Velis; Secretary, Department of Family and Community Services

DECISION AND REASONS FOR DECISION [2002] AATA 780

ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2001/1906

GENERAL ADMINISTRATIVE DIVISION )

Re      Secretary, Department of Family and Community Services
  Applicant
           And    Georgia VELIS
  Respondent

DECISION

Tribunal Ms N Isenberg, Member

Date10 September 2002
PlaceSydney

Decision The Administrative Appeals Tribunal sets aside the decision of the Social Security Appeals Tribunal and finds that the decision of Centrelink to recover a payment of $4246.80 made in respect of Newstart Allowance paid during a preclusion period of 18 October 1997 and 17 September 1999 was correct.

[SGD] Ms N Isenberg
Member

CATCHWORDS
SOCIAL SECURITY – lump sum workers' compensation payment – preclusion period – whether special circumstances exist to justify the exercise of the discretion to disregard all or part of the compensation payment being made – unfairness of the strict application of the '50% rule' – whether debt due 'solely' to administrative error – whether 'special circumstances' to waive debt

LEGISLATION
Social Security Act 1991 – ss 17(2)(e), (3); 1165(8); 1182; 1184K; 1223(1); 1237A(1)

CASE LAW
Beadle v Director of Social Security (1984) 6 ALD 1
Re Secretary, Department of Social Security and Bolton (1989) 18 ALD 464
Groth v Secretary of Social Security (1995) 40 ALD 541
Re Colaiacolo and Secretary, Department of Social Security (AAT N84/439, 24 April 1985)
Re Beadle and Director General of Social Security (1985) 60 ALR 225
Haidar v Secretary of Social Security (1998) 52 ALD 255
Re Martin and Secretary, Department of Social Security (1989) AAT 6482, 14 November 1989
Hajar and Secretary, Department of Social Security (1988) 16 ALD 716
Bland and Secretary of Family and Community Services (1999) AATA 711 (21 September 1999)
Department of Social Security and Norman (1998) AATA 444 (22 June 1998)
Fowles and Secretary, Department of Social Security (1995) 38 ALD 152
Hutt v Piggott, Wood and Baker (unreported decision of Supreme Court of Tasmania, No B20 of 1993, delivered 28 May 1993)
Guerrero and Secretary, Department of Social Security (1994) (unreported AAT decision No 9603)
Gough v Department of Social Security (1999) FCA 400

REASONS FOR DECISION

10 September 2002 Ms N Isenberg, Member
DECISION UNDER REVIEW

On 20 April 2001 Centrelink determined that the sum of $4246.80 be recovered from the Respondent, which was the amount of Newstart Allowance paid to her between 18 October 1997 and 17 September 1999 (T11). That decision was affirmed by an Authorised Review Officer on 24 September 2001 (T18). The Respondent sought review by the Social Security Appeals Tribunal (SSAT) and on 9 November 2001 the SSAT set aside the decision and waived the entire debt (T2).
BACKGROUND

On 24 November 1996 the Respondent was injured by a needle stick injury at her workplace, St Vincent's Hospital. She received periodic compensation payments, but on 17 October 1997 those payments ceased. On 13 April 1999 the Respondent applied for, and was granted Newstart Allowance (T7).
The Respondent brought a claim in the District Court and, on 28 February 2001 her claim was settled for $149,367.00 (T9).
However, it was not until 4 April 2001 that the Respondent's solicitor sought a notice of charge from Centrelink (T9).
On 20 April 2001 Centrelink determined that a sum of $4,246.80 be recovered as Newstart allowance payments were made to the Respondent during the preclusion period. This period was calculated from 18 October 1997 to 17 September 1999 (T11). Notices were issued to the Respondent (T11) and her solicitor (T12).
ISSUE BEFORE THE TRIBUNAL

It was not disputed before the SSAT, nor was it disputed before the Tribunal that if the statutory formula were applied to the Respondent's circumstances, a preclusion period would result from 18 October 1997 to 17 September 1999.
The central issue in this matter was the application of section 1237A and section 1184K of the Social Security Act 1991, that is, whether the debt should be waived or if there are any "special circumstances" in the Respondent's case to reduce the length of the preclusion period.
APPEARANCES

A hearing was held before the Tribunal on 8 August 2002 at which the Applicant was represented by George Lozynsky, an advocate from the Advocacy and Administrative Law Team at Centrelink, and the Respondent was self-represented, although advised by the Legal Aid Commission.
LEGISLATION

The Social Security Act 1991 ("the Act"), provides potential relief from the strict application of the compensation preclusion period, by giving the Secretary a discretion to disregard the whole or part of the compensation payment in "special circumstances", as follows:
"Secretary may disregard some payments
1184K (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."
The Social Security Appeals Tribunal had found that the debt should be waived under section 1237A which provides as follows:
"1237A (1) Subject to subsection (1A), the Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt".

