Rane and Secretary, Department of Education, Employment and Workplace Relations [2011] AATA 89 (14 February 2011)

Last Updated: 22 February 2011

Administrative Appeals Tribunal

ADMINISTRATIVE APPEALS TRIBUNAL )
) No: 2010/2507
GENERAL ADMINISTRATIVE DIVISION )

Re: Ashok Rane
Applicant

And: Secretary, Department of Education, Employment and Workplace Relations
Respondent

DIRECTION

TRIBUNAL: Dr T Schafer, Member

DATE: 18 February 2011

PLACE: Sydney

The Tribunal directs the Registrar, pursuant to subsection 43AA(1) of the Administrative Appeals Tribunal Act 1975, to alter the text of the decision in this application follows:

1. The correct Respondent in this application is Secretary, Department of Education, Employment and Workplace Relations.
   

......................[SGD]..............................................
T Schafer
Member

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2011] AATA 89

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2010/2507

GENERAL ADMINISTRATIVE DIVISION DIVISION		)
	Re		ASHOK RANE

Applicant

And

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

Respondent

DECISION

Tribunal

Dr T Schafer, Member

Date 14 February 2011

Place Sydney

Decision

The decision under review is affirmed.

.................[SGD]................................
Dr T Schafer, Member
CATCHWORDS

Compensation recovery - lump sum compensation payment – what are special circumstances – family circumstances – financial circumstances – health circumstances discretion in special circumstances to treat payments as not having been made - whether special circumstances where small compensation component - not appropriate to dissect lump sum on finding a compensation component - discretion not exercised

Social Security Act 1991 (Cth) s 17(1), 17(2), 17(3)(a), 1169, 1170, 1170(2), 1170(4), 1170(5), 1184, 1184A, 1184G, 1184K

Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25; (2007) 100 ALD 9

Beadle v Director-General of Social Security; Blurton, Corbett and Johns v Same [1984] AATA 176; (1985) 7 ALD 670

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

Re Colaiacolo and Secretary,Department of Social Security [1985] AATA 91,

Dranichnikov v Centrelink [2003] FCAFC 133; (2003) 75 ALD 134

Drew and Secretary, Department of Social Security [1996] AATA 321

Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541

Lintern and Secretary, Department of Social Security [1993] AATA 398

Secretary, Department of Family and Community Services v Chamberlain [2002] FCA 67; (2002) 116 FCR 348

Re Secretary, Department of Social Security and Smallacombe [1991] AATA 155; (1991) 23 ALD 141

Secretary, Department of Social Security v Banks (1990) 23 FCR 416

Secretary, Department of Social Security and Barry [1995] AATA 579

Re Secretary, Department of Social Security and Bolton (1989) 18 ALD 464

Re Secretary, Department of Social Security and Bunge (1990) 20 ALD 488).

Secretary, Department of Social Security v Hulls (1991) 22 ALD 570

Secretary, Department of Social Security and McFetrish [1998] AATA 367

Re Secretary, Department of Social Security v Rodgers (1992) 26 ALD 235

REASONS FOR DECISION

11 February 2011

Dr T Schafer, Member

1. Mr Rane has applied to the Tribunal for review of the decision of the Social Security Appeals Tribunal dated 25 May 2010 which affirmed the decision of Centrelink to recover a compensation charge of $12,846.47 from the compensation payment Mr Rane received on 23 July 2009.

BACKGROUND

2. Mr Rane was injured in a motor vehicle accident on 25 July 2003. At the time, he was in receipt of parenting payment single, but he received parenting payment partnered from 1 September 2004.
3. On 28 January 2009, Centrelink wrote to Mr Rane, advising him that should he receive any payment of weekly compensation or a lump sum compensation payment, some or all of the Centrelink payments paid to him and his partner since the date of his injury may have to be paid back.
4. On 17 December 2008, Mr Rane submitted a claim for damages, including economic loss, in respect of injuries sustained in the accident on 25 July 2003.
5. On 12 January 2009, Mr Rane was issued with a notice from Centrelink informing him that he may have to return income support payments in the event that he received compensation.
6. On 23 July 2009, Mr Rane's claim for compensation was settled in the sum of $160,000 on 23 July 2009.
7. On 19 August 2009, Centrelink advised Mr Rane that he was subject to a preclusion period from 25 July 2003 to 23 June 2005, and was required to repay an amount of $12,846.47, representing parenting payment received by him during the preclusion period.

