VALERIAN NOVAC and SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

[2010] AATA 698

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 698

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2010/1397

GENERAL ADMINISTRATIVE  DIVISION		)
Re		VALERIAN NOVAC

Applicant

And SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Ms A F Cunningham (Senior Member)

Date14 September 2010

PlaceHobart

Decision The decision under review is affirmed.

[Sgd Ms A F Cunningham]

Senior Member

CATCHWORDS

SOCIAL SECURITY - newstart allowance - applicant in receipt of periodic compensation payments - effect on rate of newstart allowance - periodic compensation payments exceeded rate of newstart allowance -  applicant's contention that payments received by way of a loan rejected - no special circumstances - decision under review affirmed

Social Security Act 1991, ss 17, 23, 593, 1173, 1184K

Social Security (Administration) Act 1999, s 80

Workers' Rehabilitation and Compensation Act 1988

Seden and Secretary, Department of Education, Employment and Workplace Relations [2010] AATA 370

Hansford and Secretary, Department of Employment and Workplace Relations [2007] AATA 1152

REASONS FOR DECISION

14 September 2010   Ms A F Cunningham (Senior Member)   

1.      The applicant, Valerian Novac, seeks the review of a decision of the Social Security Appeals Tribunal (SSAT) which, on 5 March 2010, affirmed a decision of Centrelink dated 7 August 2009 to cancel Mr Novac's newstart allowance from 25 July 2009, due to the effect of periodic compensation payments that he had received from his insurer. 

2.      Mr Novac does not dispute that he has been in receipt of periodic payments but contends that he will be required to repay the monies to his insurer upon the resolution of a dispute between the insurance companies over the circumstances of his accident.  Mr Novac submitted that as he will be required to repay the compensation payments, they should be considered a loan and not included in the assessment of his newstart allowance.

3. Mr Novac appeared on his own behalf before the Tribunal and tended no evidence. Mr Sparkes appeared on behalf of the respondent and tendered the T Documents pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (the AAT Act). No other evidence was presented.

Background

4.      Mr Novac did not dispute the factual material contained in the T Documents.  He agreed that he had been in receipt of the sum of $400.00 per week from 7 March 2009 by way of compensation payments.  Following the accident he had received $500.00 per week from 9 September 2007 until 15 December 2007 which was then reduced to $425.00 per week until 6 March 2009. 

5.      Mr Novac had a contractual relationship with Taxi Combined as a taxi driver at the time of his accident in September 2007.  He suffered an injury when he fell into a hole in the ground.  His workers' compensation has been paid by Zurich Insurers but there is an issue regarding liability for the accident which is being defended by Allianz Insurers. 

6.      Mr Novac was not in receipt of a social security benefit at the time of his injury.  Following the accident on 6 September 2007, Mr Novac was unable to work and was paid a sickness benefit and then newstart allowance from around 6 September 2008. 

Legislation

7.      The legislation relevant to this matter is contained in the Social Security Act 1991 (the Act).

8.      The qualification provisions are contained in section 593 of the Act which are satisfied by Mr Novac's circumstances. 

9.      Section 608 provides that a newstart allowance is not payable to a person if the person's newstart allowance rate would be nil.

10.     The effect of periodic compensation payments on the rate of a person's compensation affected payment is set out in section 1173.

11.     "Compensation" is defined in section 17 and includes in sub-section 2(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 ...".

12.     A "compensation affected payment" is defined in section 17 and includes in sub-section 2(b):

"Includes a social security benefit which is defined in section 23 to include newstart allowance".

Consideration 

13.     The Tribunal was referred to the decision of Seden and Secretary, Department of Education, Employment and Workplace Relations [2010] AATA 370 at paragraph 12 where the Tribunal explained the operation of section 1173 as follows:

"The basis of Centrelink’s claim to recover is the statutory provision in section 1173 of the Social Security Act. In essence, it provides that where a person receives a periodic compensation payment, and the person was not at the time of the event that gave rise to the compensation entitlement qualified for or receiving a compensation affected payment, and the person received a compensation affected payment in relation to a day or days in a periodic payment period, then the rate of the person’s compensation affected payment is reduced, essentially on a dollar for dollar basis".

14.     A letter from Zurich Australian Insurance Limited dated 2 October 2007 contained in the T Documents at T3, confirmed that Mr Novac's payments were paid under the Workers' Rehabilitation and Compensation Act 1988 in lieu of lost wages as a result of his accident.  The payments thus satisfy the definition of compensation under the Act. 

