Trajcevski and Secretary, Department of Social Services (Social services second review)
[2016] AATA 593
•11 August 2016
Trajcevski and Secretary, Department of Social Services (Social services second review) [2016] AATA 593 (11 August 2016)
Division
GENERAL DIVISION
File Number(s)
2015/6254
Re
Tony Trajcevski
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Professor R McCallum AO, Member
Date 11 August 2016 Place Sydney The Tribunal affirms the decision under review.
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Professor R McCallum AO, Member
CATCHWORDS
SOCIAL SECURITY – compensation preclusion period – disability support pension – compensation for car accident – discretion to waive all or part of the preclusion period – whether special circumstances exist to warrant the exercise of the discretion – the tribunal finds no special circumstances exist – decision affirmed
LEGISLATION
Social Security Act 1991, s 17, s 1169, s 1170, s 1184K
CASES
Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25
REASONS FOR DECISION
Professor R McCallum AO, Member
11 August 2016
INTRODUCTION
The Applicant, Mr Tony Trajcevski has been receiving Disability Support Pension (DSP) since 25 November 2011. On 6 December 2012, Mr Trajcevski was struck by a motor vehicle when crossing a road at a pedestrian crossing. He claimed compensation and this matter came before the NSW Motor Accident Authority Claims Assessment and Resolution Service (CARS). On 11 May 2015, the solicitors for the insurer of the motor car involved in the accident, wrote to the Department of Human Services (known as Centrelink), informing Centrelink that Mr Trajcevski's claim for damages arising from the accident had been finalised on 22 April 2015.
The certificate from CARS dated 22 April 2015 stated that the damages assessed in respect of the claim were $153,142.65, with costs being assessed at $27,802.28, resulting in a gross compensation figure of $180,944.93. The Certificate also assessed Mr Trajcevski's past loss of earnings (including superannuation) as $12,500.00 and future loss of earnings (including superannuation) as $100,000.00, being a total of $112,500.00.
On 15 June 2015, Centrelink decided to recover a compensation charge of $56,538.14 from Mr Trajcevski. Centrelink imposed on Mr Trajcevski a compensation preclusion period commencing on 6 December 2012 and concluding on 18 March 2015.
Mr Trajcevski’s solicitors invoiced Mr Trajcevski for $44,635.88 being their costs for acting for him with respect to the motor vehicle accident.
On 3 July 2015, Mr Trajcevski’s solicitors wrote to him enclosing a cheque for $52,193.26.
Mr Trajcevski sought review from an Authorised Review Officer of the decision to recover a compensation charge of $56,538.14, but the initial decision was affirmed. Mr Trajcevski then sought review from the Social Security and Child Support Division of the Administrative Appeals Tribunal (AAT), but to no avail.
Mr Trajcevski has now appealed to the General Division of the AAT, and accordingly this is an AAT second review.
THE LEGISLATION
The relevant provisions in this matter are to be found in the Social Security Act 1991 (Cth) (the SS Act).
In brief, the Parliament has provided that where a person is receiving social security payments, including DSP, and where the person receives compensation for economic loss – for example, having been injured in a car accident – the person should not be permitted to receive DSP and also to receive the economic loss component from any award of compensation. In other words, recipients of social security including DSP, should not be able to "double dip" by also receiving money to cover their economic loss.
The Compensation Preclusion Period
The linchpin of this scheme is called a "compensation preclusion period", and it is established by subsection 1169(1) of the SS Act which provides as follows.
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.
Under this provision, a preclusion period will apply when a person is receiving, or intends to receive, a "compensation affected payment", and the person receives a "lump sum compensation payment". Subsection 17(1) paragraph (a) of the SS Act defines a "compensation affected payment" to include DSP.
Subsection 17(2) of the SS Act defines "compensation", in some detail. This definition clearly covers a finalisation of a claim for damages. In Mr Trajcevski’s circumstances, this encompasses the CARS certificate award dated 22 April 2015.
Section 1170 of the SS Act prescribes the length of a preclusion period by establishing its starting and ending dates. The starting date of Mr Trajcevski’s Preclusion Period is 6 December 2012 which it will be recalled is the date of Mr Trajcevski’s motor vehicle accident.
Subsections 1170(4) and 1170(5) of the SS Act establish the ending date for a preclusion period by determining the number of weeks in a preclusion period. They provide as follows.
(4) The 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 lump sum
Income cut-out amount
(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.
In Mr Trajcevski’s circumstances subsection 17(3) of the SS Act is of importance. It relevantly provides as follows.
(3) ...[F]or 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; ...
(b)if those circumstances do not apply—so much of the payment as is, in the Secretary’s opinion, in respect of lost earnings or lost capacity to earn, or both.
