Deacon and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2009] AATA 88 (11 February 2009)

Last Updated: 11 February 2009

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 88

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2008/4216

GENERAL ADMINISTRATIVE DIVISION		)
	Re		DREW DEACON

Applicant

And

SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal

Deputy President P E Hack SC

Date 11 February 2009

Place Brisbane

Decision

The Tribunal: Sets aside the decision under review; Substitutes a decision that $11,115 of the compensation paid to Mr Deacon be treated as not having been made.

.............Signed................
Deputy President

CATCHWORDS

SOCIAL SECURITY – disability support pension – receipt of lump sum compensation in settlement of claim – not a payment under a law that provides for the payment of compensation for a criminal injury – preclusion period – legal costs agreed – legal costs a component of lump sum compensation – inequality of treatment may amount to special circumstances – decision set aside and preclusion period calculation varied to exclude agreed costs from compensation sum

Social Security Act 1991 (Cth) ss 17(2), 17 (2B), 17(2C), 1184K(1)

Criminal Offence Victims Act 1995 (Qld).

Motor Accident Insurance Act 1994 (Qld)

Pickering v Deputy Commissioner of Taxation (1997) 37 ATR 41

Re Fuller and Secretary, Department of Family and Community Services [2004] AATA 615; (2004) 83 ALD 152

Secretary, Department of Family and Community Services v Chamberlain (2002)116 FCR 348

REASONS FOR DECISION

11 February 2009

Deputy President P E Hack SC

INTRODUCTION

1. The applicant, Mr Drew Deacon, suffered personal injuries in July 1999 when his motorcycle was forced off the road by another, unidentified, vehicle. Mr Deacon received damages from the Nominal Defendant (Queensland) for those injuries and other losses.
2. Ordinarily, the receipt of a payment of the type received by Mr Deacon has the effect of precluding the recipient from receiving social security benefits for a period of time, determined by reference to the amount received. The legislation aims to prevent a recipient from receiving damages for lost earnings or lost earning capacity and social security payments in respect of the same period of time. Mr Deacon says that the legislation does not apply to his circumstances, and that he is not precluded from receiving benefits, because the payment received by him was a payment of compensation for a criminal injury and thus outside the operation of the legislation.

THE LEGISLATION

3. The starting point is s 1169 of the Social Security Act 1991 (Cth) which provides:

“(1) If:

(a) a person receives or claims a compensation affected payment; and

(b) the person 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.”

4. Disability support pension, which is the payment in issue in Mr Deacon’s case, comes within the definition of “compensation affected payment” in s 17(1) of the Act. “Lump sum compensation payment” is not defined, however the term “compensation” is explained in s 17(2) in these terms:

“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.”

Sub-sections (2B) (on which Mr Deacon particularly relies) and (2C), provide:

“(2B)A payment under a law of the Commonwealth, a State or a Territory that provides for the payment of compensation for a criminal injury does not constitute compensation for the purposes of this Act.

(2C) The reference in subsection (2B) to a criminal injury is a reference to a personal injury suffered, or a disease or condition contracted, as a result of the commission of an offence.”

5. It is necessary also to notice the meaning of the “compensation part of a lump sum compensation payment” which is defined in s 17(3) of the Act, so far as is presently material, as being:

“(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;”

6. Finally, and by virtue of s 1184K(1) of the Act, the Secretary, or the Tribunal in her stead, may treat all or part of a compensation payment as not having been made if it is appropriate to do so “in the special circumstances of the case”.

BACKGROUND

7. Mr Deacon suffered his injuries around midday on 14 July 1999 when riding his motor bike. An unidentified vehicle changed lanes suddenly and without warning, causing him to be thrown off his motor bike, resulting in injuries to his left hand and left foot. The other vehicle did not stop and Mr Deacon was unable to identify the driver. In July 2003 Mr Deacon commenced proceedings against the Nominal Defendant, the body that is, by virtue of the Motor Accident Insurance Act 1994 (Qld), the insurer of unidentified or uninsured vehicles. Mr Deacon pleaded a claim for damages by way of past and future economic loss.
8. The action was settled on 18 December 2003 when Mr Deacon agreed to accept a payment of $85,000.00 and costs of $11,115.75 in full and final settlement of his claims against the Nominal Defendant as a result of the incident. I infer from the discharge executed by the parties that it was, at one time, contemplated that the costs would be paid as assessed by a legal costs assessor but that an agreement was reached as to the amount of those costs. Mr Deacon paid his lawyers $25,229.91 for costs and disbursements (including GST).
9. Centrelink was advised of the fact and terms of the settlement and determined that Mr Deacon was precluded from receiving benefits from 14 July 1999 to 19 December 2000. It did so on the footing that the lump sum compensation payment was $96,115.75, that is, the damages and agreed party and party costs. Centrelink relied upon a letter from the claims manager of the Nominal Defendant to determine that Mr Deacon’s settlement included an element for economic loss. For my part, I would consider that the pleadings in the action provide a sounder guide to the elements of the settlement.
10. But on the basis set out above Centrelink recovered $16,372.60 out of the settlement sum paid to Mr Deacon. That decision was affirmed on internal and external review. Mr Deacon does not take issue with the calculations undertaken in the present case and I am satisfied that they have been undertaken correctly.

DID THE PAYMENT SATISFY S 17(2B)?

