Vignjevic and Secretary, Department of Employment and Workplace Relations

[2007] AATA 1306

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 1306

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No V 200601134

GENERAL  ADMINISTRATIVE   DIVISION		)
Re		MARINKO VIGNJEVIC

Applicant

And

SECRETARY,
DEPARTMENT OF EMPLOYMENT

AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Regina Perton

Date7 May 2007

PlaceMelbourne

Decision The Tribunal affirms the decision under review.

(sgd) Regina Perton

Member

SOCIAL SECURITY ‑ lump sum compensation ‑ preclusion period ‑ whether special circumstances exist

Social Security Act 1991 ss 17, 1169,1170(1), (4), (5), 1184K

Ryde v Secretary, Department of Family and Community Services [2005] FCA 866

REASONS FOR DECISION

7 May 2007 Regina Perton       

1.      Marinko Vignjevic was injured in a fall at work in November 1999.  In March 2005, he settled a claim for common law damages for $220,000, with the retention of the weekly workers’ compensation benefits he had already received.  Prior to the settlement, Mr Vignjevic’s solicitor advised him in writing that he would be subject to a compensation preclusion period of around 167 weeks, during which he would not be eligible for social security benefits.  His solicitor also suggested that he obtain expert financial advice regarding management of the settlement funds.  On 11 April 2005 Centrelink, which delivers services for the Department of Employment and Workplace Relations, wrote to Mr Vignjevic informing him that he was subject to a compensation preclusion period from 1 April 2005 until 29 May 2008.  Centrelink also offered access to its Financial Information Service should Mr Vignjevic require it.

2.      On 1 May 2006, Mr Vignjevic applied for disability support pension (DSP).  The claim was rejected on 2 May 2006 on the basis that Mr Vignjevic was subject to a preclusion period for another two years.  Mr Vignjevic sought internal review by Centrelink of the decision.  On re-examining his settlement as part of a review, Centrelink became aware of a further $1,348.19 that had not been considered when the preclusion date was determined.  Centrelink wrote to Mr Vignjevic on 24 August 2006 informing him that the preclusion period did not end until 5 June 2008.  Mr Vignjevic sought review of the decision by an authorised review officer (ARO) of Centrelink.  On 8 September 2006, the ARO affirmed the decision to refuse DSP because of the preclusion period.  Mr Vignjevic sought review of the decision by the Social Security Appeals Tribunal (SSAT).  On 19 October 2006 the SSAT affirmed the decision on the same grounds.

3.      On 27 November 2006, Mr Vignjevic lodged an application for review with the Tribunal.  

4.      The issue before the Tribunal is whether there are grounds to waive part or all of the preclusion period due to special circumstances.

EVIDENCE

5.      In his written and oral evidence, Mr Vignjevic stated that he needed the pension because he was in a dire financial situation.  Mr Vignjevic was divorced in May 1997.  Despite this, his ex-wife took care of him for about 3 years after his injury.  At the time of the injury, he rented a flat.  He now lives with a friend and pays him board of $100 a week.   

6.      A few weeks after the compensation award, Mr Vignjevic bought a block of land in Melton for around $75,000.  He has been paying rates on the block since then.  Mr Vignjevic stated that he and his ex-wife had purchased the land as joint tenants although he personally paid the full purchase price from the settlement funds.  Prior to purchasing the land, Mr Vignjevic had never owned property.  He purchased land rather than a house because he could not get a mortgage on his low income.  His ex-wife is dependent on DSP for income so she could not meet mortgage payments either.  Mr Vignjevic said that his ex-wife, who has children by her first marriage with whom he does not get on, does not want to sell the land.  He said that he does not wish to sell the land either.  If he sells it, the money will be spent and he will have nothing again.  He said that he cannot afford to build on the land but hopes its price will increase in a few years time.  If he does not have the land, he will not even have enough money for a funeral.

7.      Mr Vignjevic spent part of the settlement on new furniture and appliances (around $11,000) and a grave for his parents ($3,360).  He took a one month holiday in Europe in June 2005 which included fares ($2,200), expenses ($4,000) and gifts for family and friends overseas ($2,500).  Mr Vignjevic said that his father died in 1990 and his mother in 2002.  He has paid for the grave and the funeral expenses his brother owed as his family was very poor.

