Weaver and Secretary, Department of Social Services (Social security second review)
[2024] ARTA 419
•13 November 2024
Weaver and Secretary, Department of Social Services (Social security second review) [2024] ARTA 419 (13 November 2024)
Applicant/s: Adam Weaver
Respondent: Secretary, Department of Social Services
Tribunal Number: 2023/6574
Tribunal:General Member S Evans
Place:Sydney
Date:13 November 2024
Decision:The Tribunal affirms the decision under review.
…..............................[SGD].......................................
General Member S Evans
Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been removed from this decision and replaced with generic information so as not to identify involved individuals as required by subsections 201(1A) - 201(1B) of the Social Security (Administration) Act 1999.
Catchwords
SOCIAL SECURITY – Compensation preclusion period - Job Seeker Payment –- decision to reject Applicant’s claim for JSP correct – whether special circumstances – applicant bankrupt – no special circumstances to warrant shortening compensation preclusion period - reviewable decision is affirmed
Legislation
Social Security Act 1991 (Cth)
Social Security (Administration) Act 1999 (Cth)
Cases
Re Drake and Minister for Immigration, and Ethnic Affairs (No. 2) (1979) 2 ALD 634
Minister for Immigration, Local Government and Ethnic Affairs v Gray (1994) 33 ALD 13
Beadle and Director-General of Social Security [1984] AATA 176
Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs v Jones [2012] FCA 639Gartside and Secretary, Department of Social Services [2017] AATA 45
Secondary Materials
The Social Security Guide
Statement of Reasons
On 14 October 2024, the Administrative Appeals Tribunal (AAT) became the Administrative Review Tribunal (the Tribunal). Under the transitional provisions in the Administrative Review Tribunal (Consequential and Transitional Provisions No. 1) Act 2024 (the Transitional Act), applications for review to the AAT that were not finalised before 14 October 2024 are taken to be an application for review to the Tribunal. The Transitional Act gives the Tribunal the authority to continue and finalise any aspect of the review not already completed by the AAT. This decision and statement of reasons is made by the Tribunal.
INTRODUCTION
The applicant, Anthony Weaver, was injured at work in October 2007.[1] Mr Weaver received a lump sum compensation payment of $43,000 on 11 July 2011.[2] On 28 February 2019, he settled his workers compensation claim for $375,000 inclusive of costs.[3] On 9 November 2022, he submitted an online claim for Jobseeker Payment (JSP).[4] On 21 November 2022, Services Australian (the Agency) rejected Mr Weaver’s claim for JSP on the basis that he had received a lump sum compensation payment and was precluded from the payment.[5] This was affirmed by an Authorised Review Officer (ARO) at Services Australia (the Agency) on 5 December 2022.[6] On 8 August 2023, the Social Services and Child Support Division of the Tribunal (AAT1) affirmed the decision of the ARO.[7] Mr Weaver seeks second-tier review of the AAT1 decision.[8]
[1] T4, p.49.
[2] T5, p.72.
[3] Ibid, p.71-93; T6, p.95.
[4] T14, p.158-165.
[5] T15, p.166-167.
[6] T17, p.173-178.
[7] T2, p.6-14.
[8] T1, p.1-5.
For the reasons that follow, the reviewable decision will be affirmed.
ISSUES FOR DETERMINATION
The issues to be determined by the Tribunal are whether Mr Weaver:
·is subject to a lump sum preclusion period from 13 April 2019 to 7 April 2023;
·has any special circumstances that make it appropriate to treat the whole or part of the compensation payment as not having been made (so as to shorten the preclusion period); and
·whether the decision to reject Mr Weaver’s claim for JSP lodged 9 November 2022 was correct.
LEGISLATION AND POLICY
The legislation relevant to this matter is contained in the Social Security Act 1991 (the Act) and the Social Security (Administration) Act 1999 (the Administration Act). Policy guidance contained in the Social Security Guide (the Guide) is also relevant. It is well established that the Tribunal is not bound by government policy, but it will generally be taken into consideration unless there is good reason not to do so.[9]
CONSIDERATION
[9] See Re Drake and Minister for Immigration, and Ethnic Affairs (No. 2) (1979) 2 ALD 634, 645 per Brennan J, which was cited with approval in Minister for Immigration, Local Government and Ethnic Affairs v Gray (1994) 33 ALD 13, 30 per French and Drummond JJ.
