WQCR and Secretary, Department of Social Services (Social security second review)
[2025] ARTA 157
•26 February 2025
WQCR and Secretary, Department of Social Services (Social security second review) [2025] ARTA 157 (26 February 2025)
Applicant:WQCR
Respondent: Secretary, Department of Social Services
Tribunal Number: 2024/0448
Tribunal:Senior Member T Hamilton-Noy (second review)
Place:Melbourne
Date:26 February 2025
Decision:The Tribunal affirms the decision under review.
...................[SGD]...........................
Senior Member T Hamilton-Noy
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
(Cth).
Catchwords
Disability support pension claim – rejection – compensation preclusion period – workplace injury – 1184K – special circumstances exercised at first review to treat part of compensation as not having been received – whether appropriate to treat further amount of compensation as not having been received – financial hardship – large amounts spent on family – health issues – no further exercise of discretion
Legislation
Administrative Review Tribunal (Consequential and Transitional Provisions No. 1) Act 2024
Social Security Act 1991
Social Security (Administration) Act 1999Cases
Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60
Fox v Wood (1981) 148 CLR 438
Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25
Re Rosemarie Beadle and Director-General of Social Security [1984] AATA 176
Groth v Secretary, Department of Social Security (1995) ALD 541
Hajr v Secretary, Department of Social Security 16 ADL 716
Cheadle and Secretary, Department of Social Services (Social services second review) [2021] AATA 3319Secondary Materials
Social Security GuideStatement of Reasons
Background
This matter relates to a decision by Services Australia (Centrelink) to reject the Applicant’s claim for disability support pension on the basis that a compensation preclusion period applies to the payment.
The Applicant lodged a claim for disability support pension with Centrelink on 29 November 2022.
On 21 March 2023, an employee of Centrelink made a decision to reject the claim for disability support pension on the basis that the payment was not payable to the Applicant due to a compensation preclusion period applying from 21 September 2020 to 11 May 2031.
The Applicant sought an internal review of this decision and on 5 July 2023 an authorised review officer of Centrelink affirmed the decision under review.
The Applicant made an application to the Administrative Appeals Tribunal (the AAT) on 11 July 2023 for an independent review of the Centrelink decision.
On 7 September 2023, the AAT at first review affirmed the decision to reject the claim for disability support pension. The AAT found that part of the compensation payment received by the Applicant was to be disregarded and that, because of this, the compensation preclusion period was to end on 4 April 2027.
On 23 January 2024 the Applicant applied to the AAT at second review and, on 27 February 2024, the General Division of the AAT granted the Applicant an extension of time in which to make this application.
From 14 October 2024, the 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.
The Tribunal held a hearing with the Applicant on 29 November 2024 and the Applicant participated in the hearing by video and gave evidence on affirmation. A representative of the Respondent also participated in the hearing by video.
Issue
The legal issue before the Tribunal in this matter is whether the Applicant’s claim for disability support pension was correctly rejected. This requires consideration of whether a compensation preclusion period applied to the payment at the time of claim and, if so, for what period.
Relevant legislation
The law relevant to the administration of social security payments is contained in the Social Security Act 1991 (the Act) and the Social Security (Administration) Act 1999.
Part 3.14 of Act provides legislation relating to compensation recovery and, at section 1160, notes that the Part operates in certain specified circumstances to do one of more of: reducing a person’s compensation affected payment; rendering a person’s compensation affected payment not payable; or requiring the repayment of some or all of a person’s compensation affected payment, because of the receipt of compensation by the person or the person’s partner. A “compensation affected payment” is defined at section 17 of the Act to include disability support pension.
Subsection 17(2) of the Act defines compensation, for the purposes of the Act, to be:
(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.
Subsection 1169(1) of the Act provides that, where a person receives or claims a compensation affected payment and receives a lump sum compensation payment, the compensation affected payment is not payable to the person in relation to any day or days in the lump sum preclusion period. Section 1169 states that a lump sum compensation payment does not include a lump sum payment to which section 1164 applies or to a payment that relates only to arrears of periodic compensation payments. Section 1164 of the Act relates to the conversion of periodic payments to a lump sum payment and does not apply in the circumstances of this particular matter.
