FEDERAL COURT OF AUSTRALIA ADMINISTRATIVE LAW – Social Security Act 1991 (Cth) – no point of principle Administrative Appeals Tribunal Act 1975 (Cth) Social Security Act 1991 (Cth) Department of Social Security v Hulls (1991)13 AAR 414, cited Commonwealth of Australia v Daniels (1994) 33 ALD 111, cited LORRAINE JANETTE MILGATE v SECRETARY, DEPARTMENT OF SOCIAL SECURITY NG 7 of 1998 BRANSON J SYDNEY 19 MAY 1998 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG 7 of 1998 BETWEEN: LORRAINE JANETTE MILGATE Applicant AND: SECRETARY, DEPARTMENT OF SOCIAL SECURITY Respondent JUDGE(S): BRANSON J DATE OF ORDER: 19 MAY 1998 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The appeal be dismissed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG 7 of 1998 BETWEEN: LORRAINE JANETTE MILGATE Applicant AND: secretary, department of SOCIAL SECURITY Respondent JUDGE(S): BRANSON J DATE: 19 MAY 1998 PLACE: SYDNEY REASONS FOR JUDGMENT INTRODUCTION This is an appeal pursuant to s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) ("the AAT Act") against a decision of the Administrative Appeals Tribunal ("the AAT") dated 24 December 1997. On that day the AAT affirmed a decision of the Social Security Appeals Tribunal by which that Tribunal had affirmed a decision of an authorised review officer, who had in turn affirmed a decision of a delegate of the respondent ("the delegate"). The decision of the delegate was to determine pursuant to s 1166 of the Social Security Act 1991 (Cth) ("the Act") that the applicant was liable to pay to the Commonwealth the amount of $6,393.50. Section 1166 of the Act authorises the making of such a determination in circumstances in which a person has received compensation in the form of a lump sum and has also received payment during "the lump sum preclusion period" of one of the social security payments defined by s 17 of the Act as a "compensation affected payment". Subsections 1165 (3), (4) and (5) of the Act provide a method of calculating for any particular case "the lump sum preclusion period". Miss Milgate did not have legal representation for the purposes of the appeal, nor I deduce, in the preparation of her application for an order of review. However, it is plain enough that her complaint is that there is no statutory or other basis for the decision of the delegate that she is liable to make a payment to the Commonwealth pursuant to s 1166 of the Act or at all. In her application she describes the sum of $6,393.50 as having been stolen from her by the Department of Social Security. It appears that the applicant has not worked since she underwent brain surgery, for the second time, in about 1986. Nonetheless she places weight on the fact that, under the Act, she was entitled to earn $30 per week without affecting her pension entitlement and that, as the loss of earnings component of her damages award was calculated on this basis, she should not have been required to make any repayment to the Commonwealth. She further places weight on the fact that the medical basis for the payment of the pension to her is unrelated to the injuries for which she received an award of compensation. BACKGROUND FACTS This history is taken from the reasons for decision of the AAT. In June 1987 the applicant commenced receiving invalid pension. In 1991 this pension was changed to a disability support pension (Schedule 1A cl. 3 of the Act). On 25 June 1989 the applicant suffered personal injuries in a motor vehicle accident. In September 1995 she was awarded lump-sum damages in respect of such injuries. The total award was $76,984 of which $25,570 was for economic loss: $6,000 for past economic loss, $2,570 for interest on that loss, and $17,000 for future economic loss. Following the awarding of lump sum damages to Miss Milgate, a delegate of the respondent imposed a preclusion period of forty-six weeks from 25 June 1989, the date of the accident, to 12 May 1990. It was calculated that the applicant had been paid invalid pension in the sum of $6,393.50 during the preclusion period and a determination was made pursuant to s 1166 of the Act that Miss Milgate was liable to pay that amount to the Commonwealth. STATUTORY BACKGROUND Part 3.14 of the Act, which comprises ss 1163-1185, is concerned with compensation recovery. Section 1163 lists certain categories of social security payments which might be affected under Part 3.14 of the Act. These categories of payment are defined in s 17 of the Act as "compensation affected payments". A disability support pension is one such category of payment. Section 1163(5) of the Act provides, so far as is here relevant, as follows: "A disability support pension … will only be affected under this Part if: (a) the compensation is received on or after 1 May 1987; and (b) the claim for the pension, benefit or allowance was made on or after 1 May 1987". Each of paragraphs (a) and (b) of s 1163(5) is satisfied in this case. Section 1165 is concerned with the calculation of a lump sum preclusion period. So far as is here relevant, it provides as follows: "(1) Where: (a) a person is qualified for a compensation affected payment; and (b) the person is not a member of a couple; and (c) the person receives compensation in the form of a lump sum (whether before or after the person became qualified for the pension, benefit or allowance); a pension, benefit or allowance referred to in paragraph (a) is not payable to the person for the lump sum preclusion period. … (3C) … the lump sum preclusion period is the period that: (a) begins on the day on which the loss of earnings or loss of earning capacity began; and (b) ends after the number of weeks specified in subsection (4). (4) The number of weeks in the lump sum preclusion period is the number worked out under the following formula: compensation part of lump sum __________________________ average weekly earnings (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." The determination in issue on this appeal was made pursuant to s 1166(1) of the Act which provides as follows: "If: (a) a person receives compensation in the form of a lump sum; and (b) the person receives payments of a compensation affected payment for the lump sum preclusion period; the Secretary may, by written notice to the person, determine that the person is liable to pay to the Commonwealth the amount specified in the notice." The lump sum damages awarded to Miss Milgate as a consequence of the injuries which she received in the accident were "compensation" within the meaning