Is Mr Weaver subject to a lump sum preclusion period?
Mr Weaver received two lump sum compensation payments in settlement of his workers compensation claim. The payments contained a component for economic loss.[10] On this basis, the Secretary contends that these amounts should be treated as ‘compensation’ for the purposes of the Act.[11]
[10] T5, p.72.
[11] Respondent’s Statement of Facts, Issues and Contentions (‘R SOFIC’) dated 18 September 2024 at [5.4].
Mr Weaver says that the payment he received in 2011 was comprised of two parts. One payment was made for loss of income, and a second payment was for pain and suffering. He writes in relation to the 2011 compensation payment:
… I don’t have any paperwork relating to that payment, but the payment was comprised of two parts, made under the Workers Compensation Act NSW. One payment was made under Section 66 for loss of income, and because the payment was for more than ten thousand dollars, due to the percentage level of my disability, I was entitled to a Section 67 claim for pain and suffering.
I again refer the Tribunal to correspondence provided to both the Tribunal and me, by the lawyer for Centrelink on 3 October 2023. On page 8 of the decision by DC McKelvey, tribunal member, clause 12, he states –
“The calculation of the preclusion period was based on Mr Weaver’s receipt of a lump sum compensation payment of $418,000. This was made up of the final payment of $375,000 and earlier payments of $28,600 and $14,400 in August 2013.”
I draw the Tribunal’s attention to clause 14 of the same document, where he states, in part –
… “any component for loss of income is deemed by statutory provision (subsection 17(3) of the Act) to be 50% of the lump sum compensation, where the payment was made in settlement of a claim that related in whole or in part to a disease, injury or condition and the damages were paid wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury (subsection 17(2) of the Act).
Clearly, the Section 67 payment, for pain and suffering, does not qualify as income. The two payments received in 2011 are specifically listed individually, in two amounts, one for economic loss, and the other for pain and suffering, so as to designate that fact.
This is a fundamental error made by Centrelink.[12]
[12] Further Statement by Adam Weaver dated 31 July 2024, p.4.
The meaning of ‘compensation’ is defined in subsection 17(2) of the Act, which provides:
Compensation
(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.
Instruction 4.13.1.10 of the Guide relevantly states:
Compensation provisions only apply to compensation payments that are made wholly or partly in respect of lost earnings or lost capacity to earn, i.e. 'economic loss'. In cases where compensation does not include any component for lost earnings or lost capacity to earn, they are not treated as 'compensation', but more generally, as ordinary income under the [Act].
The Compensation Advice of Lump Sum Payment provided to the Agency by Mr Weaver’s insurer confirms that the settlement included a component for economic loss. Therefore, the lump sum payment amounts are considered as ‘compensation’ for the purposes of the Act.[13]
[13] T5, p.70-73; T6, p.95.
Part 3.14 of the Act deals with compensation recovery. The method for calculating a lump sum preclusion period is set out in section 1170 of the Act.
1170 Lump sum preclusion period
(1) Subject to subsection (2), if a person receives both periodic compensation payments and a lump sum compensation payment, the lump sum preclusion period is the period that:
(a) begins on the day following the last day of the periodic payments period or, where there is more than one periodic payments period, the day following the last day of the last periodic payments period; and
(b) ends at the end of the number of weeks worked out under subsections (4) and (5).
(2) If a person chooses to receive part of an entitlement to periodic compensation payments in the form of a lump sum, the lump sum preclusion period is the period that:
(a) begins on the first day on which the person’s periodic compensation payment is a reduced payment because of that choice; and
(b) ends at the end of the number of weeks worked out under subsections (4) and (5).
(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:
(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.
Section 1171 of the Act provides that multiple compensation payments are to be aggregated and treated as a single payment. The single compensation is deemed to have been received on the date of the last payment in respect of the injury.
