Brice and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 799 (18 October 2010)

Last Updated: 19 October 2010

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 799

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2009/5397

GENERAL ADMINISTRATIVE DIVISION		)
	Re		MARK BRICE

Applicant

And

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

Respondent

DECISION

Tribunal

Senior Member K Bean

Date 18 October 2010

Place Adelaide

Decision

The decision under review is affirmed.

..............................................
K Bean
(Senior Member)

CATCHWORDS

SOCIAL SECURITY – Carer payment – Receipt of lump sum compensation payment – Preclusion period giving rise to debt – Whether debt solely attributable to administrative error by Centrelink – Whether “special circumstances” justifying waiver of debt – Debt not due solely to administrative error – No special circumstances – Decision under review affirmed.

Social Security Act 1991 (Cth), ss 17, 1170, 1182, 1184B, 1184C, 1184K, 1236, 1237A(1) and 1237AAD

Social Security (Administration) Act 1999 (Cth), ss 68(2), 72(3A) and 74

Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25; (2007) 44 AAR 436

Dranichnikov v Centrelink [2003] FCAFC 133; (2003) 74 ALD 134

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

Kirkbright v Secretary, Department of Family and Community Services [2000] FCA 1876; (2000) 65 ALD 211

Re Beadle and Director-General of Social Security (1984) 6 ALD 1

Re Deakin and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2009] AATA 88

Re Nathan and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2009] AATA 263

Re Secretary, Department of Social Security and Duzevich [1996] AATA 63

Re Topp and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 99

Riddell v Department of Social Security [1993] FCA 261; (1993) 42 FCR 443

Secretary, Department of Family and Community Services and Edwards [2000] FCA 1645; (2000) 32 AAR 370

Secretary, Department of Family and Community Services v Sekhon [2003] FCA 76

Trimboli v Secretary, Department of Social Security (1986) 86 ALR 64

REASONS FOR DECISION

18 October 2010 Senior Member K Bean

INTRODUCTION

1. In June 2005, the applicant (Mr Brice) was involved in a motor vehicle accident in which he sustained significant injuries. He subsequently made a personal injury claim which was settled in September 2008 for a total sum of $141,165.56.
2. Unfortunately, at the time he received this money, Mr Brice does not appear to have been aware that his receipt of it gave rise to a debt to Centrelink which had not yet been paid. That debt arose because the settlement Mr Brice received included a component for economic loss and, in the period between the motor vehicle accident and his receipt of the lump sum, Mr Brice had been in receipt of a social security payment, namely carer payment (CP). Under the terms of the relevant legislation, this combination of circumstances gave rise to a debt to the Commonwealth equivalent to the amount of CP received by Mr Brice during the period for which he was deemed to have received compensation for economic loss.
3. Mr Brice became aware of the amount of the debt, being $23,254.05, in late December 2008 and at that stage he still had sufficient funds remaining from his compensation settlement to pay the debt. However, he elected instead to pay the debt through small instalments. He also decided to challenge the debt, seeking internal review of the decision to raise the debt by Centrelink and, when that was unsuccessful, review by the Social Security Appeals Tribunal (SSAT).
4. The SSAT affirmed Centrelink’s decision to raise the debt and determined that there was no proper basis on which the debt should be waived[1].
5. Mr Brice has now sought review of the decision of the SSAT by this Tribunal, contending that the debt raised against him should be waived for a number of reasons. He also claims that the debt amount was not correctly calculated.

THE ISSUES

6. It follows that the issues for my consideration are:
   • whether the debt which has been raised against Mr Brice was properly raised and correctly calculated; and
   • whether any debt which has been correctly raised against Mr Brice should be waived, in whole or in part.

WAS MR BRICE’S DEBT CORRECTLY RAISED AND CALCULATED?

