Warry and Secretary, Department of Social Services (Social services second review) - [2024] AATA 500

Warry and Secretary, Department of Social Services (Social services second review) [2024] AATA 500 (25 March 2024)
Division:GENERAL DIVISION
File Number(s): 2022/10363
Re:Ian Warry
APPLICANT

Secretary, Department of Social ServicesAnd
RESPONDENT

DECISION
Tribunal:Member D Mitchell
Date:25 March 2024
Place:Brisbane

The Tribunal affirms the decisions under review.
....................................[SGD].....................................
Member D Mitchell
CATCHWORDS
SOCIAL SECURITY – Compensation Recovery – compensation lump sum – lump sum preclusion period – whether special circumstances exist – no evidence that special circumstances exist – compensation charge – no evidence to support write off or waiver – cancellation of disability support pension – decisions under review affirmed
LEGISLATION
Federal Court of Australia Act 1976 (Cth)
Social Security Act 1991 (Cth)
Social Security (Administration) Act 1999 (Cth)
CASES
Boscolo v Secretary, Dept of Social Security [1999] FCA 106; (1999) 90 FCR 531
Secretary, Department of Social Security v Smith [1991] FCA 382; (1991) 30 FCR 56
Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541
Hajar and Secretary, Department of Social Security [1988] AATA 787; (1988) 16 ALD 716
Kazmierczak v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] FCA 1084
Kezchek v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2009] FCA 956; (2009) 178 FCR 363
Re Beadle and Director-General of Social Security [1984] AATA 176; (1984) 6 ALD 1
Re Ivovic and Director-General of Social Services [1981] AATA 57; (1981) 3 ALN N61 at N95
Re Secretary, Department of Social Security and Winterbotham [1990] AATA 808
Secretary, Department of Families, Housing, Community Services and Indigenous Affairs v Jones [2012] FCA 639; (2012) 89 ATR 267
Secretary, Department of Families, Housing, Community Services and Indigenous Affairs and Whitlock [2010] AATA 816; (2010) 126 ALD 550
Secretary, Department of Social Security v Banks [1990] FCA 317; (1990) 23 FCR 416
Secretary, Department of Social Security v Hales [1998] FCA 219; (1998) 82 FCR 154
Secretary, Department of Social Security v Smith [1991] FCA 382; (1991) 30 FCR 56
Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190; (2003) 132 FCR 126
Ward and Secretary, Department of Family and Community Services [2000] AATA 212
Ward and Secretary, Department of Social Services [2022] AATA 57
REASONS FOR DECISION
Member D Mitchell
25 March 2024
INTRODUCTION

Mr Ian Warry (the Applicant) sought review of a decision of the Social Services and Child Support Division (SSCSD) of this Tribunal made on 2 December 2022[1] to affirm decisions of the Respondent to impose a compensation preclusion period from 17 August 2019 to

24 July 2026, to raise and recover a total compensation charge of $13,978.56 and to cancel his disability support pension.
[1] Exhibit 1, T Documents, T2, pages 6-11, Decision of the SSCSD.
BACKGROUND
The Applicant sustained personal injuries in the course of his employment. As a result of a workplace injury sustained on 12 February 2018, he made a claim for workers’ compensation.[2]
[2] Exhibit 1, T Documents, T2, page 7, Decision of the SSCSD, paragraph 2.
The Applicant notified the Respondent about his claim for workers’ compensation on
[3] Exhibit 1, T Documents, T5, pages 49-52, MOD C – Compensation and Damages form.
23 March 2021.[3]
On 29 March 2021, WorkCover Queensland notified the Respondent that while the Applicant’s common law claim was still open, his statutory claim was closed.[4]
[4] Exhibit 1, T Documents, T6, page 53, Correspondence from WorkCover Queensland.
Under the statutory claim, the Applicant received payments totalling $450,270.67 which comprised of the following:[5]
(a)Hospital and rehabilitation payments and travel expenses.
(b)A payment of $204,049.65 paid to his lawyers, SLF Lawyers on 24 March 2020 that comprised payments for:
(i)Permanent impairment:         $173,509.65
(ii)Additional Lump Sum:           $ 27,385.00
(iii)Gratuitous Care Lump Sum:   $   3,155.00
(c)Weekly compensation payments totalling $109,386.25 for the period 26 March 2018 to 16 August 2019.
[5]     Exhibit 1, T Documents, T6, pages 53-74, Correspondence and attachments from WorkCover Australia.
On 13 August 2021, the Applicant was granted the disability support pension (DSP) with effect from 2 October 2020.[6]
[6] Exhibit 2, Respondent’s Statement of Facts, Issues & Contentions, Attachment A, Disability Support Pension Notices issued to the Applicant dated 13 August 2021, 26 August 2021 and 3 September 2021.
On 28 March 2022, the Applicant, WorkCover Queensland and his former employer signed terms of agreement to resolve the common law claim.[7] That agreement provided that:[8]
(a)The parties had agreed to settle the claim and proceedings without any admission of liability on the terms set out in the agreement.
(b)WorkCover on its own behalf and on behalf of the Employer would pay the Applicant the sum of $350,000 in full and final settlement of the claim and proceedings.
(c)The Applicant was entitled to costs upon settlement of the claims and proceedings agreed in the amount of $90,000.
(d)WorkCover was not entitled to a refund of statutory benefits paid totalling $382,638.96.
(e)The Applicant in consideration of the payment of the settlement sum and any costs released and discharged WorkCover and the Employer from any liability however arising out of the facts and circumstances the subject of the claim and proceedings.
(f)The Applicant authorised and directed his lawyers to execute a Notice of Discontinuance[9] immediately upon payment by WorkCover of the settlement sum and any costs.
[7]     Exhibit 1, T Documents, T7, pages 75-81, Release and Discharge.
[8]     Exhibit 1, T Documents, T7, pages 75-81, Release and Discharge.
[9]     Exhibit 2, Respondent’s Statement of Facts, Issues & Contentions, Attachment B, Notice of Discontinuance.
On 30 March 2022, WorkCover advised the Respondent that the Applicant had received a net settlement offer of $350,000, statutory benefits of $382,638.96 and costs of $90,000, by way of a consent agreement or settlement signed on 28 March 2022.[10]
[10] Exhibit 1, T Documents, T8, pages 82-108, Correspondence and attachments from WorkCover Queensland.
On 29 April 2022, the Respondent decided to:
(a)cancel the Applicant’s DSP from 28 April 2022;[11]
(b)impose a preclusion period from 17 August 2019 to 24 July 2026;[12] and
(c)raise a compensation charge in the amount of $13,978.56[13] and recover that charge from WorkCover Queensland.[14]
[11]    Exhibit 1, T Documents, T9, pages 109-110, Centrelink Notice: Your Disability Support Pension Eligibility.
[12]    Exhibit 1, T Documents, T14, pages 154-155, Centrelink Notice dated 19 April 2022.
[13]
[14]    Exhibit 1, T Documents, T14, pages 154-155, Centrelink Notice dated 19 April 2022.
On 5 May 2022, the Applicant sought review of those decisions,[15] which were subsequently affirmed by an Authorised Review Officer (ARO) on 5 August 2022.[16]
[15]
[16] Exhibit 1, T Documents, T10, pages 111-119, Decision and Notes of Authorised Review Officer.
On 25 August 2022, the Applicant sought a first-tier review of the Respondent’s decisions by the SSCSD.[17] The SSCSD affirmed the decisions under review on