Subsection 1170(1) of the Act then states that, subject to subsection (2), where 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).
Where 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 begins on the first day the periodic compensation payment is reduced and ends at the end of the number of weeks worked out under subsections (4) and (5): subsection 1170(2) of the Act. Where neither of the above circumstances applies, the lump sum preclusion period begins on the day on which the loss of earnings or lost capacity to earn began and ends at the end of the number of weeks worked out under subsections (4) and (5): subsection 1170(3) of the Act.
Subsection 1170(4) of the Act states that the number of weeks is worked out by dividing the compensation part of the lump sum by the income cut-out amount. This is rounded down to the nearest whole number if the number worked out is not a whole number: subsection 1170(5) of the Act. The “compensation part of the lump sum” is defined at subsection 17(3) of the Act to be:
(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.
Section 1184K of the Act allows for a reduction in a lump sum preclusion period through the discretion to treat part or all of a compensation payment as not having been received. Section 1184K of the Act states that:
(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.
The Social Security Guide (the Guide) at topic 4.13.4.10 provides the following commentary with respect to the exercise of the special circumstances discretion under section 1184K of the Act. The Guide notes that the commentary is supported by a number of AAT and Federal Court decisions about the exercise of this discretion:
Intent of compensation recovery provisions
The compensation recovery provisions of social security law are designed to ensure that people who receive compensation for a loss of income do not also receive income support from the Australian Government in respect of the same period of time.
Note: The special circumstances provisions should not be used to override this basic legislative intention.
Improved advice on compensation payments
The Centrelink FIS - Improved Advice on Compensation Payments measure is a Department of Education, Employment and Workplace Relations measure announced in the 2007-2008 Budget. The measure commenced on 8 September 2008.
This measure aims to ensure people who receive compensation are better informed as to the effect their compensation payment will have on their income support payments or future entitlements to income support.
The measure aims to discourage some compensation recipients seeking to receive social security payments for periods, which they have already received compensation money and to provide information to assist them to better manage their compensation monies.
What are special circumstances?
The discretionary nature of the special circumstances provisions makes it impossible to give a precise list of factors that should be taken into account when considering whether the provisions should be applied.
Explanation: It is not possible to set out a complete list of the relevant factors to be taken into account in determining whether special circumstances exist. Each case must be considered on its own merits (Secretary, Department of Social Security v Hulls (1991) FCA 58; 22ALD 570/13 Aar 414).
There is usually not one factor which makes a situation unusual, unforeseen or exceptional, but a combination of factors applying to each individual.
Explanation: The concept of special circumstances is broad. A constellation of factors, including financial circumstances, may fall within it (Secretary, Department of Social Security v Hales (1998) FCA 219).
The legislation at SSAct section 1184K does not allow the lack of a causal link between the reason for the claim for a CAP and the reason a person receives compensation, alone, to constitute special circumstances.
Explanation: Lack of causal link is where the circumstances of the compensation payment and the reason behind the CAP of the compensation recipient and/or their partner are not related (Secretary, Department of Family & Community Services v Edwards (2000) FCA 1645).
When to apply special circumstances
The decision to apply the special circumstances provisions by the delegate should be based on an holistic view of an individual's circumstances (Hales Federal Court), i.e. the decision would not usually be based on just one factor but a combination of factors.
The special circumstances provisions should ONLY be applied in unusual, unforeseen or exceptional circumstances.
Explanation: In order for 'special circumstances' to exist, it must be possible to say that the circumstances in the case in question are 'markedly different from the usual run of cases'. The circumstances must have 'a particular quality of unusualness that permits them to be described as special' (Beadle v. Director-General of Social Security (1985) 7 ALD 670).
This means in situations where the compensation provisions could lead, or have led to extreme hardship or created an inequitable, unjust or unreasonable situation.
If special circumstances exist, a delegate can treat all or part of a compensation payment as:
· NOT having been made, OR
· NOT liable to be paid.
Act reference: SSAct section 1184K Secretary may disregard some payments
What is the practical effect of the special circumstances provisions
The special circumstances provisions apply to treat the whole or part of a compensation payment as not having been made or not liable to be made.