EVIDENCE: Documents

The Tribunal had before it documents lodged pursuant to section 37 of the Administrative Appeals Tribunals Act 1975 ("the T-documents"), which the Tribunal took into evidence.
In addition, the following documents were tendered:

Applicant's Statement of Issues, received 17 January 2002 (Ex A1)
Applicant's Statement of Facts and Contentions dated 5 August 2002 (Ex A2)
Respondent's Claim Form, dated 14 April 1999 (Ex A3)
Submission to Applicant, dated 11 June 2002 (Ex R1)
Statement of Respondent, dated 11 June 2002 (Ex R2)
Statement of financial circumstances, dated 7 June 2002 (Ex R3)
Report of Dr R Penny, dated 3 June 1997 (Ex R4)
Report of Dr R Penny, dated 13 December 1999 (Ex R5)
Report of Dr M Dent, dated 3 February 2000 (Ex R6)
Letter from Stacks -The Law Firm, dated 4 April 2001 (Ex R7)

EVIDENCE: the Applicant

No witnesses were called on behalf of the Applicant.
EVIDENCE: the Respondent

The Respondent gave evidence and was cross-examined on behalf of the Applicant. Questions were also put to the Respondent by the Tribunal.
The Respondent opened by saying she had paid a lot of tax since she started work in 1979 and had never before asked for welfare in any form.
She described her devastation at the injury and how for months she underwent drug therapy and testing during which time it was unknown if she might be HIV positive. Fortunately, she was ultimately declared to be uninfected.
In April 1999 she applied for and was granted Newstart Allowance. At that time she told Centrelink of her compensation claim and wrote a lengthy letter to Centrelink and took in a 'swag of documents'. A man at Marrickville Centrelink named Surin told her she may have to pay back something.
In February 2001 her compensation case went to hearing in the District Court. After 2 days of evidence she was 'forced' by her solicitor to settle. The barrister said he wouldn't go on if she didn't settle. She understood the settlement to be for her PTSD and psychological damage. There was no mention of weekly payments by her solicitor or anyone else but conceded in cross-examination that the particulars of her claim had included a component for economic loss. She was surprised that in the end result she received less than $50,000 as the solicitors had taken 'half'. She did not complain to the Law Society as she believed the 'system has let her down'.
After the settlement, in April 2001 Centrelink wrote to her advising she would have to pay back $4346.80. She phoned Karen Luccarda there and explained her circumstances. She said she was told that she need not pay the debt but had to 'send in her paperwork'. She sent her 'paperwork' in but heard nothing until August or September when a person called Wendy Maynard told her that Karen Luccarda's advice was wrong. She objected and was then advised of the appeal mechanism. Her solicitor did not tell her anything about Centrelink repayments, only that she would have to repay Medicare. She made no plans about she would manage the money she received. Her priorities were her children's health and to secure the house.
About 4 years ago she bought her house for about $480,000. To finance this she borrowed $200,000, the balance of funds coming from a previous property she owned. It is a small 3-bedroom house with a garage. It might presently be valued at $450,000 to $500,000. She was asked about selling the house to finance her debt to Centrelink and she said that even if it were sold she would then have to buy something else. She needs a 'home' for her children. As it is they are embarrassed by the lack of furnishings. She would not consider renting the house as tenants would 'trash it' as occurred with the previous property she owned. She would not want to create any more instability in their lives by a move. She also needs to be near her parents who are not well and who speak little English.
In relation to her financial situation (documented at ex R3) she said her position had deteriorated since 7 June 2002, the date of the document. She owes over $5000 in council rates and her home loan is now nearly $175,000. Although her children are at university, she is still partially supporting them. They spend about half time at her parents' home because it is convenient for transport to university. They all eat frequently at her parents. Her parents provide financial assistance, for example, by paying bills and buying things like heaters and a dining table. Her parents are pensioners who live a conservative lifestyle. She has not sought assistance from charitable organisations.
She has no other assets. She does not own a car but has the use of her parents' car.
She has no social life.
When she left St Vincent's she was receiving about $700 per week net. She was 'sacked' from her position at the hospital 'twice' and has brought an unfair dismissal action. She has tried to get a full time job but has found that her 'age is against her' and because she was 'sacked' from St Vincent's. She has a part time job and is also attending university herself. The job 'keeps her sane', although she only earns about $300 a week net. She is unsure how long the job might last as the pathology industry is undergoing some pressures.
