Sard and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2011] AATA 106 (17 February 2011)

Last Updated: 18 February 2011

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2011] AATA 106

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2009/2914

GENERAL ADMINISTRATIVE DIVISION		)
	Re		JOHN CLIVE SARD

Applicant

And

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

Respondent

DECISION

Tribunal

Senior Member K Bean

Date 17 February 2011

Place Adelaide

Decision

The Tribunal: (a) varies the decision under review so as to provide that: (i) the lump sum preclusion period applicable to Mr Sard is 225 weeks from 12 January 2006 to 5 May 2010; and (ii) there are no “special circumstances” which warrant treating the whole or part of Mr Sard’s compensation payment as not having been made pursuant to s 1184K of the Social Security Act 1991; and (b) otherwise affirms the decision under review.

..............................................
K BEAN
(Senior Member)

CATCHWORDS

SOCIAL SECURITY – Age pension – Receipt of lump sum compensation payment – Whether lump sum included component for economic loss – How that question should be determined – Whether “special circumstances” justifying reduction of preclusion period – Decision under review varied.

Social Security Act 1991 ss 17, 1169, 1170, 1171, 1184K
Secretary to the Department of Social Security v A’Beckett (1990) FCA 332; (1990) 21 ALD 79
Re Sammut and Department of Family and Community Services [2000] AATA 618
Re Secretary, Department of Family and Community Services and Cawthorn [2002] AATA 1137; (2002) 71 ALD 423
Re Secretary, Department of Employment and Workplace Relations and Sandars [2007] AATA 2; (2007) 95 ALD 152
Re Nathan and Secretary, Department of Families, Housing Community Services and Indigenous Affairs [2009] AATA 263
Kirkbright v Secretary, Department of Family and Community Services [2000] FCA 1876; (2000) 65 ALD 211
Re Fuller and Secretary, Department of Family and Community Services [2004] AATA 615; (2004) 83 ALD 152
Re Deacon and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2009] AATA 88
Re Kanina Banner Pty Ltd and Minister for Health and Ageing [2002] AATA 169; (2002) 66 ALD 663

REASONS FOR DECISION

17 February 2011

Senior Member K Bean

INTRODUCTION

1. The applicant, Mr Sard, was unfortunately involved in a motor vehicle accident on 12 January 2006 in which he sustained significant injuries. He subsequently made a claim for compensation in respect of those injuries which ultimately settled for a total amount of $355,000, on 23 April 2009. Although he had been in receipt of Age Pension (AP) between the date of the accident and settlement of his compensation claim, Mr Sard says he believed at the time he entered into this settlement that there would not be any amount repayable to Centrelink from the settlement.
2. On being advised of the settlement and the details surrounding it however, Centrelink wrote to Mr Sard advising him that it had been determined that the settlement contained a component for economic loss. Mr Sard was further advised that this had the result that he was precluded from receipt of AP between 12 January 2006 and 5 May 2010. Further, because he had received an amount of AP totalling $45,498.35 between 13 February 2006 and 5 May 2009, that amount now constituted a debt which was repayable to Centrelink. That amount was subsequently deducted from Mr Sard’s compensation settlement by the insurer, Allianz, and forwarded to Centrelink before the balance was disbursed to Mr Sard.
3. On 13 May 2009, Mr Sard sought review of Centrelink’s decision to impose a lump sum preclusion period on him and on 4 June 2009, that decision was affirmed[1].
4. Mr Sard subsequently sought review of that decision by the SSAT and on 16 June 2009 the SSAT affirmed the decision to apply a lump sum preclusion period, but decided to reduce the preclusion period by 22 weeks by reason of “special circumstances”.
5. Mr Sard has now applied to this Tribunal for review of the decision of the SSAT and on 23 July 2009, this Tribunal granted an order staying the decision of the SSAT and providing that Mr Sard’s AP was to be reinstated with effect from 5 May 2009, pending the ultimate decision of the Tribunal.
6. I propose to first outline the applicable statutory framework, before identifying the relevant issues and proceeding to consider each of those issues by reference to the evidence before me and the arguments of each party.

