Dezso and Secretary, Department of Social Security [1993] AATA 494 (7 May 1993)

4. The facts in this matter are not in dispute. The Tribunal finds that the applicant was injured in a motor vehicle accident on 18.11.89 and as a consequence of injuries sustained in that accident, he was awarded in a judgment of the District Court on 10 July 1992, the sum of $74,975.14. Of that amount, an allocation of $12,600 was made for "past loss of earnings" and $30,000 for "loss of earning capacity" (T18/64).

5. The Tribunal further finds that at the time of the accident, the applicant was in receipt of unemployment benefits. The applicant remained in receipt of unemployment benefits until 10 October 1990, when he claimed for and was granted sickness benefits. The applicant remained in receipt of sickness benefits until 6 February 1991 when he again applied for and was granted unemployment benefits which he remained on until February 1993, when he obtained employment.

6. On 3 August 1992, a delegate of the respondent determined that following the finalisation of the applicant's compensation claim, there would be a recovery of benefits paid to him, in the amount of $8,314.10. The State Government Insurance Commission has already paid the sum in question directly to the respondent.

7. Section 1165(1) of the Act provides that where a person is qualified for a social security benefit and that person is not a member of a couple and receives compensation in the form of a lump sum, that social security benefit is not payable to the person for the "lump sum preclusion period".

8. Before determining the lump sum preclusion period, it is necessary to determine what part of a compensation recipient's lump sum payment was paid as compensation. In this case, s.17(3)(b) of the Act defines the "compensation part" of a lump sum compensation payment as so much of the payment as is, in the Secretary's opinion, in respect of lost earnings or lost capacity to earn. It was the submission of the respondent that the compensation part of the lump sum payment in this case must be $42,600 as this was the amount which the judgment given in the District Court specified to be for past loss of earnings and loss of earning capacity.

9. The applicant submitted that because the sum of $30,000 was awarded by the District Court for future loss of earning capacity, this amount should not be taken into account in determining the relevant preclusion period.

10. Pursuant to the District Court judgment, this latter amount was a global figure awarded to compensate the applicant for his diminished capacity to earn in the future. The Tribunal finds that the $30,000 was correctly taken into account in determining the preclusion period as it clearly formed part of the compensation part of the lump sum. The legislation does not draw a distinction between compensation awarded for past or future loss of earning capacity in determining the compensation component of a lump sum. The Tribunal finds that the lump sum compensation payment in question is the amount of the District Court judgment namely, $74,975.14, and the compensation part of that lump sum is $42,600, being the two amounts awarded by the District Court regarding past loss of earnings and loss of earning capacity namely, $12,600 and $30,000.

11. Pursuant to s.1165(3C) of the Act, the "lump sum preclusion period" is the period that begins on the day on which the loss of earnings or loss of earning capacity began. The Tribunal accepts that for the proper administration of the scheme of the compensation recovery provisions of the Act to take place, there must be an identifiable point in time at which the loss of earning capacity or loss of earnings began.

12. It is the case for the respondent that the compensation part of the lump sum awarded by the District Court results in a preclusion period commencing on 1 January 1990. This date was suggested by the respondent having regard to page 17 of the District Court judgment where the court awarded "interest at the rate of 7% on the loss of earnings to date $12,600 for the period from 1 January 1990 to the date of judgment". Page 17 of the judgment was the only page of the judgment initially placed before the Tribunal. At the request of the Tribunal, the whole judgment was put in evidence and from a perusal of it, especially page 15, it becomes patently clear that the applicant's loss of earnings commenced from the time of his accident, namely 18 November 1989. The Tribunal finds, despite the contrary statements of the applicant, that the proper commencement date for the lump sum preclusion period is 18 November 1989.

13. Sub-section (4) of s.1165(3C) provides a method of calculation which determines the number of weeks for which the preclusion period will last, according to the amount of the compensation part of the lump sum payment as determined by s.17 of the Act. It is not in dispute that the lump sum preclusion period is 70 weeks and not 71 weeks due to the "rounding down" procedure set out in s.1165(5).

14. It is the case for the respondent that the preclusion period of 70 weeks should be from 1 January 1990 to 12 May 1991 and, that the applicant was paid unemployment and sickness benefits in the amount of $8398.70 during this time, and that this amount is the amount which was recoverable in lieu of the amount of $8314.10 which had previously been recovered as a consequence of the delegate's earlier decision. An intimation by Mr Ellis has been given that should the respondent's submissions be successful in these proceedings, the difference between these two sums will not be sought to be recovered from the applicant.

15. The applicant did not in effect challenge the application of the relevant legislation by the SSAT, the delegate, or as put to this Tribunal by Mr Ellis. It was the applicant's submission that the application of the legislation was unfair. He based his submission on the ground that he was not "incapacitated for work" during the period that he was in receipt of unemployment benefits. It was his view that he was only "incapacitated for work" during the period in which he received sickness benefits from October 1990 until March 1991.

16. The applicant submitted that the operation of the relevant legislation was unfair because he was actively looking for work throughout the entire period he was in receipt of unemployment benefits. It was his submission that he was only "incapacitated for work" for the period that he received sickness benefits and thus it was not fair that the legislation results, via the operation of the preclusion period, in him repaying the unemployment benefits he received.

It was the applicant's case that because he was not incapacitated for work whilst he was in receipt of unemployment benefit, it was unfair that those monies should be recovered on the basis that he had already been compensated for the relevant period. The Tribunal assumes that the applicant is arguing that he was not "double dipping" and that he was entitled to his unemployment benefit because the lump sum compensation he received was compensation only for the period that he was incapacitated for work, and he received no compensation for the period during which he was in receipt of unemployment benefits.

17. The Tribunal accepts the view that an important object of the compensation recovery legislation as set out in Part 3.14 of the Act is to preclude "double dipping".

However, the Tribunal does not accept the applicant's submission that the lump sum compensation he received only compensated him for the period during which he was on sickness benefits. To argue that he has not been compensated, via the lump sum, for the period during which he was on unemployment benefits completely contradicts the District Court judgment, which the Tribunal has before it, in which Hammond J. states that the sum of $12,600 was awarded for loss of earnings to the date of the judgment and the amount of $30,000 was awarded for future loss of earning capacity as from the date of judgment.

18. The Tribunal finds that there is nothing before it to support the applicant's claim that the operation of the legislation is, in the circumstances of this case, unfair. The Tribunal further finds that there exist no special circumstances that would make it appropriate to exercise the discretion contained in s.1184 to treat the whole or part of a compensation payment as not having been made. In Beadle and Director-General of Social Security (1984) 6 ALD 1, the requirement for the existence of special circumstances was expressed as being the existence of circumstances which when looked at their entirety are "unusual, uncommon or exceptional". The Tribunal finds that there exist no such circumstances in this case.

19. For the above mentioned reasons it is necessary that the Tribunal sets aside the first decision under review and substitutes a decision therefor that the applicant is liable to pay to the Commonwealth the unemployment and sickness benefits paid to him by the respondent during the period 18 November 1989 to 22 March 1991 being a lump sum preclusion period of 70 weeks. The Tribunal affirms the remaining decision under review, namely that there are no special circumstances pursuant to s.1184 of the Act.

This is to certify that this and the preceding six (6) pages are a true copy of the decision and reasons for decision herein of Deputy President B.H. Burns

Dated 7/5/93................(Signed)........................C.M. Phillips (Associate)