Her children had been to the District Court hearing to support her but were very distressed to see her undergo gruelling cross-examination. They also had to emotionally support her while she was undergoing testing for HIV and during the time of her unemployment. During that time they did not know if she would be able to afford to keep them at their private schools. For that reason she spent about $18,000 of the settlement monies on an overseas trip for them. She would have spent 'it all' on them if that were what was needed to assist them in their recovery from what had occurred. As it is, in view of the family's financial situation, they have given up activities in which each was talented.
From the settlement monies she also paid a further $30,000 off her mortgage on which she had fallen in arrears.
As to her health, she said that she is not receiving psychiatric or psychological counselling because she can't afford it. She can no longer handle blood because of her fear of HIV. Some days are better than others but every day she has to deal with what has happened and how she was let down by her employer. She knows she needs help and has to 'move on' and needs to stop 'rehashing' what has occurred.
SUBMISSION: Applicant
The advocate for the Applicant submitted that the SSAT had erred in applying section 1237A(1) of the Act and that the debt had been validly raised. The only available avenue for the debt to be waived was if the Respondent had 'special circumstances' in accordance with Section 1184K of the Act.
The Applicant's contention was that the compensation settlement received by the Respondent was compensation within the definition of section 17(2) of the Act and it was made at least partly in respect of past or future lost earnings pursuant to section 17(2)(e). The advocate for the Applicant brought to the Tribunal's attention the Statement of Particulars filed by the Respondent's solicitor in the District Court (T14). The provisions regarding calculation of lump sum periods are set out in section 1165 of the Act. Given that the Respondent received an amount of $149,367.00, Centrelink assessed 50% of the compensation lump sum figure as per section 17(3) of the Act. However, the payback of periodic compensation benefits to GIO Workers Compensation (NSW) Limited amounting to $36,570.73 is deducted from the lump sum therefore, the total lump sum settlement amount is $112,796.27. In applying the 50% rule, the compensation part amount becomes $56,398.13. Section 1165(8) provides a formula for calculating a lump sum preclusion period which requires $56,398.13 being divided by $562.75. This results in a 100 week preclusion period.
The SSAT found the debt to exist by virtue of an administrative error up to the date the compensation settlement was identified. This is because Centrelink failed to notify either the Respondent's solicitor or the insurance company of a claim that might have been made by Centrelink to part of the compensation payment. As a result, the SSAT applied section 1237A(1) of the Act in waiving the debt. The Applicant contended that Centrelink's error in not notifying the solicitor or insurer (thereby having the debt recovered directly from the insurer) did not cause the debt and only affects the recovery process.
The advocate for the Applicant contended that the debt arose as a consequence of the compensation preclusion and recovery provisions of the Social Security Act 1991. Section 1184K is the appropriate provision of the Act, in compensation cases, to consider it there are special circumstances to waive a debt. Therefore, it was contended on behalf of the Applicant that the SSAT's decision to apply section 1237A(1) of the Act constitutes an error of law.
Under section 1184, the whole or part of the compensation payment may be treated as not having been made if there exist "special circumstances". In Beadlev Director-General of Social Security (1985) 60 ALR 225, the Federal Court noted at page 230 that it was in broad agreement with the position adopted by the Tribunal in Re Beadle and Director-General of Social Security (1984) 6 ALD 1 in that the circumstances must be 'unusual, uncommon or exceptional'.
The Applicant submitted that the purpose of the legislation is to ensure that an injured person who receives compensation for an injury does not "double-dip" and receive benefits from the public purse in respect of the same period of time. To shorten the preclusion period is to frustrate the object of the legislation in the absence of any circumstances in which it would be reasonable to do so as noted in Groth v Secretary, Department of Social Security (1995) 40 ALD 541, Kiefel J stated:
"...for present purposes it is sufficient to observe that it would require something to distinguish (this case) from others, to take it out of the usual or ordinary case. That was, I consider, the only enquiry to be undertaken in this 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."