2 December 2022.[18]
[17] Exhibit 1, T Documents, T11, pages 120-121, Request for Statement.
[18] Exhibit 1, T Documents, T2, pages 6-11, Decision of the SSCSD.
Following this, the Applicant sought a second-tier review of these decisions by the General Division of this Tribunal by way of an application received on 15 December 2022.[19]
[19] Exhibit 1, T1, pages 1-5, Application for Review of Decision.
A Hearing was held by this Tribunal on 30 January 2024. At the Hearing, the Applicant was self-represented, appeared in person and gave evidence under oath.
ISSUES
The issues before the Tribunal are:
1.Whether:
(a)the compensation preclusion period was correctly calculated; and if so
(b)there are special circumstances that make it appropriate to treat all or part of the Applicant’s compensation payment as not having been received.
2.Whether:
(a)the compensation charge was correctly calculated; and if so
(b)the compensation charge can be written off or waived.
3.Whether the decision to cancel the Applicant’s DSP was correct.
THE LAW
The relevant law in relation to this matter is found in the Social Security Act 1991 (Cth) (the Act) and the Social Security (Administration) Act1999 (Cth) (the Administration Act). The following is a summary of the key provisions which relate to the Applicant.
Part 3.14 of Chapter 3 of the Act deals with compensation recovery. Section 1160 of the Act sets out the general effect of Part 3.14 as follows:
(1)This Part operates in certain specified circumstances to do one or more of the following:
(a)reduce a person’s compensation affected payment;
(b)render a person’s compensation affected payment not payable;
(c)require the repayment of some or all of the person’s compensation affected payment;
because of the receipt of compensation by the person or the person’s partner.
(2)This Part applies whether or not there is any connection between the circumstances that give rise to the person’s qualification for the compensation affected payment and the circumstances that give rise to the receipt of compensation by the person or the person’s partner.
Division 3 of Part 3.14 of the Act relates to persons receiving or claiming a compensation affected payment and receiving a lump sum compensation payment regardless of whether the lump sum payment was received before or after the person received or claimed the compensation affected payment.[20]
[20] Section 1168 of the Act.
Section 17 of the Act provides compensation recovery definitions.
The definition of ‘compensation affected payment’, set out in section 17(1) of the Act, includes the DSP.
Section 17(2) of the Act defines ‘compensation’ as:
(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.
Section 17(3) of the Act relevantly defines ‘compensation part of a lump sum compensation payment’ as:
Subject to subsection (4), for 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 judgement being entered in respect of the settlement or otherwise; or
(ab)50% of the payment if the following circumstances apply:
(i)     the payment represents that part of a person's entitlement to periodic compensation payments that the person has chosen to receive in the form of a lump sum; and
(ii)     the entitlement to periodic compensation payments arose from the settlement (either with or without admission of liability) of a claim that is, in whole or in part, related to a disease, injury or condition; and
(iii) the claim was settled, either by consent judgment being entered in respect of the settlement or otherwise; or
(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.
Section 17(4) of the Act provides that where a person:
(a)has received periodic compensation payments; and
(b)after receiving those payment, receives a lump sum compensation payment (in this subsection called the LSP); and
(c)because of receiving the LSP, becomes liable to repay an amount (in this subsection called the Repaid Periodic Compensation Payment--RPCP) equal to the periodic compensation payments received;
then, for the purposes of subsection (3), the amount of the lump sum compensation payment is:
LSP - RPCP
Section 17(5) of the Act provides that a person receives compensation whether he or she receives it directly or whether another person receives it, on behalf of, or at the direction of the first person.
Section 1169 of the Act provides that if a person receives or claims a compensation affected payment and also receives a lump sum compensation payment, the compensation affected payment is not payable to the person in relation to any days in the lump sum preclusion period. Section 1169 is effectively a bar against eligibility for certain social security payments, including the DSP.
Section 98(1) of the Act provides that a DSP is not payable to a person if the person’s DSP rate would be nil.
Section 1170 of the Act sets out the calculation method of a lump sum compensation preclusion period and relevantly provides:
(1) ……...
(2) ……...
(3) If neither of subsections (1) and (2) applies, the lump sum preclusion period is the period that:
(a)begins on the day on which the loss of earnings or loss of capacity to earn began; and
(b)ends at the end of the number of weeks worked out under subsections (4) and (5).
(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 the 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.
The income cut-out amount is calculated with reference to the maximum basic rate of pension.[21] The income cut-out amount in force when the compensation was received on

