William Barrass and Secretary, Department of Social Services

[2014] AATA 272

[2014] AATA 272

Division	GENERAL ADMINISTRATIVE DIVISION
File Number	2013/6090
Re	William Barrass
APPLICANT
And	Secretary, Department of Social Services
RESPONDENT

Decision

Tribunal	RM Creyke, Senior Member
Date	7 May 2014
Place	Canberra

The decision under review is affirmed.

......................[sgd]......................

RM Creyke, Senior Member

Catchwords

SOCIAL SECURITY – Compensation recovery charge – Whether compensation recovery charge properly imposed - Whether all or part of the compensation payment should be treated as not having been made – decision affirmed.  

Legislation

Social Security Act 1991 (Cth) sections 17, 23, and Part 3.14.

Cases

Angelakos v Secretary, Department of Education and Workplace Relations (2007) 100 ALD 9 Beadle v Director-General of Social Security (1985) 60 ALR 225

Re Beadle v Director-General of Social Security (1985) 6 ALD 1

Re Chamberlain and Secretary, Department of Family and Community Services [2002] AATA 487

Dranichnikov v Centrelink (2003) 75 ALD 134

Re Groth and Secretary, Department of Social Security (1995) 37 ALD 797

Groth v Secretary, Department of Social Security (1995) 40 ALD 541

Re Secretary, Department of Families and Community Services and Lazarus (2003) 73 ALD 183

Click here to enter text.

REASONS FOR DECISION

RM Creyke, Senior Member

1. Mr William Barrass, born 1964, injured his foot in a chain drive at work on 10 January 1989. He sought compensation and on 24 April 2013 he was granted a lump sum payment by GIO General Ltd, being arrears of periodic compensation for periods between 9 April 1996 and 14 December 2003.

2. On 18 June 2013 Mr Barrass received a letter from Centrelink advising that, as he had been receiving income support payments for periods between 17 April 1996 and 14 December 2003, Centrelink was deducting the amount of the Centrelink payments to him prior to payment to him of the balance of the lump sum.

3. Mr Barrass sought review of that decision which was upheld by an authorised review officer on 29 August 2013, a decision upheld on 17 October 2013 on further review by the Social Security Appeals Tribunal (SSAT).

4. Mr Barrass sought further review by the Tribunal on 27 November 2013.  The matter was heard in Canberra by telephone on 27 March 2014.

   Background

5. Mr Barrass injured his foot in an employment related injury on 10 January 1989. He still suffers pain from the injury which at times prevents him working.

6. He sought compensation which was finally granted on 24 April 2013 when, in a settlement agreement, Mr Barrass was granted $70,000.00. That figure covered periodic workers’ compensation payments for :

   ·9 April 1996 to 26 July 2000; and

   ·17 November 2000 to 14 December 2003.

7. GIO General Ltd, the insurer, contacted Centrelink prior to making the payment to Mr Barrass.  Centrelink calculated that the compensation charge involved for the two periods amounted to $56,412.10.  The amount of the charge was deducted prior to the balance of $13,587.90 being provided to Mr Barrass. In the event, once Medicare expenses had been met, Mr Barrass said he had ended up with little.  In a written submission he had said the amount was $7,000; at the hearing he said it was about $5,000.

8. Mr Barrass was upset at the decision since he argued he had fought for 25 years for compensation and ultimately had hardly received anything.  In his view this was very unfair.

9. In a conversation with Centrelink on 8 August 2013, following the decision, Mr Barrass initially said he had never been advised by Centrelink of the possibility of a compensation charge being imposed.  In response Centrelink reminded him that it had advised him on 5 January 2005 in a letter concerning his rights and responsibilities that this could occur. 

10. The Centrelink letter of 5 January 2005 said that as Mr Barrass was to receive payment of arrears of periodic compensation payments for the period 15 December 2003 to 20 January 2004, amounting to $1,032.82, that amount would be deducted prior to his receipt of the balance of payment of his compensation settlement. So he was advised both that the monies would be deducted, and that the deduction would occur before he received the balance.

11. Mr Barrass said that was a ‘dark period of his life’ when he was addicted to drugs, prior to his undergoing rehabilitation. He said due to the injury, he was on morphine for seven years and became addicted to the drug.  It was not until he attended a pain clinic for the addiction that he was cured of the addiction. In any event Mr Barrass claims he never received the letter. He also said ‘I never knew there was money owed to Centrelink’.