The Applicant submitted that the Respondent's circumstances are not inherently "special".

In Re Colaiacolo and Secretary, Department of Social Security (1985) AAT 2109, the Tribunal stated that the factor of financial hardship alone is not sufficient to amount to special circumstances unless it is "exceptional" and not merely "straitened". The Applicant contended that the Respondent's current financial situation is not beyond 'straitened' circumstances and exceptional. The Applicant noted that the Respondent is currently earning $300 per week while her children are both in receipt of youth allowance (T2, p4). In addition, she does not pay any rent or board to her parents (T2, p5).
When considering financial hardship, it is relevant in ascertaining the way in which the hardship arose. There is also a need in considering the person's assets and the nature of the expenditures of the lump sum. The Respondent has a property at Earlwood which is worth at least $450,000 according to her (as stated in her financial statement). The Applicant contended that for the Respondent to claim financial hardship when owning a valuable asset is inequitable. (Hajar and Secretary, Department of Social Security (1988) 16 ALD 716.)
The Respondent had invested approximately $30,000 of her settlement in the mortgage on her Earlwood property (T2, p4). The advocate for the Applicant referred the Tribunal to the cases of Bland and Secretary, Department of Family and Community Services (1999) AATA 711 (21 September 1999) and Secretary, Department of Social Security and Norman (1998) AATA 444 (22 June 1998), where the Tribunals noted that payment of workers' compensation is intended to provide a person with income for a period, not capital for investment.
The Respondent has a mortgage on her home in Earlwood (T2, p5) and the Applicant contended that having a mortgage today is not unusual or uncommon. The fact that the Respondent has incurred debts or has outstanding household bills to pay is not unusual or uncommon. It is also noted from her Commonwealth Bank Investment Home Loan Summary dated 31 December 2001 that she is ahead in repayments by $30,424.70. The Applicant submitted that if the Respondent has problems in paying her bills that she should attempt to withdraw amounts from her loan repayments.
The Applicant contended that the Respondent had exercised a choice over the expenditure of the lump sum compensation payment. The Respondent concedes that after she was notified in writing by Centrelink of a debt, she spent approximately $18,000.00 in July 2001 in sending her children to Europe for a holiday (T2, p4). Such expenditure should be regarded as imprudent and extravagant and, it was submitted, clearly showed a total disregard of the compensation preclusion period and for her future security.
The Applicant contended that the Respondent's reference to ill health does not constitute special circumstances nor does it give rise to something that is uncommon, unusual or exceptional. The advocate for the Applicant referred to Re Secretary, Department of Social Security and Bolton (1989) 18 ALD 464 in which the Tribunal found ill health alone was not enough to be considered a special circumstance.
While it was accepted that a written notice had not been issued to the Respondent before her settlement, the Applicant noted that the Respondent was given verbal advice regarding her compensation (T2, p4 - paragraph 6 & T6, p19). The Respondent acknowledged that she was made aware of the fact that she might be required to pay Centrelink an amount from her compensation settlement (T2, p4) as noted by her signed statement of 14 April 1999 (ex A2) therefore, it cannot be accepted that she had received the payments in good faith as was held by the SSAT. As well, she was put on notice that she was required to notify Centrelink within 14 days if she received compensation (T7, p22). She has disposed of her compensation monies in total disregard of Centrelink's advice.
The Applicant noted that after payment of costs and disbursements, the Respondent received a net figure of only $58,000.00 from her settlement of $149,369.00 (see Respondent's statement dated 11 June 2002, ex R2). The Applicant contended that the disparity between the amount received by the Respondent out of her settlement and the gross settlement figure is not a special circumstance. The Applicant contended that it is not the responsibility of Centrelink to go behind the terms of the settlement to determine whether the settlement was structured to benefit a third party or the Respondent given that it was agreed upon by both parties at the time of settlement. Centrelink's obligation in this regard is to the taxpayer in order to ensure that those who receive compensation are not also benefited with social security payments.

