1. The legislation relevant to this matter is contained in the Social Security Act 1991 (Cth) (the Social Security Act). The issues for the Tribunal in this matter are whether the Applicant was subject to a compensation preclusion period and whether a compensation charge was correctly imposed by the Respondent. Part of this consideration involves a consideration of whether part or all of the compensation should be treated as not having been made under section 1184K of the Social Security Act. Additionally, as the compensation charge is treated as a debt to the Commonwealth under the Social Security Act, the Tribunal must also consider whether any of the provisions for non-recovery of a debt apply in this case.
2. The Tribunal accepted from submissions made by the Applicant at the hearing that her primary issue with the decision is the refusal to find that there are special circumstances in her case. The Applicant provided the following written submissions about her reasons for seeking a review of the AAT decision (paragraph numbering deleted):

On 18 July 2022, I settled a Deed of Release with [a religious institution] with respect to injury, loss and damage I suffered. I received $600,000 as the settlement amount plus costs and disbursements of $350,000.

I am hoping for your understanding and compassion regarding my difficult situation and request the waiver under ss1237A and 1237AAD Social Security Act 1991 and write off under s1236 Social Security Act 1991 please as I am now in financial hardship due to the difficulty of living on DSP, the rising cost of living has made it virtually impossible to survive on the DSP alone. I live on my own and I don't have any assets. I sincerely regret my actions, unfortunately after my mediation, I was expecting to be feeling relieved, instead I fell into a deep depression as I was then having to grapple with the sexual abuse and coercive control that I had suffered from my ex-husband who was [in a policing role] whom I had reported to regarding the abuse from [the perpetrator from the religious institution]. I naively believed that he was genuine when he said he would help me with my case, I was already severely traumatised, and I didn't have the emotional strength to stand up to him. After mediation, I had lost my support system, I was all alone to deal with the further abuse I had endured from my ex-husband and later on from my daughter in [city] where domestic violence was and is occurring. I have been verbally abused by my daughter and domestic violence taking place between my daughter and her fiancée, she had even tried to choke him, it had taken a toll, I found myself wanting to go to the nursery to self-soothe my emotional pain, it was a trigger for me. I have been trying to protect my two and a half year old who has been developmentally delayed as a result of witnessing this violence.

I am a victim survivor of historical and current abuse and my expenditures have been caused through emotional spending in a way to self-soothe, I am totally aware now of my unfortunate and regretful spending, I have been and I am continuing to have financial counselling which is benefiting me immensely.

My mother passed away on 20/08/2023, she had been bedridden for two years after having fractured her ankle. My sister, who was Mum's full-time carer was physically and verbally abusive towards my poor mother, my sister has a gambling addiction and I found out after our mother had passed away that my sister had transferred Mum's term deposit when it became renewable into a savings account whereby over the two years that Mum was bedbound, my sister was withdrawing amounts amounting to $140,000 over the two year period, this money was used to fund her gambling habit even when Mum was dying in hospital, my sister had a track record of theft including priors of stealing money from Mum amounting to $76,000.

Unfortunately, it was completely unforeseen and unexpected that I would dissipate the compensation money over a period of time to ease emotional pain, it felt like an addiction, at the time, I knew of no other way to deal with this soul-destroying emotional pain. It wasn't until I had reached rock bottom that I realised I had a problem that required addressing urgently, I then took action and contacted [name], a financial counsellor from the [organisation], who I have been having regular appointments with, this has helped me

immensely and has assisted me in getting back on track financially and being more aware of my purchases.

I do feel more financially savvy and more conscious of my purchases, I only purchase items that are needed not wanted to sooth (sic) my emotional pain now. I enrolled and successfully completed the ANZ Saver Plus Program, the program was very interesting and educational and I have been saving the $50.00 per month required deposited into a separate ANZ Bank Account.

1. The Tribunal noted that the above matters were consistent with submissions provided by the Applicant's legal representative, acting in the compensation matter, to Centrelink in April 2024. The findings of the Tribunal in respect of the submissions made by and on behalf of the Applicant, and other evidence given by the Applicant at the hearing, is discussed further below.

1. The parties were not in dispute that the Applicant received a lump sum compensation payment of $950,000 in relation to harm suffered from the leader of a religious institution. Information provided by the Applicant's representatives to the Respondent initially noted that the date of illness / injury was 14 March 2010 to 20 April 2011 and that compensation was claimed under the common law for personal injury, being alleged sexual assault by a religious leader. The representatives initially advised that the compensation settlement was for a lump sum settlement amount of $600,000 plus $350,000 for costs, that the Applicant had not received any other lump sum payments or periodic compensation, that the settlement sum contained a component for economic loss and that the Applicant's loss of earnings commenced on 20 April 2015. On 19 August 2022 and 7 October 2022, the Applicant's representatives provided further information to the Respondent, indicating that the loss of earnings had commenced on 20 April 2011. Information provided to the Respondent by the Applicant's representatives was not disputed by either party at the hearing and the Tribunal accepted the above information as correct.
2. The compensation provisions in Part 3.14 of the Act are based on the principle that persons who have received compensation for loss of income should rely on that money rather than relying on taxpayer-funded payments.1 The objectives of the legislation were set out by the AAT in Massoud and Secretary, Department of Social Services [2017] AATA 1366 (Massoud), which noted as follows (at [12]-[15]):2

The Act contains provisions dealing both where a person, the recipient of social security payments, receives a lump sum compensation payment and where a person who has received a compensation payment subsequently applies for social security.