The relevant provisions

7. The Social Security Act 1991 (Cth) (the Act) contains a number of provisions directed toward recovery of amounts which have been paid by way of social security payments where the recipient of those payments subsequently receives a lump sum by way of compensation, including an amount attributable to economic loss. The principle underlying these provisions is that where a person receives compensation for lost earnings or lost capacity to earn, they should rely on that compensation rather than seek, or be permitted to retain, income support by way of social security payments.
8. Accordingly, in general terms the legislation provides that where a person has received compensation for economic loss, they should exhaust that compensation before being entitled to income support by way of social security payments. Similarly, where a person receives compensation for economic loss and social security payments in respect of the same period, they should repay the amount they have received in social security payments once they have received their compensation lump sum.
9. In order to achieve this objective, and prevent settlements from being manipulated so as to minimise the amount repayable to Centrelink, the Act relevantly provides that where a person has received a compensation lump sum which relates partly to lost earnings or lost capacity to earn, half of that amount is treated as compensation for economic loss and described as the “compensation part of a lump sum payment”[2]. A formula is then applied to that amount so as to determine the number of weeks that the recipient could reasonably be expected to support themselves from that component of the lump sum. The number of weeks arrived at becomes the “preclusion period” during which the compensation recipient is not entitled to receive most social security payments. Further if they have already received a specified form of social security payment or “compensation affected payment”[3] during that period, they are required to repay to Centrelink the amount of the social security payments they have received during the preclusion period.
10. The preclusion period is calculated by reference to s 1170 of the Act. Pursuant to that section, the compensation part of the lump sum (i.e. half of the total lump sum received) is divided by the “income cut out amount” to give a number of whole weeks. The “income cut out amount” is defined in s 17(1) to be:

“The amount worked out using the formula in sub-section (8), as in force at the time when the compensation was received.”

11. That formula is based partly upon the maximum pension rate payable at the time the compensation was received and in Mr Brice’s case the amount arrived at by application of the formula was $759.75[4].

Application of these provisions to Mr Brice

12. Applying these provisions to Mr Brice’s circumstances gives the result that half of Mr Brice’s total compensation settlement (of $141,165.56) was $70,582.78. Dividing that amount by the applicable income cut out amount (of $759.75) yields a result of 92 weeks, which is the preclusion period applied in Mr Brice’s case, i.e. from 14 June 2005 to 19 March 2007. Further the amount of the debt raised, i.e. $23,254.05, is equal to the amount of CP received by Mr Brice during the preclusion period.
13. I am therefore satisfied that the preclusion period and the debt amount have been correctly calculated, and the debt has been correctly raised.

SHOULD THE DEBT BE WAIVED?

14. There are a number of potential bases upon which the debt which has been raised against Mr Brice could be waived.
15. Section 1237A(1) of the Act provides for waiver of debts in the case of administrative error, and ss 1184K and 1237AAD of the Act each allow for waiver where there are “special circumstances”. For completeness, I should note that a debt may also be written off pursuant to s 1236 of the Act. However that provision was not relied upon by Mr Brice and it is clear on the evidence in any event that none of the preconditions for possible write off of the debt pursuant to that provision are established.
16. I propose to consider first whether the debt should be waived due to administrative error, before proceeding to consider whether there are “special circumstances” which justify waiver of the debt.

Is the debt attributable solely to an administrative error made by Centrelink?

17. One of the bases upon which Mr Brice argued his debt should be waived was that it was attributable solely to an administrative error made by Centrelink and should therefore be waived pursuant to s1237A(1) of the Act. That provision relevantly states as follows:

“1237A Waiver of debt arising from error

Administrative error

(1) Subject to subsection (1A), the Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt.

Note: Subsection (1) does not allow waiver of a part of a debt that was caused partly by administrative error and partly by one or more other factors (such as error by the debtor).”