The Respondent states that she was pressured into accepting her compensation settlement however, the Applicant submitted that the choice to settle her claim was within her control. In Fowles and Secretary, Department of Social Security (1995) 38 ALD 152, the Tribunal failed to find special circumstances where it was virtually essential for the case to be settled, rather than go to adjudication due to difficulties in practical terms in pursuing a claim for damages. The Tribunal (Purvis J) commented:
"… These sorts of problems are to my mind not unusual in the run of cases in the personal injuries field. Those sorts of issues arise day in, day out, and commonly form the reason why at the end of the day matters are settled, because those sorts of risks are taken on board and a value judgment is made".

The Applicant contended that if it might not have been in the Respondent's interest to settle her claim, she should have been advised by her solicitor. If the solicitor acted inappropriately, then she would have an action in negligence against him. The Tribunal was referred to the decision of Crawford J in Hutt v Piggott, Wood and Baker (unreported decision of the Supreme Court of Tasmania No B20 of 1993 delivered on 28 May 1993). Likewise, special circumstances would not exist due to the failure of her solicitor in negotiating a settlement in the best interests of the Respondent as found in Re Guerrero and Secretary, Department of Social Security (1994) (unreported AAT decision number 9603). In Gough v Department of Social Security (1999) FCA 400, the Federal Court supported the Tribunal's findings that the Applicant's health problems and his allegation that his solicitor did not properly handle the matter were insufficient to attract the application of section 1184.
As for the Respondent's dissatisfaction with the way her solicitor settled her compensation claim, the Applicant submitted that a failure by a legal adviser to properly advise does not constitute a 'special circumstance'. In Re Martin and Secretary, Department of Social Security (1989) AAT 6482, 14 November 1989, the Tribunal stated that:
"Overall this factor is not persuasive or determinative and the best view is that the matter is one, if at all, as between solicitor and client."

In this case, the solicitor failed to obtain an estimate of the recoverable amount from Centrelink and provide a copy to the Respondent when advising her about the social security implications of a settlement before her compensation matter was settled.
SUBMISSION: Respondent
Written submissions were provided on the Respondent's behalf by the Legal Aid Commission (ex R1).
It was submitted that the debt raised against the Respondent should be waived under section 1237A(1) on the basis that debt was attributable solely to an administrative error made by the Commonwealth and that she had received the payment in good faith.
Attention was invited to the following:

The Respondent had advised Centrelink of her compensation case on 14 April 1999 when she applied for Newstart Allowance (T5), and this was recorded in a computer note dated 14 April 1999 (T6). It is noted that the 'Module C' that was completed specified that the insurer was GIO (T5/p17).

Centrelink did not notify GIO of its interest in the proceedings. This was recorded in a computer note dated 9 April 2001 (T10/p29).

It was submitted that it is clear that the compensation monies were only paid to the Respondent (through her solicitors) by the insurer because Centrelink had not advised the GIO of its interest, as it may (Tribunal's italics) do under the Act (see current section 1182).
It is submitted that had Centrelink followed correct procedure and notified the GIO of its interest at the time the Respondent advised of her compensation case, the charge monies would not have been released and the debt would have been recovered directly from the insurer. In this sense, it is submitted that the debt was attributable solely to the administrative error by Centrelink.
It was submitted that the Respondent had received the money in good faith, as she had informed Centrelink of her compensation case in April 1999.
It was submitted that the reasoning of the SSAT should be applied:
"26. Mrs Velis told Centrelink verbally and in writing of her pending compensation payment Centrelink failed to notify either Mrs Velis' solicitor or the insurance company of a claim that may be made by Centrelink to part of the compensation payment if and when it was awarded. As a result of this failure by Centrelink, the tribunal accepts that the payments of newstart allowance during the period 13 April 1999 to 17 September 1999 were not recovered by Centrelink prior to the release of the settlement moneys, thus resulting in the debt of newstart allowance occurring. The tribunal considers that Ms Velis received these payments in good faith as at the time she was not in receipt of weekly compensation payments and had not received a lump sum payment. Mrs Velis was herself convinced that the compensation payment did not include a component for economic loss as the settlement finally reached was so much less than the original claim. Even though economic loss was in fact part of the payment. Consequently the tribunal is satisfied that the debt is solely attributable to administrative error on the part of the Commonwealth, and that Mrs Velis received the payments that gave rise to the debt in good faith. Therefore, there must be waiver of the debt under Section 1237A(1) of the Act".