28 March 2022 was $1077.60.
[21] Section 17(8) of the Act.
Section 1171 of the Act sets out that multiple lump sum payments are dealt with as follows:
Deemed lump sum payment arising from separate payments
(1)If:
(a) a person receives 2 or more lump sum payments in relation to the same event that gave rise to an entitlement of the person to compensation (the multiple payments); and
(b) at least one of the multiple payments is made wholly or partly in respect of lost earnings or lost capacity to earn;
the following paragraphs have effect for the purposes of this Act and the Administration Act:
(c) the person is taken to have received one lump sum compensation payment (the single payment) of an amount equal to the sum of the multiple payments;
(d) the single payment is taken to have been received by the person:
(i) on the day on which he or she received the last of the multiple payments; or
(ii) if the multiple payments were all received on the same day, on that day.
(2)A payment is not a lump sum payment for the purposes of paragraph (1)(a) if it relates exclusively to arrears of periodic compensation.
Sections 1178 and 1179 of the Act sets out that if a person receives a compensation affected payment during a lump sum preclusion period, the Respondent may determine that an amount is recoverable. The compensation charge is usually the sum of all compensation affected payments received by the person during the lump sum preclusion period.
Section 1184 of the Act provides that the Respondent may send a recovery notice to a compensation payer or insurer under which the insurer is liable to pay the Commonwealth the amount specified in the notice.
The recoverable amount is a debt to the Commonwealth pursuant to sections 1184F and 1184G of the Act.
Section 1184K of the Act provides that the Respondent may treat the whole or part of a compensation payment as not having been made or not liable to be made if the Respondent thinks it is appropriate to do so in the special circumstances of the case. This effectively allows the preclusion period to be reduced and may also reduce the compensation charge.
CONSIDERATION
Compensation preclusion period
Was the Applicant’s compensation preclusion period correctly applied?
As set out in paragraphs 6 to 8 above, the Applicant received compensation payments in relation to his workplace injury.
On 6 April 2023, the Applicant provided submissions outlining that his common law claim against WorkCover Queensland and his former employer was referred to mediation, at which an agreement was reached between the parties. The Applicant contended that the agreement reached at mediation became a court order by virtue of a Mediators Certificate filed by the Mediator on 28 March 2022.[22]
[22] Exhibit 2, Respondent’s Statement of Facts, Issues & Contentions, Attachment B, Applicant’s Written Submissions.
The Applicant further contended that the agreement was not an out of court settlement and submitted that no agreement was reached, nor was there an agreed component in respect to future economic loss, as such no amount was awarded for economic loss.[23]
[23] Exhibit 2, Respondent’s Statement of Facts, Issues & Contentions, Attachment B, Applicant’s Written Submissions.
The Applicant contended that:[24]
[24] Exhibit 2, Respondent’s Statement of Facts, Issues & Contentions, Attachment B, Applicant’s Written Submissions
The act relies heavily on the granting, or receiving, payment for ECONOMIC LOSS to determine any exclusion period.
My submissions relate to the fact that no ECONOMIC LOSS being paid or sought to be paid in the settlement.
Therefore my submission there should be
No exclusion period beyond August 2019
Full payment of the disability pension from August 2019
To all end the ACT is designed to
Ensure that people who receive compensation for a LOSS OF INCOME do not receive income support in respect for the same period of time.
…..
There was a court order settlement on 22 February 2021
In the orders there was no allowance for future economic loss
The position of Services Australia that this was an out of court settlement, is fatally flawed.
The Mediator’s Certificate dated 28 March 2022, certifies that the parties had participated in a mediation and the procedure had finished with the parties having resolved their dispute.[25]
[25] Exhibit 2, Respondent’s Statement of Facts, Issues & Contentions, Attachment B, Mediator’s Certificate.
At the Hearing, the Applicant’s evidence was consistent with his filed submissions. The Applicant told the Tribunal that:
·He did get the DSP and the compensation payments. There was no question that the payments in question were received by him.
·The starting point should be the $350,000 and $90,000 costs.
·The orders were made under agreement by the mediator and as such the mediators certificate migrates into a court order as they did not proceed to a settlement hearing.
·That section 23E(2) of the Federal Court of Australia Act 1976 (Cth) should apply.
·While $90,000 was awarded for costs, his legal fees were over $350,000.
·There should be no preclusion period but if there is it should start with $350,000 less the $90,000 legal fees.
On cross-examination, in response to questions asked by the Respondent, the Applicant:
·Agreed that the settlement was reached without admission of liability.
·Agreed that if the proceedings had not settled by way of release and discharge that it would have gone to a contested hearing or trial.
·Said that the matter did not go to a contested hearing or trial and that he settled due to the amount of legal fees involved and amount of time it would have taken to do so.
·Agreed that his decision was a commercial one to focus on getting better and that he had received legal advice and was fully informed.
·Agreed that there was no court order after a contested hearing and that the only thing that he had was the mediator’s certificate.

