Reichert v Secretary Department of Family & Community Services [2003] FCA 110

FEDERAL COURT OF AUSTRALIA

Reichert v Secretary Department of Family & Community Services [2003] FCA 110 SOCIAL WELFARE – whether application for extension of time should be granted – errors in calculation by AAT, including quantification of "lump sum" – whether errors of law – whether in any event a matter should be remitted for rehearing, where result would be the same Social Security Act 1991 (Cth) ss 17, 1165, 1184 Rules of the High Court O 60 r 6

Gallo v Dawson (1990) 64 ALJR 458 ALFRED WILHELM LORENZ REICHERT v SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES No Q 132 of 2002 SPENDER J BRISBANE 28 FEBRUARY 2003

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY Q 132 OF 2002

ON APPEAL FROM THE GENERAL DIVISION OF THE ADMINISTRATIVE APPEALS TRIBUNAL CONSTITUTED BY A SENIOR MEMBER

BETWEEN: ALFRED WILHELM LORENZ REICHERT

APPLICANT

AND: SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

RESPONDENT

JUDGE: SPENDER J

DATE OF ORDER: 28 FEBRUARY 2003

WHERE MADE: BRISBANE

THE COURT ORDERS THAT: 1. The time for lodging a notice of appeal be extended to 6 August 2002. 2. The appeal be dismissed. 3. There be no order as to costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY Q 132 OF 2002