Alternatively, if the first submission were not accepted, it was submitted that the debt could be "waived" by application of the discretion in the then section 1184, which is now found in section 1184K, namely that there are, in this case, special circumstances.
It was submitted that there are a number of special circumstances which are relevant to the exercise of the discretion, including:

The error by Centrelink

This was addressed in detail in relation to the application of section 1237A. It was submitted that a failure by Centrelink to advise promptly or accurately of the debt is significant when considering whether to exercise the discretion.

Poor health

The Respondent had provided a statement (R2, paras 5-8) and reports of Dr Penny and Dr Dent that her needle stick injury seriously affected her psychological state – leading to post traumatic stress disorder, which was described in detail by Dr Dent.

It is submitted that the Respondent's health, especially the type of condition that she suffers from, should be taken into account when deciding if "special circumstances" exist.

Poor financial circumstances

The Respondent had provided in her statement, details of her financial circumstances. It is submitted that her financial situation is poor, with many accrued debts that she cannot pay and an outstanding court case taken against her by the solicitors she had instructed in an unfair dismissal action (Haywards, Solicitors).

It is submitted that it is clear that she cannot afford to repay the Centrelink debt.

Settlement of the case

While her case was settled for $149,369, the Respondent received well under half that amount in her hand. The letter from her solicitors dated 4 April 2001 shows that she received $43,859.57. It is submitted the large difference between the settlement amount and the net amount received by the Respondent should be taken into account in deciding whether the discretion should be exercised.

In summary it was submitted that when all the circumstances are considered, there are sufficient factors for the circumstances to be considered "special" as required by the legislation.
The administrative error by Centrelink is particularly important, but this, combined with the other matters listed above, and the relatively small amount of the debt, should lead to a conclusion that the discretion ought to be exercised so as to disregard enough of the compensation award so that the debt is not raised.
CONSIDERATION AND FINDINGS

