Wolfe and Secretary, Department of Family and Community Services
[2000] AATA 367
•12 May 2000
DECISION AND REASONS FOR DECISION [2000] AATA 367
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q1998/1018
GENERAL ADMINISTRATIVE DIVISION )
Re Sandra Jane Wolfe
Applicant
And Secretary, Department of Family & Community Services
Respondent
DECISION
Tribunal K L Beddoe (Senior Member)
Date12 May 2000
PlaceBrisbane
Decision The decision under review is affirmed.
Decision No. 367/2000 …………………………………
Senior Member
CATCHWORDS
SOCIAL SECURITY : Compensation – Lump sum compensation payment - Compensation affected payment – Lump sum periodic payment – Compensation part of a lump sum – Economic loss
Social Security Act 1947
Social Security Act 1991 – ss17(2), (3), s1165(4), s1165C, s1184, s1184(1)
Re DSS and Brain (Decision No. 8799)
Beadle v DSS (1985) 7 ALD 670
Re Krzywak and DSS (1988) 15 ALD 690
DSS v a'Beckett (1990) 21 ALD 79
DSS v Hulls (1991) 22 ALD 570
DSS v Banks (1990) 20 ALD 19
Re DSS and Philpott (1998) AAT 12691
REASONS FOR DECISION
12 May 2000 K L Beddoe (Senior Member)
By letter dated 13 June 1995 the respondent notified a charge under Part 3.14 of the Social Security Act 1991 ("the Act") (T5). That decision was reviewed in 1998, although not by an authorised review officer, and affirmed. It was also subsequently affirmed by the Social Security Appeals Tribunal.
Section 17(2) of the Act relevantly provides that "compensation" means a payment (with or without admission of liability) in settlement of a claim for damages that is made wholly or partly in respect of lost earnings or lost capacity to earn.
For the purposes of the Act the compensation part of a lump sum compensation payment where the payment is made (either with or without admission of liability) in relation to an injury and the claim is settled then the compensation part of the lump sum compensation payment is 50% of that amount (section 17(3)).
The then operative provisions are in Part 3.14 of the Act. The general effect of those provisions, in the context of this case, is to impose a charge in respect of a compensation affected payment (in this case Disability Support Pension) made during a period determined as the lump sum preclusion period. That period is determined by calculating the number of weeks in the lump sum preclusion period with the following formula:
Compensation part of lump sum
Average weekly earnings
(section 1165(4)). The preclusion period commences, in this case, on the day of loss of earning capacity (date of accident) (section 1165C).
The applicant has not put the actual calculation of the lump sum preclusion period or the date of commencement in issue. She says there is no compensation part of the lump sum compensation payment.
Section 1184(1) provides that the Secretary may treat the whole or a part of a compensation payment as not having been made or not liable to be made if the Secretary thinks it is appropriate to do so in the special circumstances of the case.
At the hearing Mr Pickard appeared for the applicant and Mrs Guthrie appeared for the respondent. The documents lodged in the Tribunal pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 were before the Tribunal as the T documents. No other documents were put into evidence. Oral evidence was given by the applicant. Subsequent to the hearing the parties made written submissions.
I make the following findings of fact. In April 1992 the applicant suffered an accident at a Maroochy Shire Council worksite. She was not in employment at the time and had not been for some months. She suffered the accident as a passer-by and not in relation to any employment.
As a consequence of the accident the applicant suffered a compound fracture of the leg resulting in the leg being in plaster for 8-9 weeks. She was unable to work during this time.
However, it is the applicant's evidence that she had been unable to work for a considerable period of time prior to the accident because of, she alleges, severe harassment resulting in her being shunned for employment as a medical receptionist. It is not necessary that I consider the allegations about harassment but I am satisfied and find that the applicant had been unable to obtain employment from February 1991 until the time of the accident in April 1992. She did not resume continuous remunerative employment until March 1996 being for two days per week and now works one day per fortnight.
