Secretary to the Department of Family & Community Services v Allan [2001] FCA 1160

FEDERAL COURT OF AUSTRALIA

Secretary to the Department of Family & Community Services v Allan

[2001] FCA 1160 SOCIAL SECURITY – appeal from Administrative Appeals Tribunal – preclusion period for beneficiary in respect of lump sum compensation – relevance of GST – relevance of compensation divisor Social Security Act 1991 (Cth) s 1184(1)

Beadle v Director General of Social Security (1985) 60 ALR 225 at 228 followed Kirkbright v Secretary, Department of Family and Community Services (2000) 32 AAR 120 at 123, 127 followed Kertland v Secretary, Department of Family and Community Services (1999) 95 FCR 64 at 71 followed SECRETARY TO THE DEPARTMENT OF FAMILY AND COMMUNITY SERVICES V THOMAS ALLAN V 317 OF 2001 HEEREY J 23 AUGUST 2001 MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY V 317 OF 2001

BETWEEN: SECRETARY TO THE DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

APPLICANT

AND: THOMAS ALLAN

RESPONDENT

JUDGE: HEEREY J

DATE OF ORDER: 23 AUGUST 2001

WHERE MADE: MELBOURNE

THE COURT ORDERS THAT:

1. The appeal is dismissed. 2. The applicant pay the respondent's costs, including reserved costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY V 317 OF 2001

BETWEEN: SECRETARY TO THE DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

APPLICANT

AND: THOMAS ALLAN

RESPONDENT

JUDGE: HEEREY J

DATE: 23 AUGUST 2001

PLACE: MELBOURNE

REASONS FOR JUDGMENT 1 This appeal from the Administrative Appeals Tribunal (the Tribunal) concerns the application of provisions of the Social Security Act 1991 (Cth) (the Act) which deal with the suspension ("preclusion") of social security benefits where recipients have received compensation for loss of earnings by awards under workers compensation legislation or damages at common law. The basic policy, understandably enough, is that there should not be "double dipping". 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. 2 Relevantly for present purposes, under s 1165(1A) of the Act if a person is in receipt of a "compensation affected payment" and that person also receives a "lump sum compensation payment" no compensation affected payment is payable to the person for the "new lump sum preclusion period". 3 By s 17(1) "compensation affected payment" is defined to mean various benefits, pensions and allowances under the Act including a disability support pension (DSP). 4 "New lump sum preclusion period" is, for present purposes, defined in s 1165(7) to (9). 5 The period begins on the first day on which the person's loss of earnings or loss of earning capacity began and ends after the number of weeks worked out under subss (8) and (9). 6 The number of weeks is worked out by dividing the "compensation part of lump sum" by the "income cut-out amount" (subs (8)). (As will be seen, the Tribunal used the expression "compensation divisor" which I take to be the same thing as the "income cut-out amount"). The "compensation part of lump sum" is defined in s 17(3) and (4). For present purposes it is enough to say that it is 50 per cent of the lump sum compensation payment. Typically compensation awards will include compensation for loss of earnings and also non-economic loss such as pain and suffering and loss of enjoyment of life. The policy revealed by the Act is to avoid a detailed analysis of the loss of earnings component in each case but rather to take an arbitrary figure of 50 per cent. The "income cut-out amount" is worked out according to a formula prescribed by s 17(8). It is not necessary to go into the detail of this; the important element in the formula is the "maximum basic rate" which is a sum which will vary from time to time. Apparently it is normally recalculated every March and September following CIP reviews but may also be recalculated if one of the other variables in the formula changes. 7 The Act recognises that circumstances may change over the preclusion period in a way which will result in hardship. The method adopted to ameliorate this is the substitution of a reduced amount, or a nil amount, for the compensation payment. Section 1184(1) provides: "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 appropriate to do so in the special circumstances of the case."