LEGISLATION AND ISSUES

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, that payment is defined as “compensation” for the purposes of the Act[2]. Further where a person has received “compensation” as defined in the Act, half of the amount received is treated as compensation in respect of economic loss and described as the “compensation part of a lump sum payment”[3]. 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”[4] 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. Section 1171 of the Act also provides for the aggregation of multiple lump sum payments made in respect of the same compensable event where at least one of the payments was for economic loss. It relevantly provides as follows:

“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.”

12. However s 1184K of the Act confers a discretion to disregard some or all of a compensation payment if there are “special circumstances”. That section states as follows:

“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).”

13. It follows that the issues for my determination are:

(a) whether Mr Sard’s lump sum settlement of $355,000 is “compensation” for social security purposes;

(b) whether Mr Sard is subject to a compensation preclusion period;

(c) if so, whether the compensation preclusion period which has been imposed was correctly calculated;

(d) whether the total of AP paid to Mr Sard between 12 January 2006 and 5 May 2009 was correctly deducted from his settlement; and

(e) whether there are “special circumstances” which make it appropriate to treat some or all of Mr Sard’s compensation payment as not having been made.

14. I will now proceed to address each of these issues in turn.

WHETHER MR SARD’S LUMP SUM SETTLEMENT IS “COMPENSATION” FOR SOCIAL SECURITY PURPOSES

15. As noted above, there was no dispute between the parties that after being injured in a motor vehicle accident on 12 January 2006, Mr Sard received two payments by way of compensation. He received an interim payment of compensation of $90,000 on 27 November 2007[5]. On 23 April 2009, Mr Sard entered into a final settlement of his claim in the amount of $355,000, comprised of the $90,000 interim payment plus a further final payment of $265,000[6].
16. The issue which was disputed between the parties relates to characterisation of this settlement and in particular, whether it contained any amount by way of economic loss (i.e. lost earnings or lost capacity to earn). Having regard to the above provisions, that issue is critical in determining whether the settlement had any effect upon Mr Sard’s entitlement to AP since, as noted above, for the purposes of the Act, “compensation” means a payment made by way of compensation “that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury”[7]. Therefore, if it can be established that no part of Mr Sard’s lump sum settlement related to lost earnings or lost capacity to earn, his receipt of that settlement will have no impact upon his entitlement to AP.
17. As to whether Mr Sard’s lump sum settlement did contain any component for lost earnings or capacity to earn, Mr Sard strongly contended that no part of the settlement related to economic loss. He said that the settlement documentation did not refer to economic loss and when he agreed to enter into the settlement, he believed it did not relate to economic loss. He said he would not have agreed to the settlement if he had believed that it did relate to economic loss or that it would result in any “payback” amount to Centrelink. In his evidence, he said that he had spoken to a woman at Centrelink who had advised him that if the settlement did not contain any allowance for economic loss, then no amount would be repayable to Centrelink. He said that while he understood the total amount of the settlement when he agreed to it, he did not knowingly consent to the inclusion of an amount for economic loss. In his submissions, Mr Sard suggested that as the settlement deed itself did not refer to economic loss, the Tribunal should conclude that the settlement did not contain an allowance for economic loss, and there was no need for the Tribunal to inquire further into this question.
18. Mr Sard’s contention as to the content of the settlement documentation is correct so far as it goes. On 23 April 2009, Mr Sard signed a “release and discharge” which relevantly stated as follows:

“IN CONSIDERATION of the sum of $328,235.05 (which sum is inclusive of interest, outstanding special damages, Medicare Australia repayment, CRS repayment) but in addition to party/party costs agreed in the sum of $25,000 inclusive of GST and disbursements agreed in the sum of $1,764.95 inclusive of GST (the settlement sum) to be paid by MOTOR ACCIDENT COMMISSION, without an admission of liability ...”[8]

19. The release and discharge document also contained an acknowledgment that Mr Sard had received an interim payment of $90,000 on or about 27 November 2007, but did not further describe how the settlement sum was arrived at.
20. As to what the Tribunal should have regard to in determining whether a settlement contains an amount attributable to economic loss however, Justice Von Doussa said in Secretary to the Department of Social Security v A’Beckett (1990) FCA 332; (1990) 21 ALD 79:

“38. ... Where a claim for damages or compensation is settled after negotiation between the parties for a global sum it will frequently be impossible to dissect that sum into component parts in any meaningful way. It will frequently be impossible to determine as a matter of hard fact that a particular amount, or even an approximate amount, was included for a particular head of loss. A claimant may have one belief about the merits, or the lack of them, of a particular head of claim put forward on his behalf, whilst the party paying might have quite another view. Where liability is in issue a claimant might accept a modest offer believing (perhaps on facts unknown to the other side) that a particular head of loss will not be proved if the matter proceeds to trial. On the other hand the party making the payment might provisionally allocate a substantial sum to that particular head when calculating an offer, and then markedly discount the calculation to reflect a view that the claimant could fail altogether, or in a negligence action, is partly to blame. These considerations, in my opinion, render an exercise of the kind undertaken by the Tribunal in the present case where primary consideration is given to the beliefs of the claimant and his advisers, an unhelpful one.
39. In the present case the evidence of the respondent and his solicitor could throw little light on the defendant's reasons for making the payment. There is no reason arising from the objects of Part XVII of the Social Security Act which would make the views of the pensioner and his solicitor any more significant than those of the party making the payment in settlement of the claim. On the contrary, in many cases there may be reason to suspect that the pensioner's evidence could be less than objective about the component parts of a settlement. The difficulties which may arise if primary attention is given to the pensioner's statements as to the components of a global settlement, or even to statements formally recorded in documents signed by both sides to the settlement, have been adverted to in the secondary material connected with the Bills to amend the Social Security Act introduced in Parliament in 1979 and 1988 to which reference is made in Secretary, Department of Social Security v. Banks. Unfortunately experience has shown that such statements are at times incapable of rational explanation and are the product of "manipulation" by the parties to obscure the true position.
40. This is not to say that the evidence of the parties as to the course of negotiations is irrelevant. It is not, but it is only a part of the total picture, and often it will be of little assistance in determining if any part of a payment made in settlement of a claim is in part a payment in respect of an incapacity for work.
41. Usually the more objective evidence available about the nature and extent of the injury, and the events which followed it, for example the duration of absences from work, actual loss of wages, changes in work activity and the like, will provide a more reliable guide than the asserted beliefs of the claimant as to how the settlement sum was arrived at. Ordinarily, statements by the claimant asserting a loss resulting from an impaired capacity for work made in circumstances where those statements can reasonably be regarded as having been made to influence a defendant to pay will be entitled to substantial weight. Foremost amongst such statements will be formal particulars of claim. The formal particulars of claim identify the subject matter of the claim presented by the pensioner.”

21. In the A’Beckett case, the signed release relating to the settlement did not expressly state that the payment included a component for economic loss. However Von Doussa J had regard to the particulars of claim alleging a past and future loss of earning capacity, a summary of lost earnings submitted by the plaintiff, a concession by the plaintiff that the defendant was told that if the case were to proceed to trial he would seek to establish this loss, and the solicitor’s correspondence. In light of this material, he concluded that the settlement did contain a component related to economic loss.
22. This approach has been followed by a number of Tribunals subsequently[9].
23. I am accordingly satisfied in light of these authorities that in determining whether the settlement entered into by Mr Sard contained a component for economic loss, I am required to look beyond the settlement deed itself and consider this issue by reference to all of the material before me.
24. Adopting that approach, I note that whilst Mr Sard said in his evidence that he did not consider that the settlement amount did include an amount for economic loss, much of the contemporaneous documentation suggested that it did.
25. On 13 October 2008, prior to settlement of the claim, Mr Sard’s solicitors (Johnston and Withers) wrote to the solicitors for the insurer, Allianz (Finlaysons), setting out Mr Sard’s reformulated claim. That claim included an amount of $201,643.45 for past economic loss, $10,492.02 for past interest on past economic loss and $250,000 for future economic loss and future superannuation[10].
26. Finlaysons subsequently wrote to Johnston and Withers on 7 April 2009 advising in part as follows:

“Your client’s request that any settlement sum be recorded as general damages only, with no breakdown in relation to special damages, costs and disbursements, to assist with respect to any Centrelink reimbursement, is declined.”[11]