The applicant sued the Maroochy Council for $40,000 said to be the limit of jurisdiction in the Magistrates' Court. A copy of the applicant's statement of loss and damage is included in Document T22. That statement particularises claims out-of-pocket expenses and special damages, economic loss and pain and suffering as follows:
(a) Out of pocket and special damages $ 2,117
(b) Post economic loss to date of settlement 28,000
(c) Discounted future economic loss 46,400
(d) Ongoing expenses 5,616
(e) Pain and Suffering and loss of amenity -·(unquantified) ________
$ 82,123
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In relation to her pre-accident employment the claim discloses pre-accident employment for the period from 1 July 1991 as Mt Coolum Medical Centre of $365.62 and Department of Social Security NewStart Allowance, $7,249.60. I am satisfied that in the nine months prior to the accident the applicant would be correctly characterised as being unemployed, the limited employment at the Mt Coolum Medical Centre being relatively insignificant. In the two years following the accident very limited amounts of employment were undertaken but the applicant effectively depended almost entirely on benefits paid by the Department of Social Security.
The applicant's action was settled on the basis that the applicant receive the total sum of $25,000 by way of general and special damages plus payment of legal costs (T5). It is clear from the applicant's letter of 14 June 1995 (T5) that she was unaware at the time of settlement as to the calculation of the settlement figure of $25,000.
By letter dated 21 June 1995 solicitors then acting for the applicant advised the respondent:
"The matter was settled on the morning of the hearing.
We confirm our advice to you by telephone, namely, that our Counsel Mr Keith Howe and our Mr Boyce had indicated that whilst the Statement of Loss and Damage may have indicated that there was a claim for loss on income, we were somewhat concerned about the claim for loss of income particularly in view of the fact that our client's recent employment history showed that she was dependent on benefits from the Department of Social Security. In fact it would seem that our client was on benefits at the time of the injury.
There was also an argument in relation to liability and when settlement negotiations commenced there was no dissection as to precisely what amount was being offered in respect of each particular head of claim. It was simply an all up settlement and having regard to the difficulties that our client had in relation to past economic loss and future economic loss we recommended settlement predominantly on the basis of our client's pain and suffering and out of pocket expenses."
The applicant has had a long running dispute with Telstra Corporation Ltd and its predecessor resulting in payment of $55,000 to her in December 1997 (T8). So far as I can see this dispute with Telstra has no relevance to the payment in settlement by the Maroochy Shire Council. While the applicant claims that she was being harassed by Telstra to such an extent that she was unable to obtain employment I am unable to find any link between this dispute with Telstra and settlement of her claim against the Shire council.
The Applicant's SubmissionsThe applicant made written submissions based on two separate contentions:
(a)The lump sum of $25,000 was not a compensation payment because it was not made wholly or partly in respect of lost earnings or lost capacity to earn (section 17(2)); and
(b)There are sufficient special circumstances to justify exercise of the discretion under section 1184 of the Act.
The applicant asserts that it is unlikely that the settlement of her claim contained any element of economic loss. To support this assertion she points to the minimal income (other than Social Security benefits) before and after the accident. In this regard the applicant submits that the letter from her then solicitors (relevant part in para. 14 above) has been misconstrued by the respondent and should be read so that "predominantly" refers to reason for settlement and not the composition or character of the lump sum.
There being no evidence to the contrary it should be accepted that there was no element for economic loss in the lump sum settlement of $25,000 or if there is, the portion is so small as to make it harsh to treat 50% of the $25,000 as the compensation part of the lump sum (Re DSS and Brain Decision No. 8799).
The applicant's circumstances are special in that the continuing harassment by Telstra for which she was paid $55,000 was such as to constitute circumstances which were unusual, uncommon or exceptional (Beadle v DSS (1985) 7 ALD 670).
Even if the circumstances of the Telstra harassment are put aside the applicant's circumstances are akin to the circumstances in Re Krzywak and DSS (1988) 15 ALD 690.
The Respondent's SubmissionsThe respondent also made written submissions. The evidence does not support the applicant's contention that there was no amount for economic loss in the settlement figure of $25,000.
In particular the respondent relies on dicta of von Doussa J in DSS v a'Beckett (1990) 21 ALD 79 at pages 90-92 and also relies on the decisions in DSS v Hulls 22 ALD 570 and DSS v Banks (1990) 20 ALD 19.
The respondent submits that there are no special circumstances in this case justifying exercise of the discretion under section 1184(1) of the Act. In particular the respondent seeks to distinguish the decision in re Brain on the basis that Mrs Brain had serious ongoing medical conditions.
The respondent also submits that the applicant's financial circumstances were not such as to justify a finding that she was suffering financial hardship.