8.      Mr Vignjevic said that he now has only a few hundred dollars in the bank.  He has been selling some of the furniture and other items he had bought, to support himself in the year since he lodged the claim for DSP.  He said that while he eventually received the letter from his solicitors informing him of the preclusion period, he did not fully understand it.  He did not seek any financial advice nor did he contact Centrelink to confirm the length or impact of the preclusion period.

9.      Mr Vignjevic said that his medical condition has not improved.  He is in pain, has bruising and swelling of his foot on a daily basis and is also suffering from depression.  He is taking medication and has seen a psychologist on his doctor’s recommendation.  His doctor has said that Mr Vignjevic’s condition is likely to worsen.  Mr Vignjevic said that he will not be able to work again and feels that his life effectively ended when he had the accident in 1999.

CONSIDERATION OF THE ISSUES

10. Section 17(1) of the Social Security Act 1991 (the Act) provides that a compensation affected payment includes disability support pension. Section 17(2) of the Act provides that compensation includes:

17(2)  Subject to subsection (2B), 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 and whether it is made within or outside Australia) that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury.

11. Section 1169 of the Act provides that DSP is not payable during a preclusion period. Section 1170 of the Act sets out the method of calculating a compensation preclusion period, which commences on the day following the last day of periodic payments (s 1170(1)(a)). Section 1170(1)(b) provides that the length of the preclusion period is calculated by dividing the compensation part of the lump sum payment by the income cut-out amount (s 1170(4) and (5)).  Income cut-out amount is defined in s 17; as is the formula for calculating the income cut‑out amount.

12.     The Tribunal is satisfied that Mr Vignjevic is subject to a preclusion period and that the length of the preclusion period imposed by Centrelink is correct. 

13.     Section 1184K(1) of the Act gives the decision‑maker discretion to treat the whole or part of a compensation payment as not having been made or not liable to be made, if the decision‑maker thinks it is appropriate to do so in the special circumstances of the case.  It is this provision that Mr Vignjevic seeks to rely upon in applying for review to this Tribunal. 

14.     For the Tribunal to use the discretion provided in s 1184K it must be satisfied that there is something to make the case stand out from the usual or the ordinary.  The term special circumstances is not defined in the legislation.  It has been discussed in many court cases where it has generally been defined as requiring a departure from the norm.  In Ryde v Secretary, Department of Family and Community Services [2005] FCA 866 Branson J stated at paragraph 26 that the circumstances of a particular case must give rise to hardship or unfairness sufficient to justify departure from the general rule.

15.     Special circumstances need to be considered on a case by case basis.  In considering this concept, the Tribunal must maintain a balance between the circumstances and difficulties of the individual involved and the purpose of the legislative provision. 

16.     Mr Vignjevic admitted he was aware of that he had been notified of the preclusion period.  However, he said that he had heard of cases where people were paid lump sum compensation, spent it all and then received DSP. 

17.     Mr Vignjevic was renting a flat at the time of the settlement.  He bought a block of land, which is not subject to a mortgage, soon after the settlement.  That land could be sold to provide living expenses for the balance of his preclusion period, which is now only some 13 months.  Mr Vignjevic also chose to spend money on furniture and appliances he does not use.  As he has already been doing, some of those items could be sold; although clearly second-hand they will not bring the amount he paid for them.

18.     Notwithstanding Mr Vignjevic’s belief that he could not work again given his limited language skills and disability, it is uncertain whether Mr Vignjevic would satisfy the requirements of DSP, in relation to achieving the relevant points score and demonstrating that he is unable to work or undertake training over the two years following his application for DSP.

19.     After considering all relevant matters and viewing Mr Vignjevic’s case in its entirety, the Tribunal is not satisfied that his circumstances, though difficult, are such that they could be described as special circumstances.  Therefore, it is not appropriate for the Tribunal to exercise the discretion under s 1184K(1) of the Act, to disregard the compensation received, in whole or in part.  As a result, Mr Vignjevic is prevented from qualifying for DSP based on his application made in May 2006 due to a preclusion period which is operative until 5 June 2008.  The Tribunal is not satisfied that the preclusion period should be shortened. 

DECISION

20.     The Tribunal affirms the decision under review.

I certify that the twenty [20] preceding paragraphs are a true copy of the reasons for the decision of:

Regina Perton, Member

(sgd)       Ursula Noyé

Clerk

Date of hearing:  1 May 2007
Date of decision:  7 May 2007
Advocate for applicant:                Self-represented
Solicitor for respondent:              Mr M Pike, Centrelink Legal Services