Generally, the provisions are applied to a lump sum compensation payment with the result that all, or part, of a preclusion period is reduced. This may also reduce, or negate altogether, any associated compensation debt. However the special circumstances provisions may also be applied to reduce all or part of a periodic payment of compensation.
The decision to apply the special circumstances provisions by the delegate may be made in terms of a reduction in the actual duration of the preclusion period. This would be relevant where there are a number of mitigating factors in the decision and it is not possible to determine any specific amount to be disregarded.
The special circumstances provisions can also be applied to treat a specific amount of the compensation payment as having not been made. This would be relevant where it is reasonable to disregard part of a compensation lump sum, but not all of it.
Explanation: In a settlement case, the amount specified is deducted from the original compensation lump sum and the 50% rule applied to the amended amount to give the new compensation part of the lump sum.
When special circumstances should generally NOT be applied
Each case must be examined on its own merits by the delegate but as a general rule, special circumstances would NOT usually be applied where:
·the person has sufficient liquid assets to support themselves, and their family if applicable, for the duration of the preclusion period, or
·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, or
·the person's periodic compensation payments are reduced due to the effects of taxation laws, and this is the only grounds for consideration, or
·where the only special circumstance is the legal deduction from both a social security payment and a DVA payment, or
·where the only special circumstance is the perceived unfairness of the 50% rule (Chamberlain Federal Court 2002), or
·if the sole factor is that the person or their partner's reason for receiving a CAP was different to the reason the compensation was paid (Edwards Federal Court 2000).
The Tribunal is not bound by the above policy, but the Tribunal will generally have regard to policy that is not inconsistent with the provisions or objects of an Act (Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60). The Tribunal accepted the policy set out above is consistent with the intentions of the legislation and provides relevant guidance in interpreting section 1184K of the Act.
Evidence and Findings
At the hearing, the Tribunal had before it documents provided by the Respondent, relating to the Centrelink and AAT decisions that had been made in this matter. The Applicant provided the Tribunal a written submission and a Statement in support of her request that the Tribunal exercise its discretion under section 1184K of the Act given her particular circumstances, and supporting documentation which is discussed in some detail later in this Statement of Reasons.
The Applicant’s written statement in support of her application set out her reasons for seeking a review of the decision by this Tribunal, and stated the following:
Summary
I am requesting my compensation payment be disregarded under section 1184K
Background
On the 31st December 2014 I suffered a workplace injury that has rendered me unable to ever work again. I sought legal representation and battled through legal proceedings for 6 years. During this time frame I was residing in Kogarah, paying $670 per week in rent – the insurance was paying me $585 per week, inconsistently. I received eviction notices and disconnection notices for utilities. This led to my decision to move to Campbelltown to my daughters investment property, where I knew I had residential security. Over the course of the 6 years, I paid what I could, when I could without stress.
On 18th September 2020 the final judgement was made, awarding me $828,000. Although this was not the case – on 25th September 2020 I received correspondence that the initial judgement was an error and I would infact be receiving approx. $450,000 clear. This was also not the case. On the 20th November 2020 I received a total $385,000 in compensation.
With the compensation money I repaid loans that family and friends had provided me in order to survive the 6 years prior, I paid for structural repairs and modifications at the property where I live and I used it for standard living expenses (mortgage, groceries, utilities etc).
Since late 2022 I have been dependent on my daughters to support me financially, this has led to a rapid decline in my mental health. I have suffered with chronic pain for almost 10 years now, but since having no financial stability I have further deteriorated and have no sense of self or joy remaining. My daughters pay my bills, put food on the table for me and buy my medication. I cannot afford the medical tests I require and cannot bring myself to burden them further with my expenses. Without the medical tests and proper medication, I cannot expect to have any quality of life.
Special Circumstances
I received insufficient advice from my legal representation in regards to my preclusion period – Tanya To verbally informed me that it would be 2-3 years before I could receive any form of support payment from the government and I took her words at face value because they are my lawyers. When I received the letter from Centrelink regarding the preclusion period being until 2031 I disregarded it as I assumed it had been an error, like the final settlement letter from Brydens had been. (attached for reference)
I was not given or offered any financial advice, had I been offered advice of given the correct preclusion period I would have been able to manage the compensation more effectively.