12. Mr Barrass said after the notification of the latest deduction by Centrelink he was particularly disappointed because he had not expected the amount would be so much.  He and his partner had planned to buy a block of land and to have a proper wedding once the payment came through.  However, these possibilities could no longer be contemplated as he had incurred a debt of $10,000.00 to his parents in the interim and the amount would almost wholly be used up repaying that debt. These events are not at issue in this matter.

13. A letter from Mr Barrass’s father dated 11 February 2013 noted that the $10,000.00 he was owed was to buy a car for Mr Barrass and to cover fines which Mr Barrass failed to pay. His father’s letter also noted that since his accident, Mr Barrass had suffered depression and was very moody. Mr Barrass said at the hearing that the total he had borrowed from his father had been $22,000 but he had already managed to repay some $12,000 of that amount.  The balance of $10,000.00 is owed.

14. A statement by Mr Barrass’s partner noted that Mr Barrass had lost his toes on the injured foot, and the injury continues to cause him pain. She said as a consequence of ‘the loss of work, loss of dignity, the mental strain, extra health issues that can be related back to his foot’, his well-being deteriorated leading to ‘further depression, intense pain, future loss of work, nothing to put aside for further needs for foot’.  As she said ‘How sad that William was only paid this pitiful amount anyway, just to pay government back’.

15. Dr Patricia Salisbury, Katungal Aboriginal Corporation Community and Medical Services, provided a testimonial for Mr Barrass dated 12 December 2013.  She noted that the continuing pain from his foot puts strain on the family particularly when he is unable to work and becomes depressed.  She said he is unable to take strong pain medication, that his ‘foot accident continues to cost him money … to buy expensive shoes, see doctors, buy medication’.

16. Mr Barrass is currently working.  He earns approximately $600.00 a week.  His partner also works in an aged care facility. He lives in a housing commission dwelling for which he pays per fortnight rent of $610.00 and $12.00 for water.  He said his income for the 2013 financial years was only $8,148.00 from his work on the farm and $3,986.00 from Centrelink. His partner said the couple have no savings. In addition, GIO General Ltd notified Mr Barrass on 17 December 2013 that it would not be reimbursing him for medical treatment expenses beyond 31 December 2013.

17. Mr Barrass said his ‘nerves’ are bad, particularly since the news about the small amount of the compensation payout, and a car accident he had in which his car was written off.   His general practitioner, Dr Helen Anderson provided a medical certificate dated 17 September 2013, that Mr Barrass was unfit to work between 17 September 2013 and 22 October 2013 due to his ‘generalised anxiety, flat mood, not coping with life’ and that she had referred him for mental health assessment and treatment.  She noted his condition was likely to improve over the next two years. Mr Barrass said in his statement that these events had put stress on his entire family.

18. Mr Barrass also said he owes $7,000 on his credit card, he has no superannuation because of his injury and he has ongoing pain which means on occasions he has to take time off work. As he said ‘I got nothing but pain out of this injury. Everybody got a cut out of my injury but me.  I got the pain, the life sentence of pain and I was paid a total of $7,000.00 for a lifetime of pain, $140.00 a week.  It’s a joke’. As he said ‘I am not in a good place in my head or emotionally’.

    Legislation

19. The relevant legislation is the Social Security Act 1991 (Cth) Part 3.14 – Compensation Recovery, and the related definitional provision, sections 17, and 23. See attachment.

    Issues

20. The issues are:

    ·Whether a compensation recovery charge should have been deducted from the lump sum compensation payment to Mr Barrass; and

    ·Assuming that charge was correctly imposed, whether all or any part of the compensation payment should be treated as not having been made.

    Consideration

    Deduction of the compensation recovery charge

21. Part 3.14 of the Social Security Act 1991 (Cth) (Act) provides, among other things, for recovery by the Commonwealth of the amount of any income support payment it has made to a person if that person has received a compensation settlement.

22. Mr Barrass did receive a lump sum amount in April 2013 by way of a compensation settlement. He had also received an income support payment, namely, newstart allowance, for periods to which the settlement related. So the Commonwealth is entitled to recover the amount it had paid Mr Barrass in order to prevent him being paid twice for the same periods, that is, to avoid ‘double dipping’.