27. After the settlement had been entered into, Allianz also advised Centrelink by facsimile transmission of the settlement, indicating in answer to question 5 on the notification form that the settlement did include an allowance for past or future economic loss[12].
28. Finlaysons also wrote to Centrelink on 5 August 2009 outlining the history of negotiations between the parties and advising that “for Allianz’s own internal purposes” the settlement sum comprised components for past economic loss of $150,000 and future economic loss of $85,000[13].
29. In addition, Mr Sard confirmed in his oral evidence that at the time of the motor vehicle accident he was working, that he had been earning approximately $2,000 per week and, but for the accident, had been intending to continue to work.
30. In light of all of this evidence, I am satisfied that, although the settlement deed itself did not refer specifically to economic loss, the settlement sum received by Mr Sard did contain an amount in respect of “lost earnings or lost capacity to earn” and therefore his settlement sum should be considered “compensation” within the meaning of the Act.
31. Further, although his interim payment of compensation of $90,000 did not contain any amount with respect to economic loss, I note that s 1171 of the Act has the effect that where there are two or more lump sum payments and one of those payments relates to lost earnings or capacity to earn, both payments together are taken to be the compensation payment received by the person. It follows therefore that, for the purposes of the Act, Mr Sard received a total lump sum compensation amount of $355,000 and the whole of that amount is “compensation” for the purposes of the Act.

WHETHER MR SARD IS SUBJECT TO A COMPENSATION PRECLUSION PERIOD

32. As alluded to above, pursuant to the Act, the compensation part of a lump sum is defined in s 17(3) of the Act. In Mr Sard’s circumstances, this provision requires that 50 percent of the amount Mr Sard received is treated as the compensation part of his lump sum. Section 1169 of the Act imposes a lump sum preclusion period in circumstances where a person receives a lump sum compensation payment and has also received a “compensation affected payment”, which includes AP[14].
33. As Mr Sard has received a lump sum compensation payment and also received a compensation affected payment, namely AP, I am satisfied that a lump sum preclusion period is applicable to him.

WHAT IS THE PRECLUSION PERIOD APPLICABLE TO MR SARD?

34. Section 1170 relevantly provides that the lump sum preclusion period begins on the day on which the relevant loss of earnings or loss of capacity to earn began, and ends at the end of the number of weeks worked out pursuant to a formula specified in ss 1170(4) and (5). As noted above, this formula requires that the compensation part of the lump sum (ie 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 a formula in sub-section (8) as in force at the time when the compensation was received.”

That formula is based partly upon the maximum pension rate payable at the time the compensation was received and in Mr Sard’s case the amount arrived out by application of the formula was $788.75 per week[15].

35. I am satisfied that half of the lump sum received by Mr Sard is $177,500 and that when that amount is divided by $788.75, it gives a result of 225 weeks. I am further satisfied that it is appropriate that the preclusion period commences from the date of Mr Sard’s accident, being 12 January 2006 and that 225 weeks from 12 January 2006 extends to 5 May 2010.
36. I am accordingly satisfied that the preclusion period applicable to Mr Sard is from 12 January 2006 to 5 May 2010.

WHAT WAS THE AMOUNT PROPERLY RECOVERABLE FROM MR SARD’S SETTLEMENT?

37. On the material before me, I am satisfied that Mr Sard was paid AP of $45,498.35 between 12 January 2006 and when his pension was cancelled on 6 May 2009 and that this amount constituted a debt payable by Mr Sard which was correctly deducted from his compensation settlement.

ARE THERE “SPECIAL CIRCUMSTANCES” WHICH MAKE IT APPROPRIATE TO REDUCE THE PRECLUSION PERIOD?