18. In support of his argument for waiver of the debt pursuant to this provision, Mr Brice said that he had telephoned Centrelink on 29 September 2008 and been transferred to a female staff member who he understood was in the debt recovery department. He said that he informed her that he was about to get a compensation payment arising from a car accident and asked whether any amount was going to be withheld by Centrelink. He said she told him that he did not have any debt. Mr Brice argued that if that staff member, now known to have been Ms Jane Mitchell, had done her job correctly, he would not be in the position he is in now.
19. There are a number of difficulties with this argument put by Mr Brice. Most fundamentally, in order for it to be possible for the debt to be waived under s 1237A(1), I must be satisfied that the debt which has been raised against Mr Brice is attributable “solely” to an error made by Centrelink.
20. However in the circumstances of this matter, even if I was satisfied that Ms Mitchell made one or more errors in responding to Mr Brice’s telephone call, it is clear that the debt did not arise because of any error made by Ms Mitchell. As alluded to above, the debt which has been raised against Mr Brice arose by operation of the applicable statutory provisions on the personal injury settlement received by him. In effect, the debt arose by application of the social security law to his circumstances[5].
21. Admittedly, if Mr Brice had communicated to Ms Mitchell that he had received a compensation settlement amount from which he anticipated a Centrelink ‘payback’ amount would need to be deducted, and if steps had been taken to act on that notification in September 2008, it is likely that the debt would have been raised much earlier than it was. There is no doubt this would have been a much better outcome for Mr Brice as he would have received timely notification of the amount repayable to Centrelink and it is likely that that amount would have been repaid to Centrelink either before he received the balance of the compensation funds or shortly thereafter, and he would not have been left with a Centrelink debt to be repaid.
22. However, even if Mr Brice’s receipt of the compensation lump sum had been notified earlier, a debt would still have been raised and the debt would have been for the same amount. In other words, whilst earlier notification is likely to have affected the timing of the debt, it would not have had any bearing upon whether a debt was raised.
23. It follows that any action or inaction by Ms Mitchell in response to Mr Brice’s telephone call did not have the capacity to influence whether a debt was raised at all, simply the timeframe within which the debt was raised. In these circumstances, I am not satisfied that it can be said that the debt which has been raised against Mr Brice has arisen “solely” as a result of any error on the part of Centrelink. Rather, the debt is attributable primarily to the operation of the social security law. Accordingly I am not satisfied that the debt should be waived pursuant to s 1237A(1) of the Act.

Should the debt be waived due to “special circumstances”?

The Law

24. As alluded to above, there are two provisions of the Act pursuant to which Mr Brice’s debt can potentially be reduced or eliminated if it can be shown that his circumstances are “special”. Section 1184K confers a discretion to treat some or all of the compensation payment as not having been made, thus reducing any debt or preclusion period which would otherwise be imposed. It relevantly provides:

“1184K Secretary may disregard some payments

(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.
(2) If:
(a) a person or a person’s partner receives or claims a compensation affected payment; and
(b) the person receives compensation; and
(c) the set of circumstances that gave rise to the claim for compensation is not related to the set of circumstances that gave rise to the person’s or the person’s partner’s receipt of, or claim for, the compensation affected payment;
the fact that those 2 sets of circumstances are unrelated does not alone constitute special circumstances for the purposes of subsection (1).”

25. Section 1237AAD of the Act provides as follows:

“1237AAD Waiver in special circumstances
The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:
(a) the debt did not result wholly or partly from the debtor or another person knowingly:
(i) making a false statement or a false representation; or
(ii) failing or omitting to comply with a provision of this Act, the Administration Act or the 1947 Act; and
(b) there are special circumstances (other than financial hardship alone) that make it desirable to waive; and
(c) it is more appropriate to waive than to write off the debt or part of the debt.”

26. As the Tribunal observed in Re Topp and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 99, these provisions have an “uncertain relationship” with one another and “could be regarded as primarily directed to different purposes”, being:

“(i) the preclusion or rate reduction consequences of a compensation payment (in the case of s1184K); and
(ii) the debt consequences (in the case of s1237AAD).”[6]

There are also some clear differences between the two provisions. For example, the s 1184K discretion may be exercised in “special circumstances” that are, amongst other things, constituted by financial hardship alone, while the s 1237AAD discretion may not. Further as SM Hunt observed in Re Nathan and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2009] AATA 263, s 1184K is specifically designed to “ameliorate unfairness or injustice which results from the strict application of the Act.”[7]

27. However, while ss 1184K and 1237AAD have slightly different, albeit overlapping spheres of operation, the meaning of the term “special circumstances” has been interpreted to have a similar meaning in the context of each section. Senior Member Hunt summarised some of the applicable case law in Nathan (at [24] - [27]), as follows:

“24. The meaning of ‘special circumstances’ in relation to the compensation provisions or other provisions of social security law, has been the subject of much judicial examination, and is interpreted in much the same way no matter under which provision of social security law it is applied. See, for example, Re Secretary, Department of Social Security and Duzevich [1996] AATA 63, at paragraph 32.
25. In Re Beadle and Director-General of Social Security (1984) 6 ALD 1, an application regarding an allowance for disabled children, the tribunal, at paragraph 12, stated that the term ‘special circumstances’ is by its very nature incapable of precise or exhaustive definition. More recently the Full Federal Court, in reviewing the cases in relation to the recovery of a Family Tax Benefit debt in Dranichnikov v Centrelink [2003] FCAFC 133; (2003) 75 ALD 134, stated that:
‘what is required will be circumstances which distinguish the case in consideration from the usual case. There will be a requirement that the circumstances are such that takes the case out of the ordinary ....’ [at paragraph 66]

26. Also see the Full Federal Court in Riddell v Department of Social Security [1993] FCA 261; (1993) 42 FCR 443, at 450, in relation to a similar provision in the Act:

‘Each particular case must be considered on its merits. It is the essential nature of the provision to create a broad discretion to meet the great variety of circumstances which must occur, raising considerations of individual hardship, need, fairness, reasonableness, and whatever else may move an administrator, keeping in mind the scope and purposes of the Act, to make a decision one way or the other.’

27. As the above cases indicate, the concept of special circumstances is broad and does not impose a fetter on the matters which may be considered by a decision-maker. See also Trimboli v Secretary, Department of Social Security (1989) 86 ALR 64 at 73, and Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25; (2007) 44 AAR 436.”
    
28. In light of the similarity between the two provisions, I propose to address their potential application to each of Mr Brice’s relevant circumstances simultaneously, rather than considering the relevant facts separately against each provision. However in the course of that consideration I will also have regard to the different contexts in which each provision operates, so as to ensure that I have properly considered the potential application of each provision to all of the relevant facts.

Mr Brice’s circumstances

29. There were a variety of matters referred to and relied upon by Mr Brice in support of his contention that his circumstances were “special”. These included the following:
    • Errors made by his lawyers and the insurer, in particular in not taking steps to ensure that the amount repayable to Centrelink was deducted from his compensation settlement;
    • Errors made by Centrelink, in particular the error made by Ms Mitchell referred to above;
    • His various medical problems, resulting in part from the accident for which he received the compensation settlement;
    • His financial circumstances;
    • The fact that he had lost a proportion of the settlement sum through gambling; and
    • The fact that the provisions of the Act operated unfairly in his circumstances.

I propose to address each of these matters in turn, together with an additional issue which I consider arises from the material before me.