23. The amount to be recovered by the Commonwealth is calculated by deducting the amount received for newstart allowance during the relevant time or times from the amount of the compensation settlement.  In Mr Barrass’s case that means the total amount of his newstart allowance, namely, $56,412.10, had to be deducted from the $70,000.00 he received in the settlement.  The Tribunal finds those figures are correct and the calculation was correctly undertaken, leaving Mr Barrass with a balance of $13,587.90 from his settlement monies.  Mr Barrass also said at the hearing that a deduction was further made for Medicare payments made to him during that time, leaving him with just over $5,000.00.

24. Mr Barrass was upset that he had not been notified in advance of the amount of the deduction.  He argued it was a common courtesy to advise someone before you take something from them even if it is owed to that other person.  The representative of the Secretary undertook to inform his managers of this concern on behalf of Mr Barrass about the absence of such an administrative step in his case.

25. Mr Barrass was also unhappy that the amount had been deducted before the balance was given to him.  The Tribunal explained that the law provides for this to happen.  GIO General Ltd is required to check with Centrelink before paying out the settlement monies to discover whether the person has been on Centrelink payments, including newstart allowance, during any or all of the periods covered by the settlement.  If that is the case the law requires that the amount paid by the Commonwealth to the person is a debt to the Commonwealth and if GIO General Ltd fails to make the advance deduction the company has committed an offence which has a serious penalty. Therefore GIO General Ltd was not permitted by law to pay Mr Barrass the full amount without deducting the debt owed to the Commonwealth.

    Special circumstances

26. Mr Barrass has also argued that it is unfair that he should have had so much of his settlement monies deducted.  He has indicated he would like the Secretary to exercise the discretion the Secretary has to ignore some or all of the compensation payment, thus increasing the amount payable to Mr Barrass under the settlement. 

27. The Secretary is only able to respond to such a request if the Secretary, and on review, the Tribunal, is satisfied that there are ‘special circumstances’ in Mr Barrass’s case. What amount to ‘special circumstances’ has been considered in numerous cases.  In summary the principles are that the decision is entirely discretionary but the decision-maker is to bear in mind that the discretion can only be exercised in a case where the circumstances are sufficiently unusual or out of the ordinary to justify them doing so. [1] The decision must take into account that the recovery provisions in Part 3.14 of the Act are to prevent double dipping. At the same time, the decision to recover the amount must not be unreasonable or unjust.

    [1] Beadle v Director-General of Social Security (1985) 60 ALR 225 at 228; Re Beadle v Director-General of Social Security (1985) 6 ALD 1 at 3; Re Secretary, Department of Families and Community Services and Lazarus (2003) 73 ALD 183; Angelakos v Secretary, Department of Education and Workplace Relations (2007) 100 ALD 9 at [33]; Dranichnikov v  Centrelink (2003) 75 ALD 134; Re Chamberlain and Secretary, Department of Family and Community Services [2002] AATA 487 at [14].See also Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545 per Kiefel J.

28. Mr Barrass has been unfortunate that his injury has left him with constant pain, varying in intensity, and on occasions swelling in his foot. His pain is chronic, that is, it is likely to continue.  The Tribunal notes that on occasion, the pain is sufficiently severe to mean that Mr Barrass is incapable of working. In addition when his foot swells he cannot even wear sandshoes.  This also means he is unable to work in his employment on a beef farm.   He is fortunate in that he has an understanding employer who accepts that on occasions Mr Barrass will need to take time off.  This, however, affects his financial situation which is discussed more fully later in these reasons.

29. Mr Barrass’s ability to control his pain levels is hampered as he can no longer use strong pain-relieving medication because of his history of substance abuse with pain relief medicine. The consequence is that he is no longer able to take such medication and has to rely instead on less effective pain-killers which do not take away the pain, just dull the effects.  

30. That is an unfortunate long-term aspect of the injury he received.  Those circumstances, however, are not so unusual on their own so as to justify exercise of the Secretary’s special circumstances discretion.  The Tribunal notes that while an unfortunate side effect of his work place injury, Mr Barrass’s previous issues with drug addiction has not entirely prevented him from working, even though it has undoubtedly restricted his ability to do so. He is to be commended for his fortitude for continuing to undertake employment when his injury permits.