LEGISLATION

8. The term "compensation" defined by section 17(2) of the Social Security Act 1991 (Cth) (the Act) to include a payment of damages, or a payment in settlement of a claim for damages or any other compensation or damages payment, that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury.
9. The amount of a lump sum compensation payment which is “compensation” is also defined under the Act. In the case of a lump sum payment made in settlement of a claim that is related to an injury, 50 per cent of the lump sum payment is defined as compensation (section 17(3)(a) of the Act).
10. Parenting payment falls within the definition in section 17(1) of the Act of a “compensation affected payment”. Under section 1169 of the Act, parenting payment is not payable to a person who receives or claims such a payment in relation to any day or days determined to be a “lump sum preclusion period”.
11. Under section 1170(2) of the Act a lump sum preclusion period prevents a person from receiving a social security payment for a period of time calculated from the day on which the loss of earning or capacity to earn commenced (usually the date of the injury) and ceasing at the end of the preclusion period, calculated in accordance with subsections 1170(4) and 1170(5) of the Act.
12. Section 1184G of the Act provides that Centrelink payments received by a person during a preclusion period are, upon notice given to the person, debts due by the person to the Commonwealth. Such debts can be recovered by the Secretary in accordance with sections 1184 and 1184A of the Act.
13. Section 1184K of the Act permits the Secretary to disregard part or all of the compensation payment if it is appropriate to do so due to any special circumstances of the case:

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).

ISSUE TO BE DECIDED

14. The issue which the Tribunal must decide is whether the length of the preclusion period should be reduced to allow refund of part or all of the compensation charge of $12,846.47.

CONSIDERATION

15. Mr Rane briefly attended the hearing, but was not receptive to questioning by the Tribunal and left abruptly during questioning by the Tribunal.  He was not cross-examined by the Respondent prior to leaving the hearing.
16. It was proposed to the Respondent that, in the circumstances, it would be appropriate for the Tribunal to determine the matter on the material already before the Tribunal.  The Tribunal was not confident that the Applicant would attend a re-listed hearing, which would result in delays in the Tribunal reaching a decision.
17. The Respondent agreed that, although there would not be the opportunity to cross-examine the Applicant, re-listing the hearing was not the preferable course of action.  On this basis, the Respondent agreed for the Tribunal to reach its decision without cross-examination of Mr Rane.
18. It was proposed to the Respondent that, in the circumstances, it would be appropriate for the Tribunal to determine the matter in the absence of the Applicant. The Tribunal was not confident that the Applicant would attend a re-listed hearing, which would result in delays in the Tribunal reaching a decision.
19. The Respondent agreed that, although there would not be the opportunity to cross-examine the Applicant, re-listing the hearing was not the preferable course of action. On this basis, the Respondent agreed for the Tribunal to reach its decision without cross-examination of Mr Rane.
20. Mr Rane received a compensation payment of $160,000 within the meaning of section 17(2) of the Act, since the payment was made wholly or partly in respect of lost earnings or lost capacity to earn resulting from his injury in a motor vehicle accident on 25 July 2003.
21. From the time of his accident until 31 August 2004, Mr Rane received parenting payment in the amount of $12,846.47. That parenting payment was defined as a "compensation affected payment" under section 17 of the Act and, pursuant to section 1169 of the Act, was not payable during any days which were determined to be in the "lump sum preclusion period".
22. The "lump sum preclusion period" is determined in accordance with the formula in section 1170 of the Act. According to that formula, a 101 week preclusion period applied to Mr Rane's compensation payment, which commenced on 25 July 2003 (the date of Mr Rane's injury) and concluded on 30 June 2005.
23. In accordance with section 1169 of the Act, Mr Rane was not eligible to receive a compensation-affected payment for the duration of the preclusion period. The payments which Mr Rane received during the preclusion period constituted a debt owed by Mr Rane to the Commonwealth, recoverable by the Secretary in accordance with sections 1184 and 1184A of the Act.
24. The Tribunal must decide whether or not the length of the preclusion period should be reduced to allow for refund of all or part of the debt of $12,846.47.
25. Pursuant to section 1184K of the Act, the Tribunal may disregard part or all of the compensation payment if special circumstances apply which make it appropriate to do so.

