Tribunal: Senior Member S Trotter (second review)

Decision: The Tribunal sets aside the decision under review and in substitution decides that, pursuant to section 1184K of the Social Security Act 1991, the aggregate lump sum compensation payment of $108,949 is to be treated as not having been made for the purposes of the compensation preclusion provisions, with the result that no compensation preclusion period applies.

Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been removed from this decision and replaced with generic information so as not to identify involved individuals as required by subsections 201(1A) - 201(1B) of the Social Security (Administration) Act 1999.

SOCIAL SECURITY - age pension - compensation - compensation payments - characterisation of compensation - whether payments relate to lost earnings or earning capacity - whether payments relate to same event - deed of release - compensation limited to a period prior to receipt of compensation affected payment - compensation preclusion period - discretion to disregard whole or part of compensation payment - special circumstances - interaction between workers' compensation and social security schemes - statutory purpose - no double payment - decision set aside and substituted

Social Security Act 1991

Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25

Clark v Secretary, Department of Employment and Workplace Relations [2007] FCA 1076 Dranichnikov and Centrelink [2003] FCAFC 133

Fuller v Secretary, Department of Family and Community Services [2004] AATA 615

Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541

Kertland v Secretary, Department of Family Services [1999] FCA 1596

Miller and Secretary, Department of Employment, Education, Training and Youth Affairs [1998] AATA 258

Re Ivovic and Director-General of Social Services [1981] AATA 57; (1981) 3 ALN N95

Secretary, Department of Social Security v Banks [1990] FCA 196

Secretary, Department of Family and Community Services v Chamberlain [2002] FCA 67

Secretary, Department of Social Security v Cunneen [1997] FCA 1033

Secretary, Department of Social Services v Hulls (1991) AAR 414

Ward and Secretary, Department of Social Services [2022] AATA 57

1. Mrs MCJL was injured in a workplace incident on 22 October 2003 and received weekly periodic compensation payments prior to receiving lump sum compensation in relation to the injury. She turned age pension age on 16 July 2020 and age pension was claimed and paid a year later from 17 July 2021.
2. Receipt of compensation that includes a component for lost earning or lost capacity to earn results in a legislatively calculated preclusion period during which there is no entitlement to certain social security benefits. Those benefits received during a calculated preclusion period amount to a charge which is usually required to be repaid. In certain circumstances all or part of the compensation monies may be treated as not having been made if appropriate to do so.
3. The background to this application includes as agreed by the parties in a Statement of Agreed Facts dated 4 April 2025,[1] which includes as follows (with references to the Applicant being to Mrs MCJL):
   1. Mrs MCJL was born on 16 July 1954 and is 70 years old.
   2. On 22 October 2003, Mrs MCJL sustained a work-related injury in the course of her employment at Murrumbidgee Local Health District.
   3. On 10 August 2023, Mrs MCJL made a claim for workers compensation.
   4. On 21 February 2005, Mrs MCJL commenced receiving periodic compensation payments (weekly payments), backdated from 15 November 2004.
   5. On 13 October 2009, the compensation payer (EML), paid Mrs MCJL two lump sums totalling $53,949.10 pursuant to section 66 and section 67 of the Workers Compensation Act 1987 (NSW) (the 1987 Act) on the basis that Mrs MCJL had suffered 24% whole person impairment due to her compensable incident on 22 October 2003.
   6. Mrs MCJL's pension age was 66 years, reached on 16 July 2020.
   7. Mrs MCJL received and was entitled to receive statutory weekly payments of compensation until the first anniversary of the date on which she reached retiring age being 16 July 2021 pursuant to section 52 of the Workers Compensation Act 1987 ("the 1987 Act").
   8. On 10 August 2023, EML agreed to pay Mrs MCJL a further $15,000 as her whole person impairment had been re-assessed at 30% (up from 24% as assessed in 2009). In total, including the payments from 2009, Mrs MCJL received $68,949 in respect of her entitlements under section 66 and section 67 of the 1987 Act.
   9. On 4 September 2023, Mrs MCJL settled a Work Injury Damages claim for $40,000.
   10. The only damages that can be awarded are for past economic loss due to loss of earnings and damages for future economic loss due to the deprivation or impairment of earning capacity pursuant to Section 151G of the 1987 Act.
   11. Section 151IA of the 1987 Act provides a restriction on the ability to claim economic loss after pension age in the case of a damages claim. The pension age for Mrs MCJL was 66 years, reached on 16 July 2020.[2]
   12. On 3 September 2021, Mrs MCJL was paid her first Centrelink benefit (Aged Pension) backdated from 17 July 2021.
4. On 14 December 2023, EML wrote to Services Australia - Centrelink (the Secretary, Department of Social Security)[3], providing a copy of a Deed of Release dated 4 September 2023 (signed by Mrs MCJL on 30 August 2023 and on behalf of EML on 4 September 2023) in relation to Mrs MCJL's claim. A list of the weekly payments made to Mrs MCJL was also provided. The Deed of Release included as follows:[4]