The Applicant made it clear at the Hearing that he did not think he should have been subjected to a preclusion period or compensation charge and should still be receiving the DSP.
The Applicant told the Tribunal that if it considered that no court order had been made then he would consider seeking one.
The Respondent submitted that:[26]
[26] Exhibit 2, Respondent’s Statement of Facts, Issues & Contentions, pages 7-8, paragraphs 36-37.
36. The Secretary contends that paragraph 17(3)(a) and subsection 17(4) of the Act apply, such that the “compensation part of the lump sum” for the Applicant is 50% of the payment made in settlement of the claim on 28 March 2022 less the periodic compensation payments received, calculated as follows:
50% of (lump sum compensation payment – periodic compensation payments)
Where:
Lump sum compensation payment: lump sum settlement of $350,000 + statutory benefits of $450,270.675 + costs of $90,000 = $890,270.67
Periodic compensation payments: $109,386.25
Therefore, the “compensation part of the lump sum” for the Applicant is:
50% of ($890,270.67 - $109,386.25) = $390,442.21
37. The Secretary contends that the Applicant’s compensation preclusion period is calculated by taking the $390,442.21 and dividing it by the income-cut out amount of $1,077.60, resulting in a preclusion period of 362 weeks from
17 August 2019 to 24 July 2026.
In response to the Applicant’s contentions that the lump sum payment of $350,000 had been paid as part of an out of court settlement following a mediation convened by the Supreme Court of Queensland and that the settlement agreement should be treated akin to a court decision, the Respondent contended that as a lump sum payment of $350,000 was made to him in settlement of a claim, section 17(3)(a) of the Act, rather than section 17(3)(b) applied.[27]
[27] Exhibit 2, Respondent’s Statement of Facts, Issues & Contentions, pages 8-10, paragraphs 38-44.
The Respondent contended that there is no discretion to look behind the terms of the agreement to determine the economic loss component of the lump sum, as sought by the Applicant.[28]
[28] Exhibit 2, Respondent’s Statement of Facts, Issues & Contentions, pages 9-10, paragraph 44.
The Respondent made the following observations and reference to relevant case law in support of their contentions:[29]
[29]    Exhibit 2, Respondent’s Statement of Facts, Issues & Contentions, pages 8-9, paragraphs 40-43.
40.The Secretary observes that:
a.    On or about 30 March 2022 (T8/83), WorkCover provided a Compensation Advice of Lump Sum Payments form which described at section 2 of the form, the type of lump sum compensation payment as “consent agreement or settlement” signed on 28 March 2022, rather than “verdict/tribunal/court judgement”.
b.    The terms of agreement signed on 28 March 2022 (T7/75) clearly state under Recitals C, that the parties agreed to settle the claim and proceedings without an admission of liability.
c.    The Applicant has provided a copy of the Court’s mediator’s certificate which stated that the parties had participated in mediation on 28 March 2022 and had resolved their dispute. There was also a Notice of Discontinuance filed by the Supreme Court of Queensland which stated that the plaintiff discontinued the whole action against the defendant (Attachment B).
41.The terms “settle” and “settlement” in the context of subsection 17(3) of the Act were considered by the Federal Court of Australia in Kezchek v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2009] FCA 856, where Jagot J held at [48]-[50] (emphasis added):
The ultimate question thus is and remains the meaning of s 17(3) of the Social Security Act. The ordinary meaning of “settle” and “settlement”, as the Tribunal’s analysis of various definitions from dictionaries shows, includes both resolution of a claim by agreement and resolution of a claim by any means.
In the context of the Social Security Act it is apparent that s 17(3) does not use the words “settle” and “settlement” in the broadest sense of the ordinary meaning of those words. If those words meant simply a resolution of a claim (irrespective of the means) then, as the Secretary submitted, there would be no work for s 17(3)(b) to do. Hence, to “settle” a claim within the meaning of s 17(3)(a) cannot be merely to resolve a claim. A narrower meaning, within the range of the ordinary meaning of the words, must be found. Such a meaning is immediately apparent, namely, to resolve a claim by agreement.
This meaning, involving the essential requirement of a resolution by agreement, accords with the purpose of s 17(3). Section 17(3) was intended to prevent the manipulation or masking of the economic loss component of damages awards. A resolution by agreement need not identify any component for economic loss or, if it does so, the sum nominated may bear no true relationship to that component. This is because parties to an agreement about compensation are generally interested only in their ultimate net position and not the components which contribute to that position.
42. In Secretary, Department of Social Security v Banks (1990) 23 FCR 416, Doussa J held at 423:
The expression “the lump sum payment ... made ... in settlement of a claim” is apt to describe the total amount which is payable as the monetary consideration passing from the party on whose behalf the payment is to be made to the recipient in exchange for a release from the claim.
43. In Secretary, Department of Families, Housing, Community Services and Indigenous Affairs and Whitlock [2010] AATA 816, the Tribunal held at [30]-[31] (emphasis added):
The effect of s 17(2)(c) of the Act is that once a component is included in the lump sum, it does not matter whether it relates to non-economic loss or to costs, or some other component that might, taken alone, not come within the definition of “compensation” in the Act.
We agree that what matters in the context of this Act is that, as a matter of substance, the payment that included the miscellaneous payment was made in settlement of a claim under a scheme of compensation. Once the various components form part of the final settlement deed, they must all be called into account for the purposes of the Act. This is the effect of Banks and the line of Federal Court authority that follows. As O’Loughlin J observed in Hulls, once the mischief addressed by the legislation is identified, it becomes apparent that the legislation prevents dissection of the “lump sum”. If one part of a payment is in respect of incapacity for work, the payment must be classified in its entirety as a payment by way of compensation. As further observed in Hulls, the provisions have the hallmarks of simplicity and certainty, and cases where anomalies arise can be addressed under the discretionary provisions.
The Respondent further contended that:[30]
45.The Secretary also notes the effect of subparagraph 1171(1) of the Act which states that where a person receives two or more lump sum payments in relation to the same compensable event, and at least one of those payments is made in respect of lost earnings or lost capacity to earn, then the multiple payments is taken to have been received as one lump sum.
46.Therefore, as the $350,000 settlement amount was in relation to the same compensable event as the statutory amount, it was appropriate by the Agency to combine both lump sums to calculate the length of the compensation preclusion period.
[30] Exhibit 2, Respondent’s Statement of Facts, Issues & Contentions, page 10, paragraphs 45-46.
The Tribunal understands the dispute in this matter centres around the status of the payments made pursuant to the agreement to resolve the civil law dispute between the Applicant, WorkCover and his former employer. The finding in this regard impacts upon the calculation of the Applicant’s preclusion period.
The Applicant acknowledged that his dispute did not go to a hearing before a court and that the proceedings were finalised by way of the Release and Discharge Agreement made by the parties and the subsequent notice of discontinuance filed on his behalf. The Applicant contended that the payments that resulted from the agreement reached by the parties at the conclusion of Supreme Court mediation should be seen to be a court order. The Applicant referred to Supreme Court rules and provisions of the Federal Court of Australia Act1976 (Cth) and the ability to have the agreement reach enforced by the court.
Based on the evidence before it, it appears to the Tribunal that the process involved with finalising his claim for compensation as a result of his workplace injury was long and difficult.
While the Tribunal can see the Applicant’s point of view, it considers it to be misconstrued. The evidence before the Tribunal indicates that the agreement reached by the parties pursuant to the mediation process and given effect to by the Release and Discharge Agreement constituted a consent agreement or settlement; it was not in any way a verdict or tribunal or court judgement. The fact that such an agreement resulted from an alternative dispute resolution pathway and may be enforced by the court (should enforcement action be commenced) does not change the nature of the transaction that occurred.
In this case the $350,000 compensation payment resulted in the settlement of the Applicant’s personal injury claim and was settled not by consent judgement being entered into but by a consent agreement and discontinuance of the claim. The proceedings were settled between the parties.