31. Mr Barrass says he is ‘not well off’.  So much can be accepted.  In particular his current financial circumstances mean that he can no longer purchase a block of land, nor enjoy the wedding celebration he had planned. His washing machine broke down towards the end of 2013 and he replaced it with a front loading machine which cost approximately $700.00. In that same period he also had to purchase a freezer which cost about $600.00. He said his Holden utility cost approximately $1500.00 and he purchased it in part with the monies borrowed from his employer and in part from insurance money he received.

32. Mr Barrass had to purchase another car in September 2013 when his previous car was written off.  In addition, the couple have had to purchase new tyres for Mr Barrass’s wife’s car at $1,000 and for his Holden utility for about $600.00. Both cars are second hand.  His wife’s place of work is 40 km from their home and Mr Barrass works some 25km away from his residence.  His wife works the afternoon shift, while he has a daytime job.  So that means the couple each need a car. 

33. Mr Barrass is earning between $300.00 and $600.00 a week depending on how many days a week he can manage to work.  He had what he described as a nervous breakdown in September 2013 which meant he was off work for some five weeks in the period between mid-September 2013 and end of December 2013.

34. Mr Barrass suffers, on occasions, from depression. His doctor organised for him to be treated under a mental health treatment plan at the time of the breakdown.  The plan gave him six sessions with a psychologist.  These ceased in December 2013 as he could not afford to pay for continuation of the treatment. Mr Barrass also has the expense of special shoes, doctors’ appointments, and medication for his foot. GIO General Ltd has not been meeting his medical expenses since 31 December 2013. These extra financial pressures are compounded for a person who can only work about half the time and must pay for any medication he needs.

35. Mr Barrass has regular payments to make of $311.00 a week for water and accommodation.  That either uses up all his earnings for the week or leaves him nearly $300.00 depending on his earnings for the week.  The Tribunal accepts that Mr Barrass, due to his injury, cannot work throughout the year.  For the financial year 2013 he only earned from his work some $8,000.00, while his Centrelink payments were around $4,000.00.  His evidence, which the Tribunal accepts, was that he was only able to work for about half the 2013 financial year. He was on newstart allowance for much of the period from July 2012 to end of March 2013, and again from mid-September 2013 until end of December 2013.  In the weeks when he was not earning, the couple were reliant on his wife’s income for meeting their regular and other expenses.

36. Mr Barrass’s wife works at a nursing home.  She is a permanent part-time employee working four days a week.  The evidence indicated that she received just over $35,000.00 in the financial year ending June 2013. That is roughly $670.00 a week.  However, she said that the nursing home where she works is under new management and she may be cut back to 25 hours a week. That has still to be determined.   

37. The bank statements for Mr Barrass show that on 17 October 2013, he only had $1,227.73 in his bank account and by 1 March 2014, his account was overdrawn by $71.84. His wife’s account on 19 October 2013 was overdrawn by $39.10.  On 1 March 2014 one of her accounts showed a positive balance of $1,197.57. Another of her accounts had a balance of $94.29 on 17 October 2013, and on 27 February 2013, the balance was $219.29. Mr Barrass said at the hearing, and his accounts support this assertion, that the couple have no savings.  He has no superannuation. 

38. All the couple’s accounts have on occasion been overdrawn and accordingly have attracted overdrawn account fees indicating how finely balanced are their financial arrangements. Mr Barrass said ‘we try to live simple’ and the couple’s bank account statements support this assertion. The Tribunal finds that the couple do live simply and their earnings do not at times cover their expenses. On 1 March 2014, the latest figures available to the Tribunal, the couple had roughly $1345.00 in their accounts. Mr Barrass said he owed some $7.000 on his credit account. 

39. In summary, Mr Barrass’s injury left him with chronic pain, which can only partly be alleviated by over-the-counter medication, and which, on occasions, prevent him working. He also has additional expenses of expensive shoes, doctor’s appointments and medication for his injury. If the previous financial year is an indication he is only able to work for about half a year.  His income fluctuates between about $300 and $600 a week. He owes a debt to his father of about $10,000 and has a credit card debt of $7,000.  He has also been repaying the fines he incurred for driving offences of about $10,500.  He now only owes about $900, meaning that debt is almost cleared.

40. The couple’s living expenses are minimal. They each own a second hand car which is essential to enable them to attend their workplaces, some distance from their housing commission dwelling, as their working times do not coincide.