1171 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.
Subsection 17(3) of the Act provides that the compensation part of a lump sum compensation payment is 50 percent of the payment:
Compensation part of a lump sum
(3)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 judgment 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.
Mr Weaver received periodic compensation payments in respect of his workers compensation claim which ceased on 12 April 2019.[14] Pursuant to subsection 1170(1), Mr Weaver’s lump sum preclusion period began the day following the last day of the periodic payments period, 13 April 2019.
[14] T5, p.73.
Subsections 1170(1), (4) and (5) of the Act set out the method for calculating the end of the Mr Weaver’s lump sum preclusion period. The Secretary has calculated that the compensation part of Mr Weaver’s lump sum payments should be 50% of the aggregate of the lump sum compensation payments, being $209,000.00. The relevant income cut-out amount at the time of receiving the lump sum payment was $1002.30. The number of weeks in Mr Weaver’s lump sum preclusion period was 208 (rounded down to the nearest whole number) and therefore the lump sum preclusion period ended 208 weeks after 13 April 2019, on 7 April 2023.[15] I am satisfied that the calculation of the preclusion period has been done correctly.
[15] R SOFIC dated 18 September 2024 at [5.12]
For a social security payment to be affected under Part 3.14 of the Act, the payment must be a ‘compensation affected payment’ (CAP). Section 17(1) of the Act defines a CAP and includes a ‘social security benefit’. Section 23 of the Act provides that a social security benefit includes JSP. Section 1169 of the Act provides that a compensation affected payment is not payable during a lump sum preclusion period. As the preclusion period applied on 9 November 2022 when Mr Weaver lodged an application for JSP, the decision to reject his claim for JSP was correct as the benefit was not payable during a lump sum preclusion period.[16]
Should all or part of Mr Weaver’s lump sum compensation payment be disregarded due to special circumstances?
[16] T14, p.158-165.
Section 1184K of the Act provides a discretion to disregard some or all of a lump sum compensation payment for the purposes of part 3.14 of the Act.
(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.
Mr Weaver contends that the special circumstances provision should be exercised in his favour so that the lump sum preclusion period ended when he applied for JSP on 9 November 2022.
The phrase ‘special circumstances’ is not defined in the Act or in related legislation. However, it has been considered extensively by the courts and Tribunal. In Beadle and Director-General of Social Security [1984] AATA 176, the AAT stated that:
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 Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs v Jones [2012] FCA 639, the Federal Court observed that ‘special circumstances’ is “…sufficiently understood as including events or things that render the operation of the statute in a particular case as unfair, unintended or unjust”’ and set out that “What is required is something that takes the case out of the ordinary, and unfairness or unintended consequences may show that this exists”.
Mr Weaver is currently 67 years old and receives age pension.[17] He gave evidence that he had two actions against his former employer, one of which was unsuccessful. Legal fees amounting to $375,000 and additional costs relating to his separation, divorce and property settlement contributed to his declaring bankruptcy in September 2022.[18]
[17] R SOFIC dated 16 May 2024 Annexure A.
[18] Certificate of Appointment of Trustee dated 23 September 2022.
When Mr Weaver settled his workers compensation claim on 28 February 2019 his solicitor at the time told him about the preclusion period and was aware that he would not be eligible for social security benefits.[19]
[19] T5, p.71-93; T6, p.95.
Mr Weaver’s son has an intellectual disability and receives Disability Support Pension (DSP). Mr Weaver used $215,000 of the compensation settlement funds to purchase a property for himself, his son, his son’s partner and their three children to live in.[20] He used the balance of the funds to buy furniture, a bed and for livings costs. Mr Weaver also used some of the compensation to help out his four other children. The compensation had been spent by the end of 2020.
[20] T2, p.13.