My children have been supporting me for the past few years – I am solely dependent on them to help me make ends meet and provide food on the table for me – this has placed me in an even greater depression. I feel worthless and have no joy in life anymore. I feel I am a burden to everybody around me. I have completely lost all dignity and pride.
My living arrangements are secure as my daughter had purchased a property as an investment that required a lot of repairs in order to be liveable – I invested money into repairing the house as this would be my primary place of residence. The floors were rotten with water damage, the roofing had sunken and was collapsing in parts and majority of the windows and walls had leaks and mould. Stairs required modification due to the severity of my injury. I made changes to the property to accommodate my disability – adding railings for support when walking etc. these were all repairs/modifications that I required to be able to live here.
I was paying $670 per week renting in Kogarah at the time of my injury – I was receiving eviction notices and overdue bills/disconnection notices constantly. Moving to Campbelltown was the only option I had otherwise I would be homeless. My daughter paid the mortgage from when I moved in up until my settlement – from then I paid the mortgage as if it were a rental but with the added security of knowing I will not be evicted. I have no concern on my living situation – it is secure. This is why I invested in the repairs that were required.
I struggle to put food on the table and feel ashamed asking my children anymore as they already support me for everything else. I cannot afford medical tests that are not covered by Medicare (MRI) which means I cannot have the correct medications that I require as an MRI is needed to see what else has deteriorated. I have had excruciating pains down the right side of my body and because I cannot afford to get the tests required, I have become more dependent on pain medications that have ruined my quality of life. I do not want to depend on pain medication – I want to get better but I’m falling deeper into depression and hardly leave the couch anymore. I cant afford to go anywhere or do anything. The cost of living with inflation over the recent years has made it impossible without financial assistance.
I would like to go to therapy but this also comes at a dear cost that I cannot afford. Without regular therapy my disability will only worsen. I cannot burden my children with this on top over everything else so I sit quiet and withdraw myself.
I am in constant severe pain, it used to be only physical but has now consumed me completely where I worry about the thoughts I have when I am alone and withdrawn.
The Respondent provided the Tribunal a Statement of Facts, Issues and Contentions and an Amended Statement prior to the hearing. Following the hearing, the Applicant provided further information, including medical documents, to the Tribunal, and the Respondent provided written submissions in response to this information. Details of all documents and information are discussed further below, where relevant.
Lump sum preclusion period
It is not disputed, and the Tribunal accepts, that the Applicant was injured in a compensable event on 31 December 2014 while at work at a supermarket. The Applicant sustained a back injury in a lifting incident, which required surgery and which prevented her from returning to her former employment or to any other work.
The Applicant was initially awarded an amount of $828,554.60 by way of judgment issued by the District Court of New South Wales on 18 September 2020. In the written judgment, the Court accepted that the Applicant had ongoing lower back pain and sciatic leg pain, restricted mobility and agility and occasionally walked with a limp. She was experiencing difficulty sleeping and the medication she was taking was interfering with her ability to think clearly. She was described as experiencing pain, anxiety and depression. The Court found that the defendant was required to pay the Applicant’s costs on an ordinary basis and assessed the damage to the Applicant as being:
(a)Past economic loss $259,200
(b)Past superannuation loss $28,512
(c)Future economic loss $446,273
(d)Future superannuation loss $53,533
(e)Fox v Wood $41,036.60
Total $828,554.60
On 25 September 2020, the amount awarded to the Applicant was amended by way of signed Short Minutes of Order, with the Court ordering by consent that:
1.The allowance for Fox v Wood damages in paragraphs [114] and [115] of the judgment be amended to $30,840.00 in accordance with the agreement between the parties.
2.As a consequence of the amendment in (1) above the assessment of damages in paragraphs [115] and [116] of the judgment be reduced to $818,358.00.
3.That assessment of damages be reduced in accordance with paragraph [116] of the judgment to $604,803.60 to account for the repayment of $213,554.40 due to the defendant for weekly compensation payments made to the plaintiff.
4.The judgment amount in paragraph [118(1)] accordingly be amended to $604,803.60.
5.Paragraph [118(2)] of the judgment be amended to read “There be no order as to costs”.