The Tribunal notes that the Applicant was fixated on future economic loss and economic loss components of the compensation payments.
The Tribunal is bound by the Federal Court decisions in Kezchek v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2009] FCA 856; (2009) 178 FCR 363; Secretary, Department of Social Security v Banks [1990] FCA 317; (1990) 23 FCR 416 and the line of Federal Court authorities that followed.[31]
[31] See relevant exerts provided at paragraph 45 of this decision.
As such the Tribunal finds that there is no discretion to look behind the terms of the Applicant’s agreement to determine the economic loss component of the lump sum payment and that the lump sum payment was made as a result of the resolution of the dispute by way of a settlement agreement reached between the parties.
As such the Tribunal considers that sections 17(3)(a) and 17(4) of the Act apply to the calculation of the compensation part of the Applicant’s lump sum compensation payment.
Having reviewed the Act and the evidence before it, and in particular noting the operation of section 1171(1) of the Act, the Tribunal agrees with the Respondent’s calculation of the Applicant’s compensation preclusion period as set out in paragraph 42 above.
Consequently, the Tribunal finds that the Applicant’s lump sum compensation payments resulted in a preclusion period commencing on 17 August 2019 (being the day after his weekly compensation payments ceased) and ending on 24 July 2026 (being 362 weeks later).
Do special circumstances exist to reduce the preclusion period?
As the Tribunal has found that the compensation preclusion period was correctly calculated, it must consider whether there are any special circumstances that would make it appropriate to treat part or all of the Applicant’s compensation payment as not having been made.
What does ‘special circumstances’ mean?
Section 1184K of the Act provides a discretion to treat all or part of the compensation payment as having not been made or not liable to be made, where special circumstances exist. This would in turn reduce the preclusion period calculated.
The Act does not provide a definition of special circumstances. However, the general proposition, established by relevant Federal Court decisions, make it clear that ‘special’ means something different from the usual or ordinary.
In Re Beadle and Director-General of Social Security [1984] AATA 176; (1984) 6 ALD 1 the Tribunal held at page 3:
An expression such as “special circumstances” is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special.
In Re Ivovic and Director-General of Social Services [1981] AATA 57; (1981) 3 ALN N61 at N95, the Tribunal stated at pages N96-N97:
Whilst it would be unwise, if not impossible, to attempt to lay down any precise delineation of what may amount to “special circumstances” …., the use of the word “special” is, we think, intended to allow the decision-maker the fullest opportunity to consider the particular circumstances of each case … In the exercise of the discretion …., the decision-maker must have regard to whether, by exercising the discretion in a particular case, he will be achieving or frustrating ends or objects which are conformable with the scope and purpose of the …. Act.
In Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541, the Federal Court stated at 545:
The phrase “special circumstances”, it has been said, although imprecise is sufficiently understood not to require judicial gloss …it is sufficient to observe that it would require something to distinguish Mr Groth’s case from others, to take it out of the usual or ordinary 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 legislative intent in relation to those who receive a lump sum compensation payment for lost earnings or lost capacity to earn is that they are expected to support themselves using their compensation payment before seeking support from the taxpayer. In Re Secretary, Department of Social Security and Winterbotham [1990] AATA 808, Deputy Present Burns explained at paragraph [19]:
This particular piece of legislation …. was aimed specifically at preventing those people receiving compensation for loss of income because of incapacity for work from being able also to receive benefit from the public purse … Primary responsibility for the payment of such compensation lies at the feet of those responsible for the compensable injury. Once that responsibility has been met, by way of a settlement sum agreed to by both parties, it is inequitable for the recipient to seek supplementary funds from the taxpayer.
Von Doussa J remarked in Secretary, Department of Social Security v Smith [1991] FCA 382; (1991) 30 FCR 56 at 61 that the Compensation Recovery scheme is intended to operate to provide “a fair balance of the interests of the recipient of the payment with the competing interests of others in the community whose needs must be met as far as possible from a finite budget allocation for social security measures.”
Do special circumstances exist?
The Applicant did not make any contentions in his written submission in relation to the existence of special circumstances that apply to reduce his preclusion period. At the Hearing it was clear that the Applicant primarily relied on his contentions that a preclusion period should not have been applied at all.
At the Hearing, the Applicant told the Tribunal that:
·He agreed with the principles behind the intention of the compensation provisions of the Act, however he did not get paid the amount set out.
·He received around $150,000, of which the majority was put into his superannuation fund.
·He was unsure what the balance of his superannuation fund was but it was substantial.
·The $350,000 was largely reduced by legal fees.
·Given the circumstances he did not consider the legal fees to be unusual, it was what he had to go through to get to the end resolution that was unreasonable.
·His property holdings were substantial.
·His wife had now retired.
·He worked hard for everything he had, and the workplace accident curtailed his whole life.
·When he put the money into his superannuation fund, he had not realised that his DSP would be cancelled.
·His intention was to retire without Centrelink payments and but for the accident he would have been able to do so.
·He has titanium in lots of places in his body as a result of the accident and the doctors have told him there is not much more they can do to assist him, he has to now recover and rebuild muscle.
On cross-examination, the Applicant told the Tribunal that:
·He has had no income since 2019.
·His wife had totally retired. She had finished work as a teacher in January 2023 by taking her long service leave and then retired in January 2024.
·He and his wife volunteer teaching English to migrants.
·He accepted that his wife receives carer payment and allowance each fortnight.
·They have no other income outside of those payments.
·They own their home outright.
·He built the home and his mother-in-law had later on purchased a third share of the property to live with them and that when she passed away, she left her share to his wife.
·There is no mortgage over their home.
·He agreed that the value of the property had risen sharply and was well in excess of $1 million however it has a creek that runs through it and they get flooded in.
·When put to him that where someone has a realisable asset then the expectation is that they realise it if they have hardship and asked if he had considered downsizing, that given the house prices how could they do that and also, he only has a third holding, he could not sell the property or deal with it without his wife’s agreement.
·His superannuation was a non-reportable superannuation fund, and he was not sure what his balance was but that it could be as much as $800,000.
·His wife’s superannuation balance was more than his, but she is not at pension age.
·When asked if he could get money out of his superannuation fund, that he would need to provide notice to access it from the investment portfolio.
·He intended to have a bridge built to deal with the creek flooding which he estimated would cost $300,000 however he already has the material onsite, the council approvals and he estimates it will cost $30,000 to pay for labour to get it built and $64,000 for the concreting.
·When asked how he meets his living expenses, that his wife looks after all of that as she was working, he does not have much savings, but she has quite a lot.
·His wife is more well off than he is and has a large share portfolio.
·His legal fees in relation to his workplace issue totalled $329,000, so after $90,000 cost that were awarded, it cost him a further $239,000.
·He has no legal fees outstanding in relation to the workplace issue.
·He went overseas in early 2023 to Japan for three weeks with his wife and a group of friends, everyone skied but him, he sat in the hotel.
·He has since travelled around Australia for 7 months, on an exercise program of walking and riding his bike. During his travel he walked 5,000 kms and cycled 10,000 kms.
The Tribunal asked the Applicant to expand on why he says his circumstances were straitened; he said that he cannot go back to work and had not received income for 5 years. The Applicant said it is unfair on his wife of 27 years to have to support him, he feels like he is unable to contribute, and he would like to have some money of his own to put into daily living. He said they live a comfortable life, he was an engineer and after working hard, he now was unable to contribute.