In an undated statement, Mr Weaver writes he is the official carer for his son. His son is 38 years old, and he and his partner’s three children are aged between 10 months and 9 years old. Mr Weaver writes:
I provide assistance to [his son], and also his family, in particular my two grandsons, on a daily basis. The care consists of general grocery shopping for the family, taking them on outings, appointments and visits, and making sure the children are appropriately fed, clothed and generally looked after. I also take both boys to swimming lessons weekly, and during 2022 I took [grandson] to and from day care three times a week. Neither my son nor his partner have a drivers licence and are unable to go anywhere without my assistance.[21]
[21] Statement of Adam Weaver [Undated], filed 1 February 2024, p.1.
At the time of settlement, Mr Weaver planned to retrain and use his skills and start a business. He writes:
During the years leading up to, and following the settling of the NSW workers compensation matter, the whole strategy employed for my rehabilitation revolved around being self employed in an outdoor business. I am a qualified builder, and the strategy had been to see me set up in an outdoor maintenance business, doing lawns, yards, and small building jobs such as decks and pergolas. I had purchased a ride on lawnmower, chainsaw, powered hedge trimmer and several brush cutters for this purpose, as well as already owning a good selection of tools and equipment I had collected over the years…[22]
[22] Ibid, p.2.
His plans for employment were dashed by developments in 2020, which describes as a ‘terrible year’. His mother was hospitalised from May until her death in June 2020. His father had a stroke and died in August. He lost a friend to suicide and two others died from illness. He broke up with his long-term girlfriend in November 2020. Mr Weaver’s health deteriorated to the point where he had to abandon his business plans. In his statement Mr Weaver explained:
Towards the end of 2020 I completely broke down physically with Fibromyalgia. I couldn’t walk, I could barely stand, and I couldn’t hold a cup of coffee in one hand due to the pain. After several weeks I had marginally improved to the point where I could “shuffle” for short distances. I was placed on yet another medication (Cymbalta) for the pain, but it gave me terrible side effects, and after several months I had to stop taking it.
Almost simultaneously, I developed Carpal Tunnel in both hands and wrists. It is unknown whether the trigger for the simultaneous development of this ailment was related to the Fibromyalgia or not, however, I had nerve conduction studies on both hands and was told I had severe Carpal Tunnel. Along with this diagnosis I was told that I shouldn’t use any power tools or heavy items that I needed to grip, or anything that vibrated or shook, as this would exacerbate the condition. This, then, put an end to my aspirations to run an outdoor business. In May, 2021, I was admitted to a Hospital with atrial fibrillation. I have been placed on a further two medications for that condition, which I am required to take for the rest of my life.[23]
[errors in original]
[23] Further Statement by Adam Weaver dated 31 July 2024, p.2.
Fibromyalgia and carpal tunnel syndrome in both hands prevent Mr Weaver from working, and he currently receives DSP in the amount of $1,116.30 per fortnight.[24]
[24] Ibid; T19, p.196; p.198, p.205.
Mr Weaver completed a Statement of Financial Circumstances form on 24 July 2023 in which he confirmed he owned his own home valued at $220,000. He also owns a motorcycle valued at $9,000.[25] Mr Weaver is paid $300 a fortnight for food and accommodation by his son and his son’s partner.[26] Mr Weaver spends the money he receives from them on food for his son, his son’s partner and his grandchildren.
[25] T19, p.182-185.
[26] T8, p.120.
Mr Weaver explained that his son and his family lived in a housing commission flat in an unsafe area until 2019. His son ‘trashed’ the flat and Mr Weaver believes his son would not be able to secure rental accommodation because of his poor rental history. He used the compensation payment to purchase somewhere that he, his son and his son’s family would have stable accommodation where they would feel safe. The arrangement ensures his son has somewhere to live and Mr Weaver is able to ensure his grandchildren are cared for appropriately.
Mr Weaver said his son and partner spend their money on alcohol and buying computer games. Asked why he did not increase the food and accommodation charge for his son, Mr Weaver said he feared doing so may lead to his son and partner residing with rough friends, which would not be in the interests of his grandchildren.
In terms of special circumstances, Mr Weaver argues that had his plans for rehabilitation and then starting his own business came to fruition, he would not have required income support. He settled his claim on 28 February 2019 and says his medical conditions onset suddenly at the end of 2020 and worsened in the first half of 2021.[27]
[27] T5, p.71-93; T6, p.95; Further Statement by Adam Weaver dated 31 July 2024, p.2.