Did special circumstances apply in Mr Rane's case?

26. Although the Act does not define "special circumstances", the term has been considered in previous case law. In the leading case of Beadle v Director-General of Social Security; Blurton, Corbett and Johns v Same [1984] AATA 176; (1985) 7 ALD 670, the Federal Court agreed with the Tribunal's position in Re Beadle and Director-General of Social Security (1984) 6 ALD 1, in which the Tribunal stated at 3:

An expression such as ‘special circumstances’ is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special.

27. Referring to Beadle [1984] AATA 176; 7 ALD 670, in Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541 at 544, Kiefel J reasoned that special circumstances:

...would require something to distinguish Mr Groth's case from others, to take it out of the usual or ordinary case.

28. Similarly, the Full Court in Dranichnikov v Centrelink [2003] FCAFC 133; (2003) 75 ALD 134 held at [66] that the Tribunal, in deciding whether there were special circumstances, was required to identify "circumstances which distinguish the case in consideration from the usual case".
29. The Federal Court in Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25; (2007) 100 ALD 9 agreed, but attempted to place the meaning of "special circumstances" in context at [33]:

...the authorities have emphasised time and again the importance of maintaining flexibility in determining what constitutes special circumstances. The danger is that the test will be overstated if the word 'exceptional' is emphasised. It was not the intention of parliament to confine the exercise of the discretion to an exceptional case. There is less risk of overstatement if the words 'unusual' or 'uncommon' are emphasised. Those words indicate, correctly in my view, the fact that there must be something that distinguishes the case from the ordinary or usual case. It may not be easy to postulate the ordinary or usual case other than in quite general terms and, in doing so, close attention must be given to the particular statutory context.

30. The Applicant stated that the compensation charge should be refunded to assist him in establishing a business which he contended would negate his need to apply for income support from Centrelink. The Applicant further contended that despite a compensation settlement of $160,000, he only received $49,380.02 after payment of legal and medical costs and that it was unreasonable to apply the 50% rule in section 17(3)(a) of the Act to the whole of the payment. In essence, Mr Rane argued that the sum he received after payment of legal and medical costs should be held by this Tribunal to be 50% of the gross lump sum. He also raised a more general objection to the application of the 50% rule, given the relatively small amount of payment he received after the payment of legal and medical costs.
31. In Secretary, Department of Family and Community Services v Chamberlain [2002] FCA 67; (2002) 116 FCR 348, Keifel J rejected the claim that the application of the 50 percent rule was unfair. He also rejected arguments that the application of the 50 percent rule would amount to a special circumstance and held that strict adherence to the statutory process was mandatory.
32. Similarly, in Secretary, Department of Social Security and Smallacombe [1991] AATA 155; (1991) 23 ALD 141, the Tribunal held at [10]:

A special circumstance is unlikely to exist, in isolation of any other factor at least, simply by reason of the application of a legislative provision. Even where the effect of a legislative provision may be harsh or unjust the Tribunal is bound by the clear intention of parliament.

33. In this application the Social Security Appeals Tribunal determined that compensation payments were not intended to improve a person's circumstances. The Respondent contended that an exercise of section 1184K to refund the compensation charge to Mr Rane "would frustrate the objects and intention of the legislation by allowing the Applicant to engage in business endeavours and engage in asset generation and accumulation at the expense of the taxpayer." In support, the Respondent cited Lintern and Secretary, Department of Social Security [1993] AATA 398, which held that public money should not be used to improve social security recipients.
34. In my view, the Tribunal does not have the discretion to refund Mr Rane's compensation charge simply on the basis that most of Mr Rane's lump sum compensation payment went towards the payment of his medical and legal costs. The Tribunal is bound to follow the legislation, which does not provide for alternative methods of a applying the 50 percent rule, or of dissecting a lump sum compensation payment (See Secretary, Department of Social Security v Hulls (1991) 22 ALD 570 and Secretary, Department of Social Security v Banks (1990) 23 FCR 416).
35. I also do not accept that Mr Rane's intention to establish a business would qualify as "special circumstances" within the meaning of the Act, which would justify refunding the compensation charge. I consider that refunding Mr Rane the compensation payment in these circumstances would be contrary to the intention of the legislation to ensure that recipients of taxpayer-funded compensation payments are not at the same time "double-dipping" by receiving the benefit of taxpayer-funded social security payments.
36. The Tribunal does not have the discretion to take account of the fact that Mr Rane only received a relatively small amount of the lump sum compensation payment after legal and medical costs were paid. Previous decisions of the Tribunal (See Drew and Secretary, Department of Social Security [1996] AATA 321 and Secretary, Department of Social Security and McFetrish [1998] AATA 367) have held that such circumstances are not considered "special circumstances" which would justify exercising discretion.