The Applicant contended that he is under personal and financial stress and hardship and this is due to special circumstances that arise from the fact that he did not receive the full amount of the settlement monies.
The Respondent relied on the contentions set out in its Statement of Facts, Issues & Contentions that the Applicant’s circumstances do not constitute special circumstances and as such do not warrant the exercise of the discretion provided by section 1184K of the Act.[32]
[32] Exhibit 2, Respondent’s Statement of Facts, Issues & Contentions, pages 10-17, paragraphs 50-80.
At the Hearing the Respondent contended that the Applicant’s circumstances as a whole must be considered and referred the Tribunal to Hajar and Secretary, Department of Social Security [1988] AATA 787; (1988) 16 ALD 716. The Tribunal in that case found it impossible to ignore the fact that the applicant had an asset, namely a house, when considering the issue of hardship and found that it would be “inequitable for the applicant to claim financial hardship when he owns such a valuable asset and does nothing to release on it”.[33]
[33] Exhibit 2, Respondent’s Statement of Facts, Issues & Contentions, page 15, paragraph 71; Hajar and Secretary, Department of Social Security [1988] AATA 787; (1988) 16 ALD 716 at 720.
The Respondent contended that the Applicant was not in financial hardship in circumstances where his wife receives income support, he has stable accommodation, he has superannuation, and his wife holds a large share portfolio.
The Respondent further contended that:
·The application of the 50% rule to calculate the Applicant’s compensation preclusion period does not amount to special circumstances.[34]
·Whilst the Applicant’s health conditions are serious and complex, when considered in the context of other income support recipients, they are not unusual or out of the ordinary.[35]
[34] Exhibit 2, Respondent’s Statement of Facts, Issues & Contentions, pages 12-13, paragraphs 58-60.
[35] Exhibit 2, Respondent’s Statement of Facts, Issues & Contentions, pages 15-17, paragraphs 73-80.
The Tribunal commends the Applicant on the honesty and vulnerability he showed in giving his evidence. It was clear to the Tribunal that the Applicant is an intelligent man who prior to his workplace accident had a plan in place for his retirement.
There is no dispute that the Applicant received the compensation payments or that he presently was not in receipt of social security benefits. Further there is no dispute that the Applicant as a result of his injuries is no longer able to undertake the work he was previously undertaking or work of any kind for more than 7 hours a week (however that may also not be realistic).[36]
[36] Exhibit 2, Respondent’s Statement of Facts, Issues & Contentions, Attachment D, Job Capacity Assessment Report dated 28 May 2021.
The Tribunal accepts that the Applicant has not been deriving income and that when he considers his present situation, he considers himself to be experiencing financial hardship. However, as contended by the Respondent and discussed with the Applicant at the Hearing, the Applicant’s full financial circumstances must be considered. Further it is important to keep in mind that financial hardship on its own does not constitute special circumstances.
When considering the Applicant’s financial situation as a whole, and especially when taking a household perspective, based on the evidence before the Tribunal he cannot be said to be in financial hardship. Rather, having worked hard and having built and maintained what sounded to the Tribunal like a happy and supportive marriage, the Applicant’s financial position when considered in comparison to that of most social security recipients could be described as comfortable.
While the Tribunal appreciates the difficulty caused for the Applicant in feeling that he is unable to contribute financially to his household, it notes that he has access to a large superannuation account and together with his wife they own their home.
The Applicant confirmed that his wife was not about to withdraw her support or ask him to leave their home. As such he has a safe place to sleep, and his daily needs are being met.
The Tribunal notes that perceived unfairness of the rules surrounding compensation preclusion periods do not constitute special circumstances.[37]
[37] Ward and Secretary, Department of Social Services [2022] AATA 57 at [76]-[79].
It is accepted that the Applicant has medical conditions which impact on his ability to function, however, there is no evidence before the Tribunal that his conditions are unusual or out of the ordinary for someone who has received a compensation payment as a result of a compensable injury, nor someone who is receiving a DSP.
As such, having considered the evidence and contentions before it, the Tribunal considers that special circumstances for the purposes of section 1184K of the Act have not been established in this matter.
Compensation Charge
Was the compensation charge correctly applied?
The Tribunal has found that a preclusion period applies to the Applicant’s eligibility to receive social security payments, for the period 17 August 2019 to 24 July 2026 and that special circumstances do not exist to shorten that period. As such, by virtue of the operation of section 1169 of the Act, the DSP was not payable to the Applicant in relation to any days in the preclusion period.
The Applicant was paid the DSP for the period 2 October 2020 to 27 April 2022. As that period was within the preclusion period, the DSP was not payable to the Applicant.
Pursuant to sections 1178 and 1179 of the Act the Respondent determined that the amount of DSP paid to the Applicant during the preclusion period was recoverable. The Respondent, pursuant to section 1178 of the Act sent a recovery notice to WorkCover seeking payment of $13,978.56 being the amount of DSP paid to the Applicant.[38] The Respondent also sent a notice of that effect to the Applicant pursuant to section 1184 of the Act.[39]
[38] Exhibit 1, T Documents, T12, page 123, Centrelink payment summary.
[39] Exhibit 1, T Documents, T14, pages 154-155, Centrelink Notice to the Applicant.
By virtue of sections 1184F and 1184G of the Act the recoverable amount constitutes a debt owed to the Commonwealth.
Consequently, in the absence of evidence to the contrary, and in circumstances where no special circumstances were found to reduce the Applicant’s compensation preclusion period, the Tribunal finds that the compensation charge was correctly imposed on the Applicant constituting a debt owed to the Commonwealth and was correctly recovered from WorkCover Queensland.
Can the compensation charge be written off or waived?
The Tribunal has found that the compensation charge was correctly raised and recovered as a debt to the Commonwealth.
It is generally expected that debts to the Commonwealth resulting from overpayments are recovered. This proposition was expressed by French J in relation to debt recovery in Secretary, Department of Social Security v Hales [1998] FCA 219; (1998) 82 FCR 154 at 155 as:
The taxpayer is entitled to expect that in the ordinary course money paid to people that they are not entitled to received will be recovered, albeit in a way appropriate to the circumstances which led to the overpayment and the circumstances of the persons concerned.
However, there are circumstances where the recovery of a debt is either put on hold for a period of time (written off) or is no longer pursued (waived) if the requirements set out in sections 1236, 1237A or 1237AAD of the Act (found in Part 5.4 of the Act) are met.
The Respondent contended that Part 5.4 of the Act regarding the non-recovery of debts (write-off and waiver) is applicable to compensation charge debts arising under Part 3.14 of the Act relying on the decision of the Full Federal Court in Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190; (2003) 132 FCR 126.[40]
