Pocius and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 909 (16 November 2010)

Last Updated: 17 November 2010

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 909

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2010/1835

GENERAL ADMINISTRATIVE DIVISION		)
	Re		SANDRINE POCIUS

Applicant

And

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

Respondent

DECISION

Tribunal

Mr P Wulf, Member

Date 16 November 2010

Place Brisbane

Decision

The Tribunal affirms the decision under review.

..................[Sgd]............................
Member

CATCHWORDS

SOCIAL SECURITY – Pensions, benefits and allowances – Settlement of compensation claim – Lump-sum compensation payment includes component referable to lost earnings and capacity to earn – Imposition of preclusion period – Special circumstances not established – Preclusion period not shortened – Decision under review affirmed.

Administrative Appeals Tribunal Act 1975 (Cth) s 37

Social Security Act 1991 (Cth) ss 17, 94, 1164, 1169, 1170, 1171, 1184K
Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25
Director-General of Social Services v Hales [1983] FCA 81; (1983) 47 ALR 281
Groth v Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541
Re Department of Family and Community Services and Rankin [1999] AATA 496
Re PGVK and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2008] AATA 381
Re Secretary, Department of Family and Community Services and Jones [2003] AATA 505
Re Secretary, Department of Family and Community Services and Peak [2003] AATA 1212
Re Secretary, Department of Family and Community Services and Pearce [2003] AATA 972
Re Stavrakis and Secretary, Department of Family and Community Services [2003] AATA 212
Secretary, Department of Family and Community Services v Allan [2001] FCA 1160; (2001) 66 ALD 147
Department of Social Security v Smith (1991) 23 ALD 277

REASONS FOR DECISION

16 November 2010

Mr P Wulf, Member

1. Mrs Sandrine Pocius (the applicant)[1] has appealed against a decision of the Social Security Appeals Tribunal (“SSAT”)[2] that the applicant had a compensation preclusion period covering 27 August 2008 through to 17 September 2013 (“the relevant period”). The matter was heard on the papers.

BACKGROUND

2. On 21 September 2009, Mrs Pocius entered into a Release and Discharge (“the Discharge”) in which she agreed to accept a sum of money ($442,309.07) in final settlement of a WorkCover claim as a result of a traumatic accident that occurred on 30 August 2006 when working for the Queensland Department of Primary Industries and Fisheries undertaking clean up works near Ravenshoe after Cyclone Larry. The accident resulted in permanent injuries to the applicant’s legs which subsequently also impacted her lower back.[3]
3. From the settlement amount, $172,309.07 was a refund to WorkCover Queensland and $196,634.98 was comprised of an “economic loss” payment including some refunds to Centrelink and Medicare.[4] Mrs Pocius was paid an amount of $60,669.49 as a part payment after the finalisation of her claim after payments to ASK Funding, Shine Lawyers and solicitor’s fees.
4. On 30 September 2009, a Centrelink delegate determined that, as a result of Mrs Pocius’ receipt of the settlement, she was subject to the relevant period.[5] The effect of that decision was that Mrs Pocius was precluded from receiving all forms of income support payments under the Social Security Act 1991 (Cth) (“the Act”) during the preclusion period. This included disability support pension (“DSP”) for which she completed a claim form.
5. On 10 November 2009, the applicant made a claim for DSP,[6] and the applicant qualified for DSP pursuant to s 94 of the Act on 18 November 2009.[7] However, as a result of the relevant period, Centrelink determined that the applicant could not be paid DSP.
6. The applicant sought review of the decision with respect to the relevant period, and on 23 December 2009, the original Centrelink decision-maker affirmed the decision and determined that the relevant period should stand.[8]
7. The applicant sought review of the decision to impose the relevant period on 29 December 2009. On 4 February 2010, the decision was affirmed by a Centrelink authorised review officer (“ARO”).[9]
8. On 19 February 2010, the applicant appealed the ARO’s decision. On 6 April 2010, the SSAT affirmed the original decision.[10]
9. On 11 May 2010, the applicant appealed against the decision of the SSAT.[11]

THE ISSUE FOR THE TRIBUNAL’S DETERMINATION

10. The issues for the Tribunal’s determination are whether:
    • (a) It was correct to impose the relevant period with respect to the compensation settlement received on 21 September 2009; and, if so
    • (b) The relevant period has been correctly calculated; and, if so
    • (c) There are any special circumstances allowing all or part of the relevant period to be disregarded; and, if so
    • (d) The applicant qualifies for DSP.
11. For the reasons which follow, the Tribunal has determined that the applicant cannot be paid DSP during the relevant period.