Mr Rane's claim of Financial Hardship

37. Mr Rane claimed that the compensation charge should be refunded on the grounds of financial hardship and that this constituted special circumstances within the meaning of the Act. The Respondent disagreed with this claim.
38. Mr Rane received a cheque for $49,380.02 from the compensation payment after deduction of medical and legal costs. This amount was transferred to Mr Rane's bank account on 21 September 2009. Amounts of $16,000 and $25,000 were transferred out of Mr Rane's bank account on 25 September 2009 and cash withdrawals of $2500 were made from Mr Rane's account on 28 September 2009 and 29 September 2009. Mr Rane has claimed that he has little remaining from his settlement, but provided no explanation as to how the funds which were deposited on 21 September 2009 were expended.
39. I am not inclined to lend any support to Mr Rane's claims of financial hardship in circumstances where $46,000 was transferred out of Mr Rane's account without reasonable explanation. Applying the reasoning in Re Secretary, Department of Social Security v Rodgers (1992) 26 ALD 235, although it is apparent that Mr Rane may face some financial hardship, the fact that the hardship was essentially self-inflicted diminishes its significance. In Secretary, Department of Social Security and Barry [1995] AATA 579, the Tribunal held that exercise of its discretion to shorten the preclusion period was unjustified, because it would condone a spending pattern which did not plan for financial maintenance during the preclusion period.
40. The Tribunal also notes the Respondent's evidence that Mr Rane has travelled overseas every year since 2006, which would tend to rebut the proposition that he is suffering from financial hardship.

Mr Rane's claim of Ill Health

41. The Applicant contended that his ill health and costs associated with his medication are relevant considerations which constitute special circumstances.
42. The Tribunal has previous held that a person's medical condition and cost of treatment does not, of itself, constitute special circumstances (See Re Secretary, Department of Social Security and Bolton (1989) 18 ALD 464), whether or not the person's health would make him eligible to receive disability support payments (See Re Secretary, Department of Social Security and Bunge (1990) 20 ALD 488).
43. In Re Colaiacolo and Secretary, Department of Social Security [1985] AATA 91, the Tribunal found there were no special circumstances which justified the exercise of discretion, despite the fact that the applicant and his family had significant health problems, did not own their own home and had assets worth only $3000.
44. Mr Rane is currently receiving a disability support pension, which acknowledges his incapacity to work on a full-time basis. It does, however, allow for Mr Rane to perform work for up to 15 hours per week. Mr Rane stated in evidence before this Tribunal that he would like to establish a business, which would provide him with income in addition to the Centrelink payments he already receives.

Marriage breakdown

45. Mr Rane asserted that he and his partner were separated and his domestic situation should, therefore, be considered a special circumstance. He admitted, however, that although he had separated from his partner, they had continued to reside at the same address since September 2004. The Tribunal rejects any claim that Mr Rane's domestic situation constitutes a special circumstance.

DECISION

46. The Tribunal decides that there are no "special circumstances" which apply to Mr Rane which would justify the exercise of the discretion in sub-section 1184K(1) of the Act to reduce the preclusion period and refund the compensation charge to Mr Rane.
47. The decision to recover a compensation charge of $12,846.47, which represents parenting payment during the preclusion period, is the correct or preferable decision.
48. For the reasons stated above, the decision under review is affirmed.
    

I certify that the 48 preceding paragraphs are a true copy of the reasons for the decision herein of Dr T Schafer, Member

Signed: .......................[SGD]..............................................................

Associate

Date/s of Hearing 14 December 2010

Date of Decision 14 February 2011

Solicitor for the Applicant Unrepresented

Solicitor for the Respondent George Lozynsky