The Act is focused either on recovery of social security paid, or preventing the payment of social security during the preclusion period. The principle underpinning these provisions is

1 Social Security Guide at Part 4.3.12.60, referenced in Respondent's SFIC at paragraph 4.5.

2 Referenced in Respondent's SFIC at paragraph 4.6.

that "double dipping" should not be allowed, and that a person should not simultaneously obtain the benefit of a compensation payment and also receive the benefit of a social security pension or allowance.

The Commonwealth Parliament enacted legislation with the specific objective of ensuring that if a person receives a compensation payment for economic loss, the recipient should draw on those funds for a reasonable period before again benefitting from social security payments.

This overriding objective was explained by Deputy President Burns in Secretary, Department of Social Security and Winterbotham [1990] AATA 808 as follows:

This particular piece of legislation...was aimed specifically at preventing those people receiving compensation for loss of income because of incapacity for work, from being able also to receive benefit from the public purse...Primary responsibility for the payment of such compensation lies at the feet of those responsible for the compensable injury. Once that responsibility has been met, by way of a settlement sum agreed to by both parties, it is inequitable for the recipient to seek supplementary funds from the taxpayer.

1. Section 1169 of the Social Security Act states that if a person receives or claims a compensation affected payment and receives a lump sum compensation payment, the compensation affected payment is not payable to the person in respect of any day or days in the lump sum preclusion period.
2. Sections 17 and 23 the Social Security Act provide that compensation affected payments include disability support pension and, at the time the Applicant was receiving newstart allowance, also included newstart allowance. The payability of both newstart allowance and disability support pension to the Applicant were affected by any preclusion period she was required to serve.
3. Subsection 17(2) of the Social Security Act defines compensation to be (subject to subsection (2B)) any of the following:

(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 and whether it is made within or outside Australia) that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury.

1. Subsection 17(2A) of the Social Security Act states that paragraph 2(d) does not apply where a person has made contributions towards the payment and either: the agreement under which the contributions are made does not provide for the amounts that would otherwise be payable under the agreement being reduced or not payable because a recipient is eligible for or receives payments under the Act that are compensation affected payments; or the agreement does so provide but the compensation payment has been calculated without reference to the provision. The Tribunal finds that this does not apply in the circumstances of this case, on the basis that the Applicant had not made any contributions (such as insurance premiums) towards the payment.
2. Subsection 17(2B) of the Social Security Act states that a payment made under the law of the Commonwealth, or a State or Territory, that provides for payment of compensation for a criminal injury does not constitute compensation for the purposes of the Act. Subsection 17(2C) then provides that the reference in (2B) to a criminal injury is a reference to a personal injury suffered, or a disease or condition contracted, as the result of the commission of an offence. As the amount paid to the Applicant was not made under the law of the Commonwealth or of a State or Territory, the Tribunal finds that subsections 17(2B) and (2C) do not apply to the payment made to the Applicant.
3. The Tribunal finds that the amount paid to the Applicant was a payment in settlement of a claim for damages and that it was made partly in respect of lost earnings or lost capacity to earn resulting from a claimed personal injury. The settlement payment is a compensation payment as defined in paragraph 17(2)(c) of the Social Security Act and is relevant to the imposition of a preclusion period as set out in section 1169 of the Social Security Act.
4. Section 1170 of the Social Security Act establishes how to calculate a lump sum preclusion period. As the Applicant did not receive both periodic compensation payments and a lump sum compensation payment, subsection 1170(1) does not apply; and as there is no evidence before the Tribunal that the Applicant elected to receive part of an entitlement to periodic compensation payments as a lump sum, subsection 1170(2) does not apply. Subsection 1170(3) of the Social Security Act then states that:

(3) If neither of subsections (1) and (2) applies, the lump sum preclusion period is the period that:

(a) begins on the day on which the loss of earnings or loss of capacity to earn began; and

(b) ends at the end of the number of weeks worked out under subsections (4) and (5).

1. The lump sum preclusion period is then calculated in accordance with the formula at subsection 1170(4) of the Social Security Act: where the compensation part of the lump sum is divided by the income cut-out amount. Subsection 1170(5) provides for the number worked out under subsection (4) to be rounded down to the nearest whole number.
2. The "compensation part" of a lump sum compensation payment is 50% of the payment in accordance with subsection 17(3) of the Social Security Act, and is $475,000. The Tribunal accepted that the Applicant's lost capacity to earn or loss of earnings began on 20 April 2011 and that the income cut-out amount at the relevant time was $1,082.60. Using the formula as

set out above, the Tribunal accepted that the Applicant's preclusion period was 438 weeks, that it commenced on 20 April 2011 and that it ran to 10 September 2019. Neither newstart allowance nor disability support pension was payable to the Applicant during this period.

1. Section 1184 of the Social Security Act states that:

(a) a person (the compensation payer):

(i) is liable to pay compensation to a person (a claimant); or

(ii) where the compensation payer is an authority of a State or Territory, has determined that a payment by way of compensation is to be made to a claimant; and

(b) the claimant has received a compensation affected payment in relation to a day or days in the periodic payments period or the lump sum preclusion period, as the case may be;

the Secretary may give written notice to the compensation payer that the Secretary proposes to recover from the compensation payer the amount specified in the notice.

(a) an insurer is liable, under a contract of insurance, to indemnify a compensation payer against any liability arising from a person's claim for compensation; and

(b) the person has received a compensation affected payment in relation to a day or days in the periodic payments period or the lump sum preclusion period, as the case may be;

the Secretary may give written notice to the insurer that the Secretary proposes to recover from the insurer the amount specified in the notice.

(3) If a compensation payer or insurer is given notice under subsection (1) or (2), as the case may be, the compensation payer or insurer is liable to pay to the Commonwealth the amount specified in the notice.