of the Act (s 17(2)(a)). Miss Milgate's circumstances were such that the amount which the Secretary was entitled to specify in the notice given to her pursuant to s 1166(1) ("the recoverable amount") was an amount: "equal to the smaller of: (a) the compensation part of the lump sum; or (b) the sum of the pension … payments made to [her] for the lump sum preclusion period". (s1166(3)) Section 17(3) of the Act defines, for the purposes of the Act, the expression "compensation part of a lump sum compensation payment". In the circumstances in which lump sum compensation was paid to Miss Milgate the "compensation part of the lump sum compensation payment" was - "so much of the payment as is, in the Secretary's opinion, in respect of lost earnings or lost capacity to earn." (s 17(3)(b)) Section 1184(1) of the Act gives to the respondent a discretion to disregard some payments, or liabilities to make payments, for the purpose of compensation recovery. The subsection provides as follows: "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." CONSIDERATION The AAT treated the sum of $25,570 awarded to Miss Milgate as damages for economic loss as being the "compensation part of the lump sum compensation payment" received by her. In view of the terms of s 17(3)(b) of the Act it was appropriate for it to do so. Section 1165(4) of the Act provides for the lump sum preclusion period to be calculated by dividing the compensation part of the lump sum by average weekly earnings. Departmental officers calculated the lump sum preclusion period so far as Miss Milgate is concerned by using an average weekly earning figure of $548.50. The Social Security Appeals Tribunal and the AAT used an average weekly earnings figure of $546.60. The difference between these two figures does not affect the result of the calculation required by s 1165(4) of the Act. Section 17(1) of the Act defines "average weekly earnings" in relation to a lump sum preclusion period as meaning the amount: "(a) estimated as the average total weekly earnings, during a particular month, of all employees (all persons) in Australia; and (a) last published by the Australian Statistician before the lump sum compensation payment became payable". The evidence before me does not establish the estimate of average total weekly earnings during a particular month of all employees in Australia last published by the Australian Statistician before the lump sum compensation payment made to Miss Milgate became payable. That figure is a matter of fact, not of law. However, the question of whether the estimate of average total weekly earnings has been arrived at as required by s 17(1) of the Act is a question of law. The relevant departmental calculation sheet shows $548.50 as the average weekly earnings figure as at "D.O.S.". I understand "D.O.S." to stand for "date of settlement". The calculation sheet treatsa "verdict" as a form of settlement. In Miss Milgate's case, her claim for damages for personal injury was resolved by a judgment of the District Court of New South Wales. Such judgment is to be understood as a "verdict" within the meaning of the calculation sheet. I see no reason to conclude that the relevant departmental officer looked at anything other than the appropriate publication of the Australian Statistician in order to establish the appropriate average weekly earnings figure. I am satisfied that no error of law has been established as to the method by which the estimate of average weekly earnings used to calculate the preclusion period was arrived at. In Miss Milgate's case, the compensation part of the lump sum received by her was larger than the sum of the pension payments made to her for the lump sum preclusion period (s 1166(3)). The recoverable amount for the purposes of s 1166 in her case was therefore the sum of the pension payments made to her for the lump sum preclusion period. Miss Milgate was paid $6,393.50 in disability support pension during the lump sum preclusion period. No error of law has been established in the calculation of this recoverable amount. Miss Milgate's concern that there is no statutory basis for the decision of the delegate that she is liable to make a payment to the Commonwealth pursuant to s 1166 of the Act is unfounded. The AAT gave consideration to the question of whether the whole or part of the compensation payment made to Miss Milgate should be treated as not having been made (s 1184). It took into account the total award of damages paid to her. It also noted that she had received advice in 1992 that any payment of damages which she received might affect her current or future pension entitlements, and that she had also received advice promptly after the decision of the District Court awarding her damages that she was required to pay to the Commonwealth the sum of $6,393.50. The AAT found that soon after her receipt of her damages award, she embarked on "extensive and diverse spending, on both consumable and durable items, some of which were basic items and many of which were classifiable as luxury items". The AAT gave consideration to Miss Milgate's financial circumstances at the time of the hearing before it. It concluded that it was unable to find that she was in "straightened financial circumstances". It concluded that an application of the compensation recovery provisions of the Act to Miss Milgate did not create an injustice, and that Miss Milgate's circumstances were not sufficiently out of the ordinary to be considered "special circumstances" (Secretary, Department of Social Security v Hulls (1991)13 AAR 414 at 425; Commonwealth of Australia v Daniels (1994) 33 ALD 111). I am unable to identify any error of law in the approach taken by the AAT to the application of s 1184 of the Act to the circumstances of this case. In particular I find that the AAT was not in error in failing to give weight to the ability of Miss Milgate to earn a limited amount without affecting her pension entitlement, or to the lack of relationship between the medical basis upon which she is entitled to receive invalid pension and the injuries sustained by her in the accident which resulted in her receiving an award of damages. The appeal will be dismissed. I certify that this and the preceding seven (7) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Branson. Associate: Dated: The Applicant appeared in person. G. Peek, instructed by the Australian Government Solicitor, appeared for the respondent. Date of Hearing: 28 April 1998 Date of Judgment: 19 May 1998