1. In a good week for Mr Barrass, when he can earn $600, he has funds available once the essential rent and water charges of $311 a week are met.  In addition the couple have his wife’s income of about $670 a week.  In a week when Mr Barrass has only earned about $300, the rental and water payment must be supplemented by his wife’s income. 

2. Nonetheless, Mr Barrass, although in straightened financial circumstances, is not completely impecunious. The couple does have regular income.  As a consequence his situation is not so out of the ordinary as to justify the exercise of the Secretary’s ‘special circumstances’ discretion. Being in financially straitened circumstances is often a feature of those receiving Centrelink income support payments even when that receipt, as in Mr Barrass’s case, is intermittent.[2] Nor are the additional features of Mr Barrass’s chronic pain, which is likely to continue and hence to restrict his ability to work, his depression which his doctor says should improve in the next two years, nor his other circumstances, so unusual or uncommon as to come within the special circumstances exception.

   [2] Re Groth and Secretary, Department of Social Security (1995) 37 ALD 797 at [37]; upheld on review in Groth v Secretary, Department of Social Security (1995) 40 ALD 541.

   Concluding comments

3. Mr Barrass was on notice  from 2005, in the context of another settlement process, that the monies he had received as newstart allowance during the period covered by the settlement would be recovered from him.  Nonetheless, he was not aware of the size of the amount he would have to repay. That was a shock.  Mr Barrass also understands that he would not be entitled to monies twice over if he received both income support monies and settlement monies to cover the same period.

4. It is understandable that Mr Barrass is very disappointed about the small amount of settlement monies he actually received, especially after he had had to spend so long going through the processes required to establish his eligibility. To find that at the end of the process an expectation that his financial load would be lightened has not materialised was, as he said, a ‘real blow’.  He is left with the unfortunate effects of his injury, and having to work to help with family expenses, despite his pain. 

5. Unfortunately the Tribunal is constrained by the law and how the special circumstances discretion has been exercised and finds that it cannot exercise that discretion in Mr Barrass’s favour, given his circumstances. These are not so unusual or uncommon, in cases such as his, as to warrant the exercise of the discretion. As a consequence the Tribunal affirms the decision under review.

6. Mr Barrass was also distressed about incorrect information held about him by Centrelink which he discovered in the documents produced for the hearing.  The representative for the Secretary, in addition, to speaking to his manager about the communication issue, has also agreed, provided Mr Barrass notifies Centrelink in writing of the offending statements, to advise Centrelink that they should remove any incorrect statements from Centrelink’s records.

I certify that the preceding 46 (forty-six) paragraphs are a true copy of the reasons for the decision herein of RM Creyke, Senior Member.

........[sgd]................................................................

Associate

7 May 2014

Date of hearing	27 March 2014
Applicant	In person
Advocate for the Respondent	Stefan Misrachi
Solicitors for the Respondent	Department of Human Services

Attachment

Relevant provisions of the Social Security Act 1991 (Cth).

Section 1164(1) If:

(a) a person was entitled to periodic compensation payments under a law of a State or Territory; and

(b) the person's entitlement to the periodic payments was converted under the law of the State or Territory into an entitlement to a lump sum; and

(c) the lump sum was calculated by reference to a period;

this Part applies to the person as if:

(d) the person had not received:

(i) the lump sum; or

(ii) if the lump sum was to be paid in instalments--any of the instalments; and

(e) the person had received in each fortnight during the period a periodic compensation payment equal to:

where:

lump sum amount is the amount of the lump sum referred to in paragraph (b);

number of fortnights in the period is the number of whole fortnights in the period referred to in paragraph (c).

Section 1168 provides:

A provision of this Division that refers to a person receiving or claiming a compensation affected payment and receiving a lump sum compensation payment has effect regardless of whether the lump sum compensation payment was received before or after the person received or claimed the compensation affected payment.

‘Compensation’ means ‘a payment under a scheme of insurance’ or ‘a payment (with or without admission of liability) in settlement of a claim for  … a claim under … an insurance scheme’.[3] 

[3] Act s 17(2)(b), (c).

A ‘compensation affected payment’ is defined to include newstart allowance.[4] 

[4] Act s 17(1)(a).

The Act also provides, however, that the Secretary may ‘treat the whole or part of a compensation payment as (a) not have been made; or (b) not liable to be made; if the Secretary thinks it is appropriate do so in the special circumstances of the case’.[5]

[5] Act s 1184K.