(4) The amount to be specified in the notice is the recoverable amount under section 1184A.

(5) A notice under this section must contain a statement of the effect of section 1184D so far as it relates to such a notice.

(6) This section applies to an amount payable by way of compensation in spite of any law of a State or Territory (however expressed) under which the compensation is inalienable.

1. The Applicant did not dispute, and the Tribunal accepted from the information provided by the Respondent, that a notice was sent to the compensation payer on 11 August 2022 and that the Applicant received $199,763.45 in compensation affected payments during the period from 17 June 2011 (commensurate with the commencement of newstart allowance) and 10 September 2019 (being the end of the preclusion period). The Tribunal finds that the Applicant owes a compensation charge of $199,763.45 under section 1184 of the Social Security Act.

Whether any or all of the compensation payment can be disregarded

1. Section 1184K of the Social Security Act provides a mechanism to disregard part or all of a compensation payment in specified circumstances. Application of the provision has a consequent impact on both a preclusion period and on the recovery of a compensation charge.
2. Subsection 1184K of the Social Security Act states that:

(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.

1. For the section to apply, the Tribunal must be satisfied that the Applicant's circumstances are distinguishable from others (Groth and Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541) and are distinguishable from the usual case (Dranichnikov v Centrelink [2003] FCAFC 133). Such considerations require the Tribunal to consider not only the Applicant's circumstances, but to consider whether there are circumstances that make it desirable for the section to apply, having regard also to the general administration of the social security system (Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114).3
2. The Applicant gave evidence at the hearing that she is seeking section 1184K of the Social Security Act be applied on the basis that she had unforeseen events that had occurred. In opening submissions made to the Tribunal, the Applicant stated that after receiving the lump sum settlement amount, she had had plans to invest the money. However, after mediation she had depression and had lost all support from her network. The Applicant submitted that she had been sexually abused and taken advantage of by her ex-husband and that she has experienced historical and current family violence from both her ex-husband and her daughter.

3 Comments made within the context of special circumstances considerations relating to debt waiver.

1. In her evidence to the Tribunal at the hearing, the Applicant acknowledged that she had been aware how much the in-hand amount was she was to be paid in compensation as of July 2022, although noted that it was different to what she had been told. The Applicant also acknowledged in her evidence that she had been made aware of the amount of the compensation charge that was to be recovered.
2. The Tribunal accepted that the circumstances in which the lump sum payment was made was that the Applicant had claimed compensation for abuse by a religious leader. The Applicant told the Tribunal at the hearing that the abuse had occurred in 2010, when she was in her late 40s. The Tribunal accepted from a letter provided by the Applicant that she has attended a support service for survivors of institutional abuse, that she had been linked with the service since 2019 and that she had been supported by a caseworker during the civil litigation process. The caseworker who prepared the letter, dated 9 July 2025, noted that the Applicant had confided about issues with her daughters, her purchase of gifts for her grandchildren and her need to assist her mother who was experiencing emotional abuse from the Applicant's sister. The caseworker noted their belief that the Applicant had recognised her "erratic spending condition was getting out of control and that she had a serious problem that she needed help for", that the Applicant had sought help through a financial counsellor, and that she had been learning to save for her future. The Tribunal accepted the contents of the letter as correct and finds accordingly.
3. The Applicant also claims to have suffered abuse from her former husband, who she was married to from 1985 up to their divorce in 1997. She told the Tribunal that she believes her former husband took advantage of her case with the religious leader and was "trying to manipulate her case", she believes due to his history of family violence towards her. The reasons for this reasoning were unclear to the Tribunal based on the submissions made by the Applicant at the hearing.
4. The Applicant provided the Tribunal a Statement she had prepared in October 2023 in respect of her experiences at the hands of her husband. The Tribunal noted that the Statement outlines the Applicant's belief that she had been sexually assaulted by her former husband and that he preyed on her vulnerability. The Applicant recounted in the statement an incident of sexual assault that she stated had happened in 2021 and referred to other similar incidents having occurred dating back to 2011. In the absence of any evidence to the contrary, the Tribunal is prepared to accept that the Applicant experienced family violence at the hands of her husband between 1985 and 1997 and that she has made a police report alleging a further incident of sexual violence by her former husband in 2021.
5. The Applicant resides in a house owned by one of her daughters. She gave evidence at the hearing that she had experienced family violence from that daughter since her daughter gave birth to a child and that this had included physical and verbal violence. She gave evidence of her two granddaughters being subject to violence and emotional abuse and of having to make a report to a family violence service about one of her grandchildren and, more recently, to a child protection service. In the absence of any evidence to the contrary, the Tribunal is prepared to accept this evidence as correct.
6. The Applicant gave evidence at the hearing that her mother had passed away. Her sister has a history of theft and gambling addiction and drained her mother's accounts of $140,000 and then had their mother's account frozen when their mother passed away. The Tribunal is prepared to accept the evidence given by the Applicant that her mother has passed away and that her sister took money from her mother's account after her mother's passing.
7. The Tribunal accepted the Applicant's evidence that she had attended a psychologist from 2012, a second psychologist from 2015 and had been attending her current psychologist since 2019. The Tribunal was provided a report prepared by the Applicant's current psychologist (undated) which set out responses to specific questions put to the psychologist. Given its relevance to the submissions made by the Applicant at hearing, the information provided in the report is set out in full below (numbering deleted):

In your professional opinion, what, if any, psychological or other conditions (medical conditions) does [the Applicant] present with?

[The Applicant] initially presented with historical conversion disorder and PTSD. She currently still struggles with PTSD as a consequence of her marital and [religious institution] assaults.

