already ended and the applicant is seeking repayment of the charge. What if the applicant’s circumstances have changed?
Mr Hamilton, who appeared for the Secretary, argued I should focus on the applicant’s current circumstances for the purposes of this exercise. On that approach, if the Tribunal is persuaded special circumstances exist at the time of the hearing, it may re-do the calculations on the basis that part or all of the compensation payment is ignored – thereby effectively shortening the preclusion period – with a view to avoiding (or providing relief from) a harsh outcome. An applicant would presumably be unsuccessful if circumstances had changed for the better so that a harsh outcome was no longer in prospect, or if relief would not be effective.
An alternative approach is to focus on whether special circumstances made it inappropriate to impose the preclusion period at the time it was running. On that approach, events or circumstances during the preclusion period would be the principal focus even though the applicant’s position has subsequently improved. Yet another approach suggests the decision-maker can have regard to all of the applicant’s circumstances over time and decide whether there are or were special circumstances that suggest it is now appropriate to treat the compensation payment as if it had not been made.
I must begin my analysis by referring to the words of the section. Section 1184K(1) provides:
(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.
Sub-section 1184K(1)(a) contemplates the Secretary making a decision after the compensation payment was made to ignore the fact of payment (or part of the payment), thereby shortening the preclusion period. In making the decision to do that, the
sub-section directs the Secretary to have regard to the special circumstances of the case. The section does not appear to qualify whether the special circumstances in question were circumstances that prevailed when the compensation payment was made, during the preclusion period, or subsequently.
The operation of s 1184K was considered in Haidar v Secretary, Department of Social Security (1998) 52 ALD 255. In that case, the preclusion period had already passed, and the applicant’s position had subsequently improved. Hill J said the Tribunal should not consider an “event [that] was wholly unrelated to the relationship between the lump sum and pension”: at p 264. His Honour illustrated this conceptually difficult point by referring to a hypothetical applicant who won the lottery after his preclusion period concluded. His Honour explained (at pp 264-265):
There would seem to be no relationship between the lottery on the one hand and the question whether, in the circumstances, the government should pay a pension to the claimant during the preclusion period on the other. It seems to me that events after the expiration of the ordained preclusion period could only have relevance as factors to be considered in the exercise of discretion if those facts in some way related to the events occurring during the preclusion period.
In Haidar, the applicant’s circumstances had improved because he became eligible for another social security benefit after the preclusion period. Hill J explained (at p 265) the real question was:
…whether, during the so-called preclusion period, it was appropriate in all the circumstances and having regard to the legislative policy which the relevant part of the legislation enshrines that [the applicant] receive some part of the pension rather than some other part or none at all.
The decision in Haidar confirms the discretion in s 1184K is not intended as a versatile capacity for responding to the adverse life events of someone who also happens to have been subject to a preclusion period. The question must be whether there is something about those adverse life events or circumstances that make it especially harsh or unfair to impose the preclusion period. Where the adverse events or circumstances are apparent during the course of the preclusion period, that link may be easy enough to draw. It will be a more complex task where the events occur outside of the preclusion period.
What are the implications of all of that for this case? As it happens, it makes no difference to the outcome of the case whether I adopt the pragmatic response contended for by the Secretary, or the more nuanced approach that I apprehend is required by the Federal Court in Haidar (although it should go without saying I am required to follow the Federal Court’s approach to the extent of any inconsistency). Let me explain.
Ms Smith is currently facing essentially the same circumstances – and the same challenges – that she faced while the preclusion period was running. She was (and is) experiencing ongoing pain and discomfort as a result of her injuries in 2011 that occasioned the legal action and the settlement. She was not (and is not) otherwise in bad health. She was (and is) experiencing financial difficulty, although her situation is not dire: she has enjoyed secure tenure in a home in which she has an ownership interest for a number of years, and she does not pay high rent. She does not (and did not) have significant debts. She experienced difficulty with her car during the preclusion period, but she was able to purchase a working car out of the settlement monies. Ms Smith received benefits during the preclusion period, and she continues to receive them: she has been paid $1371.70 per fortnight in recent times, and her statement of financial circumstances (exhibit one at pp 29-30) suggests she is able to meet her household and living expenses out of those payments.
Ms Smith points to her sons as a special circumstance that justifies the exercise of the discretion in s 1184K. She has two sons who live with her. Both of them resided with her during the preclusion period. One is aged 19 and the other has just turned 16. Each of them has serious behavioural problems, although Ms Smith’s evidence at the hearing confirmed the elder son has settled in recent times. He is unable to work and is currently in receipt of the disability support pension. The younger son has become more of a problem. Together, Ms Smith’s sons have practically wrecked the family home. I was shown photographs taken on Ms Smith’s mobile phone showing holes in the walls.