As is apparent from an examination of subsection 17(3), it defines the "compensation part of lump sum" in the numerator of the formula set out in subsection 1170(4). Under subsection 17(3) paragraph (a) it is 50% of the gross compensation payment if the proceedings are settled etc. However, under subsection 17(3) paragraph (b) where the proceedings are not settled etc., the "compensation part of lump sum" in the numerator of the formula is "so much of the payment as is, in the Secretary's opinion, in respect of lost earnings or lost capacity to earn, or both".
Centrelink argues that Mr Trajcevski’s CARS certificate damages come within subsection 17(3) paragraph (b), whereas Mr Trajcevski asserts that the CARS certificate damages come within subsection 17(3) paragraph (a) of the SS Act.
Centrelink further argues that the "compensation part of lump sum" in the numerator of the formula in Mr Trajcevski’s case is $112,500. It will be recalled that this was the amount specified in the CARS certificate for past and future economic loss.
The "income cut-out amount" in the denominator of the formula is defined in subsection 17(8) of the SS Act . Although this definition is lengthy, it is necessary to set it out in full. Subsection 17(8) provides as follows:
For the purposes of the definition of income cut-out amount in subsection (1), the formula is as follows:
2 × (Maximum basic rate ÷ Pension supplement component + Energy supplement component) ÷ Ordinary free area limit
52
where:
energy supplement component means the energy supplement worked out under point 1064-C3 for a person who is not a member of a couple:
(a)whether or not the person for whom the income cut-out amount is being worked out is a member of a couple; and
(b)whether or not that Module applies to the person for whom the income cut-out amount is being worked out.
maximum basic rate means the amount specified in column 3 of item 1 of the table in point 1064-B1.
ordinary free area limit means the amount specified in column 3 of item 1 in Table E-1 in point 1064-E4.
pension supplement component means the pension supplement amount worked out under point 1064-BA3 for a person who is not a member of a couple:
(a)whether or not the person for whom the income cut-out amount is being worked out is a member of a couple; and
(b)whether or not that point applies to the person for whom the income cut-out amount is being worked out.
Centrelink argues that the "income cut-out amount" in the denominator of the formula in Mr Trajcevski’s case is $940.20. Therefore, the numerator of $112,500 divided by $940.20 is a preclusion period of 119 weeks from 6 December 2012 to 18 March 2015.
The Secretary's Discretion
Section 1184K of the SS Act reposes in the Secretary a discretion to disregard either the whole or part of a compensation payment. Subsection (1) of 1184K provides as follows:
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.
As can be seen, the Secretary's discretion is enlivened ... if the Secretary thinks it is appropriate to do so in the special circumstances of the case. The words "special circumstances" appear in several provisions of the SS Act.
In Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25, Besanko J examined the relevant case law in some detail. He then stated as follows.
33. ... I also note that the authorities have emphasised time and again the importance of maintaining flexibility in determining what constitutes special circumstances. The danger is that the test will be overstated if the word 'exceptional' is emphasised. It was not the intention of Parliament to confine the exercise of the discretion to an exceptional case. There is less risk of overstatement if the words 'unusual' or 'uncommon' are emphasised. Those words indicate, correctly in my view, the fact that there must be something that distinguishes the case from the ordinary or usual case. It may not be easy to postulate the ordinary or usual case other than in quite general terms and, in doing so, close attention must be given to the particular statutory context.
I agree with this summation of the authorities. For Mr Trajcevski to assert that special circumstances exist, he must show that there is something that distinguishes his case from the ordinary or usual case.
THE ISSUES BEFORE THE TRIBUNAL
There are two issues before me as I stand in the shoes of the Secretary. First, is Mr Trajcevski subject to a lump sum compensation preclusion period and, if so, for what period? Second, do any special circumstances exist under which any part or all of the Preclusion Period can be waived?
THE HEARING
At the hearing, the Tribunal had before it the documents compiled by Centrelink pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (Cth) which are known as the T documents. Mr Trajcevski had filed eight documents with the Tribunal which were received on 12 February 2016 and 29 March 2016. Initially, the Respondent was unable to locate these documents, but the Respondent subsequently located them. To clarify matters, I admitted these eight documents as exhibit A1.
The Tribunal also had before it the Respondent's statement of facts and contentions.
Mr Trajcevski attended the hearing and represented himself. Mr Trajcevski gave sworn evidence, and I found him to be a truthful witness.
CONSIDERATION
There are two issues which I am required to decide. First, is Mr Trajcevski subject to a lump sum compensation preclusion period and, if so, for what period? Second, do any special circumstances exist under which any part or all of the preclusion period can be waived?
Is Mr Trajcevski subject to a lump sum compensation preclusion period and, if so, for what period?