Alleged errors made by Mr Brice’s lawyers and the insurer

30. As set out above, Mr Brice settled his personal injury claim in the amount of $141,165.56 on or about 15 September 2008. In his evidence he said that he received a cheque for the balance of the settlement monies, being $106,383.45, on or about 2 October 2008. However it was not until 1 December 2008, when Mr Brice contacted Centrelink (again) by telephone that Centrelink recorded having been notified of the compensation settlement and issued a form to Mr Brice requiring him to provide details of the compensation he had received.
31. Having received that form, on 19 December 2008 the Centrelink compensation section contacted the insurer, Alliance CTP, requesting details of the compensation paid to Mr Brice[8]. On 23 December 2008 Alliance CTP advised Centrelink of the total amount of the settlement and that the settlement contained a component for past/future economic loss of $75,000[9]. On 30 December 2008, Centrelink calculated the preclusion period from the date of injury, being 14 June 2005 until 19 March 2007, a period of 92 weeks. As Mr Brice was paid $23,254.05 in CP during the preclusion period, a debt was raised for that amount[10] and on 30 December 2008 Mr Brice was notified of the overpayment[11].
32. Under the social security law, where Centrelink becomes aware of a compensation claim made by a person who is receiving social security payments, the Secretary may issue a notice notifying the potential compensation payer that the Commonwealth may wish to recover an amount from the potential compensation payer[12]. Where this has occurred, the insurer must provide notice to the Secretary of their liability to pay compensation to the relevant person, within a specified period. Other provisions also suspend the obligation of the compensation payer to pay compensation during the period of the notice and provide that payment to Centrelink of the amount owing discharges the compensation payer’s liability to the payee[13]. However, there is no provision of the Act which requires a compensation payer or potential compensation payer to advise Centrelink either that they have become liable to pay compensation or may be liable to pay compensation, in the absence of any notice from the Secretary. Rather the obligation to notify Centrelink that compensation has been paid or is likely to be paid falls on the recipient of that compensation, if they are also a recipient of a social security payment[14].
33. On the evidence it is clear that a notice was issued to Mr Brice on 3 November 2008 which required him to notify Centrelink within 7 days if, relevantly, he “received compensation or became aware that you will receive compensation”[15].
34. However in this matter, no notice was issued by Centrelink to the insurer and nor did Centrelink record being notified that Mr Brice had received a compensation lump sum until his telephone call in December 2008. As noted above, this was unfortunate because it had the consequence that Mr Brice was not notified of the debt until 30 December 2008, by which time he had already spent a large proportion of his compensation lump sum.
35. Ms Giaretto for the respondent advised the Tribunal that it was Centrelink’s experience that practitioners often contact Centrelink at or around the time of a compensation settlement in order to advise of the settlement and/or ascertain the ‘pay back’ amount. Further, there was a strong suggestion on the evidence that something of this kind occurred in this case, as Mr Brice gave evidence that he was advised at or around the time of the settlement that the debt owing to Centrelink was likely to be about $20,000[16]. Unfortunately however, apart from his telephone call to Centrelink in August, no further steps were taken by him, his lawyer or the insurer to ascertain the Centrelink ‘pay back’ amount and ensure that that liability was discharged at or around the time the settlement monies were disbursed.
36. Whilst this was unfortunate however, for the reasons outlined above, neither Mr Brice’s lawyers nor the insurer were under any legal obligation to notify Centrelink of the settlement, to ascertain the ‘pay back’ amount, or to ensure that the liability to Centrelink was satisfied. The legal obligation to advise Centrelink of the settlement actually fell on Mr Brice.
37. In these circumstances, whilst it would have been desirable for Mr Brice’s lawyers to ascertain the ‘pay back’ amount and ensure it was deducted from the settlement, I do not consider the failure to do so to be sufficiently unusual or to have resulted in sufficient unfairness to Mr Brice so as to amount by itself to “special circumstances” in the relevant sense, pursuant to ss 1184K, or 1237AAD.

The alleged error by Centrelink

38. I have alluded above to Mr Brice’s version of the conversation which took place on 29 September 2009, and which Mr Brice contends was not correctly recorded or actioned by Centrelink. However Ms Mitchell also gave evidence at the hearing and a document was also tendered recording the “screens” which were accessed by Ms Mitchell during the telephone call[17].
39. Ms Mitchell’s evidence and the document tendered indicated that during her conversation with Mr Brice she checked the Centrelink system to see if Mr Brice had any current or previous debts, and also whether there was any activity on foot which could lead to a debt being raised. Ms Mitchell stated that she would ordinarily have documented a call such as this, but for some reason did not do so on this occasion. She also stated that, although she had no specific recollection of the relevant call, if a caller mentioned compensation, her usual practice would have been to transfer the caller to the compensation section.
40. There is accordingly some conflict between the evidence of Mr Brice and Ms Mitchell as, although he does not clearly recall the specifics of the conversation either, Mr Brice believes that he referred to the fact that he was expecting to receive a compensation settlement during this call.
41. It is difficult to reach any firm conclusion as to precisely what was said in the course of this conversation, as it was not documented and neither Mr Brice nor Ms Mitchell have a clear recollection of it. In fact Ms Mitchell does not recall the telephone conversation at all.
42. On balance however, having regard to Ms Mitchell’s evidence as to her usual practice and the content of the document recording which screens she accessed, I am satisfied that in general terms the nature of the enquiry made by Mr Brice related to whether he had any current debt to Centrelink and perhaps whether one was likely to be raised. If he referred to his compensation settlement at all, I am not satisfied that he did so in terms which alerted Ms Mitchell to the fact that he was expecting to receive a compensation lump sum. I am therefore also not satisfied that Ms Mitchell made any error which contributed in any meaningful sense to the situation Mr Brice now finds himself in, or which gives rise to “special circumstances” in the relevant sense.

