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[2002] AATA 642
respondent. The Tribunal affirmed the decision under review. No relief was granted under s 1184K.
A legislative change meant Lubcke's workers' compensation was deducted directly from his Disability Support Pension, leaving no pension payable. He asked the Tribunal to use the special-circumstances discretion to disregard some compensation. The Tribunal accepted that his disability and the change caused hardship, but found that his disability was being compensated through workers' compensation and that the household's finances did not meet the threshold the Tribunal considered necessary. It affirmed the cancellation.
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In Lubcke and Department of Family and Community Services [2002] AATA 642, Senior Member WJF Purcell of the Administrative Appeals Tribunal considered a review concerning the interaction between periodic workers' compensation and Disability Support Pension (DSP). The Tribunal's decision, made on 10 July 2002, was to affirm the decision under review.
No linked legislation citations have been extracted yet.
The applicant, Steven John Lubcke, had suffered a work-related injury on 13 January 1998. He underwent spinal surgery on 25 September 1998, including a laminectomy and spinal fusion ([3]). He was married with four children and received workers' compensation and DSP from January 1999. Before the legislative change, the compensation was treated as ordinary income and he received DSP of $215.58 per fortnight ([3]).
The Family and Community Services Legislation (Simplification and Other Measures) Act 2001 changed the treatment of compensation provisions in Part 3.14 of the Social Security Act 1991, with effect from 20 September 2001. Under the new arrangement described in the reasons, periodic compensation was deducted directly from the rate of a compensation-affected payment. The result for Lubcke was that his DSP rate became nil and payment was cancelled ([3]). The reasons give the compensation amount as $912.52 per fortnight in paragraph 3 and $936.52 per fortnight as the amount he was then receiving in paragraph 11. They do not explain the difference between those figures.
A delegate cancelled payment on 20 September 2001. An Authorised Review Officer affirmed that decision on 25 October 2001, and the Social Security Appeals Tribunal (SSAT) affirmed it on 4 January 2002. Lubcke then applied to the AAT for review of the SSAT decision ([1], [5]).
Lubcke asked for the Secretary's discretion under s 1184K to be exercised so that enough of his compensation would be treated as not having been made to leave him in the position he said he had been in before the new legislation: receiving about $215 per fortnight in DSP as well as compensation ([6]). He described continuing deterioration in his back condition, an inability to return to work, additional costs associated with his disability, loss of the pension card and increased hardship for his family ([7]).
The Department argued that the effect arose from the legislative change, rather than a change in Lubcke's personal circumstances. It submitted that the change itself could not constitute special circumstances and that his health was not sufficient, particularly because he was receiving compensation for his incapacity ([8]-[10]).
The Tribunal's reasoning addressed two main grounds: Lubcke's disability and his household's financial circumstances.
On disability, the Tribunal accepted that Lubcke had a high level of disability and would be unable to return to the workforce ([12]). It nevertheless considered that he was receiving workers' compensation in accordance with workers' compensation legislation. The Tribunal contrasted that position with what it saw as the role of DSP: support for a disabled person unable to work who had no other source of income and ability to maintain himself ([13]). On that basis, it did not regard Lubcke's disability as a special circumstance for s 1184K ([13]).
On finances, the Tribunal considered the evidence about the household rather than treating the loss of DSP in isolation. It recorded total income of $1,728 per fortnight for Lubcke, his wife and three dependent children, with their eldest son receiving Youth Allowance and having part-time work ([11]). The applicant also described debts to his father and a friend, a remaining Radio Rentals debt, and the need to purchase a bed. The Tribunal noted that he had not incurred new debts since the legislative change and that the Radio Rentals commitment had reduced by about $40 a week ([11]). It concluded that, on the whole of the evidence, the financial circumstances were not sufficiently “straightened and unusual” to justify favourable exercise of the discretion ([14]).
The Tribunal also acknowledged that the change had affected Lubcke harshly and that he was angry and dismayed by the loss of pension-related benefits ([12]). It stated that the new legislation intended weekly compensation to operate as a direct, dollar-for-dollar deduction without a threshold, instead of being treated as ordinary income ([12]). The decision therefore treated the new statutory arrangement as controlling, while separately considering whether the special-circumstances discretion applied.