ON APPEAL FROM THE GENERAL DIVISION OF THE ADMINISTRATIVE APPEALS TRIBUNAL CONSTITUTED BY A SENIOR MEMBER

BETWEEN: ALFRED WILHELM LORENZ REICHERT

APPLICANT

AND: SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

RESPONDENT

JUDGE: SPENDER J

DATE: 28 FEBRUARY 2003

PLACE: BRISBANE

REASONS FOR JUDGMENT 1 This is an application for an extension of time to file and serve a notice of appeal from a decision of the Administrative Appeals Tribunal ("the Tribunal") of 15 July 2002, whereby the Tribunal affirmed a decision to impose a lump sum preclusion period from 13 May 1998 until 16 February 1999 and recover a refund of $6,240.10 paid by way of disability support pension during the said preclusion period. 2 The application for an extension of time to file and serve a notice of appeal from the Tribunal was filed in the Federal Court on 6 August 2002. Mr Reichert says that the reasons for the delay in bringing this appeal are that after lodging the appeal with the Tribunal he needed to travel to Germany on family business. He advised the Tribunal that he was travelling overseas and they informed him that it would be unlikely that a decision in his matter would be made in his absence. He also advised Centrelink of his intended travel. 3 On Mr Reichert's learning of the decision of the Tribunal, given in his absence overseas and which had been forwarded to his address in Australia while he was overseas, he communicated with the Federal Court registry and received some documents forwarded by the Court to him. He also made approaches to several legal firms and eventually received some assistance from the Central Queensland Community Legal Centre. It was as a consequence of those circumstances that a notice of appeal was not filed within the prescribed period. 4 The proposed grounds of appeal are: (1) That the respondent improperly exercised its power under s 1184(1) of the Social Security Act 1991 (Cth) ("the Act")by taking into account incorrect information. (2) That the applicant was not given a fair hearing. 5 The application for an extension of time is resisted by the respondent, contending that the reason for the delay in bringing the appeal has not been satisfactorily explained by the applicant, and on the further ground that the substantive case has no prospects of success. 6 In Gallo v Dawson (1990) 64 ALJR 458, McHugh J was concerned with an application based on O 60 r 6 of the Rules of the High Court for an extension of time for an application to be made. McHugh J said at 459: "That rule provides that the Court or a Justice may enlarge the time appointed by the Rules for doing an act upon such terms, if any, as the justice of the case may require and that the enlargement may be ordered although the application is not made until after the expiration of the time appointed or fixed for doing the act. The grant of an extension of time under this rule is not automatic. The object of the rule is to ensure that those Rules which fix times for doing acts do not become instruments of injustice. The discretion to extend time is given for the sole purpose of enabling the Court or Justice to do justice between the parties: see Hughes v National Trustees Executors & Agency Co of Australasia Ltd [1978] VR 257 at 262." And later: "When the application is for an extension of time in which to file an appeal, it is always necessary to consider the prospects of the applicant succeeding in the appeal: see Burns v Grigg [1967] VR 871 at 872; Hughes, at 263-264; Mitchelson v Mitchelson (1979) 24 ALR 522 at 524." Here there is no prejudice alleged, nor, in my preliminary assessment of the material, is it demonstrable that there would be no prospects of success. I accept Mr Reichert's explanation for the delay. He appears for himself on the appeal, although he has received some legal advice in the preliminary stages of lodging his application. I therefore grant an extension of time within which to appeal the decision of the Tribunal to 6 August 2002. 7 The matters the subject of dispute arise out of the decision by Centrelink to impose what is referred to in the Act as a lump sum preclusion period from 13 May 1998 until 16 February 1999, and the consequent decision to recover a refund of disability support pension in the amount $6,240.10. That amount relates to the amount of disability support pension paid during that forty-week period. 8 The Tribunal found: "(a) Alfred Reichert, the applicant, was born on 15 September 1942. (b) On 31 July 1997, Mr Reichert injured his back at his workplace. He was lifting heavy doors when he experienced lower back pain with radiation of pins and needles to the point of numbness down his left leg. He was diagnosed as having a combination of 'intradiscal disruption at the lower three levels of the lumbar spine and chronic degenerative change'." (c) Mr Reichert has not worked since he injured his back. (d) Mr Reichert received weekly workers' compensation payments from WorkCover totalling $19,249.84 between 31 July 1997 and 12 May 1998. He also received $4,334.18 from WorkCover for medical, rehabilitation and other expenses. That is, he received a total of $23,584.02 from WorkCover. (e) From 13 May 1998, Mr Reichert has received the disability support pension. (f) As a result of civil action, Mr Reichert signed an out of court settlement document in which he agreed to accept in full settlement of his claim $64,000, clear of WorkCover refund of $23,584.02, on 2 October 2000. (g) Mr Reichert received the $64,000 on 30 November 2000. The money was paid into his solicitor's trust account, to allow for any statutory refunds to be made prior to a final payout being made to Mr Reichert. (h) The lump sum payment received by Mr Reichert was made partly in respect of lost earnings and lost capacity to earn." 9 The matters in issue arise out of the purported application of provisions of the Act designed to prevent "double-dipping". The Tribunal, in a clear, non-legal way, summarised the provisions that apply in the present case, (which include s 17, particularly subss 17(2) and (3), and s 1165 of the Act), as follows: "If a person is awarded compensation from a court, or receives a lump sum settlement as a result of court action and part of the award or lump sum is compensation for lost wages, that person will not be entitled to disability support pension for the period during which it would be expected that the person would use the award for living expenses. If a person receives a lump sum payment by way of settlement of a claim for damages which includes a claim for lost earnings or lost capacity to earn, it is usually difficult to determine what portion of the lump sum should be assigned to lost earnings and what portion should be assigned to cover legal costs, medical expenses and other loss and damage. This matter is covered by s.17 of the Act, which deems 50% of a lump sum payment to be assigned to compensation for lost earnings or capacity to earn and 50% to all of the other expenses." 10 Mr Reichert's fundamental complaint is that the sum that he received was "not in any sense for compensation" and therefore none of these provisions has any application in his case. However s 17(2) of the Act provides: "For the purposes of this Act, compensation means: (a) a payment of damages; or (b) a payment under a scheme of insurance or compensation under a Commonwealth, State or Territory law, including a payment under a contract entered into under such a scheme; or (c) a payment (with or without admission of liability) in settlement of a claim for damages or a claim under such an insurance scheme; or (d) any other compensation or damages payment; (whether the payment is in the form of a lump sum or in the form of a series of periodic payments) that is: (e) made wholly or partly in respect of lost earnings or lost capacity to earn; and (f) made either within or outside Australia." 