[The Applicant's] most recent score on the posttraumatic stress disorder checklist (PCL5) shows severe PTSD.

[The Applicant's] most recent scores on the DASS21, show severe for depression and anxiety and extremely severe for stress.

This elevation is consistent with [the Applicant's] presentation to me over the last 2 years, following her court case and settlement.

What, if any, link is there between [the Applicant's] spending of the settlement money (and any other money) and her medical conditions? Has [the Applicant's] expenditure been caused, aggravated or otherwise affected by any medical conditions she suffers?

Impulsiveness is a response to stress and anxiety. She has problems with self-regulation and spending would create a false experience of control. There is a potential that she has also developed obsessive compulsive disorder as an extreme expression of anxiety, although this has not been formally assessed at this stage. Compulsive spending can also be a form of addiction or a way to avoid tension and destress and create the illusion of control.

Many of [the Applicant's] expenditures relate to instrumental support of her family as well as gardening costs. [The Applicant] has attempted to the purchase of gifts and clothing for her grandchildren as a means of approximating emotional care, as her current medical condition precludes more direct emotional relating. Her stress and anxiety are so consistently elevated that she has limited access to emotional processing.

[The Applicant] has always seen her garden as a place of stress relief. Her investments in gardening products is directly related to the lack of down regulation and comfort she experiences currently in her garden. Therefore, she purchases more gardening products

as an attempt to generate the relief that she has previously experienced but which her ongoing medical condition precludes.

In my opinion her levels of stress and anxiety have directly influenced her poor decision making in regard to her expenditure. This kind of poor decision making and impulsivity is fairly typical of someone suffering PTSD. There is a consistent pattern of avoidance of internal suffering by engaging in externalising behaviour. Higher levels of gambling, risk taking or substance abuse can be features of unregulated PTSD. In [the Applicant's] case the expression is compulsive spending.

If there is a link between [the Applicant's] spending of the settlement money (and any other money) and her medical conditions, what has been done and or what can be done to ensure that her future spending is not affected by her medical conditions?

She had minimised the extent of her problem with compulsive spending and mentioned it merely as spending on the grandchildren. She has only recently acknowledged the extent of the problem and showed me the outline of her spending as outlined to the tribunal. Her sister is also reportedly a compulsive gambler so there is some family vulnerability potentially.

[The Applicant] has only recently acknowledged the extent of her spending disorder although she has noted that her daughters have commented on it in the past. Whilst not in the scope of my professional knowledge, any form of trust arrangement whereby [the Applicant] needs to justify expenditure, such as a trustee, may be useful. Alternately having income funnelled into property or superannuation where she has less disposable income may be strategies. A full commitment on her part to psychological treatment for her compulsivity is also essential.

Are there any other special circumstances that explain (in full or part) [the Applicant's] spending of the settlement money (and any other money)?

She has spent many years trying to come to terms with the abuse in her marriage and then the grooming and abuse from the [perpetrator]. She has spent many years in litigation which can be both a harrowing and traumatising experience itself. [The Applicant] has had little or no respite from stress and trauma for the last decade or more. She has a number of issues now with her children and their families related to stress and family issues. [The Applicant] would have found it extremely difficult to cope with the level of stress caused by the trauma and the subsequent years of litigation.

1. The Applicant also provided a letter prepared by a consultant psychiatrist, dated 8 July 2025, which stated the following:

[The Applicant] is known to me since 2015. She suffers from Chronic Post Traumatic Stress Disorder and Chronic Major Depression secondary to domestic violence from her previous marriage, and secondary to sexual and spiritual abuse by the [religious institution].

[The Applicant's] legal case against the [religious institution] was settled out of court. [The Applicant] states she received a lump sum payment of around $600,000 in 2022 after paying legal fees. [The Applicant] states that Centrelink deducted $199,763.45 for the preclusion period. This left [the Applicant] with $343,558.55 after paying further fees.

[The Applicant] states that all of these funds have been spent. [The Applicant] states she has spend (sic) the money on gifts for her family, furniture for her house, her mother's funeral and wake, life and TPD insurance premiums, as well as contributing to her superannuation fund.

Prior to her payout, [the Applicant] demonstrated a pattern of impulsive spending. I believe that shopping has served to soothing difficult emotions experienced by [the Applicant]. I believe this continued after her legal payout, resulting in exorbitant amounts of money being spent. I believe [the Applicant] is vulnerable to being taken advantage of from a financial point of view. I note that [the Applicant] contributed over $50,000.00 to [insurance company] over a 3 year period. It is extremely unfortunate that [the Applicant] stopped seeing me when her legal case was resolved. I may have been able to advert some of the financial damage that has been done.

If the preclusion period payment were to be returned to [the Applicant], I recommend that the funds be held in trust and managed by a financial administrator, to avoid a similar problems recurring.