The Tribunal accepted that an amount of $30,840 was awarded to the Applicant in respect of damages made in accordance with Fox v Wood (1981) 148 CLR 438 and that this component of the amount awarded was not made with respect to lost earnings or lost capacity to earn. The Tribunal accepted that, for the purposes of calculating any lump sum preclusion period, the remaining components of the amount awarded total $573,963.50 and represent the compensation part of the lump sum in accordance with the definition in paragraph 17(3)(b) of the Act.
The Tribunal further accepted that the original lump sum preclusion period calculated in this matter, using this figure and a divisor of $1,033.30, resulted in a 555-week lump sum preclusion period and that, following the AAT’s decision, the lump sum preclusion period was reduced to 341 weeks. The lump sum preclusion period following the AAT decision is due to end on 5 April 2027.
Should the discretion in section 1184K be exercised?
Before assessing the Applicant’s circumstances at the time the Tribunal has proceeded to make its decision, the Tribunal notes that the AAT at first review decided to exercise the discretion in section 1184K of the Act and to treat part – but not all – of the compensation payment as not having been received. The reasons for this, set out in the AAT’s written statement of reasons, were that:
·It is unusual that there was no award for damages other than those that might be described as being forms of economic loss, with the exception of the Fox v Wood damages. In contrast to the presumption in the legislation deeming 50% of the compensation sum to be paid in respect of lost earnings or lost capacity to earn, in the Applicant’s case the structure of the judgment was that approximately 95% of the sum had formed the basis of the calculation, minus repayments of periodic compensation.
·The Judge had initially ordered the defendant to pay the Applicant’s costs subject to further orders, but the adjustment to the ultimate judgement sum appeared to have had the effect of reducing the judgment sum below a final settlement offer and resulted in the court making no order as to costs. It is unusual for a successful plaintiff to have to meet the entirety of their own costs of proceedings.
·The Applicant incurred substantial legal and related costs. An amount of $383,354.46 was received “in hand” after solicitor costs of $111,481.82, counsel fees of $22,770 and witness fees of $16,716.96. The amount received was substantially lower than the amount used to calculate the preclusion period, by nearly $200,000.
·The Tribunal found that the above factors made it appropriate to treat part of the compensation payment as not having been made and to reduce the compensation preclusion period to 341 weeks, ending on 4 April 2027.
·The Applicant had given money to friends and family who had assisted her prior to the award of damages. She used some funds towards servicing the mortgage on her daughter’s investment property in which she was residing with another daughter. The Tribunal estimated she had spent approximately $110,000 servicing her daughter’s mortgage. At the time of the AAT hearing, the AAT accepted the Applicant had no income and no savings. The Tribunal found these additional factors did not make it appropriate to treat any further part of the compensation payment as not having been received.
The Tribunal does not intend to disrupt the findings made by the AAT at first review, in reducing the original compensation preclusion period calculated by Centrelink, and the Respondent did not submit that it should. The Tribunal has therefore proceeded to consider whether the Applicant’s circumstances, when considered in totality, would make it appropriate to treat any further amounts of the compensation as not having been received. The Applicant submits that the Tribunal should exercise its discretion favourably in this respect; the Respondent submits that it should not.
The Applicant’s written Statement has been set out in full, above. In addition, the Applicant provided further written submissions to the Tribunal relating to her request for the Tribunal to find special circumstances exist in this case. In addition to restating a number of matters that had been set out in her Statement, the Applicant also noted that during the COVID-19 pandemic the cost of living rose and she had ceased attending her psychologist during lockdown and as a result suffers chronic depression for which she takes daily medication. The Applicant stated that her mental and physical health has deteriorated to the point that she has attended the hospital multiple times. The Applicant stated that she had paid back friends and family a total of $80,000 which had been lent to her over a 5.5 year period to support her and her children. The Applicant also noted that, according to the compensation preclusion calculator on the Centrelink website, her preclusion period should have ended in 2023. She also noted she had received a letter through her myGov account, dated 18 December 2023, stating that she could apply for the pension after 4 April 2024 and she had trusted that the letter was correct.
The Applicant’s evidence, given at the hearing, was broadly consistent with the evidence she had given to the AAT and with the written submissions. The Applicant told the Tribunal that she has financial difficulties and health issues. Her health is deteriorating and she has had a diagnosis of what she described as a chronic chest disease, following results that were received a week prior to the Tribunal hearing. She is currently being managed for this by her GP but she will need to see a specialist.
