Warrell and Secretary, Department of Social Services (Social services second review)

[2021] AATA 2353

Warrell and Secretary, Department of Social Services (Social services second review) [2021] AATA 2353 (15 July 2021)

Division:GENERAL DIVISION

File Number(s):      2017/5194

Re:Mr Edward Warrell

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

DECISION

Tribunal:Chris Puplick AM, Senior Member

Date:15 July 2021

Place:Sydney

The decision under review is set aside and remitted with a decision that under section 1184K, the whole of the compensation payment is determined as not having been made.

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Chris Puplick AM, Senior Member

CATCHWORDS

SOCIAL SECURITY – disability support pension – age pension – decision to recover quantum of age pension as a debt – preclusion period – whether there are special circumstances that would allow part or all of the compensation payment to be treated as not having been made –– whether there are special circumstances that make it desirable to waive the debt – constellation of factors – decision under review set aside and remitted

LEGISLATION

Social Security Act 1991(Cth)

CASES

Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25
Beadle and Director General of Social Security (1984) 6 ALD 1
Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114
Dranichnikov v Centrelink [2003] FCAFC 133
Hogan v Secretary, Department of Employment, Education and Workplace Relations [2011] AATA 162
In the Marriage of Phillippe [1997] 4 Fam LR 153
Jess v Scott and Others (1986) 70 ALR 185
Secretary, Department of Social Security and VYS [1995] 40 ALD 745
Secretary, Department of Social Security v Hales [1998] 82 FCR 154
Skinner and Secretary, Department of Social Services (Social services second review) [2015] AATA 569

REASONS FOR DECISION

Chris Puplick AM, Senior Member

15 July 2021

Mr Edward Warrell (the Applicant) has sought a review of a decision by the Social Services and Child Support Division of this Tribunal (AAT1) made on 18 May 2017.

Background

1. The background to that AAT 1 decision is as follows:

2. On 7 December 2012 the Applicant suffered significant injuries as a result of a workplace accident.

3. The Applicant was awarded compensation under the workers’ compensation insurance scheme and received two payments (28 September 2015 and 27 September 2016) which amounted to a total sum of $108,674.91.

4. In the meantime, the Applicant had been granted the disability support pension (DSP) on 25 June 2015 which was converted to payment of the Age Pension on 26 August 2015 (his sixty-fifth birthday).

5. Social Security legislation provides that where a person is in receipt of compensation payments for loss of income, they should not be entitled to payment of certain other social security benefits defined as “compensation affected payments”[1] at the same time.

   [1] This includes the age pension.

6. In effect, what happens is that social security payments which are being made (or to which there is an entitlement) are suspended for a period of time depending on the quantum of compensation payments made to an individual. This period is referred to as the “preclusion period”.

7. There is an elaborate scheme in the Social Security Act 1991 (Cth) (the Act) setting out how the preclusion period is to be calculated. In short, the relevant lump sum included in the compensation is reduced by 50% and that sum is then divided by what is called the “income cut-out amount”.[2]

   [2] According to a formula set out in subsection 17(8) of the Act.

8. The figure so derived is then expressed as a whole number of weeks to give the “preclusion period”.

9. The preclusion period commences the day after any periodic workers compensation payments cease and continues for the number of weeks determined.

10. The effective date of the cessation of the Applicant’s periodic workers compensation payments was 27 August 2016.

11. This means that the preclusion period (calculated to be 56 weeks) ran from 27 August 2016 to 22 September 2017.

12. On 7 October 2016, the Applicant was notified that his age pension had been cancelled because of his compensation settlement.[3] On 31 January 2017, he was advised that the quantum of age pension paid to him from 27 August 2016 to 6 October 2016 was to be recovered as a debt owing to the Commonwealth. The amount in question was $2,125.33 and was recovered by the Respondent directly from the employer’s insurer (the GIO).[4]

    [3] Tribunal documents (T docs) at [98].

    [4] T docs at [106-110] and [134],

13. The Applicant, for reasons elaborated below, sought a review of this decision by the Respondent whereupon an Authorised Review Officer (ARO) of the Department affirmed the decision on 31 January 2017.

14. The Applicant then sought a further review of that ARO decision, and the matter came before the AAT1 on 24 April 2017. At the time the Applicant was serving a term of imprisonment which appears to have been from around 23 April 2017 to 22 October 2020.[5] Under the Act, the age pension is not payable to people while they are incarcerated.[6]

    [5] There is some lack of clarity as to the date of incarceration. Both the Applicant himself and the Submission by People with Disability Australia (10 June 2021) give his incarceration date as 12 July 2017 but the AAT1 states that the Applicant was in prison at the time of its hearing on 24 April 2017: Tribunal documents at [25].

    [6] Act section 1158. The matter of payment of age pension to any dependents (section 1159) is not before the Tribunal for consideration.

15. The AAT1 gave its decision on 18 May 2017. It decided that all the relevant calculations made by the Respondent (as affirmed by the ARO) were correct, but that there existed “special circumstances” such that the preclusion period should be shortened from expiring on 22 September 2017 to expiring on 18 May 2017.

