Poptile and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 572 (3 August 2010)

Last Updated: 3 August 2010

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 572

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2010/1187

GENERAL ADMINISTRATIVE DIVISION		)
	Re		VASILE POPTILE

Applicant

And

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

Respondent

DECISION

Tribunal

Mr R G Kenny, Senior Member

Date 3 August 2010

Place Brisbane

Decision

The Tribunal affirms the decision under review.

...............[Sgd]...............................
Senior 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 for each injury – Imposition of preclusion period – No special circumstances to disregard any part of lump sum – Decision under review affirmed.

Social Security Act 1991 (Cth), ss 17, 1169, 1170, 1184, 1184A, 1184C, 1184F, 1184K

Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25; (2007) 100 ALD 9
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 Manafikhi and Secretary, Department of Employment and Workplace Relations [2007] AATA 1529
Re Krzywak and Department of Social Security (1988) 15 ALD 690
Re PGVK and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs (2008) AATA 381
Secretary to Department of Family and Community Services v Allan (2001) 66 ALD 147; [2001] FCA 1160
Department of Social Security v Smith (1991) 23 ALD 277
Savage v Secretary, Department of Employment and Workplace Relations [2008] FMCA 32

REASONS FOR DECISION

3 August 2010

Mr R G Kenny, Senior Member

BACKGROUND

1. Vasile Poptile suffered workplace injuries on 26 April 2006. He received compensation payments from Workcover from 28 August 2006 until 8 July 2008 and income support payments, in the form of disability support pension (DSP) under the Social Security Act 1991 (Cth) (“the Act”), from 2 December 2008 until 30 July 2009. A common law damages claim by Mr Poptile against his employer was settled on 27 July 2009 in the amount of $471,375.49. Because of repayments to Workcover, Centrelink and costs to Mr Poptile’s solicitor, he received, on 27 August 2009, a lump sum payment of $321,973.79.
2. On 11 August 2009, a Centrelink delegate determined that, as a result of the settlement payment, Mr Poptile was subject to a preclusion period from 9 July 2008 until 16 July 2013. The effect of that decision was that Mr Poptile was precluded from receiving certain forms of income support payments, including DSP, during the preclusion period. The delegate also determined that Mr Poptile had already received DSP from 2 December 2008 until 30 July 2009, which was during the preclusion period, in the amount of $7,590.76. Centrelink issued a recovery notice[1] to Workcover requiring Workcover to repay this amount to Centrelink before any settlement monies were paid to Mr Poptile. In the letter of 11 August 2009, the delegate advised Mr Poptile that this amount of $7,590.76 in DSP would be recovered from his settlement sum.
3. In response to a request by Mr Poptile, a Centrelink delegate reviewed the decision and, on 28 October 2009, it was affirmed by an authorised review officer. It was then affirmed by the Social Security Appeals Tribunal (the SSAT) on 25 November 2009.

ISSUES AND LEGISLATION

4. Where a person receives compensation monies which include a component referable to lost earnings or lost capacity to earn, provision is made in the Act for the imposition of a period during which certain income support payments are precluded. It is not disputed in this matter that Mr Poptile’s compensation payment was of that character. The relevant provisions are ss 17, 1169, 1170, 1184, 1184A, 1184C and 1184F of the Act and they require the number of weeks of the preclusion period to be calculated by applying the formula:

compensation part of lump sum
income cut-out amount.

5. Centrelink determined that the compensation part of Mr Poptile’s lump-sum was $207,616.73 and the income cut out amount was $790.75. Application of the formula led to a preclusion period from 9 July 2008, the day after Mr Poptile’s compensation payments ceased, until 16 July 2013. Mr Poptile does not dispute these calculations.
6. The issue raised by Mr Poptile relates to the operation of s 1184K(1) of the Act. This makes provision for disregarding part or all of the lump sum payment with a resultant shortening of the applicable preclusion period.