2.1. The Employer agrees to pay the Worker in full and final settlement of the Proceeding, and in consideration of the Worker's agreement to wholly and forever abandon any claim against the Employer in relation to the injury, the allegations of negligence and the Proceeding, and any claim the Worker may have, and to provide the release set out in this Deed of Release, damages in the sum of $40,000.00 clear of workers weekly compensation payments made to the date, if applicable, to be made as a term of the agreement, and inclusive of costs and all disbursements (Settlement Sum).

1. A handwritten notation to the Deed of Release, initialled by Mrs MCJL's solicitor, is as follows:

It is acknowledged that the Workers claim covers the period 22 October 2003 to 16 July 2020.

1. On 12 January 2024, Centrelink decided that a charge of $22,332.78 was recoverable from Mrs MCJL's compensation payment on account of age pension payments received by Mrs MCJL in the compensation preclusion period 2 August 2021 to 19 June 2022.[5] This preclusion period of 46 weeks was calculated based on compensation received of $108,949 ($53,949 + $15,000 + $40,000),[6] with a starting date of 2 August 2021 being the date following last receipt of periodic payments by Mrs MCJL.
2. On 24 January 2024, Mrs MCJL sought review of the decision to impose a compensation recovery charge of $22,332.78 stating as follows:[7]

The compensation settlement amount of $40,000 relates to economic loss up to 16.07.2020 only in accordance with the executed Deed of Release dated 30.08.2023.

Further, in awarding damages for future economic loss due to deprivation or impairment of earning capacity or loss of expectation of financial support, the court must disregard any earning capacity of an injured worker after pension age (s151A Workers Compensation Act 1987). In applying this provision, there is no entitlement to future economic loss under the 1987 Act after 16.07.2020.

On the basis of the Deed and the Legislation, there should be no recovery amount payable.

1. On 13 August 2024, following application on 26 April 2024 for review of the decision, the Administrative Appeals Tribunal (the AAT) in its then Social Security and Child Support Division set aside Centrelink's decision finding that the preclusion period that applied was from 2 August 2021 until 29 November 2021, with the compensation charge to be recalculated on the basis of the reduced preclusion period and the excess charge recovered to be repaid to Mrs MCJL. The reduced preclusion period was calculated on the basis that the monies received pursuant to sections 66 and 67 of the Workers Compensation Act 1987 (NSW) (the NSW Act) ($53,949 + $15,000) were not payments made wholly or partly in respect of lost earnings or lost capacity to earn and therefore were not subject to the compensation recovery provisions of the Act. It was determined that the only relevant compensation for the purposes of calculating the preclusion period was the $40,000 received on 4 September 2023. This resulted in a reduced preclusion period of 17 weeks calculated based on compensation received of $40,000,[8] again starting from 2 August 2021 but ending on 29 November 2021 instead of 19 June 2022. The 13 August 2024 decision was sent to the parties by email on 22 August 2024.
2. On 18 September 2024, the Secretary lodged an application with the Tribunal seeking second review of the decision, stating as follows:

The Tribunal has erred in their application of section 1171 of the Social Security Act 1991, in that all compensation lump sum amounts should be aggregated and cannot be excluded from the calculation of the compensation preclusion period as long as one of the lump sum amounts satisfies ss 1171(1)(b) of the Act (there is evidence that the Respondent received an amount which satisfies this subsection).