16. It should be noted that this decision had no impact upon the recovery of the sum of $2,125.33 as outlined above.

17. On 22 September 2017, the Applicant sought a review of that AAT1 decision, but the matter did not come before this Tribunal until 6 July 2021[7] when it was heard with all the parties participating on the Microsoft Teams platform in accordance with the Tribunal’s COVID-19 protocols. The Applicant was assisted by a representative from People with Disabilities Australia (PWDA).

    [7] The delay caused primarily by the Applicant’s incarceration.

18. Before the Tribunal, the Respondent urged that the decision of the AAT1 should be affirmed. The representations of the Applicant were not expressed in terms any more specific than “respectfully asking the Secretary consider his circumstances to recover lost earnings”.[8]

    [8] Submission by People with Disability Australia (10 June 2021).

    Matters not in contention

19. There is no dispute that the calculations made by the Respondent in relation to the financial position of the Applicant in terms of his compensation payments nor the calculation of the preclusion period (in accordance with the Act) are correct.

    Special circumstances

20. Section 1184K(1) of the Act provides:

    1184K Secretary may disregard some payments

    (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.

21. As with so many key concepts in the Act, the term “special circumstances” is not given any precise definition. Without going into extensive detail, it can be said that the courts have identified a number of factors which go to establishing whether or not “special circumstances” exist. They must be:

    ·Something more than ordinary or usual[9]

    ·Markedly different from the usual run of cases – not necessarily unique but having a particular quality of unusualness[10]

    ·Somehow distinguishing from usual cases of an analogous nature[11]

    ·Attuned to the individual circumstances of each case[12]

    ·Not so rigidly applied as to risk harsh or unreasonable outcomes[13]

    ·Involving “facts peculiar to the particular case which set it apart from other cases”[14]

    ·Supportive of the overall integrity of the social security system and recognising the public interest in ensuring that public moneys are recovered where they can and should be.[15]

    [9] Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25; Jess v Scott and Others (1986) 70 ALR 185.

    [10] Re Beadle and Director General of Social Security (1984) 6 ALD 1 at [3].

    [11] Dranichnikov v Centrelink [2003] FCAFC 133.

    [12] Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114 (‘Davy’).

    [13] Secretary, Department of Social Security v Hales (1998) 82 FCR 154.

    [14] In the Marriage of Phillippe [1997] 4 Fam LR 153 per Kay J.

    [15] Skinner and Secretary, Department of Social Services (Social services second review) [2015] AATA 569; Davy [2007] AATA 1114, Secretary, Department of Social Security v Hales (1998) 82 FCR 154.

22. Additionally, the Tribunal is invested with ‘a broad discretion to respond to a variety of circumstances’[16] but should note that ‘the “special circumstances” are not merely directed to the person's own circumstances. Rather; they are directed to those that are “special circumstances ... that make it desirable to waive”’.[17]

    [16] Hogan v Secretary, Department of Employment, Education and Workplace Relations [2011] AATA 162 at [82].

    [17] Davy [2007] AATA 1114 at [80].

    The Applicant’s position / special circumstances

23. At the age of 18, the Applicant suffered severe injuries when he was thrown from a horse and kicked in the head. This resulted in his suffering traumatic brain injury which in turn has resulted in him spending his whole life with limited literacy and numeracy skills and with poor memory and impaired cognitive functioning.[18]

    [18] Applicant’s Submissions Report by Sr Susan Yeung (21 February 2012).

24. The AAT1 recoded the following:

    15. As described earlier, Mr Warrell received two lump sum payments: the first, of $40,174.91 was paid out on 28 September 2015; the second, of $68,500, on 27 September 2016. Ms Odgers' submission states that Mr Warrell had spent the first payout by the time the second was paid. The second payout was reduced by legal fees and other disbursements and Mr Warrell received $35,303.36 paid into his bank account on 21 October 2016.

    16. It is evident from the hearing papers, and especially from the material provided as additional papers before the hearing, that Mr Warrell's attention at this time was given to a relationship that he had developed with a Zambian woman, Christine Kaumba, and her family. He travelled to Zambia, marrying her in December 2016, and, as shown by the bank records supplied, used his second payout to support himself and the family and bring them back to Australia. Visas, airfares and costs associated with living for a brief period in Zambia seem to have absorbed almost $30,000 of Mr Warrell's funds. At the beginning of February 2017, Mr Warrell's total funds were reduced to $3,856.52, and he had no remaining source of income.

    17. Mr Warrell, his wife and her two younger children (sons aged 11 and 15) came to Australia in February 2017. Mr Warrell's small apartment was inadequate, and Mrs Warrell and her two boys are being accommodated by a clergyman, Pastor Goodson Muleya, at his house until an alternative can be found. Arrangements with Housing NSW for accommodating the family were halted when Mr Warrell was arrested. Mrs Warrell is now dependent on the charity of others (in effect on the charity of Pastor Goodson).[19]

    [19] Tribunal documents at [28].