Mr Brice’s medical problems

43. Mr Brice tendered a report of Dr Penglis, Consultant Rheumatologist, dated 18 November 2008, which stated that following the motor vehicle accident Mr Brice had developed “widespread pain predominantly focussed around the shoulders, neck and lumbar spine”. Dr Penglis also reported that Mr Brice had “mild nodal osteoarthritis peripherally and quite dramatic restriction in his right shoulder with impingement”. He also had “nodal osteoarthritis in his feet and patellofemoral osteoarthritis”[18]. Other material before the Tribunal also indicated that Mr Brice was suffering from tinnitus, Type II diabetes, anxiety and “PTSD”[19].
44. However, Mr Brice also acknowledged that he continued to be in receipt of CP in respect of care he provided to a Mr Scott McKay, and was capable of providing that care.
45. Whilst Mr Brice has some significant health issues, when compared with many people in a similar position, he is in relatively good health. He is not in receipt of Disability Support Pension and is in fact providing care to another person, Mr Scott McKay.
46. Accordingly, I do not consider that his medical problems are capable of amounting to “special circumstances” within the meaning of either of the relevant provisions.

Mr Brice’s financial situation

47. Mr Brice claimed to be in a poor financial situation. However, he also acknowledged that he owns a property at Mintaro, South Australia with a current value of approximately $90,000 and a mortgage of approximately $49,500. He also owns a property at Kadina, South Australia, with a current value of $47,000 and no mortgage, and a property at Mindari, South Australia, with a current value of $12,000 and no mortgage.
48. Whilst Mr Brice is not affluent, compared with many welfare recipients he is in a relatively comfortable financial position. Whilst it may take time to sell any of his properties for a profit, or at least without making a loss, if he chose to do so he could sell one or more of his properties, pay off his debt to Centrelink and have money left over. This being the case, in my view his financial situation is not capable of amounting to “special circumstances” within the meaning of either of the relevant provisions.

Disposition of the settlement monies including gambling

49. Mr Brice also gave evidence as to how he had spent the settlement monies and made reference to the fact that he had lost a significant amount of his compensation settlement through gambling.
50. He acknowledged that when he first learned of the debt he owed to Centrelink, he still had approximately $36,000 in his bank account[20]. Nevertheless, he decided to pay the debt off through instalments rather than paying it as a lump sum. A short time later, he said he “panicked” and ended up spending a significant amount of money gambling, in an attempt to win enough money to pay off the debt. He said he gambled for about a week and a half, and estimates that he spent somewhere in the region of $10,000 to $15,000.
51. In relation to how he spent the balance of his compensation monies, amongst other things he said that he spent approximately $23,000 on a car, he lent Mr McKay approximately $15,000 and he paid approximately $27,000 off the mortgage which was owing on the Mintaro property (although he also took out a fresh loan against the Mintaro property to buy the Kadina property). Mr Brice also conceded that he had been negotiating to purchase the Kadina property prior to being informed of his Centrelink debt, and proceeded to purchase the property after becoming aware of the debt. He indicated that settlement on the property occurred on 4 March 2009[21].
52. Whilst I accept Mr Brice’s evidence as to how he spent the settlement monies, I do not consider that there is any aspect of that expenditure which is capable of amounting to “special circumstances” in the relevant sense. In particular the amount he lost through gambling was a relatively small proportion of his compensation lump sum, and he has not put forward any medical evidence to suggest that this resulted from an addiction or other pathological condition. It is also significant in my view that Mr Brice chose to spend the amount which he did on gambling after he became aware of the debt and at a time when he still had sufficient funds left to satisfy the debt.