1. The Applicant told the Tribunal that her counselling was covered through victims of crime up to the end of 2024 but as of this year she has been paying privately to continue seeing her psychologist. The Tribunal accepts this as correct and accepts the matters put by the psychologist and psychiatrist as outlined in their correspondence above.
2. The Applicant gave evidence at the hearing that she developed conversion disorder in 2011 due to the trauma suffered from the religious leader, but that over time this "changed to a neurological disease". The Tribunal accepts that it was on the basis of having developed conversion disorder that the Applicant claimed and was granted disability support pension in 2011. The Tribunal further accepted the Applicant's evidence, given at hearing, that she has attended recent testing for "health issues" and has been advised to see a private specialist. The Tribunal accepts the source of the concerns are breathlessness. The Applicant gave evidence that she attends a physiotherapist, has osteoarthritis in her hip and leg and that her doctor has indicated she may be showing signs of Parkinson's disease and has recommended she attend a neurologist and the Tribunal is also prepared to accept this evidence as correct.
3. In addition to the oral evidence given by the Applicant at the hearing, the Applicant's legal representatives, who had acted in the compensation matter, provided submissions to the Respondent in April 2024, raising the following additional matters for consideration:
   • Based on information received from Centrelink, the representative had advised the Applicant that the likely repayment to Centrelink would be within the vicinity of

$120,000, significantly less than the amount of $199,763.45 recovered by Centrelink. When the Applicant had instructed the representative to settle, she believed she would be receiving an additional $60,000 to $80,000. An "unfairness arises from Centrelink misrepresenting the amount repayable due to its failure to make a full and proper disclosure of all benefits received" by the Applicant;

• The 50% rule created an unfair result, based on nearly 37% of the Applicant's settlement representing legal costs and the compensation portion not being a true reflection of all the Applicant's past, current and future pain and suffering, loss of earnings and capacity, and medical expenses. The Applicant reached a settlement given the significant risks and costs associated with proceeding to trial.

1. The Tribunal is prepared to accept the Applicant was initially incorrectly advised of the amount of the compensation charge and that 37% of her settlement amount represented legal costs.
2. The Respondent made extensive written submissions to the Tribunal about the Applicant's expenditure of the compensation money paid to her, in addition to her expenditure of other amounts she had received in the relevant period. The Respondent submits that the Applicant had received $294,200.79 into her bank account on 29 August 2022 from the compensation amount she had settled and that, by 15 December 2023, the Applicant had received a total of $348,916.20 from the settlement amount. She also received an amount of $122,701.59 from an inheritance. She spent a total of $393,755.45 from the compensation sum and a total of $471,617.79 from the compensation and inheritance within two years, largely on clothing, gifts, toys, homewares, Christmas decorations, gardening and other discretionary expenses. The Respondent noted that the above expenditure was in addition to the Applicant having received disability support pension throughout that period. The Respondent submitted that the Applicant's bank balance on 1 August 2024 was $77,862.
3. Having had regard to the Applicant's bank accounts, the Respondent submitted that the Applicant had spent, in two years, the following amounts on the following particular categories of items:
   • Clothing, shoes, jewellery and perfume: $67,728.48

• Unidentified Layby, Osko, ZipPay and Latitude payments:

• Confectionary stores: $7,868.82
• Cash Converters: $4,073.20

1. The Tribunal accepted that the above payments totalled $304,527.58. The figures cited by the Respondent were not disputed by the Applicant and were accepted by the Tribunal on the basis that they were consistent with transactions in the Applicant's bank accounts observed by the Tribunal.
2. The Applicant stated at the hearing that she was seeing a psychologist at the time of the settlement and she was legally represented for the settlement. After the settlement, she commenced seeing her current psychologist, and was attending him once a month between 2022 and 2024. She agreed her psychologist was supporting her through the period she incurred the above expenditure. She also agreed with the Respondent's observations that she had received $294,000 "in her pocket" in August 2022, had received around $350,000 by late 2023, received a further amount of $122,000 in April 2024 from an inheritance, was receiving disability support pension the entire time, and received arrears of disability support pension after cancellation and reinstatement of $20,000 and $11,000. The Applicant agreed with the Respondent's observations that she had also been receiving the maximum rate of disability support pension throughout this period.
3. The Applicant gave detailed evidence to the Tribunal at the hearing about the expenditure of the compensation amount and the inheritance she had received. She told the Tribunal that she had initially had a plan to make a fresh start and move out of the rental cycle and buy a small home in a regional area. She first had the settlement amount sitting in her Bank of Melbourne account and intended to leave it there, but found she was transferring money to other accounts to pay for things. She needed a new loungeroom suite and a television and paid $8,000 for each of these. She had taken out life insurance, TPD and trauma insurance which was costing "maybe 50 to 100" a month. The Tribunal noted that the regular payments in addition to lump sum payments towards the insurance company amounted to approximately $70,000. The Applicant stated she has, more recently, had to withdraw some of the money from the insurance paid for medical tests. She had also withdrawn $2,000 to

$3,000 from her superannuation for the psychiatrist and her psychologist. She stated that her current superannuation balance is $140 and that this is a superannuation fund she opened in 2002.

1. When asked about items of expenditure indicated in the Applicant's bank accounts, the Applicant gave evidence of these having been for Christmas decorations for her mother, herself and her daughter; Christmas presents and gifts; children's clothing; toys; gardening items for her home and her mother's home; stationery and cards; a large toy rabbit for her granddaughter; purchases for her home; perfume gifts for her daughter and son; a Tiffany bracelet for her infant granddaughter and a Pandora bracelet for her other granddaughter; clothing for herself; and cash for her children for Christmas. She agreed with the Respondent's observations that, on the day she had received the inheritance, she had spent

$6,000 and gave evidence that the expenses on that date related to homewares and clothing for her granddaughter.