ConsiderationThe applicant was paid $25,000 in settlement of her claim for damages against Maroochy Shire Council. That claim was based on quantified amounts for economic loss and expenses. The claim for pain and suffering and loss of amenity was not quantified. The amount of the quantified claim of $82,123 included $74,400 relating to economic loss. On that analysis of the quantified damages it might be accepted that it is more likely than not that the settlement figure of $25,000 included an amount for economic loss.
This view is supported by the response of the applicant's then solicitors set out at paragraph 14 above. The solicitors acknowledged difficulty with pursuing claims for economic loss but do not rule it out as an element in the settlement figure.
The present case fits, exactly in my view, the circumstances contemplated by von Doussa J in DSS v a'Beckett 21 ALD at 90 where his Honour made the following comments in the course of judgment at pages 90-91:
"Usually the more objective evidence available about the nature and extent of the injury, and the events which followed it, for example the duration of absences from work, actual loss of wages, changes in work activity and the like, will provide a more reliable guide than the asserted beliefs of the claimant as to how the settlement sum was arrived at. Ordinarily, statements by the claimant asserting a loss resulting from an impaired capacity for work made in circumstances where those statements can reasonably be regarded as having been made to influence a defendant to pay will be entitled to substantial weight. Foremost amongst such statements will be formal particulars of claim. The formal particulars of claim identify the subject matter of the claim presented by the pensioner."
In this case the claim for damages included claims for post accident economic loss and future economic loss. As set out in paragraph 11 these claims were the significant quantified amounts in the claim. While it is not difficult to accept that the applicant may have had difficulty in convincing a court to accept those claims in their entirety I am not satisfied that the economic loss claims played no part in the eventual settlement of the matter and therefore the payment of $25,000 by Maroochy Shire Council.
Both parties directed my attention to the decision of the Tribunal in Re DSS and Philpott (1998) AAT 12691. That case is immediately distinguishable because of:
(a)evidence from one insurance company that there was no element for economic loss in its payment under the settlement; and
(b)the inference drawn by the Tribunal that the payment made by the other insurance company did not include any element of economic loss.
Whether the Tribunal was justified in drawing the inference on the material before it is not a matter I should consider. The claimant/respondent was successful in that case because the Tribunal was able to draw that inference.
In this case there is no basis in the material before me by which I can infer that the settlement amount did not include an element for lost earnings or lost capacity to earn. The basis of the claim against the Council clearly raised claims for economic loss. In my view it is, on balance, more likely than not that the payment was made partly in respect of lost earnings (post economic loss) or lost capacity to earn (discounted future economic loss).
In coming to that view I have taken into account the difficulties that the applicant was having in obtaining employment due to the harassment by the then Telecom. I have no basis for being satisfied that such harassment was taking place other than I have inferred that to be the case from the applicant's evidence and the fact of payment of $55,000 by Telstra at the direction or recommendation of the Telecommunications Industry Ombudsman. However I am satisfied that the applicant had a basis in fact for claiming post economic loss and future economic loss based on her occupation as a medical receptionist. The claim was not fanciful. It appears to have been an element in the settlement of the claim.
Section 1184(1) operates, in special circumstances, to treat the whole or part of a compensation payment as not having been made. What are special circumstances very much depends upon the facts of the particular case. Beadle v DSS (1985) 7 ALD 670 is authority for the proposition that where the circumstances are unusual, uncommon or exceptional so that the normal application of the law to the markedly different to the usual case results in an unfair or inappropriate result, then those circumstances would justify a finding of special circumstances.
Here the law has operated as the Parliament intended it to operate. That intention is clear from the legislation, specifically the provisions of section 17 and in particular sub-section (3). In DSS v Banks 20 ALD at 24 von Doussa J sets out there the mischief which the provisions are designed to prevent and part of the Minister's second reading speech in relation to similar provisions in the Social Security Act 1947. I respectfully adopt his Honour's dicta as being equally applicable to the current provisions.
In this case the law has operated as it was intended to operate. I do not perceive that there is any unfair or inappropriate result. I am satisfied the circumstances do not justify the exercise of the discretion in section 1184(1) of the Act.
The decision under review will be affirmed.
I certify that the 35 preceding paragraphs are a true copy of the reasons for the decision herein of K L Beddoe (Senior Member)
Signed:
T G Lowther
AssociateDate/s of Hearing 22 November 1999
Date of Decision 12 May 2000
Solicitor for the Applicant Mr Pickard - Richard O'Bryen SolicitorsSolicitor for the Respondent An officer of the Department of Family & Community Services
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