[40] Exhibit 2, Respondent’s Statement of Facts, Issues & Contentions, page 17, paragraphs 81-86.
The Tribunal accepts the Respondent’s contentions in this regard and must determine whether the Applicant’s circumstances give rise to the compensation charge being written off or waived.
The Tribunal notes that the Applicant did not make any specific contentions in relation to whether the compensation charge should be written off or waived.
Should the Applicant’s compensation charge debt be written off pursuant to section 1236 of the Act?
Section 1236 of the Act applies in relation to whether the Applicant’s compensation charge debt should be written off.
Section 1236(1) of the Act provides that subject to section 1236(1A), the Respondent may, on behalf of the Commonwealth, decide to write off a debt for a stated period or otherwise.
Section 1236(1A) of the Act allows the Respondent to decide to write off a debt if and only if:
(a)the debt is irrecoverable at law; or
(b)the debtor has no capacity to repay the debt; or
(c)the debtor’s whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or
(d)it is not cost effective for the Commonwealth to take action to recover the debt.
The Respondent contended that the Applicant’s debt cannot be written off under section 1236 of the Act as the amount has already been fully recovered by the Agency and none of the criteria in section 1236(1A) would apply.[41]
[41] Exhibit 2, Respondent’s Statement of Facts, Issues & Contentions, pages 17-18, paragraphs 87-88.
It is undisputed that the compensation charge was recovered by the Respondent from WorkCover Queensland. As such the evidence before the Tribunal indicates that the compensation charge debt is not irrecoverable at law, the Applicant did have capacity to repay that debt, his whereabouts are known and it was cost effective for the Respondent to take the action it did to recover the debt.
Consequently, the Tribunal finds that the Applicant’s compensation charge debt cannot be written off pursuant to section 1236(1) of the Act.
Should the Applicant’s compensation charge debt be waived due to sole administrative error pursuant to section 1237A of the Act?
Section 1237A of the Act applies in relation to whether the Applicant’s compensation charge debt should be waived due to a sole administrative error having been made by the Respondent.
Section 1237A of the Act provides that the Respondent 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.
Selway J, in Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190; (2003) 132 FCR 126 at paragraph [35] stated:
The ordinary or usual interpretation of the phrase ‘attributable solely to’ is that it refers to the single or sole cause of the relevant act or event. The word ‘attributable’ means ‘capable of being attributed’. It involves an objective assessment of causation. The words ‘a debt attributable solely to an administrative error’ can be paraphrased as meaning that the only cause that objectively can be ascribed to the relevant debt is an administrative error.
Relevantly, in Ward and Secretary, Department of Families and Community Services [2000] AATA 212, Deputy President Forgie held at [47]:
This means that the Secretary’s duty to waive does not extend to those debts which are attributable to errors or other factors which are independent of the Commonwealth’s administrative error. It makes no difference that those other errors or factors are minor.
The Respondent contended that the compensation charge was not raised due to sole administrative error of the Respondent, or any administrative error made by the Commonwealth at all, but rather the charge was raised due to the Act operating as intended. The Respondent also contended that there was no delay or procrastination on the Respondent’s part in acting on advice from WorkCover about the lump sum settlement amount and therefore section 1237A of the Act has no application.[42]
[42] Exhibit 2, Respondent’s Statement of Facts, Issues & Contentions, page 18, paragraph 80.
Given the Tribunal’s findings outlined above and based on the evidence before it, the Tribunal finds that the Applicant’s compensation charge debt arose as a result of a correctly calculated preclusion period and represents the compensation affected payments received during the preclusion period. As such, the Tribunal finds that the Applicant’s compensation charge debt did not result from an administrative error, let alone a sole administrative error.
Consequently, the Tribunal finds that the Applicant’s compensation charge debt cannot be waived pursuant to section 1237A of the Act.
Should the Applicant’s compensation charge debt be waived due to special circumstances pursuant to sections 1237AAD of the Act?
Section 1237AAD of the Act applies in relation to whether the Applicant’s compensation charge debt should be waived due to the presence of special circumstances.
Section 1237AAD of the Act provides that the Respondent may waive the right to recover all or part of a debt if they are satisfied that:
(a)the debt did not result wholly or partly from the debtor or another person knowingly:
(i) making a false statement or a false representation; or
(ii) failing or omitting to comply with a provision of this Act, the Administration Act or the 1947 Act; and
(b)there are special circumstances (other than financial hardship alone) that make it desirable to waive; and
(c)it is more appropriate to waive than to write off the debt or part of the debt.
In the same way that the Act does not provide a definition of special circumstances for the purposes of section 1184K of the Act, it does not provide a definition of special circumstances for the purposes of section 1237AAD of the Act. The general proposition established by relevant Federal Court decisions make it clear that special means something different from the usual or ordinary.[43]
[43] Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541 at 545per Kiefel J; Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs v Jones (2012) 89 ATR 267; [2012] FCA 639 at [51]; Boscolo v Secretary, Dept of Social Security[1999] FCA 106; (1999) 90 FCR 531 at [18]; Barker J in Kazmierczak v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs[2010] FCA 1084 at [37].
The Respondent contended that the term special circumstances has a meaning that is analogous to the reference in section 1184K of the Act and has been extensively considered in case law.[44] The Tribunal agrees and as such will not repeat the case law here.
[44] Exhibit 2, Respondent’s Statement of Facts, Issues & Contentions, pages 18-19, paragraphs 91-92.
The Respondent submitted that for the same reasons it contended that the Applicant’s circumstances are not special in relation to section 1184K of the Act, they are not special for the purposes of section 1237AAD of the Act. The Respondent further contended that to waive the Applicant’s compensation charge would result in the Applicant receiving a social security benefit and compensation over the same period, which is the situation that the compensation recovery provisions of the social security law were intended to prevent.[45]
[45] Exhibit 2, Respondent’s Statement of Facts, Issues & Contentions, page 19, paragraph 93.
Based on the evidence before it and the findings made with regard to section 1184K of the Act set out above, the Tribunal is not satisfied that, for the purposes of section 1237AAD of the Act, special circumstances exist that make it desirable to waive the Applicant’s compensation charge debt.
Consequently, the Tribunal finds that the Applicant’s compensation charge debt cannot be waived pursuant to section 1237AAD of the Act.
Was the decision to cancel the Applicant’s DSP correct?
The Tribunal has found that a preclusion period applies to the Applicant’s eligibility for social security payments for the period 17 August 2019 to 24 July 2026 and that special circumstances do not exist to shorten that period. As such, by virtue of the operation of sections 98 and 1169 of the Act, the Applicant was not entitled to DSP from