1. When asked about the large amounts spent on the above items, the Applicant stated that, looking back, she was "probably over-generous" with her family, rather than looking after herself. When the Respondent observed that $130,000 had been spent over a four-month period, the Applicant responded by stating that it "seems incredible". In response to the Respondent's observation that a further $122,000 had been spent in eight months in 2024, in addition to the Applicant having received disability support pension, the Applicant stated in response yes, and at the time she had been unaware she was spending that amount of money.
2. The Applicant gave evidence of having seen a financial counsellor but that she had not sought financial advice at the time the compensation payment was made. This was because she thought she'd be okay without financial advice and was going along okay at the start. She saw the financial counsellor in around 2023, by which stage she had gone through a substantial amount of money; she had around $50,000 left at that time. The financial counsellor told her she was going through trauma and had been abused.
3. The Applicant told the Tribunal that her spending was due to her trying to ease her own pain and that of her grandchildren. She claimed to have been seeking an outlet due to not having financial support. She asserted at the hearing that she has now addressed her problem spending herself, with a financial counsellor and by enrolling in a saver course, and that she is no longer "emotional spending". She asserted that she is, however, in financial hardship as her rent is $680 per fortnight and the disability support pension is not sufficient for her to live on. She has cancelled her contents insurance as a result, but is still contributing to her superannuation fund when she can because she doesn't want to use the fund. She gave evidence of having made a decision that her living environment has been a "handicap" to her and that she will be leaving the area she is residing in and making a fresh start, away from her daughter, hopefully by the end of the calendar year. She claimed that she is currently reliant on food packages and vouchers because of her financial situation. The Tribunal accepted the evidence given by the Applicant about her attendance at a financial counsellor and enrolment in a saver course, the cancellation of her contents insurance and that she is considering moving out of her current accommodation.
4. The Respondent submits that it is not appropriate to apply section 1184K of the Social Security Act in the circumstances of this particular case. The Respondent's stated reasons for this include that:4
   1. The practical effect of exercising the discretion would be to refund the Applicant taxpayer funds as the compensation preclusion period has been served (ended in September 2019), the compensation charge has been fully recovered, and the Applicant has been in receipt of disability support pension since the compensation payment.

1. It would not be appropriate to exercise the discretion given the Applicant's frivolous and discretionary spending. The Applicant received $348,916.20 in pocket after

disbursements and costs from her $950,000 settlement. The Applicant then spent a total $393,755.45 in 2 years from her compensation sum and inheritance (total of

$471,617.79) on clothing, gifts, toys, homewares, Christmas decorations, gardening, and other discretionary spending.

1. The Applicant is not in severe financial hardship as she has liquid assets of

$77,862.34 (as of 1 August 2024), has stable accommodation, and is currently receiving the maximum rate of disability support pension of $1,369.20 per fortnight.

1. Even if the totality of the Applicant's circumstances could be considered special circumstances in combination, it is not appropriate to exercise the discretion as it would be inconsistent with the objectives and purpose of the Act as a lump sum refund would in essence allow the Applicant to 'double dip' disability support pension payments for the same period. Further, there is no injustice in the law operating as intended and there is no guarantee that limited taxpayer funds would not be spent on further frivolous and discretionary spending.

1. Given the evidence of the Applicant at the hearing, and the submissions presented by the Respondent, the Tribunal had particular regard, from the Respondent's written submissions, to previous AAT decisions addressing the nature of an applicant's spending. In Department of Family and Community Services and Rankin [1999] AATA 496, the AAT had found that (at [56]):5

Counsel relies on a decision of this Tribunal - Re Krzywak (1987-1988) 15 ALD 690, where Senior Member Dwyer had occasion to review the case law relating to "special circumstances" under the Act. That case involved a degree of hardship vastly greater than any conceivable hardship that may be said to exist in this case. The case is of interest, however, because the learned Senior Member cites Re Tallon (1988) 15 ALD 6 with approval where this Tribunal noted: "To say that the applicant is a spendthrift and foolish with money is an understatement. However, hardship is hardship, even if it is self-inflicted". Senior member Dwyer went on to point out - and I respectfully agree with her observation - that the circumstances out of which hardship arose, and the degree of hardship, are both relevant in deciding whether and how the discretion under the Act should be exercised. Alas, these observations cannot assist this applicant. I find there is insufficient hardship to introduce the discretion, and the circumstances in which Mr Rankin finds himself are the result of a deliberate choice to acquire a number of assets and to dissipate the balance. Thus whilst hardship is a relevant factor, in finding "special circumstances" one must always ask whether circumstances exist which would allow an applicant to retain the double advantage of social security benefits and damages in respect of the same period of incapacity. Applied to this case, I find that, contrary to counsel's submission, that the applicant has deliberately and somewhat recklessly embarked on a course of conduct which has created the circumstances of hardship he now relies on; see Re Ivovic and Director-General of Social Services [1981] AATA 57; (1980-1981) 3 ALN N95.

1. In KCFY and Secretary, Department of Social Services (Social Services second review)

[2023] AATA 983, the AAT found that (at [85]-[88] & [91]):6

Much of the Applicant's expenditure consists of discretionary expenditure, including loans to friends, purchases of gifts for her children, holiday expenses, and spending on Ubers, Uber Eats, fast food, lottery tickets and gambling. In Secretary, Department of Social Services and Aydin ("Aydin"), the Tribunal considered the respondent's discretionary spending which included amounts spent on Uber Eats and jewellery and made the following observation:

.... Further, his spending... on jewellery and Uber eats leads me to conclude that if he was experiencing financial hardship, he was to a large extent the author of his own misfortune. The Tribunal in Re John Clinton Alver and Secretary, Department of Social Security has previously determined that the cause of an individual's financial difficulties is relevant when considering the exercise of the special circumstances provisions and the Tribunal has previously 'tended to take a hard like where someone has, through extravagance or thoughtlessness, brought about their own dilemma'. The evidence strongly supports a finding that any financial difficulties Mr Aydin may have faced when he claimed JSP or subsequently were brought about by his extravagance.