In coming to the correct and preferable decision, the Tribunal took into account all the evidence, submissions, case law and relevant legislation.
Following settlement of a compensation claim in respect of a work accident, the Respondent received a lump sum payment which was compensation as defined in section 17 of the Act. The total sum awarded to the Respondent before any deductions was $149,367.00.
Deducted from this is the payback of periodic compensation benefits to GIO Workers Compensation (NSW) Limited amounting to $36,570.73, leaving $112,796.27. Pursuant to section 17(3) of the Act, the compensation part of the lump sum is 50% of that amount. There was no dispute that, applying the statutory formula to the Respondent's circumstances results in a preclusion period of 100 weeks.
It was the Applicant's submission that the SSAT had erred in applying section 1237A(1) of the Act as the debt had been validly raised and that the only available avenue for the debt to be waived was if the Respondent had 'special circumstances' in accordance with Section 1184K of the Act. It was the Applicant's position that, there are no special circumstances in the present case such that the discretion should be exercised.
The Tribunal considered each of these submissions in turn.
The Tribunal is satisfied and so finds that the Applicant was paid excess entitlements from 13 April 1999 to 17 September 1999 in the form of Newstart Allowance, and as such the amount paid is a recoverable debt under the provisions of section 1223(1) of the Act.
Section 1237A(1) provides that a debt must be waived if it is attributable solely to an administrative error made by the Commonwealth which in this case, is Centrelink.
The Respondent's evidence was that as early as April 1999, at the time she applied for and was granted Newstart Allowance, she was told she may have to pay back something when her compensation claim was settled. No action was taken by Centrelink at that time to register its interest with the insurer nor to open correspondence with her solicitors.
In February 2001, when the case went to hearing she accepted the advice of her solicitor to settle while the matter was part-heard. Her evidence was that, at that time, her solicitor did not tell her anything about Centrelink repayments, only that she would have to repay Medicare.
In April 2001 her solicitors asked Centrelink to issue a Notice of Charge and Centrelink then informed her she would have to pay back $4346.80. When she telephoned and explained her circumstances she was told that she need not pay the debt but to 'send in her paperwork'. She was subsequently informed that the previous telephone advice was wrong.
Meanwhile, she made no plans about how she would manage the money she received, deciding to spend $18,000 on an overseas trip for her children who had been distressed by the family's circumstances. She spent a further $30,000 on back payments, and an advance payment, on her mortgage.
The Tribunal finds that it is unfortunate that Centrelink did not contact the Respondent's solicitors or insurers when first notified that she had an outstanding compensation claim. However the Respondent was herself aware from April 1999 that some monies would need to be paid back to Centrelink. At the time of settlement it would appear that her solicitor made no enquires as to the amount she would need to pay back and nor did she. The result would appear that at that time she may not have been in a position to make an informed decision as to the amount she would ultimately receive in her hand when all deductions were made. (It might be added at this point that her evidence was that she was also taken aback at the amount of the solicitors' costs, which amounted to half of the settlement monies, once the insurance and Medicare paybacks were made).
The Tribunal finds that although there was an 'error' by Centrelink it could not be said that the overpayment to the Respondent was due solely to that error. Failure by the Applicant herself and her solicitors to enquire as to at least an estimate of her payback led to the overpayment, and hence the debt.
The Tribunal therefore finds that the debt is not to be waived under section 1237A(1) of the Act.
The Tribunal then turned to consider if the Respondent had 'special circumstances' in accordance with section 1184K of the Act.
The Respondent is not impecunious. She has the substantial asset of her house, valued, conservatively in the Tribunal's view, at $450,000 to $500,000. It cannot, therefore, in the Tribunal's view, be said that she is in straitened circumstances.
The Tribunal does not consider the Respondent to be in financial hardship in that her circumstances are not "unusual, uncommon or exceptional" (Beadle's case). True, she has debts and obtains assistance, both financial and in kind, from her parents, but against this is the substantial asset of the house. The Tribunal is not satisfied that the need to finance any shortfall in meeting daily expenses by drawing on the advance payments on her mortgage for example, would permit the Respondent's financial circumstances to be described as 'special' under section 1184K(1) of the Act.
As to her present health it is noted that she is in part time work and is looking for full time work. She is able to concentrate sufficiently to be undertaking university studies. She has some emotional problems but knows she must move on after the accident.
The Legal Aid Commission had also submitted on her behalf that the error by Centrelink and the circumstances of the settlement should be taken into account in considering if there were special circumstances. These have been addressed above, and, in the Tribunal's view do not amount to special circumstances. The Respondent, perhaps naively, chose to disregard the advice she received in her first dealings with Centrelink. She also chose to disregard the advice by letter and the telephone advice about the amount of payback and sent her children overseas and paid more off her mortgage than was necessary. She conceded that she had made no plans about living off the proceeds of the settlement monies. As to whether her solicitor had properly advised her the Tribunal makes no finding but notes that the Respondent may wish to take this up in another place. In any event, in view of her dealings with Centrelink herself, omissions by her solicitor did not, in the Tribunal's vie, amount to special circumstances, nor did the initial 'error' by Centrelink in failing to correspond with the solicitors or the insurer.
No submission was made on behalf of the Respondent in relation to the arbitrariness of the 50% rule in calculating the preclusion period. The Tribunal observed that the particulars of her claim included an economic loss component of a total of about 11 months at $890 per week, and a further period to the date of hearing of over 2 years at that rate. On the assumption that the periods and the amounts claimed are accurate, in the Tribunal's calculations, nearly the whole of the settlement monies could have been attributed to economic loss. In these circumstances the 'arbitrary nature' of the '50% rule' has in fact worked to the Respondent's advantage.
In summary, the Tribunal finds there are no special circumstances with the meaning of section 1237A(1) of the Act.
DECISION
The Tribunal sets aside the decision of the Social Security Appeals Tribunal and finds that the decision of Centrelink to recover a payment of $4246.80 made in respect of Newstart Allowance paid during a preclusion period of 18 October 1997 and 17 September 1999 was correct.

I certify that the 78 preceding paragraphs are a true copy of the reasons for the decision herein of Ms N Isenberg, Member
Signed:         .....................................................................................
  Associate
Date of Hearing  8 August 2002
Date of Decision  10 September 2002
Counsel for the Applicant        Self
Solicitor for the Applicant         Mr Bill Gerogiannis, Legal Aid Commission
Counsel for the Respondent    Mr George Lozynsky, Department of Family and Community Services

[2002] AATA 780

10 September 2002

Key Legal Topics

Areas of Law

Administrative Law

Social Security Law

Legal Concepts

Administrative Error

Discretionary Waiver of Debt

Statutory Interpretation