In response to questions by the Respondent at the hearing, the Applicant told the Tribunal that she had received insufficient legal advice at around the time of the court proceedings. She stated that during mediation proceedings she was advised not to accept an offer because it was too low; she had never had dealings within the law before and whatever they told her, she followed their advice. She had a discussion by video with her barrister and was told that she should not settle for lower than $600,000. The Court then awarded a lower amount.
The Applicant agreed in her evidence at the hearing that she had had a discussion with her lawyers about the compensation preclusion period, who told her not to worry and she could obtain $10,000 from court fees and after two to three years she would receive Centrelink payments. When she received the Centrelink letter stating the compensation preclusion period would end in 2031, she thought it must be a mistake and related to the higher amount of compensation that had initially been advised to Centrelink. She ignored the letter stating the period would end in 2031; the Applicant stated in her evidence that she had received another letter from Centrelink referring to 18 September 2020. She then stated that she had trusted her lawyers and didn’t understand the law.
The Applicant was directed during the hearing to Centrelink correspondence dated 6 November 2020, which had been sent to her lawyers and which provided the following information in relevant part:
Centrelink is notified about recent claims and settlements for compensation because any lump sum compensation payments may stop a person from receiving Centrelink payments in the future.
Important information
We have been advised that your client is to receive a lump sum compensation payment:
· For the incident dated 31 Dec 2014 reference 1, we have been advised that the compensation amount is $604,803.60.
If your client needs to apply for Centrelink payments in the future, we have calculated that their preclusion period starts on 21 September 2020 and ends on 11 May 2031. There is no Centrelink charge for the above compensation payment claim.
When directed to this correspondence, the Applicant stated that that was the letter she had been referring to (which spoke about September 2020). She stated that she had then received another letter that identified the amount she received but she didn’t understand what it was talking about; she thought Centrelink and her solicitors were going backwards and forwards.
The Applicant agreed she had received a letter from Centrelink about the compensation preclusion period before the payment was made into her account. She agreed she had not contacted Centrelink to check the dates set out in the letter and said she called Centrelink to advise she could provide documents and the amount they had recorded was not correct. As to whether she had sought updated advice from her lawyers about the 2031 end date indicated in the letter, the Applicant stated she had tried but they had not responded. She has not taken action against her lawyers for incorrect advice as she wanted to get her health sorted. She then referred to the fact that her doctor even told her something was not right.
The Applicant agreed she had received $383,000 into her bank account in November 2020 and that she had repaid loans to friends and family totalling around $80,000. She stated that this had been for credit card balances, her daughter’s 2013 wedding and “stuff like that”. She stated that she had been unable to pay her rent and that colleagues and her children had been there to help her. She had not had loan agreements for these amounts but “used to be with those people 10, 11, 12 hours a day”. She did not agree she could have repaid the amounts over a longer period of time and stated that one of the amounts had been repayments to a colleague who had taken money from a credit card to help her. She agreed that, when she repaid these amounts, she had known about the compensation preclusion period, but stated she had thought that if she got it off her chest, she could deal with it.
The Applicant stated that her roof had needed repairing and that instead of $10,000 she had been asked for $17,000 for the repairs. Her biggest expenses were in 2021 as there was a window leaking and everything needed to be replaced, including a staircase. She agreed that the property she was referring to is owned by her daughter and that she had invested her money into the house, stating that her life is there. As to how much had been spent on repairs, the Applicant stated she is not sure, but what needed to be done was done. This included a balcony to the backyard so that washing could be put on the line. As to the mortgage payments she had contributed to, the Applicant stated this is part of her rent and she and her daughter had an agreement that she would stay and her daughter would allow her to stay. Her children are now struggling to help the Applicant meet her financial commitments. She agreed that her accommodation is currently stable, but stated she is concerned that her daughter will no longer be able to meet the mortgage costs and may need to sell the property. As to the calculation by the AAT at first review that she had paid around $110,000 towards her daughter’s mortgage, the Applicant stated it was maybe more than that as her “rent went up and up and up”.