Unfairness

53. Mr Brice also claimed that the legislation operated unfairly in relation to him since the preclusion period which had been calculated related to the period prior to when he received his compensation settlement, yet the economic loss amount allowed in the settlement related to future economic loss only. He also alluded to the fact that he had been in receipt of CP prior to the motor vehicle accident.
54. It is clear on the authorities that unfairness in the operation of the compensation provisions of the Act is capable of amounting to or contributing to “special circumstances” in the relevant sense[22].
55. In relation to Mr Brice’s first argument however, properly understood this does not appear to me to support a conclusion that he has been treated unfairly. Certainly if, as he claims, his settlement had related to future economic loss only, this should have led to the preclusion period commencing from a later date, probably the date of the settlement[23]. This in turn would have meant that Mr Brice would not have had a debt raised against him. However he would have had to serve a preclusion period following receipt of his compensation lump sum. In other words, this is not so much an argument which supports waiver of the debt on the grounds of unfairness, but one which, if made out, would support the imposition of a later preclusion period.
56. As to the accuracy of Mr Brice’s assertion however, the information which is available in relation to the ‘breakdown’ of his compensation settlement indicates an amount of $75,000 was allowed for “economic loss (including superannuation)” and this was not further broken down into the past and the future[24]. Further, Mr Brice gave evidence that prior to the motor vehicle accident, he had been intending to go back to teaching in 2005, but was prevented from doing this by the injuries he sustained in the accident. If that is right, then the amount he received in compensation for the motor vehicle accident should have included a component for past as well as future economic loss, as the contemporaneous material suggests that it did.
57. In light of this evidence, I am not satisfied that the factual foundation for Mr Brice’s argument is made out. In other words, I am not satisfied as a matter of fact that his compensation settlement related only to future economic loss. Therefore in my view his first argument in relation to unfairness fails on that basis.
58. In regard to the second issue raised by Mr Brice, relating to his receipt of CP prior to the accident, the lack of a causal connection between the social security payments received and the event giving rise to compensation can, in some circumstances, contribute to the existence of special circumstances[25]. However, as noted above, Mr Brice gave evidence that at the time of the accident he had been intending to return to teaching in 2005, i.e. later the same year. Assuming that the economic loss component of his settlement was intended at least in part to compensate him for his inability to do so, there is no unfairness in my view in the preclusion period having been imposed by reference to that settlement from 14 June 2005 to 19 March 2007. Even if the preclusion period had been calculated to commence from a later date, say December 2005, it would still have expired by the time Mr Brice received his lump sum and the debt amount would have been almost the same. Accordingly in my view, the fact that Mr Brice was in receipt of CP prior to the accident does not render his circumstances “special” in the relevant sense.

Provision for costs in the settlement

59. Another matter I have considered, although it was not relied upon by Mr Brice, is the fact that the settlement amount taken into account by Centrelink included an allowance for legal costs, in the amount of $15,000[26], plus approximately $1,300 for disbursements.
60. As the President of the Tribunal, Justice Downes, pointed out in Fuller and Secretary, Department of Family and Community Services (2004) 83 ALD 152[27], the inclusion of costs in the figure from which the preclusion period is derived has the potential to operate unfairly, since if costs are not agreed at the time of the settlement but determined later, they are not taken into account in calculating the compensation part of a lump sum payment. In other words, the length of any preclusion period or the amount of any debt depends in part upon whether a settlement has been arrived at on an inclusive or exclusive of costs basis. Whilst there is no doubt on the authorities that if they are included in the settlement they are properly taken into account in calculating the compensation part of the lump sum, in some cases the Tribunal has concluded that the inclusion of costs in the settlement has resulted in unfairness which amounts to “special circumstances” in the relevant sense[28].
61. In the circumstances of this matter however, the amount allowed for costs was relatively small as a proportion of the overall settlement. Further, the amount allowed for economic loss in the settlement, being $75,000, was actually slightly in excess of 50% of the total settlement and therefore what is known as the “50 percent rule” has operated marginally in Mr Brice’s favour in any event. Therefore whilst Mr Brice is worse off than he would have been if costs had been determined later, in my view this has not produced unfairness of the degree which is necessary to constitute “special circumstances” within the meaning of ss 1184K, or 1237AAD.