The reasons describe the earlier treatment of Lubcke's compensation as ordinary income. The Department's submission was that, under s 1168, his compensation was treated that way because his wife was receiving Parenting Allowance, which the Department described as a compensation-affected payment at the time of his injury ([8]). The reasons state that this provision was removed with the introduction of s 1173 ([8]).
The Tribunal reproduced part of s 1173. In the circumstances set out there, where a person received periodic compensation and claimed or received a compensation-affected payment for relevant days, the rate of that payment was reduced ([3]). The Tribunal characterised the effect of the changed scheme as a direct dollar-for-dollar deduction, with no threshold amount ([12]). For Lubcke, that calculation reduced the DSP rate to nil ([3]).
Section 1184K supplied the relevant discretion. The reproduced text allowed the Secretary to treat all or part of a compensation payment as not having been made or not liable to be made if that was considered appropriate in the special circumstances of the case. Subsection (2) provided that the fact that the circumstances giving rise to compensation were unrelated to those giving rise to a compensation-affected payment did not, by itself, constitute special circumstances ([4]).
The decision does not set out a comprehensive test for special circumstances or explain all possible applications of s 1184K. Its reasoning is confined to the facts and evidence before the Tribunal. It also does not decide whether the Department's broader submission about Parliament's intention and the absence of a saving provision was correct as a general proposition. The Tribunal's operative conclusion was that the discretion was not warranted on Lubcke's circumstances ([12]-[15]).
At paragraph 12, the Tribunal said: “The 2001 legislation has affected him harshly, but that is the legislation Parliament has enacted, and which the Secretary of the Department, and hence this Tribunal, must apply.” In plain English, the Tribunal recognised the adverse impact but considered itself bound to apply the statutory scheme that had taken effect.
The same paragraph described the legislative change as requiring weekly compensation to be treated as a direct deduction, dollar for dollar, without a threshold amount ([12]). That statement explains how the Tribunal understood the new scheme's practical operation in this case.
At paragraph 13, the Tribunal said it did not consider Lubcke's disability a special circumstance. Its reasoning was that the insurer was compensating him under workers' compensation legislation and, in the Tribunal's view, DSP had a role where a disabled person unable to work had no other source of income and ability to maintain himself. This was the Tribunal's application of s 1184K to the evidence before it, not a finding that disability could never be relevant to special circumstances.
At paragraph 14, the Tribunal concluded that the family's financial circumstances were not “so straightened and unusual” that it was appropriate to exercise the discretion in Lubcke's favour. In plain English, the Tribunal considered the household income and other evidence, and found the circumstances did not justify disregarding any part of the compensation for DSP purposes.
The final paragraph records the disposition: “For these reasons, the Tribunal affirms the decision under review” ([15]). The AAT therefore left the cancellation decision in place.
The decision is most directly relevant to a fact pattern involving periodic workers' compensation, a compensation-affected social security payment, and a request for special treatment of compensation under the version of s 1184K considered in 2002. It illustrates that a person could argue that personal hardship, disability, or financial circumstances justified treating all or part of compensation as not having been made. The Tribunal assessed those matters on the evidence rather than treating the legislative change itself as automatically establishing special circumstances ([6]-[14]).
The factual features material to this decision included that Lubcke was receiving workers' compensation for his work-related incapacity, that the household had the income and payments recorded by the Tribunal, that some debts were being repaid, and that he had incurred no new debts after the legislative change ([11], [13]-[14]). The decision does not establish that any one of those features will determine another case. Its findings concern the evidence in Lubcke's review.
The decision may also be relevant when distinguishing the existence of hardship from whether the statutory discretion is appropriately exercised. The Tribunal acknowledged that the change had affected Lubcke harshly, yet found neither his disability nor the financial evidence sufficient in the circumstances ([12]-[14]). The decision does not say that hardship is irrelevant; it shows that the Tribunal did not regard the hardship established on this record as enough to change the outcome.
The supplied judgment contains no discussion of later cases and provides no material about how subsequent courts or tribunals treated Lubcke. Accordingly, no claim about its later treatment, approval, limitation, or reconsideration can be grounded in this judgment alone.
The decision is an AAT decision by a Senior Member, not a judgment of a court. The text records the Tribunal's determination of the particular review and does not identify any earlier judicial precedent. It cites the relevant statutory provisions and discusses the parties' submissions, but no case citations appear in the reasons. Any assessment of later treatment would require sources beyond the judgment supplied here.