The Guide provides that a person’s financial circumstances may be a factor to consider in determining whether special circumstances exist. The Guide states that every case must be examined on its own merits and provides some general principles to consider. Relevantly, the Guide states that as a general rule special circumstances would not be provided where the person acquired realisable assets after the person was advised of the preclusion period and there is no impediment to the realisation of those assets.
Although Mr Weaver acquired his property after settlement of the compensation claim and he was aware of the preclusion period at that time, I consider the needs of his son and his son’s family a legitimate impediment to its sale. Mr Weaver has a motorcycle and a motor vehicle.[28] Mr Weaver’s car is the only vehicle for the whole family and he uses it to drive his grandsons. Mr Weaver has not identified a compelling reason as to why he could not realise the value of his motorcycle.
[28] T19, p.184; T20, p.211.
Mr Weaver is currently in arrears for his council rates, but having declared bankruptcy on 23 September 2022 he has had the benefit of previous debts being discharged. He was granted DSP from 20 April 2023 and currently receives DSP and carer-allowance for his son’s care.[29] Mr Weaver is in straightened financial circumstances but has managed his affairs to ensure he continues to own his home. In my view, Mr Weaver’s reasoning for not increasing the board he is paid by his son is insufficient to preclude that option.
[29] T21, p.228.
After settlement, Mr Weaver experienced a difficult period, and the onset of his health conditions prevented him returning to work. The compensable injury occurred in October 2007.[30] I accept Mr Weaver had genuine plans to re-enter the workforce, but had experienced a long period during which he was suffering from post-traumatic stress disorder and major depression, and not working. He says both illnesses were in remission by 2018. Nonetheless, he was aware of the preclusion period and been out of the workforce for many years when he settled his claim. Mr Weaver has identified unforeseen health conditions as the reason he could not return to the workforce. However, in my view it was possible, and certainly not unforeseeable, that he may not be earning income from paid employment before the end of the preclusion period for the reasons I have outlined.
[30] T17, p.175.
In Gartside and Secretary, Department of Social Services [2017] AATA 45 the Tribunal stated at [57]:
I do not understand the many Federal Court and Tribunal decisions on “special circumstances” to require the Tribunal to find that special circumstances exist simply because the Applicant is in straitened financial circumstances. My understanding of the law is that it is open for the Tribunal to find special circumstances in such a circumstance, but a Tribunal Member is not obliged to do so. In exercising the discretion vested in the Tribunal, a Member is required to consider all of the matters the evidence admitted produces and straitened financial circumstances is one factor, albeit a very important one, but not the sole one. As Sheppard J said in Director General of Social Services v Hales [1983] FCA 81; (1983) 47 ALR 281 at 321:
“The legislation provides for the payment of a variety of benefits to different classes of people who will usually have one thing in common; they will be impecunious and in straitened circumstances. Very often their stories will be quite tragic.”
Other factors which may outweigh straitened financial circumstances include consideration of the general administration of the social security system (Re Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114) and whether an Applicant’s disposition of their compensation payment has been reckless – e.g. Davis and Secretary, Department of Family and Community Services [1999] AATA 84.
Mr Weaver is in difficult financial circumstances, but I am not satisfied they rise to the level of being special circumstances. He owns realisable assets and receives income support payments. He has limited debts and based on the Statement of Financial Circumstances his expenses are manageable.[31] It is open for him to reduce the level of financial assistance he provides his son, who also receives income support.
[31] T19, p.182-185.
CONCLUSION
Mr Weaver was subject to a lump sum preclusion period from 13 April 2019 to 7 April 2023. There are no circumstances which warrant all or part of the preclusion period being shortened, and the correct decision is to refuse his application for JSP made on 9 November 2022.
DECISION
For the reasons outlined, the reviewable decision is affirmed.
Date(s) of hearing: 25 September 2024 Applicant: Self-Represented (via Microsoft Teams) Solicitors for the Respondent: M Gauci, Hunt & Hunt Lawyers (via Microsoft Teams)
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