1. On 26 September 2024, Mrs MCJL lodged an application with the Tribunal seeking second review of the decision, and, further seeking an extension of time within which to lodge the application, stating as follows:

The Tribunal Member has failed to consider that the $40,000 payment of compensation received by Mrs MCJL is only in respect of economic loss during the period 22/10/2003 to 16/07/2020 which is evidenced in the Deed of Release. No component of the compensation payment can account for any period after which Mrs MCJL reached retirement age.

1. On 14 October 2024, the AAT became the Administrative Review Tribunal (the Tribunal). Under the transitional provisions in the Administrative Review Tribunal (Consequential and Transitional Provisions No. 1) Act 2024, proceedings in the AAT that were not finalised before 14 October 2024 are taken to be continued and finalised by the Tribunal. Anything done in relation to the proceeding before 14 October 2024 is taken to have been done by the Tribunal.
2. On 8 November 2024, the Tribunal extended the time within which Mrs MCJL could seek second review.
3. On 5 August 2025, the Tribunal stayed the operation of the decision of the Social Services & Child Support Division of the AAT until the decision of the Tribunal on second review on the substantive application comes into operation or until further order of the Tribunal.
4. Mrs MCJL's representative, Mr Cameron, and the Secretary's representative participated in a hearing before me by video on 30 October 2025. The Tribunal heard sworn evidence from Ms Sharla Sutcliffe, the solicitor acting for Mrs MCJL in relation to her compensation claim and settlement. Further documents were provided on behalf of Mrs MCJL to the Tribunal and the Secretary immediately following the hearing. Additionally, further time was allowed after hearing for written post hearing submissions from both parties, with further submissions on behalf of Mrs MCJL received on 13 November 2025 and further submissions on behalf of the Secretary received on 24 November 2025.
5. In addition to the oral evidence and submissions at hearing, the following documents were before me at hearing and post hearing and marked as Exhibits (or for identification):

(a) Decision of the Tribunal on first review - 2024/S188340 dated 13 August 2024, marked Exhibit 1;

(b) Order of the Tribunal dated 8 November 2024 extending the time for making of an application for second review by Mrs MCJL on application no 2024/7577, marked Exhibit 2;

(c) Order of the Tribunal dated 5 August 2025 staying the 13 August 2024 decision of the AAT, marked Exhibit 3;

(d) Joint Statement of Agreed Facts dated 4 April 2025, marked Exhibit 4;

(e) Documents provided by Mrs MCJL on first review, pages A1 to A26, marked Exhibit A1;

(f) 26 September 2024 application for second review and extension of time request by Mrs MCJL, marked Exhibit A2;

(g) Mrs MCJL's Statement of Issues dated 13 December 2024; marked Exhibit A3;

(h) Mrs MCJL's Statement of Issues, Facts & Contentions dated 28 February 2025, marked Exhibit A4;

(i) Email from Mrs MCJL's solicitors dated 30 October 2025 and attached:

• - Email from Mrs MCJL's solicitors to insurer's solicitors dated 10 August 2023;
• - Letter from Mrs MCJL's solicitors to insurer's solicitors dated 10 August 2023 - section 282 particulars;
• - Email from Mrs MCJL's solicitors to insurer's solicitors dated 18 August 2023;
• - Email from Mrs MCJL's solicitors to insurer's solicitors dated 1 September 2023;
• - Pre-Filing Statement in proceedings between Mrs MCJL and Murrumbidgee Local Health District,

(j) Mrs MCJL's further submissions dated 13 November 2025, marked Exhibit A6;

(k) Documents provided by the Secretary pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 on first review, pages 1 to 171, marked Exhibit R1;

(l) 18 September 2024 application for second review by the Secretary, marked Exhibit R2;

(m) Secretary's Statement of Issues, Facts and Contentions and List of Authorities dated 19 March 2025, marked Exhibit R3;

(n) Email from Secretary's representative dated 17 September 2025; marked Exhibit R4; and

(o) Secretary's further submissions dated 24 November 2025, marked Exhibit R5.