The reasons do not provide a general definition of “special circumstances” under s 1184K or specify a threshold applicable across cases. They explain why the discretion was not exercised on these facts, but do not determine how different combinations of disability, compensation, household need, debts, or additional disability-related expenses should be evaluated.
The decision also does not resolve how s 1184K would apply where a person's compensation does not adequately meet the effects of incapacity, or where the person's financial position differs materially from the evidence in this case. The Tribunal noted particular expenses and debts, but did not set out a method for weighing them ([11], [14]).
Nor does the judgment explain the difference between the two compensation amounts it records, $912.52 per fortnight in paragraph 3 and $936.52 per fortnight in paragraph 11. It gives no reason for the differing figures, so no reconciliation can be drawn from the text.
Finally, the reasons do not discuss later amendments to the legislation or whether the provisions described remained in force after the decision. The analysis above is limited to the statutory text and facts reproduced in the supplied judgment.
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DECISION AND ORAL REASONS FOR DECISION [2002] AATA 642
And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Decision The Tribunal affirms the decision under review.
SOCIAL SECURITY - pensions, benefits and allowances - Disability Support Pension - whether the applicant's ill health and inability to work is a special circumstance - whether section 1184K should be exercised in the applicant's favour
Family and Community Services Legislation (Simplification and Other Measures) Act 2001 sections 1173, 1184K
1. This is an application for review of a decision of the Social Security Appeals Tribunal (the SSAT) of 4 January 2002, which affirmed the decision of an Authorised Review Officer of 25 October 2001, which in turn had affirmed a delegate's decision of 20 September 2001, to cancel the applicant's Disability Support Pension because of the amount of his weekly compensation payments.
2. The evidence before the Tribunal comprised the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (the T Documents), together with an exhibit tendered by the applicant, who appeared on his own behalf and gave oral evidence. Mr Underwood represented the respondent (the Department).
3. The applicant, who is 39 years of age and married with 4 children, suffered a work-related injury on 13 January 1998; and on 25 September 1998 he underwent spinal surgery, a laminectomy of the L4-5 and spinal fusion of the L5-S1 discs. He had been in receipt of weekly payments of Workers' Compensation and Disability Support Pension from January 1999. His compensation was treated as ordinary income and he received Disability Support Pension of $215.58 per fortnight. When the Family and Community Services Legislation (Simplification and Other Measures) Act 2001 (the 2001 legislation) repealed and replaced the compensation provisions in part 3.14 of the Social Security Act 1991 (the Act), with effect from 20 September 2001, the changes to the legislation resulted in the applicant's periodic compensation payments of $912.52 per fortnight being treated as a direct deduction from the rate of Disability Support Pension. This resulted in no Disability Support Pension being payable, as the rate would be nil. A Departmental officer decided on 20 September 2001 to cancel payment of Disability Support Pension. Section 1173 of the 2001 legislation provides for the treating of periodic compensation as a direct deduction, and provides, in part, as follows:
(a) a person receives periodic compensation payments; and
(b) the person was not, at the time of the event that gave rise to the entitlement of the person to the compensation, qualified for, and receiving, a compensation affected payment; and
(c) the person receives or claims a compensation affected payment in relation to a day or days in the periodic payments period;
the rate of the person's compensation affected payment in relation to that day or those days is reduced in accordance with subsection (2).
4. Section 1184K of the 2001 legislation provides discretion to the Secretary in the following terms:
"(1) For the purposes of this Part, the Secretary may treat the whole or part of a compensation payment as:
if the Secretary thinks it is appropriate to do so in the special circumstances of the case.
(a) a person or a person's partner receives or claims a compensation affected payment; and
(c) the set of circumstances that gave rise to the claim for compensation is not related to the set of circumstances that gave rise to the person's or the person's partner's receipt of, or claim for, the compensation affected payment;
the fact that those 2 sets of circumstances are unrelated does not alone constitute special circumstances for the purposes of subsection (1)."
5. The applicant applied for review of the delegate's decision and on 25 October 2001 an Authorised Review Officer affirmed the decision. The applicant applied for review of that decision and on 4 January 2002 the SSAT affirmed the decision. He has applied to this Tribunal for review of the SSAT decision.
6. The applicant submits that it is appropriate in his special circumstances that the discretion provided by section 1184K of the 2001 legislation should be exercised in his favour; that so much of the compensation payment should be treated as not having been made as would result in his being in the same position as he was before the implementation of the 2001 legislation, namely in receipt of Disability Support Pension of $215 per fortnight, in addition to his weekly payments of compensation.