38. In its decision, the SSAT concluded that there were circumstances which justified shortening the preclusion period by 10 percent, or ignoring $35,500 out of the settlement. The SSAT considered that the circumstances which justified this were Mr Sard’s age (now 72), his health and incapacity for work, his current financial circumstances and his inability to borrow on normal loan terms until he received the AP[16].
39. In his evidence before me however, Mr Sard indicated that subsequent to be SSAT hearing he had been able to “refinance” his home loan over 30 years and he now owed $900 a month. He said that most of his bills were paid. He said that his health was as good as he could reasonably expect and his house payments were up-to-date. He said he had $4,500 in the bank and $1,000 in his safe. Mr Sard also confirmed that he had been able to return to employment for a period of time following the accident, and did not dispute the income recorded by Centrelink as attributable to that employment[17]. He also mentioned in his evidence that he expected that he would need a further hip operation which was likely to cost in the region of $15,000.
40. Mr Sard told the SSAT that his house was worth about $350,000 which had $278,000 owing on it under a bridging loan. At that time he had also “quarantined” $146,000 from his compensation lump sum for the purpose of making payments on his bridging loan. However, it appears he has now paid that money off his home loan under his refinancing arrangements and he indicated in his evidence before me that he currently owes Westpac approximately $164,000.
41. As to what may constitute “special circumstances” in this context, Senior Member Hunt summarised some of the applicable authorities in Re Nathan and Secretary, Department of Families, Housing Community Services and Indigenous Affairs [2009] AATA 263 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.”

Senior Member Hunt also noted that s 1184K is specifically designed to “ameliorate unfairness or injustice which results from the strict application of the Act”[18].

42. In light of these authorities, in addition to the other matters I have referred to above, I also consider that I should have regard to the fact that Mr Sard claims he was unaware at the time he entered into his settlement that it would be subject to a Centrelink “payback” amount and said that if he had been aware of that he would not have settled the matter but would have proceeded to have it heard by a Court. Mr Sard also stated at the hearing and in his subsequent written submissions that his lawyers had not advised him of the consequences of the settlement in terms of his obligations to Centrelink.
43. These claims are to some extent inconsistent with the contemporaneous documentation. The settlement deed signed by Mr Sard clearly stated that the settlement monies were to be paid to Mr Sard’s solicitors “less any hospital, government department, Centrelink or other statutory amounts owing”. Further, the letter from Finlaysons to Mr Sard’s solicitors dated 7 April 2009 and referred to above suggests that Mr Sard’s solicitors themselves were well aware of the likelihood of Mr Sard being liable to reimburse Centrelink.
44. Even assuming that Mr Sard’s solicitors failed to advise him of this however, it does not appear to me that this has resulted in any injustice to Mr Sard of the kind which could potentially amount to a “special circumstance”. That is because it was not properly open to Mr Sard, his solicitors, or Allianz or their solicitors, to misrepresent the constituent parts of the settlement so as to seek to reduce or eliminate the Centrelink “payback”. It is also clear from Finlaysons’ letter of 7 April 2009 that Allianz were not willing to do this.
45. Further if Mr Sard had proceeded to a hearing and been awarded economic loss of a similar amount to that which was apparently allowed in the settlement, his preclusion period would have been significantly longer. That is because the Act has the effect of treating half of his settlement as being attributable to economic loss. However the contemporaneous documentation suggests that the “true” allowance for economic loss was in the region of $235 000, being approximately 66 percent of the total settlement. If the matter had proceeded to hearing and an award of that kind had been made by the court, the whole of the amount awarded by the court for economic loss would have been treated as “the compensation part” of Mr Sard’s lump sum for the purposes of the Act[19]. It follows that, at least on the material before me, Mr Sard was always going to be subject to a preclusion period of at least the length of that which was imposed, unless he had elected to receive a lower overall settlement amount.
46. Another matter which I consider I should have regard to is the fact that there was an amount of $25,000 allowed for legal costs in the settlement. As the President of the Tribunal, Justice Downes, pointed out in Re Fuller and Secretary, Department of Family and Community Services (2004) 83 ALD 152[20], 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[21].
47. In the circumstances of this matter however, the amount allowed for costs was relatively small as a proportion of the overall settlement. Further, as noted above, the amount allowed for economic loss in this settlement, being approximately $235,000, was actually significantly in excess of 50 percent of the total settlement and therefore what is known as the “50 percent rule” has operated in Mr Sard’s favour in any event. Therefore, whilst Mr Sard 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 s 1184K.
48. In summary, I do not consider Mr Sard’s age alone constitutes a “special circumstance” within the meaning of s 1184K. Further I note that he is in reasonable health, has been able to work since the motor vehicle accident and his financial circumstances whilst difficult are by no means “straitened” as he has approximately $186,000 worth of equity in his home. Whilst I am prepared to accept that he was unaware at the time of the settlement that it would be subject to a “payback” amount/preclusion period, I do not consider this has resulted in any unfairness given that, if Mr Sard’s matter had proceeded to hearing, on the material before me his preclusion period is likely to have been longer. Of course he could have reduced the preclusion period by seeking or agreeing to accept less by way of compensation, but that would not have left him any better off overall. Further as noted above, whilst his lump sum settlement amount included a component for legal costs, this was relatively small and the “50 percent rule” has in any event operated in his favour.
49. I have accordingly concluded that none of the circumstances identified above, whether considered in isolation or taken together, amount to “special circumstances” within the meaning of s 1184K, such as would justify reduction of the preclusion period, or to reflect the provision more accurately, treating the whole or part of Mr Sard’s compensation payment as if it had not been made.