In his application for this second review and in his evidence before me, Mr Trajcevski asserted that the law had been strictly applied to his disadvantage. It will be recalled that under subsection 17(3) paragraph (a) of the SS Act, the lump sum compensation payment is 50% of the gross compensation payment if the proceedings are settled etc. However, under subsection 17(3) paragraph (b) where the proceedings are not settled etc., the "compensation part of lump sum" in the numerator of the formula is "so much of the payment as is, in the Secretary's opinion, in respect of lost earnings or lost capacity to earn, or both". The CARS scheme clearly falls under paragraph (b) because it does not concern itself with court settlements etc. I find that the award of damages pursuant to the CARS certificate does clearly fall under paragraph (b) of subsection 17(3). I further find that the Secretary has correctly applied paragraph (b) by selecting $112,500 to cover past and future economic loss as the numerator in the formula with respect to Mr Trajcevski.
In his evidence before me, Mr Trajcevski challenged the accuracy of Centrelink's calculations that the "income cut-out amount" in the denominator of the formula in his case is $940.20. He said that at the conference before a Registrar, errors had been found in Centrelink's calculations. He was asked by the Respondent whether he could point to any errors in document 10 of the T documents. Mr Trajcevski said that he could not recall the nature of the errors. He was also asked whether he could recall not receiving payments from Centrelink, and he said that he could not recall any missed payments.
From the documents available to me in the T documents, without more, it is not possible to check the accuracy of every Centrelink payment. If in the future, Centrelink becomes aware of any inaccuracies I am sure they will be corrected.
Having regard to the oral and written evidence before me, I find that the "income cut-out amount" in the denominator of the formula in Mr Trajcevski’s case was correctly calculated as $940.20.
After examining all of the evidence, I find that the numerator of $112,500 divided by $940.20 is a preclusion period of 119 weeks commencing on 6 December 2012 and concluding on 18 March 2015. I therefore find that Centrelink correctly imposed on Mr Trajcevski a compensation charge of $56,538.14.
Do any special circumstances exist under which any part or all of the Preclusion Period can be waived?
From the documents and having regard to the evidence of Mr Trajcevski, the following matters have been put forward as amounting to special circumstances.
First, Mr Trajcevski said that he had received poor legal advice. He had been told by a solicitor that the compensation charge to Centrelink would be around $30,000, but instead it was $56,538.14. Thus he received about $26,000 less than he expected. I appreciate that Mr Trajcevski is disappointed. I find that Mr Trajcevski’s disappointment, albeit flowing from incorrect legal advice, is not a special circumstance within the meaning of subsection 1184K of the SS Act.
Second, Mr Trajcevski is unhappy with the legal costs of $44,635.88 which his solicitor charged for representing him in the motor car accident. Again, this is not a matter which I can take into account when assessing any special circumstances in Mr Trajcevski’s case. He can pursue other remedies if he believes that his solicitor has over charged him.
Third, in the documents and in his oral evidence, Mr Trajcevski gave details about his expenses. Mr Trajcevski received DSP during the preclusion period from 6 December 2012 to 18 March 2015. He is still receiving DSP. Mr Trajcevski did receive $52,193.26 as compensation for the injuries which he suffered as a result of the motor car accident. He used $43,000 of this amount to repay a loan from his Mother. Mr Trajcevski also paid a function centre $7,000 to celebrate his daughter's christening as well as his wedding. The cost was $20,000. Mr Trajcevski said that he owes his Mother $13,475 because she paid the outstanding portion of the function centre bill.
In relation to his day to day expenses, at the hearing Mr Trajcevski explained that about four months ago (he could not recall the exact date), he and his wife separated. He now receives DSP at the single rate, whereas previously he had been receiving DSP at the coupled rate.
Mr Trajcevski said in evidence that he now lives at his parent's home and pays $350 per fortnight in rent. He does receive rent assistance as a component of his DSP.
Mr Trajcevski detailed his living expenses, buying groceries, mobile telephone plan payments and medical expenses.
Mr Trajcevski said in evidence that he does own a car which he purchased with some financial assistance from a friend. He said that he pays money back to the friend when he is able.
In his evidence, Mr Trajcevski said that he occasionally undertook work in a call centre. He said that some weeks when he works, he works for less than 15 hours a week. Sometimes he works for more than 15 hours a week. When this occurs he receives less DSP because it is means tested.
Mr Trajcevski chose to spend $20,000 to celebrate his wedding and his daughter's christening. I find that this does not amount to a special circumstance to enliven the discretion in subsection 1184K of the SS Act.
Finally, Mr Trajcevski’s day to day living expenses are in no way exceptional or out of the ordinary. They are the living expenses of a father of two children.
Having regard to all of the evidence, I find that there are no special circumstances in Mr Trajcevski’s case to warrant the exercise of the discretion in subsection 1184K of the SS Act to disregard the whole or part of the compensation preclusion period.
DECISION
The decision under review is affirmed.
I certify that the preceding 47 (forty -seven) paragraphs are a true copy of the reasons for the decision herein of Professor R McCallum AO, Member
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Associate
Dated 11 August 2016
Date(s) of hearing 13 July 2016 Applicant In person Solicitors for the Respondent Dr S Thompson, Department of Human Services
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