EVIDENCE

Mr Poptile

7. Mr Poptile has not been able to undertake employment since the accident in 2006 which resulted in a serious injury to his back. He continues to experience constant pain and is unable to sit down for long periods.
8. Mr Poptile was referred to a copy of a letter sent to him by Centrelink on 6 January 2009 and also to the letter, dated 11 August 2009, setting out Centrelink’s decision. The first of these advised that a preclusion period may apply if he received a compensation payment. The second of these imposed the preclusion period until July 2013. Mr Poptile said that he could not recall reading that information. Initially, in his evidence, he was uncertain whether he had been advised by his solicitor that there would be a preclusion period imposed on him. However, he then conceded that he had been so advised and that he would be paid an amount between $250,000 and $320,000. Nonetheless, while he could not recall when these advices were given to him, his evidence was that he knew, at the time of purchasing the house, that the amount he received in the settlement was not enough to complete the purchase.
9. Mr Poptile is married but was living separately from his wife for several years until mid 2009. Prior to this, he and his wife were each living in rented premises. Mrs Poptile had lived by herself and paid rent of $230 per week. Mr Poptile had shared his premises and paid rent of $115 per week. After they reconciled in mid 2009, Mr Poptile lived with his wife and shared the rent of $230 per week. In late July 2009, Mr Poptile was advised by his solicitor that he would receive an amount in the order of $250,000 to $320,000 in settlement of his claim. He and his wife resolved to purchase a house and, on 20 August 2009, they signed a contract for the purchase of a house at Waterford West as joint tenants. The cost was $355,000. They borrowed $40,000 from a friend for the deposit. On 27 August 2009, Mr Poptile was advised by his solicitor that, after deductions of amounts retained for legal costs and reimbursements to Workcover and Centrelink, he was to be paid $321,973.79 in settlement of his claim. Mr Poptile applied this amount to the purchase of the house which was settled on 18 September 2009. It is owned by Mr and Mrs Poptile, free of any mortgage, as joint tenants. Mr Poptile’s evidence was that he knew, at the time of purchasing the house, that he would need to use some of the monies he had borrowed from his friend to do so.
10. Mrs Poptile is in receipt of DSP in the amount of $528.50 per fortnight as well as a fortnightly carer payment $106.50 in relation to the assistance she provides to Mr Poptile. They have two adult children who do not live with them. Mr Poptile has no income. He said that he and his wife are able, barely, to make ends meet on Mrs Poptile’s social security payments.
11. Apart from the house and its contents, Mr and Mrs Poptile’s assets comprise two vehicles, valued at $4,000 and $7,000 respectively. They have separate bank accounts. The balance in Mr Poptile’s account is $86. Mr Poptile said that his wife’s account had a smaller balance. Mr Poptile rarely drives his own vehicle because of his back problem and has recently attempted to sell it by parking it on the roadway bearing a “for sale” sign. He has not been contacted by any potential purchaser. The only debt that Mr and Mrs Poptile have is the residual amount owing to their friend who loaned them $40,000 for the deposit on their house. This stands at $25,000 but no steps are being taken currently for recovery of that debt. Mr Poptile said that his wife does not want to sell their house and that, on the only occasion that he raised that prospect with her, she took an overdose of medication.
12. Mr Poptile’s evidence was that, in addition to his back problem, he suffers from depression. He advised that his wife also has a depressive condition. Mr Poptile is unable to afford medication and makes do by using his wife’s medication from time to time.

Other evidence

13. In evidence was a medical report, dated 6 July 2010, from Mr Poptile’s general practitioner, Dr David Bartholomeusz. He described Mr Poptile as suffering from pain and depression and was unemployable. He wrote that the denial of benefits to Mr Poptile was not in accord with the notion that Australia is a welfare state and implied that it would be inappropriate for him to be forced to sell his house in order to gain access to a fund on which he and his wife could live.
14. Centrelink documentation in evidence included the calculations relating to the preclusion period, letters to Mr Poptile in January 2009 and August 2009 detailing the effects of a compensation payment on future social security payments and letters to Mr Poptile’s solicitor in July 2009 which also set out that information.

SUBMISSIONS

15. For the respondent, Karen Hamilton submitted that Centrelink was bound to apply the provisions relating to the imposition of the preclusion period in Mr Poptile’s case. This was because part of the settlement payment he received was intended to cover future loss of earnings because of his back condition and that to provide him with a pension would cast an unfair burden on the Australian taxpayer. She also submitted that the preclusion periods and repayment calculations had been correctly made. Further, she submitted that there was no basis for treating any of the lump sum as not having been received by Mr Poptile. In particular, she submitted that Mr and Mrs Poptile were better off financially than they were when they had to make rental payments. Ms Hamilton submitted that they were able to cope on Mrs Poptile’s current benefits and that the house which they purchased was a substantial asset available to them. Ms Hamilton also advised that both Mr and Mrs Poptile were in a position where they could seek a health care card from Centrelink to assist with the payment of their medication.
16. Mr Poptile submitted that it was inappropriate for the respondent to assert that he should be denied the payment of the DSP on the basis that the burden should not be carried by the taxpayer. He said that he came to Australia in 1983, became an Australian citizen in 1986 and worked hard until he had his accident, thereby making his contribution by way of income tax payments to the Australian community. He submitted that he had a made a mistake in purchasing the house and that this should not be held against him to deny further social security payments.