The Applicant told the Tribunal that she has three to four referrals to see a specialist, who is asking for so much money that she is hiding the invoices from her children. In response to the Respondent’s observations that she had repaid around $80,000, had undertaken house repairs, had made mortgage repayments and had made numerous withdrawals from ATMs, the Applicant stated that she has receipts from Bunnings. The Applicant was asked about specific withdrawals from her bank account, including an amount of $30,0000 on 30 November 2020, to which she responded she cannot now recall them, but she knows who she paid and she didn’t splash the money. When asked about withdrawals on 18 and 22 December 2020 of $23,000 and $14,000, the Applicant stated that the first was for her older daughter because she had used some money for her wedding and provided gifts to where she used to live. When asked about amounts of $20,000 and $100,000 withdrawn on 23 December 2020, the Applicant stated that this was “for the loan for the house” and she had put this money towards the mortgage. When asked whether she was aware at that point of the compensation preclusion period, the Applicant stated that she could secure her position where she was and no one could evict her. She agreed that her goal was to prioritise her living arrangements, stating that she wanted to transfer the property over to her name and had spoken to someone at the bank about this but had been advised she needed proof of where she was working. The Applicant then went on to state that she had attended rehabilitation therapy after her surgery and was spending money on her health and on therapy so that she could build muscle; her health was her first priority, and keeping a roof over her head, and her goal was to return to the workforce.
The Applicant stated that, at the time she put money towards the house, she had not received any assistance with budgeting, but had spoken to someone at the bank. She ultimately couldn’t return to work in 2021 despite all of the effort she had made, because of her back and leg. She had had a double spinal fusion and had nerve damage, sciatica in her leg, and back and neck pain. More recently she has been diagnosed with emphysema in her chest, a lump in her neck and severe headaches. While she had recovered after her surgery, she was well for only a month or two. Another surgery was advised but her GP said to wait and she had cortisone injections in the meantime. She is unable to walk without a walking stick and is now experiencing fainting because of a lump in her neck.
The Applicant stated that her daughter may put $100 in her bank account and this would be for her medication. The Applicant is paying life insurance and her bank account is always in debit. She doesn’t always receive assistance from her daughters because one daughter bought a car and is still only 20. When asked whether the Applicant or her daughter is currently paying the mortgage, the Applicant responding by stating, “how could she?” and stated that they are all struggling. She then stated that at the moment one daughter puts some money in and the other daughter puts in half and that “scraps” from their pay go towards the Applicant’s medication, which includes Endone, tramadol and Lexapro.
Following the hearing, the Applicant provided further information to the Tribunal, including the results of a CT lumbosacral spine and coccyx, which indicated irregularities consistent with a fracture, soft tissue swelling and disc bulging. The Applicant also provided the results of a CT chest scan, which had revealed emphysematous changes and a right middle lobe 5mm nodule over a branch pulmonary artery. The results, dated 13 November 2024, queried COPD and malignancy and recommended further follow-up investigation. The Tribunal accepted from this evidence that the Applicant has ongoing back pain and has been recommended for further investigation for irregularities in her chest.
The Applicant also provided a bank statement to the Tribunal for the period 24 June 2024 to 24 September 2024, showing a minimal bank balance throughout the period and no regular living expenses coming out of the account. A Medical Certificate provided by the Applicant confirmed she is suffering from depression and anxiety as a result of chronic back pain. This was consistent with a psychologist report provided to the AAT at first review, dated 26 November 2022, in which the Applicant was assessed as having depression complicated by severe chronic pain arising from the workplace injury.
The Respondent provided written submissions to the Tribunal, submitting that the Applicant’s circumstances do not warrant any further exercise of the discretion and that the Respondent’s position remains the same after consideration of the additional medical information provided to the Tribunal after the hearing. The Respondent has noted in its written submissions the numerous withdrawals the Applicant has made from her bank account between 30 November 2020 and 26 October 2022 of amounts of up to $100,000 in one transaction.
At the hearing itself, the Respondent noted, in oral submissions made to the Tribunal, that the Applicant was seeking to rely on a combination of factors including her compensation received having been less than the amount awarded, certain advice from her legal representatives, the repayment of money to family and friends, payments to her daughter for a property, and health and financial issues. The Respondent accepted that the legal fees paid by the Applicant may constitute special circumstances, as it would not be usual for an applicant to pay their own legal fees in full, but submitted that the Applicant’s other circumstances are not unusual, exceptional or uncommon.