THE RELEVANT LEGISLATION

12. The relevant legislative provisions are contained within ss 17, 94, 1169, 1170 and 1184K of the Act.
13. Where a person receives certain compensation monies which include a component referable to lost earnings or lost capacity to earn, provision is made for the imposition of a period during which income support payments under the Act are precluded. Mrs Pocius believes that she did not receive the whole amount; that her overall payment should not be aggregated in calculating her preclusion period; and, it should be either reduced or excluded altogether.
14. The provisions of the Act, in so far as relevant, read:

Sect 17 Compensation recovery definitions
(1) In this Act, unless the contrary intention appears:
compensation has the meaning given by subsection (2).
...
compensation affected payment means:
...
(a) a disability support pension; or
...
compensation part, in relation to a lump sum compensation payment, has the meaning given by subsections (3) and (4).
...
income cut-out amount, in relation to a person who has received a compensation payment, means the amount worked out using the formula in subsection (8), as in force at the time when the compensation was received.
...
periodic payments period means:
(a) the period to which a periodic compensation payment, or a series of periodic compensation payments, relates; or
(b) in the case of a payment of arrears of periodic compensation payments—the period to which those payments would have related if they had not been made by way of an arrears payment.
...
Compensation
(2) 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.
...
Compensation part of a lump sum
(3) Subject to subsection (4), for the purposes of this Act, the compensation part of a lump sum compensation payment is:
(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
...
(4A) For the purposes of this Act, a payment of arrears of periodic compensation payments is not a lump sum compensation payment.
Receives compensation
(5) A person receives compensation whether he or she receives it directly or whether another person receives it, on behalf of, or at the direction of the first person.
...
(8) For the purposes of the definition of income cut-out amount in subsection (1), the formula is as follows:

where:
maximum basic rate means the amount specified in column 3 of item 1 of the table in point 1064-B1.
ordinary free area limit means the amount specified in column 3 of item 1 in Table E-1 in point 1064-E4.
point 1064-BA3 amount means the pension supplement amount worked out under point 1064-BA3 for a person who is not a member of a couple:
(a) whether or not the person for whom the income cut-out amount is being worked out is a member of a couple; and
(b) whether or not that point applies to the person for whom the income cut-out amount is being worked out.
Sect 1163 Interpretation
(1) In a provision of this Part (other than section 1164), a reference to the payment or receipt of periodic compensation payments includes a reference to the payment or receipt, as the case may be, of arrears of periodic compensation payments.
(2) A reference in this Part to periodic compensation payments is a reference to:
(a) a periodic compensation payment; or
(b) if 2 or more periodic compensation payments relate to the same period, those payments.
(3) In this Part, a reference to a person’s partner receiving or claiming a compensation affected payment includes a reference to the partner receiving or claiming a compensation affected pension within the meaning of the Veterans’ Entitlements Act.
Sect 1169 Compensation affected payment not payable during lump sum preclusion period
(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.
(2) In this section:
lump sum compensation payment does not include a lump sum payment:
(a) to which section 1164 applies; or
(b) that relates only to arrears of periodic compensation payments.
Sect 1170 Lump sum preclusion period
(1) Subject to subsection (2), if 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).
(2) If 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 is the period that:
(a) begins on the first day on which the person’s periodic compensation payment is a reduced payment because of that choice; and
(b) ends at the end of the number of weeks worked out under subsections (4) and (5).
(3) If neither of subsections (1) and (2) applies, the lump sum preclusion period is the period that:
(a) begins on the day on which the loss of earnings or loss of capacity to earn began; and
(b) ends at the end of the number of weeks worked out under subsections (4) and (5).
(4) The number of weeks in the lump sum preclusion period in relation to a person is the number worked out using the formula:

(5) If the number worked out under subsection (4) is not a whole number, the number is to be rounded down to the nearest whole number.