15.     As Mr Novac was not receiving a compensation affected payment prior to the accident, section 1173 provides that the rate of newstart allowance is to be reduced by the amount of his daily rate of periodic compensation (sub-section (2)).

16. The rate of newstart allowance at the relevant time was $570.50 per fortnight and Mr Novac's periodic compensation rate was $400.00 per week. As the periodic compensation payment well and truly exceeded the newstart allowance payment, the rate of newstart allowance was accordingly determined at nil. As section 608 provides, in such circumstances newstart allowance is not payable. Section 80 of the Social Security (Administration) Act 1999 provides that the payment is to be cancelled where it is not payable.

17.     Mr Novac did not produce any documentary evidence in support of his contention that he received his workers' compensation payments as a loan.   He contended that he was required to sign a document by Centrelink acknowledging that the monies would have to be repaid but no such document was presented to the Tribunal. 

18.     In Hansford and Secretary, Department of Employment and Workplace Relations [2007] AATA 1152 the Tribunal rejected the applicant's contention that the periodic work cover payments made to Mr Hansford and repaid to Work Cover Corporation did not constitute compensation within the meaning of section 17(2) of the Act. In that case the interim payments were received by Mr Hansford in the knowledge that if his common law claim was successful, the payments would have to be repaid. The Tribunal found that the periodic work cover payments fell within the definition of compensation under the Act and the fact that they were repaid did not affect this classification nor categorise them as a loan by Work Cover Corporation. The payments were received by Mr Hansford and constituted compensation which was taken into account in the assessment of his parenting payment. The Tribunal also rejected the alternative contention that Mr Hansford's circumstances constituted special circumstances within the meaning of section 1184 to justify disregarding payments pursuant to section 1184K of the Act.

19.     Mr Novac is still in receipt of periodic workers' compensation payments and there was no evidence before the Tribunal that he will be required to repay these monies to Zurich Insurance.  It is simply Mr Novac's expectation.  The Tribunal endorses the Tribunal's reasoning in Re Hansford, and determines that even if accepted that the compensation payments will have to be repaid, this would not change the classification of the payments for the purposes of the Act and assessment of Mr Novac's newstart allowance in accordance with the above provisions.   There is a reference to repayment of periodic payments in sub-section 17(4) but it relates to lump sum compensation payments which has not occurred in Mr Novac's case. 

20.     For all of these reasons the Tribunal is satisfied that the respondent's decision to cancel Mr Novac's newstart allowance with effect from 25 July 2009 was the correct decision in the circumstances.

Special Circumstances

21.     Section 1184K of the Act provides that certain payments may be disregarded as follows:

"(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.

(2)       If:

(a)       a person or a person’s partner receives or claims a compensation   affected payment; and

(b)       the person receives compensation; and

(c)       the set of circumstances that gave rise to the claim for compensation                   is not related to the set of circumstances that gave rise to the person’s              or the person’s partner’s receipt of, or claim for, the compensation   affected payment;

the fact that those 2 sets of circumstances are unrelated does not alone constitute special circumstances for the purposes of subsection (1)".

22.     Mr Novac did not address this provision nor did he make any submissions in support of the exercise of this discretionary power.  The only issue raised by Mr Novac in response to the decision under review was the submission as outlined above, that he expects to have to repay the periodic workers' compensation payments upon settlement of the legal dispute regarding liability for his accident.  The Tribunal has rejected that submission for the above stated reasons as having any effect on the payment of his newstart allowance.  

23.     The term "special circumstances" has been interpreted as unusual, uncommon or exceptional factors which take a case out of the normal run of cases.  In such circumstances a strict application of the legislation would produce unfairness or injustice and thus justify the exercise of a discretion to treat all of part of the compensation payments as not having been made.  The Tribunal does not consider that Mr Novac's circumstances are particularly unusual or uncommon such as to constitute special circumstances within the meaning of the Act.   Accordingly the Tribunal affirms the decision under review. 

I certify that the 23 preceding paragraphs are a true copy of the reasons for the decision herein of Ms A F Cunningham (Senior Member)

Signed:    R Hunt (Administrative Assistant)

Date/s of Hearing  19 August 2010
Date of Decision  14 September 2010
Solicitor for the Applicant          Applicant on his own behalf
Solicitor for the Respondent     Mr B Sparkes, Centrelink Advocacy Branch