7. The applicant maintains that because of the continuing deterioration of his back condition, he will not return to any form of employment, and he is unable therefore, to earn any additional income. He faces also, the necessary costs associated with his disability, such as lawn mowing expenses, car washing, and car repairs, all of which he performed himself before his injury. He was in receipt of Disability Support Pension for 3 years before the 2001 legislation, and overnight he was "tarred with the same brush" as those who rort the system. He has lost the benefit of the pension card, the extra income, and, in effect, the legitimacy of being a Disability Support Pension recipient. He and his family had been able to survive financially on their social security income, but now their financial hardship has increased.
8. The Department contends that the cancellation of the applicant's pension has arisen solely from the changed treatment of compensation effected by the 2001 legislation. The applicant's wife was receiving Parenting Allowance, a compensation affected payment, at the time of his injury, and in accordance with section 1168 of the Act, the applicant's compensation payment was to be treated as ordinary income. That provision was removed with the introduction of section 1173 of the 2001 legislation. Although this is a changed treatment of periodic compensation, it was intended by Parliament to have this effect. Had Parliament intended existing compensation recipients to be exempt from the new scheme, it could have introduced a saving provision. That no saving provision was included demonstrates that Parliament intended no relief for existing recipients.
9. It is the Department's contention that some relief may be provided if the person has sufficient factors to warrant treating all or part of the compensation as not being made, pursuant to section 1184K of the 2001 legislation; and had these factors been evident prior to 20 September 2001, there could already have been favourable treatment of the applicant's compensation payments. There has been no change to his personal situation. The effect upon his pension entitlement stems solely from the legislative change, which cannot of itself constitute a special circumstance.
10. The Department submits finally, that the only factor that might give rise to special circumstances is the applicant's health. However, although he believes he will never work again, he is already being compensated for that fact. Should his compensation entitlement reduce, he may at that time receive the pension again. In any event, ill health by itself is not sufficient reason for exercise of the discretion in section 1184K of the 2001 legislation.
11. On the evidence, the applicant receives now, $936.52 per fortnight compensation payments. His wife receives Carer Payment and Family Payment for 3 dependent children, of $792 per fortnight from the Department, a total of $1,728 per fortnight or $864 per week. The applicant's eldest son, who is 17, is in year 12, receives Youth Allowance and has a part-time job. The applicant gave evidence that he owes his father $2,000, a friend $3,000 and the balance of his Radio Rentals debt is now reduced to $1,000. He agreed in evidence, that he has not incurred any new debts since the implementation of the 2001 legislation. He needs to purchase a new bed, which the compensation insurer refuses to supply, but he has the Radio Rental commitment reduced now, by about $40 per week.
12. It is not in dispute that the applicant suffers a high level of disability and will be unable to return to the workforce. He is clearly angry and dismayed at the effects upon him and his family of the change in the legislation and the loss of the benefit of the pension card. The 2001 legislation has affected him harshly, but that is the legislation Parliament has enacted, and which the Secretary of the Department, and hence this Tribunal, must apply. It was Parliament's intention that the weekly compensation payments be treated now as a direct deduction, a dollar for dollar deduction, without a threshold amount, instead of being treated as ordinary income.
13. In relation to the applicant's submission that his ill health and inability to work is a special circumstance; he is currently being compensated by the insurer in accordance with Workers' Compensation legislation, and in my view, it is the role of the Disability Support Pension to support a disabled person unable to work, and who has no other source of income and ability to maintain himself. I do not consider that his disability is a special circumstance for the purposes of the legislation.
14. In relation to the applicant's financial circumstances, he and his wife and 3 of the children, have an income of $1,728 per fortnight or $864 per week, and the eldest son is in receipt of Youth Allowance. I do not consider, on the whole of the evidence, that the applicant's financial circumstances are so straightened and unusual, as to satisfy me that it is appropriate in all the circumstances of this matter, that the discretion provided by section 1184K of the 2001 legislation should be exercised in the applicant's favour.
15. For these reasons, the Tribunal affirms the decision under review.
I certify that the 15 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member WJF Purcell
Signed: .....................................................................................
The Tribunal affirmed the decision under review. No relief was granted under s 1184K.