Sect 1171 Deemed lump sum payment arising from separate payments
(1) If:
(a) a person receives 2 or more lump sum payments in relation to the same event that gave rise to an entitlement of the person to compensation (the multiple payments); and
(b) at least one of the multiple payments is made wholly or partly in respect of lost earnings or lost capacity to earn;
the following paragraphs have effect for the purposes of this Act and the Administration Act:
(c) the person is taken to have received one lump sum compensation payment (the single payment) of an amount equal to the sum of the multiple payments;
(d) the single payment is taken to have been received by the person:
(i) on the day on which he or she received the last of the multiple payments; or
(ii) if the multiple payments were all received on the same day, on that day.
(2) A payment is not a lump sum payment for the purposes of paragraph (1)(a) if it relates exclusively to arrears of periodic compensation.
Sect 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.

THE EVIDENCE

15. The evidence before the Tribunal was comprised of:

(1) The “T Documents” (Exhibit 1 (T1-T23/1-133) lodged by the Secretary, Department of Families, Housing, Community Services and Indigenous Affairs in accordance with s 37 of the Administrative Appeals Tribunal Act 1975 (Cth);

(2) The applicant’s submissions of 30 August 2010 (Exhibit 2); and,

(3) The respondent’s Statement of Facts and Contentions (Exhibit 3).

APPLICANT’S EVIDENCE

16. In her written evidence, the applicant indicated that her family was in dire need of assistance. She indicated that her husband made a fortnightly income of between $1,500.00 and $2,000.00. She suggested that her husband was on a probation period until September 2010; however it would appear that he must still be in full-time work as the Tribunal has not been advised any differently.
17. Mrs Pocius indicated that the amount they were forced to live on was unreasonable as they are required to live in a remote location, although within her evidence she indicated that it was only 4.8km to the bus stop for her children to attend school.
18. Mrs Pocius argued that the amount she received in damages was not $442,309.07 but was rather $60,669.49, this being the amount that she actually received. It is clear from the Discharge and all correspondence though that Mrs Pocius did receive this amount, less the amount required to be refunded to WorkCover Queensland. She was also obliged to pay $88,004.98 to her solicitor in costs and $981.00 to Shine Lawyers.
19. Mrs Pocius also indicated that the amount she was required to pay back to ASK Funding was significantly more than they had borrowed and that this was as a result of interest that was required to be paid. It would appear strange that they sought a loan and then did not think that there would be interest on that loan despite them having to have signed contract documents when seeking the loan. After the repayment of these amounts and the WorkCover Queensland refund, she received $60,669.49.
20. It would appear from the evidence that this amount now appears to have been expended by Mrs Pocius and her family on a new motor vehicle, computer and various other costs. The evidence also is that she now only has one credit card with a debt whereas previously both her and her husband had numerous credit cards that had outstanding amounts owing.
21. Importantly, it is clear that Mrs Pocius was aware that the relevant period would apply and signed a letter stating that she was aware of this fact.[12]

ANALYSIS

22. Section 1169 of the Act makes it clear that if a person receives or claims a “compensation affected payment” and a “lump sum compensation payment” then no “compensation affected payment” is payable to that person in the “lump sum preclusion period”.
23. “Compensation affected payment” is defined in s 17(1) of the Act to include a disability support pension.
24. “Compensation” is defined in s 17(2) of the Act to mean, among other things, any compensation or damages payment (whether lump sum or periodic) “that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury”.
25. An exception to this aggregation is set out in s 1164 of the Act but I am satisfied that this is not applicable to Mrs Pocius’s situation. The formula in s 1170 of the Act was applied correctly to the aggregate of her payments. I am satisfied that the amount used in applying the statutory formula was in accordance with the definition of income cut-out amount set out in s 17(8) of the Act. I am also satisfied that the calculation of the length of the relevant period has been properly made in the decision under review.
26. The purpose of the provisions relating to preclusion periods has been the subject of judicial comment. They have been described as operating as a:

...fair balance of the interests of the recipient of the payment with the competing interests of others in the community whose needs must be met as far as possible from a finite budget allocation for social security measures.[13]

27. Similarly, they have been described as a safeguard against “double dipping” in that:

People should not receive social security payments for loss of earnings where they have received compensation for that same loss of earnings from another source.[14]

28. Those considerations must be kept in mind when determining, for the purposes of applying s 1184K(1) of the Act, whether or not special circumstances exist in a given case. The issue of special circumstances arises in various parts of the Act. In the context of other aspects of the Act, it was observed that what is required is:

... something to distinguish ... [the] ... case from others, to take it out of the usual or ordinary case. ... It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.[15]

29. That observation is equally applicable to s 1184K(1) of the Act. Accordingly, there must be something about the applicant’s situation which makes it “unusual” or “uncommon” such that it distinguishes it from the ordinary or usual case.[16]
30. I note in Mrs Pocius’ evidence that she was given advice about the preclusion period. I also note that she has signed a letter indicating that the preclusion period would exist.[17] Accordingly, she was well aware of the need for her to preserve those funds to cater for her future needs. Much of her money, on her evidence, was spent buying a new car and whitegoods. I am satisfied that these outlays do not amount to a special circumstance under s 1184K(1) of the Act.[18]
31. It was submitted that financial hardship is a relevant consideration in this matter. This will not generally constitute a special circumstance unless the financial hardship goes beyond straitened circumstances and is truly exceptional.[19] Mrs Pocius claimed that she owed and still owes debts to family members and people with whom she knows. There was no material before the Tribunal to substantiate any of these debts except for the statements made in Exhibit 2. I am satisfied that these matters are not such that she should be able to obtain income support payments from the Commonwealth.
32. The breadth of the discretion in s 1184K(1) of the Act is such as to accommodate health problems and an inability to return to work. Mrs Pocius in her material described herself as being limited in her opportunity to gain work. Her evidence was that those consequences are directly related to the injuries for which she was compensated. It is not an unusual or uncommon consequence that the compensated conditions would lead to the outcomes described by Mrs Pocius[20] and I am satisfied that they are not sufficient in order to enliven the discretion under s 1184K(1) of the Act.
33. I am satisfied that there are no circumstances, either individually or in conjunction with each other, that are special such as to meet the requirements of s 1184K(1) of the Act.

DECISION

34. The Tribunal affirms the decision under review.

I certify that the 34 preceding paragraphs are a true copy of the reasons for the decision herein of Mr P Wulf, Member

Signed: ....................[Sgd].........................................................

Kate Slack, Research Associate

Hearing on the papers

Date of Decision 16 November 2010

---

[1] Exhibit 1, T1/1-4.
[2] Exhibit 1, T2/5-14.
[3] Exhibit 1, T14/78-88.
[4] Exhibit 1, T9/45-48 and T10/49.
[5] Exhibit 1, T23/130.
[6] Exhibit 1, T16/90.
[7] Exhibit 1, T18/115.
[8] Exhibit 1, T20/127.
[9] Exhibit 1, T21/128.
[10] Exhibit 1, T2/5-14.
[11] Exhibit 1, T1/1-4.
[12] Exhibit 1, T15/89.
[13] Department of Social Security v Smith (1991) 23 ALD 277 at 281-282.
[14] Secretary, Department of Family and Community Services v Allan [2001] FCA 1160; (2001) 66 ALD 147 at 148.
[15] Groth v Department of Social Security ([1995] FCA 1708; 1995) 40 ALD 541 at 545.
[16] Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25 at [33]
[17] Exhibit 1, T15/89.
[18] See Re Department of Family and Community Services and Rankin [1999] AATA 496; Re Secretary, Department of Family and Community Services v Peak [2003] AATA 1212; Re Secretary, Department of Family and Community Services v Jones [2003] AATA 505; and Re Stavrakis v Secretary, Department of Family and Community Services [2003] AATA 212 at [19].
[19] Director-General of Social Services v Hales [1983] FCA 81; (1983) 47 ALR 281 at 321.
[20] See PGVK v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs (2008) AATA 381.