11 The settlement agreement is a two-page document headed "DISCHARGE" dated 2 October 2000 and signed, sealed and delivered by Mr Reichert. The recitals of the document are: "A. Reichert claims to have suffered injuries in the course of his employment with Jacalta on the 31st day of July 1997 and instituted proceedings claiming damages in the District Court at Brisbane under claim number D1365 of 2000 (hereinafter referred to as "the proceedings"). B. WorkCover and Jacalta defended the proceedings denying liability. C. The parties are desirous of resolving Reichert's proceedings without admission of liability and solely for the purposes of avoiding the uncertainty and expense of further litigation." The first two clauses of the agreement are: "1. In consideration of the payment by WorkCover on its own behalf and on behalf of Jacalta to Reichert the sum of Sixty Four Thousand Dollars ($64,000) Reichert does hereby forever completely release and discharge WorkCover and Jacalta from any liability howsoever arising out of the facts and circumstances the subject of the aforesaid proceedings. There is no entitlement as to costs. 2. WorkCover acknowledges that it shall not be entitled to a refund out of the payments referred to in clauses 1 and 2 hereof in respect to Workers' Compensation benefits paid in relation to the injuries the subject of the claim in the sum of Twenty Three Thousand Five Hundred and Eighty Four Dollars and Two Cents ($23,584.02).…" 12 In my opinion, the Tribunal incorrectly stated the basis of the settlement. It said: "In Mr Reichert's case he settled his civil action in the District Court for $64,000 (plus $23,584.02 to be refunded to WorkCover)." And later the Tribunal said: "In Mr Reichert's case the lump sum received was $64,000 plus $23,584.02." These statements, in my opinion, are incorrect. The lump sum received by Mr Reichert was $64,000, and there was a waiver of entitlement by WorkCover in respect of "benefits" in the sum of $23,584.02. The settlement could have been for a lump sum of $87,584.02, with $23,584.02 to be refunded to WorkCover, but the fact is it was not. 13 The Tribunal then made a calculation which took into account, out of the $23,584.02, an amount of $19,249.84 by way of weekly payments, from 31 July 1997 to 12 May 1998. The "extra" amount of $4,334.18 had been paid by WorkCover on account of medical expenses and other matters. 14 This approach led to the Tribunal arriving at a "lump sum" figure of $68,334.18 (being $64,000 plus $4,334.18), to be apportioned between lost earnings and other loss and damage, 50% of which, pursuant to the Act, was to be attributed to compensation for lost earnings. That amount is $34,167.09. Applying the "income cut-out amount" of $552.63 per week to that amount, the Tribunal reached a period of sixty-one weeks, which period was calculated to commence on 13 May 1998 when his WorkCover payments ceased, and ended sixty-one weeks later on 13 July 1999. During this period Mr Reichert had been paid disability support pension of $9,685.57. This was the amount, so the Tribunal said, which should have been refunded to Centrelink from the lump sum payment. The Tribunal noted: "As a result of a misunderstanding by an officer of Centrelink, who thought that the $19,249.84 repayment to WorkCover had to come out of the lump sum of $64,000, a preclusion period of 40 weeks was calculated and the sum of $6,240.10 was paid by the solicitors for Mr Reichert to Centrelink." The Tribunal observed: "When the mistake was eventually discovered Centrelink decided not to pursue Mr Reichert for the balance of $3,445.47." 15 In the view I take of the matter, the Tribunal has miscalculated the lump sum received by Mr Reichert, with the consequence that the 50% of it being the amount to be attributed to compensation for lost earnings is overstated, as is the lump sum preclusion period. On any view of the matter, the "lump sum" which is the basis for the calculation of the lump sum preclusion period was not $79,249.84, the figure the Tribunal arrived at. The lump sum was either $64,000 (which in my view is the correct figure on the proper interpretation of the Discharge document), or $87,584.02, the sum of $64,000 and $23,584.02. Nonetheless, when Centrelink decided not to pursue Mr Reichert for what was understood to be the excess of $3,445.47, the position was that the amount which Mr Reichert ought correctly to have been required to refund to Centrelink is greater than the amount of $6,240.10 which was paid by the solicitors for Mr Reichert to Centrelink. 16 On what I would take to be the correct calculation, the lump sum preclusion period is fifty-seven weeks, arrived at by dividing $32,000 by $552.63 and rounding down as required by s 1165(9) of the Act. This would require a refund to Centrelink of the amount of disability support pension Mr Reichert had been paid during the period 13 May 1998 to the period fifty-seven weeks later on 16 June 1999. This amount, nonetheless, is greater than the sum that was in fact paid by the solicitors for Mr Reichert to Centrelink. 17 The miscalculations which in my view have occurred are errors of fact. However, more importantly, the correct calculations do not have the effect of requiring less to be paid to Centrelink by Mr Reichert than was in fact paid. In my view, no legal error has been made by the Tribunal and, in any event, it would be futile to send the matter back on this account, because there would be no change in the end result. 18 A ground in the notice of appeal is a claim that the amount of $6,240.10 which was repaid should be reduced, pursuant to s 1184(1) of the Act, which 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 is appropriate to do so in the special circumstances of the case." 19 Mr Reichert claims he signed the discharge document "under duress". As the Tribunal noted, the amount which Mr Reichert eventually received in respect of his civil action cannot be changed by the Tribunal or by this Court on the material before the Tribunal. The Tribunal had before it material as to the applicant's assets and income. No legal error has been shown in the exercise of the discretion by the Tribunal that there were no "special circumstances" to warrant the exercise of the Tribunal's discretion to reduce the preclusion period. The Tribunal noted: "Mr Reichert has already received a very generous benefit of the exercise of discretion in relation to the $3,445.57 mentioned above." 20 In my judgment, no legal error has been demonstrated in the decision of the Tribunal the subject of the appeal. 21 Such errors as I think have occurred do not lead to entitlement to a repayment to Mr Reichert, so that even if the errors were to be characterised as errors of law, it would be futile, in a realistic sense, to remit the matter to the Tribunal for reconsideration. The actual decision of the Tribunal affirmed the lower lump sum preclusion period of forty weeks. 22 The appeal has to be dismissed. Having regard to the fact that the applicant was successful in his application to extend time over the opposition of the respondent, and to my view the Tribunal erred in its calculations leading to the determination of a lump sum preclusion period of sixty-one weeks but that circumstance involved no error of law, I think it appropriate that there be no order as to costs.