Ms Smith said the house is peppered with damage: both of her sons, but particularly the younger son, are prone to smashing furniture, destroying household effects, and punching holes in walls and windows in the course of uncontrolled rage. This pattern of destructive behaviour has been established since before the preclusion period was imposed. While the older son has been taking medication for his condition, the younger son remains a source of serious disruption. Ms Smith said her younger son had trashed his own room and now lived in her bedroom, while she has moved into rooms that are in the process of being constructed under the house.
The evidence before me suggests Ms Smith’s position is not materially different now to what it was during the preclusion period.
I am not aware of any reason to dispute Ms Smith’s account of her very difficult life in the company of her sons over a number of years. She says she has been unable to obtain proper assistance from the state authorities. Her younger son is periodically hospitalised but he is always released and he soon relapses into bad behaviour. He was last in hospital just ten days before the hearing, and he had an extended stay in hospital during the preclusion period. Ms Smith said she was hopeful she might obtain assistance from a state agency and a charity that would help her to manage her son, although his record so far is discouraging.
Ms Smith says her life would be made a lot easier if she were repaid the money Centrelink recovered out of her settlement in 2012. She has a plan: she said she would use the money to complete the renovations to the downstairs area of the house. That would enable her to move her eldest son downstairs. (He refuses to move there at present because the space is incomplete, even though his mother has been living there for the last five months.) Ms Smith says one of the factors exacerbating her younger son’s behaviour is the interaction with his brother. She reasons that physically separating her sons might lead to an improvement in her younger son’s behaviour, especially in circumstances where he is receiving medication and hopefully some support from outside agencies.
The respondent, examining the present situation, doubts whether Ms Smith’s circumstances are properly described as special, but adds it would be inappropriate to shorten the preclusion period and refund the money in any event. The Secretary argued the money would not make any difference to the applicant’s current situation because anything she built with the money would soon be wrecked by one or both of her sons. I would add that, given the reasoning in Haidar, it is difficult to see how the current circumstances have any connection to the preclusion period – by which I mean it is difficult to see how having unruly sons at this point says anything about whether the preclusion period was harsh or unfair at the time it was imposed.
I am satisfied the applicant is experiencing circumstances that are unusual.
Those circumstances were being experienced during the preclusion period, and nothing has really changed. While it is not especially unusual for a parent to have unruly children, Ms Smith’s sons both continue to exhibit extraordinary behaviour. In that sense, she is experiencing special circumstances – but are they special circumstances that make it appropriate to exercise the discretion in s 1184K?
Sadly for the applicant, I do not think the circumstances, present or past – special though they may be – suggest it is appropriate to exercise the discretion to shorten the preclusion period and (as a consequence of that decision) refund the money that was recovered out of the lump sum settlement. I am not confident the payment of the money will make a practical difference to the applicant’s current situation, and it would not have made any difference during the preclusion period. Her youngest son has only recently commenced a course of treatment for a long-standing condition that sees him engage in aggressive, destructive behaviour. I note he has not been compliant with previous treatment regimes. It remains to be seen whether the new medication or the support which has been promised will lead to a more manageable situation in the Smith household. Indeed, far from providing relief from a harsh outcome it is possible the payment would just serve to perpetuate a dangerous situation that may only be resolved when one or both of
Ms Smith’s sons leave the family home.
CONCLUSION
I do not think it makes any difference whether I have regard to the circumstances that existed at the time of the preclusion period, or the current circumstances, or if I have regard to all of the circumstances whenever they were experienced. On any analysis, I am satisfied there are no special circumstances that make it appropriate to provide relief.
The decision under review is affirmed.There is one final matter. I have made an order suppressing the name of the applicant pursuant to s 35(2) of the Administrative Appeals Tribunal Act 1975 (Cth) in order to protect the identity of her son, who is a minor. In making that decision, I am conscious of the Tribunal’s obligation to do justice in an open way insofar as that is possible. Given the sensitivity of the evidence I have discussed in these reasons, I am satisfied it is appropriate to protect the young man’s identity.
I certify that the preceding 25 (twenty-five) paragraphs are a true copy of the reasons for the decision herein of Senior Member Bernard J McCabe
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Associate
Dated 24 October 2013
Date of hearing 16 October 2013 Applicant In person Solicitor for the Respondent Mr Bob Hamilton
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