In Black v Secretary, Department of Social Security ('Black') the Tribunal noted that the reasonableness of the person's expenditure is a relevant consideration in determining 'special circumstances':

The Tribunal has consistently considered the reasonableness of the person's expenditure of compensation payments in determining special circumstances. In particular substantial loans to family members, monies spent on travel and cars, general extravagance have been considered to mitigate against special circumstances.

The Tribunal acknowledges that the applicants are in a difficult financial situation. However, the circumstances leading to such hardship are not irrelevant. In considering the entirety of the applicant's circumstances, the Tribunal is mindful of the nature of the expenditure, and the context in which that expenditure occurred.

In Groom and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs, the Tribunal examined a catalogue of large-scale discretionary expenditure by the applicant which, the Tribunal found, had led to his being in financial hardship through 'circumstances (which) are entirely of his own making and occurred despite him having received legal advice of the preclusion period and its consequences'.

Significant discretionary expenditure on items such as travel have been highlighted in Tribunal decisions, including in Re Griffiths and Secretary, Department of Social Security. In Re Secretary, Department of Family and Community Services and Szoke the Tribunal

was particularly forthright in relation to the applicant's failure to have regard to the consequences of her behaviour:

....the Respondent's case is that she is now impoverished by her failure to make financial provision for the lump sum preclusion period. That was, on her own case, clearly the result of voluntary actions by the Respondent to dissipate the money received by her in settlement of her compensation claim. She did not experience misfortune, nor did she experience circumstances not envisaged by the legislation.

We are satisfied that the Respondent deliberately spent the money without regard to the consequences of her action. Her behaviour in relation to the money was reckless with no regard to the consequences.

On the basis of the evidence before it, and having regard to the relevant authorities, the Tribunal finds that the Applicant did not prudently manage her finances following receipt of her compensation settlement. She did not seek independent financial advice about how to manage the settlement funds and did not take up the opportunity to speak to a Financial Information Services Officer. She made purchases and loans to friends and family without regard to the consequences, being the reduction in the settlement monies which were to support her for the preclusion period. The Applicant did not experience misfortune, nor did she experience circumstances not envisaged by the legislation. Accordingly, the Tribunal finds that there are no 'special circumstances' which warrant the exercise of the discretion in section 1184K of the Act to reduce the length of the preclusion period.

1. In Massoud, cited above, the AAT also commented on the applicant's claim to have been suffering from ill health and its relevance to special circumstances. At [69]-[70] the AAT stated that:7

A further factor that has been considered in various Tribunal determinations is ill health. Whilst ill health is, of itself, not necessarily determinative it can be an important consideration. The width of the discretion is broad and "extends to all the circumstances of the case" including ill health - Secretary, Department of Social Security v Thompson [1994] FCA 1477; (1994) 53 FCR 580 at 586 per Einfeld J.

The Applicant is in bad health, but in most cases involving the preclusion period that would be expected. The fact that an applicant has been injured and received a compensation payout usually results in that person being in ill health during the preclusion period or immediately thereafter. The various Tribunal determinations focus on the consequences of that ill health in making a determination as to special circumstances. In short ill health is the starting point of the exercise, not the determining factor. Further, it is usually the case when determining that ill health is a special circumstance, the ill health being experienced by an applicant is more severe than the majority of DSP recipients.

1. The Respondent's representative made oral submissions consistent with its written submissions, at the Tribunal hearing. The Respondent's representative submitted that the Applicant's history of compulsive spending would be repeated if any amounts were repaid to her by Centrelink and that, having regard to the Applicant's circumstances as a whole and the intentions of the legislation, it is not appropriate for the discretion to be exercised in this matter. The Respondent's representative noted that the Applicant had a level of support network over the time she was spending significant amounts of money, that she had spoken to a financial counsellor and was legally represented, and she had given evidence of having an accounting degree and a background in bookkeeping. The Respondent noted that the Applicant had spent $472,000 in a two-year period, not including the disability support pension she had been receiving and that, given this history and pattern, the Respondent had no confidence in how any further amounts given to the Applicant would be spent. The Respondent further noted that the Applicant is now in the same position as other disability support pension recipients, that all social security recipients are facing issues with costs of living and that the Applicant is currently in stable accommodation.
2. The Applicant responded to the Respondent's submissions by asserting that her daughter and partner are separating and this is likely to affect the home she is living in; once the home is sold, the Applicant will have nowhere to live.
3. For the reasons set out above, the Tribunal has accepted the Applicant was paid compensation within the context of abuse by the leader of a religious institution when she was in her late forties. The Tribunal has accepted the Applicant experienced family violence at the hands of her husband, to whom she was married between 1985 and 1997, and that she has made a police report which alleges a more recent incident of sexual violence in 2021. The Tribunal has accepted the Applicant has experienced physical and verbal violence from her daughter and that she has concerns about her two granddaughters because of her daughter's violence. The Tribunal has accepted that the Applicant's mother has passed away and that, following her passing, the Applicant's sister appropriated money from their mother's bank account. From this evidence, the Tribunal has accepted the Applicant has complex and difficult relationships with a number of family members. She does, however, reside in a house owned by her daughter and the Tribunal considers that, despite her assertions to the contrary, her accommodation is presently stable.
4. The Applicant was granted disability support pension in 2011 within the context of a diagnosis of conversion disorder. While she gave evidence of having attended for medical investigations more recently, there is no additional diagnosis at the time the Tribunal has proceeded to make its decision, and the Tribunal makes no findings about any other medical conditions the Applicant has.
5. The Applicant has attended psychologists since 2012 and has been attending her current psychologist since 2019. She has had a report prepared by a psychiatrist who has indicated they have known her since 2015 and the Tribunal accepts this as correct. The psychologist and psychiatrist have provided evidence that the Applicant is experiencing symptoms of post-traumatic stress disorder and anxiety/depression symptoms and the Tribunal accepts from

this evidence that the Applicant has experienced, and is experiencing, ongoing symptoms relating to poor mental health.