17 August 2019. The Tribunal, therefore, finds that the Respondent’s decision to cancel the Applicant’s DSP was correct.
CONCLUSION
The Tribunal congratulates the Applicant for his determination to live his best life post injury in circumstances where he is trying to adapt to his post injury normal. While the Tribunal empathises with the Applicant and understands the logic in his contentions with regards to the calculation of a compensation lump sum preclusion period, for the reasons set out above, it finds that those contentions do not accord with the law in place.
Based on the evidence before it, the Tribunal finds that:
(a)
the Applicant’s compensation preclusion period was correct calculated as being from

17 August 2019 to 24 July 2026;
(b)special circumstances do not exist pursuant to section 1184K of the Act to make it appropriate to treat all or part of the Applicant’s compensation payment as not having been made;
(c)the Applicant’s compensation charge was correctly calculated;
(d)there is no basis upon which the Applicant’s compensation charge debt should be written off pursuant to section 1236 of the Act;
(e)there is no basis upon which the Applicant’s compensation charge debt should be waived pursuant to sections 1237A or 1237AAD of the Act; and
(f)the Applicant’s DSP was correctly cancelled.
As such, the Tribunal affirms the decisions under review.

I certify that the preceding 118 (one hundred and eighteen) paragraphs are a true copy of the reasons for the decision herein of Member D Mitchell

....................................[SGD]....................................
Associate
Dated: 25 March 2024

Date of hearing: 30 January 2024

Applicant: In person

Advocate for the Respondent:

Solicitors for the Respondent:

Ms Alicia Henderson

Services Australia

Representing the DSP received by the Applicant for the period 2 October 2020 to 27 April 2022.

See Exhibit 1, T Documents, T14, pages 154-155, Centrelink Notice dated 19 April 2022.

Exhibit 1, T Documents, T13, pages 144-146, Centrelink Applicant contract file notes for the period

26 March 2021 to 5 August 2022.