The Tribunal is mindful that, while the term “special circumstances” is not defined in the legislation, it has been considered extensively by the AAT and the Courts. Consideration of the term requires the Tribunal to assess whether there is something that distinguishes the Applicant’s case from the usual case (Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25), whether the Applicant’s circumstances are markedly different from the usual run of cases, such that the circumstances are able to be described as special (Re Rosemarie Beadle and Director-General of Social Security [1984] AATA 176), or whether the Applicant’s circumstances are distinguishable from others’ and are outside of the usual or ordinary case (Groth v Secretary, Department of Social Security (1995) ALD 541). As noted by the Respondent in its submissions, case law by the AAT at second review indicates that poor advice by a solicitor has been held to be insufficient to find special circumstances for the purposes of section 1184K of the Act (King and Secretary, Department of Social Services (social services second review) [2021] AATA 5288) and pressure by family members to repay loans in the absence of compelling necessity or legal obligation is also insufficient for the exercise of discretion under this ground (Cheadle and Secretary, Department of Social Services (Social services second review) [2021] AATA 3319). The Tribunal has had regard to the above case law when considering the issues raised by the Applicant in this matter and has also had regard to the intention of the legislation that people should not receive social security payments for loss of earnings where they have received compensation for the same loss of earnings from another source (Secretary to the Department of Family and Community Services v Allan [2001] FCA 1160).
The Tribunal accepted that the Applicant was initially awarded an amount by the Court that was later reduced and that the Applicant received significantly less “in hand” than the amount used in the initial calculation of the compensation preclusion period. The Tribunal accepted the Applicant received incorrect advice from her legal representative and noted, in particular, correspondence contained in the Centrelink documents from the Applicant’s solicitors to the Applicant acknowledging “the error that was made in our understanding of the judgement and our advice to you of 18 September 2020”. The Applicant did, however, receive correspondence from Centrelink with the correct dates of the compensation preclusion period and disregarded this information without seeking to clarify or query it any further.
The Tribunal accepted the Applicant previously received an eviction notice from her rental property and that she subsequently moved into her daughter’s investment property. The Applicant no longer has any income or savings and is reliant on family members to meet her expenses. This has occurred, though, in the context of the Applicant having repaid $80,000 towards loans she states she owes to family and friends, including unspecified amounts towards her daughter’s wedding, and what the Applicant estimates is over $110,000 towards her daughter’s mortgage. The Applicant at hearing conceded that the expenditure occurred after she was made aware of the compensation preclusion period. The Tribunal had some difficulty understanding the Applicant’s perceived need to pay the amount that was paid towards her daughter’s mortgage, which appears to be well in excess of any commercial rental arrangement she could have entered into in the same period.
The Tribunal accepted the Applicant suffers long-term chronic pain arising from the workplace injury and that she is suffering mental health symptoms for which she is not currently receiving counselling due to her financial situation. The Tribunal accepted the Applicant has more recently been identified as having an irregularity in her lung and that further investigation has been recommended for this.
While the Tribunal accepts the health and financial circumstances of the Applicant are very difficult, it does not consider it appropriate to exercise the discretion in section 1184K of the Act, in circumstances where the Applicant was aware that a compensation preclusion period would be applied to her receipt of Centrelink payments, did not question the information provided to her in Centrelink correspondence and proceeded to pay significant amounts of the lump sum she had received towards undocumented debts and a mortgage not in her own name. The Tribunal finds that, when the Applicant’s circumstances are considered cumulatively, including the reasons the Applicant is now in financial hardship, special circumstances are not established in this case that would make it appropriate to further reduce the compensation preclusion period.
For this reason, the decision made by Centrelink to reject the Applicant’s claim for disability support pension because a lump sum preclusion period applied to the payment at the time of claim is legally correct and this decision is affirmed by the Tribunal.
DECISION
The Tribunal affirms the decision under review.
Date of hearing:
29 November 2024
Solicitors for the Applicant:
Self-represented
Solicitors for the Respondent:
Mr Matthew Gauci, Hunt & Hunt Lawyers
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