Summary in relation to “special circumstances”

62. Of the relevant factors which I have identified, I have concluded that none of them amount by themselves to “special circumstances” in the context of either ss 1184K or 1237AAD.
63. I have found that neither Mr Brice’s lawyers nor the relevant insurer were in breach of any legal obligation in not notifying Centrelink of the settlement, and nor did they engage in any other conduct which in my view gives rise to “special circumstances” in the relevant sense. I have also concluded that any error made by Centrelink did not contribute in any meaningful sense to Mr Brice’s situation and therefore cannot amount to a “special circumstance”. While Mr Brice suffers from some medical conditions and health issues, these are relatively mild when compared with many other welfare recipients and do not amount to “special circumstances”. Similarly, he is in a much less parlous financial position than many welfare recipients, and has the capacity to significantly improve his financial position if he was to sell one or more of the properties owned by him.
64. Whilst Mr Brice gambled $10,000 - $15,000 of his settlement sum, there is no evidence before me that this was due to any medical condition and it has not by any means left him in a dire financial position. It is also relevant that he chose to do this after he was advised of the Centrelink debt and when he was in a position to pay it in full.
65. Further I am satisfied that Mr Brice’s settlement did include a component for past economic loss, and therefore the preclusion period applied to him was not unfair and should not have been calculated from a later date. I am also satisfied that the fact that he was receiving CP prior to the accident has not resulted in unfairness of the kind necessary to establish “special circumstances”. As indicated immediately above, I have also concluded that the inclusion of costs in the settlement did not operate in this matter in a way which resulted in significant unfairness to Mr Brice amounting to “special circumstances”.
66. In addition to considering each of these matters separately, it is also appropriate that I consider whether, taken together, all or any of them amount to “special circumstances” in the context of either ss 1184K or 1237AAD.
67. Whilst Mr Brice has identified a number of different factors which he says contribute to his circumstances being “special”, in the view which I have taken of the matter, on analysis, none of the matters he has relied upon are sufficiently unusual or involve sufficient hardship or unfairness so as to amount to “special circumstances” even when all of those matters are looked at in combination. I am therefore not satisfied that any of the matters relied upon by Mr Brice, or disclosed by the material before me, whether taken individually or together, amount to “special circumstances”, in the relevant sense, either in the context of ss 1184K or 1237AAD of the Act.
68. For completeness, I should add that there was a live issue on the material before me as to whether, by not notifying Centrelink of his compensation settlement, Mr Brice had failed to comply with a provision of the Social Security (Administration) Act 1999, with the result that the discretion under s 1237AAD was not available in any event[29]. However, in light of the need for me to consider whether there were “special circumstances” in the context of s 1184K, and my conclusion as to the absence of “special circumstances” pursuant to either that provision or s 1237AAD, it has not been necessary for me to finally resolve that issue.

CONCLUSION

69. I have therefore concluded that the debt raised against Mr Brice has been properly raised and correctly calculated. I have also concluded that the debt should not be waived, in whole or in part, and should therefore be recovered.

DECISION

70. The decision under review is affirmed.
    

I certify that the 70 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member K Bean

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

Associate

Date/s of Hearing 28 July, 12 and 18 August 2010

Date of Decision 18 October 2010

Applicant In person

Advocate for the Respondent Ms L Giaretto

Solicitor for the Respondent Centrelink Advocacy Branch

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[1] T2/3
[2] s 17(3)
[3] s 17(1)
[4] T3/14
[5] See Secretary, Department of Family and Community Services v Sekhon [2003] FCA 76, at [42] – [43].
[6] at [50]
[7] See also Kirkbright v Secretary, Department of Family and Community Services (2000) 65 ALD 211.
[8] T8/81
[9] T3/84
[10] T8/80
[11] T8/133
[12] s 1182
[13] ss 1184B and 1184C
[14] See Social Security (Administration) Act 1999 (Cth), ss 68(2) and 72(3A).
[15] Exhibit 10
[16] This was also acknowledged in his written submission to the SSAT - see T3/14.
[17] Exhibit 4
[18] Exhibit 16
[19] Exhibit 16 and T5/32
[20] This was also acknowledged in his written submission to the SSAT - see T3/16.
[21] T8/90
[22] See for example, Kirkbright referred to above.
[23] See s 1170(3) of the Act.
[24] T 8/84
[25] See Secretary, Department of Family and Community Services and Edwards [2000] FCA 1645; (2000) 32 AAR 370 at 379.
[26] T8/84
[27] At pp161-162
[28] See for example Deakin and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2009] AATA 88.
[29] See the discussion at paragraphs 33-36 above. Pursuant to s 74 of the Social Security (Administration) Act 1999, it is an offence not to comply with a notice under s 68 of that Act.