11. There can be no doubt that the payment made to Mr Deacon answered the description in s 17(2) of the Act. It was a payment in settlement of a claim for damages under a scheme of insurance under a law of Queensland, the Motor Accident Insurance Act. Mr Deacon does not suggest to the contrary. His argument is that whilst the payment made to him answers the description of compensation in s 17(2) of the Act it is nevertheless excluded because it was a “payment under a law of ... a State ... that provides for the payment of compensation for a criminal injury”. He identifies the law of the State as the Motor Accident Insurance Act. He says that the acts of the unidentified driver amounted to criminal offences and suggests that the driver was guilty of the offence in s 328A of the Criminal Code (Qld), dangerous operation of a motor vehicle. He says, as well, that the driver breached the obligation imposed by s 92 of the Transport Operations (Road Use Management) Act 1995 (Qld) to stop and remain at the scene of an accident involving personal injury.
12. Even assuming, favourably to Mr Deacon, that the other driver was guilty of the offences identified and that Mr Deacon’s personal injuries were suffered as a result of a crime, there are, in my view, at least two reasons why the argument cannot be accepted.
13. First: the payment made to Mr Deacon was not a payment under a law of the State. It was a payment made by an insured to settle a claim in negligence, a common law cause of action. The mere fact that the defendant owed its existence to the statute does not have the effect that a payment made by it was “under” the statute.
14. Moreover, the Motor Accident Insurance Act is not a law that provides for the payment of compensation for criminal injury. That function is performed in Queensland, as the Social Security Appeals Tribunal correctly identified, by the Criminal Offence Victims Act 1995 (Qld). The Motor Accident Insurance Act creates a scheme of compulsory insurance against claims for personal injury arising from wrongful acts or omissions in connection with motor vehicles and provides for procedural matters in connection with such claims.
15. Accordingly I do not accept Mr Deacon’s argument.

SPECIAL CIRCUMSTANCES

16. While Mr Deacon did not advance any argument based upon the existence of special circumstances in his case I take the view that the nature of the Tribunal’s function requires me to at least consider any argument apparently open to Mr Deacon had he the training or experience required to raise such matters. Without intending any disrespect to Mr Deacon, he appeared so convinced of the correctness of his argument that he did not wish to turn his mind to any other aspect of his case. The issue of “special circumstances” troubled me, hence I raised it in the course of argument with the Secretary’s representative.
17. Viewed objectively, it seems to me to be plain that the amount determined in accordance with the Act far exceeds any reasonable assessment of the component for economic loss in the settlement made here. Mr Deacon appears to have been employed for no more than one month in the three years prior to then accident and not employed since. But, as Kiefel J observed in Secretary, Department of Family and Community Services v Chamberlain[1], the statute deems a result with the effect that the parties are prevented from seeking to prove the truth. The fact that there was a wide difference between the deemed result and an objective view of the settlement cannot provide special circumstances.
18. There is, however, a circumstance of the case that seems to me to admit of the adjective “special” and that is the anomaly adverted to by Downes J, sitting as the President of the Tribunal, in Re Fuller and Secretary, Department of Family and Community Services[2]. His Honour there ascertained that persons who obtain the benefit of an order, or an agreement, for costs where the amount of those costs is to be determined in the future are treated more favourably that those who, like Mr Deacon, resolve the amount of costs at the same time as the action is settled. Ms Forsyth, who appeared for the Secretary in the present case, confirmed that the policy described by Downes J in Fuller remains in place.
19. It is well settled that administrators owe a duty of fairness to treat subjects equally where the circumstances are relevantly identical[3]. Here I was told that if Mr Deacon had agreed to settle on the basis of $85,000 plus costs to be assessed, as was apparently originally contemplated, only $85,000 would have been treated as compensation. However because the costs were agreed, those agreed costs were included in the amount treated as compensation. In Fuller the President analysed why, as a matter of law, costs fall to be treated as part of the compensation and I am not asked to depart from his Honour’s view. However, like the President, it seems to me that there is an element of unfairness in the differential treatment of these cases. It is not to the point that what motivates the differential treatment is the desire on the part of Centrelink not to delay the payment of a settlement to a plaintiff whilst the amount of costs is assessed or taxed, it being the case apparently that insurers will not release settlement monies until the amount of any statutory charge has been determined by Centrelink and that Centrelink cannot determine the amount of a charge until costs have been assessed or taxed. The differential treatment is not prevented from amounting to a special circumstance merely because what motivates the treatment is the commendable desire on the part of Centrelink to prevent unnecessary delay in the payment of settlement sums.
20. There is no suggestion that the amount of costs agreed is other than genuine and the material establishes that the costs actually paid by Mr Deacon were more than twice the sum recovered. The unfairness that arises amounts, in my view, to a special circumstance enlivening the discretion to treat all or part of the sum as not having been received. In the circumstances of the present case the element of unfairness will be removed if the amount of costs paid is treated as not having been made. Thus I will set aside the decision under review and substitute a decision that $11,115 of the compensation paid to Mr Deacon be treated as not having been made.

I certify that the 20 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President P E Hack SC

Signed: ..................Signed...........................

Melissa Hamblin, Associate

Date of Hearing 5 February 2009

Date of Decision 11 February 2009

Applicant Self-represented

For the Respondent Ms J Forsyth

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[1] (2002)116 FCR 348 at [24].
[2] (2004) 83 ALD 152.
[3] See e.g. Pickering v Deputy Commissioner of Taxation (1997) 37 ATR 41, 48-50.