CONCLUSION

50. It follows that I consider that the preclusion period initially imposed by Centrelink, from 12 January 2006 to 5 May 2010, was correctly imposed and should be restored. I also consider that the AP debt of $45,498.35 raised against Mr Sard in respect of AP paid between 13 February 2006 and 5 May 2009 was correctly raised and recovered.

REQUEST FOR CONFIDENTIALITY ORDER

51. I should also record that Mr Sard has requested that this decision remain “confidential” on the basis that its publication may jeopardise any action he may take in the future against his solicitors or “others”. I have construed this as a request for an order pursuant to s 35 of the Administrative Tribunals Act 1975 that the decision not be published, or that Mr Sard’s name be replaced by a pseudonym if the decision is published.
52. As the terms of s 35 itself make clear however, proceedings before the Tribunal and the decisions of the Tribunal are required to be accessible by and/or available to the public, unless good reasons for confidentiality are shown[22]. It has also been held that an important consideration in determining whether a confidentiality order should be made is the degree to which the asserted need for confidentiality is itself supported by the public interest[23].
53. From the information available to me it is not apparent that anything contained in these Reasons could reasonably be expected to unfairly impact upon any action Mr Sard may wish to take against his solicitors, or any other person. Accordingly I am not satisfied that the reasons for confidentiality put forward by Mr Sard are supported by wider public interest considerations, or are otherwise sufficient to justify an order being made under s 35. I have accordingly decided not to make an order of the kind sought by Mr Sard.

DECISION

54. The Tribunal:

(a) varies the decision under review so as to provide that:

(i) the lump sum preclusion period applicable to Mr Sard is 225 weeks from 12 January 2006 to 5 May 2010; and

(ii) there are no “special circumstances” which warrant treating the whole or part of Mr Sard’s compensation payment as not having been made pursuant to s 1184K of the Social Security Act 1991; and

(b) otherwise affirms the decision under review.

I certify that the 54 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member K Bean

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

Associate

Date of Hearing 28 September 2010

Date of Decision 17 February 2011

Advocate for the Applicant Self-represented

Advocate for the Respondent Ms L Giaretto

Centrelink Advocacy Branch

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[1] T3/4-11
[2] s 17(2)
[3] s 17(3)
[4] s 17(1)
[5] T3/45-47
[6] T3/41-44 and T6/30-37
[7] s 17(2)
[8] T3/42
[9] See Re Sammut and Department of Family and Community Services [2000] AATA 618; Re Secretary, Department of Family and Community Services and Cawthorn [2002] AATA 1137; (2002) 71 ALD 423; Re Secretary, Department of Employment and Workplace Relations and Sandars [2007] AATA 2; (2007) 95 ALD 152.
[10] T7/38-40
[11] Exhibit 9
[12] T6/31
[13] Exhibit 2
[14] s 17(1)
[15] T3/9
[16] T2/15
[17] Exhibit 3
[18] See also Kirkbright v Secretary, Department of Family and Community Services [2000] FCA 1876; (2000) 65 ALD 211.
[19] s 17(3)(b)
[20] At pp161-162.
[21] See for example Re Deacon and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2009] AATA 88.
[22] s 35(3)
[23] See Re Kanina Banner Pty Ltd and Minister for Health and Ageing [2002] AATA 169; (2002) 66 ALD 663.