1. The Applicant has spent the entirety of the compensation money paid to her, in addition to a significant inheritance she received and two large lump sum payments made by Centrelink. The majority of the amounts paid to the Applicant have been spent on discretionary, non-essential items for the Applicant and her family members. The Applicant's psychologist and psychiatrist have referred to the Applicant's emotional difficulties relating to family members as being linked to the spending, and to poor decision-making and impulsivity as related to symptoms of post-traumatic stress disorder. The Tribunal accepts that the Applicant's spending, in significant part, related to items for her mother, children and grandchildren and has links to the Applicant seeking an emotional connection to her family members.
2. The Tribunal accepts that the Applicant is currently reliant on fortnightly disability support pension payments. She has only a very small amount in her superannuation account, despite having contributed to the account since 2002, and the reasons for the very small superannuation balance were unclear to the Tribunal on the information before it. The Applicant had contributed to an insurance account from the amounts paid to her, within the vicinity of $70,000, and it appeared to the Tribunal from the information before it that at the time of the hearing, there were no longer any amounts held in the insurance account. The reasons for this were also unclear to the Tribunal on the information before it.
3. While the Tribunal accepts the Applicant is now solely reliant on social security payments, her current circumstances are due to decisions she has made in spending significant amounts paid to her. The Applicant was aware that the money she received was intended to support her for a significant period of time. The Applicant had access to legal representation, psychological support and a financial counsellor during the time of the expenditure. Previous AAT matters that have dealt with expenditure in similar circumstances have noted the relevance of the manner in which amounts were spent to the exercise of the discretion, and the Tribunal sees no reason to depart from that approach in the present matter
4. The Respondent submits that the Applicant would be likely to spend any refunded amounts in a similar manner to her past expenditure. The Tribunal did not accept this is a relevant consideration in the exercise of this discretion, as it does not consider it has the capacity to determine how any amounts must or must not be spent by a Centrelink recipient. The Tribunal does not consider that imposition of the "50% rule" creates special circumstances, on the basis that the legislation applies equally to all recipients to whom a compensation payment is made. Nor does the Tribunal consider that 37% of the settlement amount being paid to the Applicant's representatives, or her decision to settle because of risk and costs associated with a trial, create special circumstances that are significantly out of the ordinary to circumstances faced by all applicants negotiating a compensation settlement. The Tribunal has not placed weight on any of these factors in making a decision in this matter.
5. The Tribunal has weighed up all of the evidence before it and is sympathetic to the family dynamics outlined by the Applicant, to her ongoing mental health challenges and to her current straitened financial circumstances. However, when considered in totality, including

the reasons for the Applicant's current situation, the Tribunal has concluded that there are no special circumstances that make it appropriate to treat the whole or part of the compensation as not having been made. The Tribunal declines to exercise the discretion in section 1184K of the Social Security Act on the evidence presented to it in this matter.

1. Section 1184G of the Social Security Act states that, if the Secretary gives a person a notice under section 1184 that they propose to recover a specified amount from the person, the specified amount is a debt due by the person to the Commonwealth. Given this, the Tribunal also considered whether the compensation charge of $199,760.45 is able to be written off or waived under the Social Security Act.
2. Subsection 1236(1A) of the Social Security Act allows for write off of a debt for a period of time where:

(a) the debt is irrecoverable at law; or

(b) the debtor has no capacity to repay the debt; or

(c) the debtor's whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or

(d) it is not cost effective for the Commonwealth to take action to recover the debt.

1. As the compensation charge has been recovered by Centrelink, the Tribunal finds that none of the provisions in section 1236 of the Social Security Act apply and the debt is unable to be written off for a period of time.
2. Section 1237A of the Social Security Act allows for waiver of a debt where it has been caused by sole administrative error on the part of the Commonwealth and the debtor received the payments in good faith. The Tribunal finds that there was no error by Centrelink or any other Commonwealth entity and that the debt cannot be waived under this provision.
3. Section 1237AAD of the Social Security Act provides that a debt may be waived where:

(a) the debt did not result wholly or partly from the debtor or another person knowingly:

(i) making a false statement or a false representation; or

(ii) failing or omitting to comply with a provision of this Act, the Administration Act or the 1947 Act; and

(b) there are special circumstances (other than financial hardship alone) that make it desirable to waive; and

(c) it is more appropriate to waive than to write off the debt or part of the debt.

1. The Tribunal has accepted, for the reasons set out above, the claimed circumstances of the Applicant with respect to her family members, her mental health, previous harm and family violence she has experienced, and the circumstances in which a settlement amount was paid to her. The Tribunal accepts the Applicant is in straitened financial circumstances, that she is residing in accommodation owned by her daughter and is contemplating moving to a private rental arrangement, that she is attending her psychologist on a monthly basis and that she has had recent medical investigations. However, while accepting these matters, the Tribunal was not persuaded that the Applicant's circumstances are sufficiently distinguishable from other recipients of social security benefits and, and noting the findings made above about the reasons for the Applicant's current financial situation, was not persuaded that there are special circumstances in this case that make it desirable to waive the debt. The Tribunal finds that section 1237AAD of the Social Security Act does not apply in this case.
2. There are no other provisions in Part 5.4 of the Social Security Act, relating to non-recovery of debts, that apply in the circumstances of this case. The Tribunal has concluded that the debt is unable to be waived.