CONSIDERATION

Disregarding part of the Lump Sum

17. Under s 1184K(1) of the Act, part of Mr Poptile’s settlement sum may be treated as not having been received by him. This has the effect of shortening any preclusion period. It reads:

s1184K 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.

18. The provisions relating to the imposition of a preclusion period 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.[2]

19. 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[3].

20. 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 arise in a given case. The issue of special circumstances is seen in various parts of the Act and, in that context, 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[4].

21. 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.[5]
22. Mr Poptile has identified his financial position as a relevant factor in this matter. Financial hardship will not generally constitute a special circumstance unless it goes beyond straitened circumstances and is truly exceptional[6]. That is not Mr Poptile’s situation. He and his wife are free of debt except for the amount of $25,000 owed to a friend. However, his evidence is that he is not being pressed to repay that debt. I accept Ms Hamilton’s submission that, given that they have no rent to pay, Mr and Mrs Poptile are, at least, in no worse financial position than they were before the house was purchased. During that time, they were able to make ends meet on Mrs Poptile’s social security payments and I am satisfied that this will continue and leave them in a situation not greatly different from many who are dependent on social security for costs of daily living. If Ms Hamilton’s contention about access to a health care card is correct, this will further enhance their situation by gaining assistance with medication costs.
23. In any event, Mr Poptile’s financial situation will not constitute a special circumstance while he and his wife have the unencumbered assets which they own. Mr Poptile has already made his car available for sale. Unlike many who seek to have a preclusion period reduced, Mr Poptile has not wasted his settlement monies. He purchased a house and was entitled to do so. However, such prudence does not entitle Mr Poptile to look to the community for ongoing financial support[7] especially where it was the purchase of the house which left him in a position where he has limited funds at his disposal to meet day to day living costs. In that regard, I have noted Mr Poptile’s contention about his being a former taxpayer and Dr Bartholomeusz’s opinion about the welfare state.
24. There is no evidence that Mr Poptile was incorrectly advised about the prospect of a preclusion period being imposed or that he would need to repay Centrelink monies received during any preclusion period. He knew that, in buying the Waterford West house for $355,000, his settlement monies would be completely expended along with some of the monies he borrowed from a friend. Mrs Poptile and Mr Poptile may be reluctant to sell the house. However, that is a matter for them to resolve and, indeed, such a measure may not be necessary on the basis of their current capacity to mange daily living cots in their current circumstances.
25. Both Mr Poptile and his wife have health problems. Mr Poptile suffers pain in his back which is related to the injuries for which he was compensated. It is not an unusual or uncommon consequence that the compensated condition would lead to that outcome such that the discretion under s 1184K(1) of the Act should be enlivened. [8] Also, Mr and Mrs Poptile’s health problems form the basis upon which the DSP and the carer payment are paid to Mrs Poptile. These do not constitute special circumstances under the Act.
26. An exercise of the discretion in sub-section 1184K(1) of the Act would bestow a double benefit on a person in Mr Poptile’s position. In this case, I am satisfied that the matters raised by Mr Poptile do not constitute, individually or in combination, circumstances that are unusual, uncommon or exceptional such that it would be unfair or inappropriate to give effect to the legislative intention reflected in the scheme which imposed the preclusion period. Accordingly, I am satisfied that there are no special circumstances that would justify the exercise of the discretion under s 1184K(1) of the Act to treat some part of Mr Poptile’s compensation sum as not having been paid.

DECISION

27. The Tribunal affirms the decision under review.
    

I certify that the 27 preceding paragraphs are a true copy of the reasons for the decision herein of Mr R G Kenny, Senior Member

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

Kate Slack, Research Associate

Date/s of Hearing 26 July 2010

Date of Decision 3 August 2010

Applicant was self-represented

Solicitor for the Respondent Karen Hamilton, Departmental advocate

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[1] See s 1184 of the Act.
[2] Department of Social Security v Smith (1991) 23 ALD 277 at 281-282.
[3] Secretary to Department of Family and Community Services v Allan [2001] FCA 1160; (2001) 66 ALD 147 at 148.
[4] Groth v Department of Social Security ([1995] FCA 1708; 1995) 40 ALD 541 at 545.
[5] Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25 at [33].
[6] Director-General of Social Services v Hales [1983] FCA 81; (1983) 47 ALR 281 at 321 and see Re Krzywak and Department of Social Security (1988) 15 ALD 690 at 700.
[7] Re Manafikhi and Secretary, Department of Employment and Workplace Relations [2007] AATA 1529 at [28].
[8] See Re PGVK and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2008] AATA 381.