25. The AAT1 went on to make the following findings:

    ·     Mr Warrell suffers from significant intellectual dysfunction from his acquired brain injury;

    ·     as a result he has only the most limited understanding of what is occurring and why with regard to his social security entitlements;

    ·     he had a limited capacity to manage his compensation payout;

    ·     he has exhausted his compensation payout in marrying and bringing his wife and family to Australia;

    ·     he is now in gaol and unable to help his family; and

    ·     the family is effectively destitute.

26. None of this is challenged by the Respondent,[20] although the Applicant is now no longer in custody.

    [20] Respondent’s Statement of Facts, Issues and Contentions at [7.13].

27. It was on this basis that the AAT1 found that there were “special circumstances” for the reduction of the preclusion period.

28. The Tribunal notes that this is not the first occasion on which the Applicant’s position in relation to a possible social security debt was considered. In September 2016, a different AAT1 made a decision to waive a debt arising from overpayment of Newstart Allowance (based on the Applicant failing to report his income accurately). The debt in this instance was $2,691.35 and the AAT1 determined:

    28. The tribunal carefully considered how the debt arose. The tribunal formed the view that the errors in Mr Warrell’s reporting of his employment income, and his failure to be alerted to the errors by subsequent correspondence from the Department, is a consequence of his limited cognitive functioning. As stated above, the tribunal formed the view that he presents with executive dysfunction and requires support to manage his financial affairs and also requires support to manage other areas of independent living. The debt is causing him significant distress and his oral testimony and written submissions suggest that he is feeling persecuted by the Department.

    29. Mr Warrell is under considerable emotional strain. He has no savings and is in receipt of age pension. He has limited capacity to manage his affairs and cannot comprehend the basis on which the debt was raised. After carefully considering all the evidence before it, the tribunal finds that Mr Warrell’s circumstances are sufficiently “special” and out of the ordinary to warrant waiving so much of the debt that remains outstanding at the date of hearing. Approximately $900 has already been recouped. The tribunal is satisfied that this strikes a balance between providing relief to Mr Warrell while recognising the community expectation that overpayments should be repaid. [21]

    [21] Warrell and Secretary, Chief Executive Centrelink, 2016/S097896.

29. This Tribunal was presented with direct evidence in the oral hearing of the Applicant’s capacity to misunderstand and confuse matters when he told the Tribunal that Mr Goodson Muleya was his brother-in-law but was corrected on this point by his carer Mr Burt who explained that this was not the case and Mr Muleya was merely a close friend. There is also evidence that the Applicant in a number of his submissions has confused the Newstart debt ($2,691.35) with the age pension debt ($2,125.33), although this is more understandable.

30. However, what is significant is that two separate AAT1 determinations have previously found that the Applicant’s position is such that the special circumstances exemption regarding debts to the Commonwealth should be enlivened.

    Findings and discussion

31. This Tribunal is of the same opinion. Mr Warrell’s circumstances are special. They are more than mere matters of ill-health which might be suffered by any number of social security recipients[22] and they certainly amount to a “constellation of factors”[23] of physical, emotional, cognitive and intellectual impairment so that his capacity to understand matters such as the effect of a preclusion period requiring his controlled management of his finances and expenditures and planning over an extended period of time are rendered well-nigh impossible.

    [22] Secretary, Department of Social Security and VYS [1995] 40 ALD 745.

    [23] Secretary, Department of Social Security v Hales [1998] 82 FCR 154 at [162C-G].

32. The question then becomes one of the period to which such a finding should attach.

33. With the greatest of respect to the AAT1, this Tribunal finds it difficult to follow the logic of why special circumstances justify the reduction of the preclusion period only from 22 September 2017 to 18 May 2017. It seems to this Tribunal that there must be some sort of objective date upon which special circumstances came into existence. In this case it is most likely to be the date on which the original acquired brain injury occurred but, in any event, it was certainly before the date of the industrial accident of 2012.

34. There is nothing to suggest that there was anything different about the Applicant’s circumstances in the periods of 27 August 2016 to 18 May 2017 and then from 19 May 2017 to 22 September 2017.

    Conclusion

35. It follows in this Tribunal’s reasoning that the calculation of the preclusion period by the  ARO was the correct and preferable decision and should not be varied. It also follows that because special circumstances have been found to exist, they should have application throughout the entire period in question.

36. In other words, the compensation payment should be treated as not having been made at any time.

    A matter of the rate of pension

37. There is evidence to the effect that the Applicant was married in December 2016 and that this evidence was supplied to the Respondent. The Tribunal was advised that, despite this, the age pension was paid to the Applicant at the single rate rather than the married rate.

38. As the result of this determination will be to remit the matter to the Respondent, the Respondent is required to reconsider whether, in any recalculations arising here from, payments were made to the Applicant at the appropriate rate in all the circumstances.

    DECISION

39. The decision under review is set aside and remitted with a decision that under section 1184K, the whole of the compensation payment is determined as not having been made.

I certify that the preceding 39 (thirty-nine) paragraphs are a true copy of the reasons for the decision herein of Chris Puplick AM, Senior Member

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Associate

Dated: 15 July 2021

Date(s) of hearing:	6 July 2021
Advocate for the Applicant:	Francis O'Neill, People with Disability Australia
Solicitor for the Respondent:	Elizabeth Ulrick, Services Australia