1. The statutory provisions relevant to this review are contained in the Social Security Act 1991 (the Act).
2. The Act includes a statutory scheme whereby if a person receives compensation containing a component for past or future loss of income, they are not entitled to certain social security payments (compensation affected payments) for a period of time (called a lump sum preclusion period). Age pension is a compensation affected payment as defined. The preclusion period is calculated pursuant to the legislation and depends upon the amount of compensation required to be taken into account pursuant to the legislation and, further, the formula and divisor at the relevant time. Where compensation affected payments have already been paid in respect of the preclusion period, a charge arises and is usually required to be repaid. The legislation also provides a discretion to disregard the whole or part of a compensation payment, and thus reduce or remove a compensation preclusion period (and any resulting charge) if it is considered appropriate to do so in the special circumstances of the case.
3. Where a compensation charge applies, it is a debt to the Commonwealth pursuant to sections 1184G and 1222A(a) of the Act. In certain circumstances debts to the Commonwealth may be waived or written off.
4. Relevant provisions of the Act in relation to matters in dispute in this application include as follows:

(2) Subject to subsection (2B),[9] for the purposes of this Act, compensation means:

(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.

1169 Compensation affected payment not payable during lump sum preclusion period

(a) a person receives or claims a compensation affected payment; and

(b) the person receives a lump sum compensation payment;

the compensation affected payment is not payable to the person in relation to any day or days in the lump sum preclusion period.

lump sum compensation payment does not include a lump sum payment:

(a) to which section 1164 applies; or

(b) that relates only to arrears of periodic compensation payments.

1171 Deemed lump payment arising from separate payments

(a) a person receives 2 or more lump sum payments in relation to the same event that gave rise to an entitlement of the person to compensation (the multiple payments); and

(b) at least one of the multiple payments is made wholly or partly in respect of lost earnings or lost capacity to earn;

the following paragraphs have effect for the purposes of this Act and the Administration Act:

(c) the person is taken to have received one lump sum compensation payment (the single payment) of an amount equal to the sum of the multiple payments;

(d) the single payment is taken to have been received by the person:

(d) (i) on the day on which he or she received the last of the multiple payments; or

(d) (ii) if the multiple payments were all received on the same day, on that day.

(d)

(2) A payment is not a lump sum payment for the purposes of paragraph (1)(a) if it relates exclusively to arrears of periodic compensation.

(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.

(a) Did Mrs MCJL receive a lump sum compensation payment for the purposes of section 1169 of the Act? And, if so, > > (b) What is the amount of the lump sum compensation payment to be taken into account for the purposes of section 1169 of the Act and the resulting preclusion period? And > > (c) Is it appropriate in the special circumstances of the case to treat the whole or part of the compensation payment as not having been made? And, if not, > > (d) Can any resulting debt to the Commonwealth be written off or waived?

1. Mrs MCJL's submissions included that the $40,000 paid under the Deed of Release was not a lump sum compensation payment for the purposes of section 1169 of the Act because it represented arrears of periodic compensation only, covering the period from 22 October 2003 to 16 July 2020, being the date Mrs MCJL reached age pension qualification age.
2. It was submitted that pursuant to section 151IA of the NSW Act, Mrs MCJL was legally unable to recover damages for loss of earnings or loss of earning capacity after pension age. Consequentially although the damages claim by Mrs MCJL is pleaded in the alternative to include loss of earning and superannuation, the claim was necessarily confined in substance and law to past economic loss prior to 16 July 2020. It was submitted that this position is supported by:

(a) the Particulars of Loss and Damage in the Pre-Filing Statement,[10] which specifies the following: > > Particulars of Loss and Damage > > 4. As a result of that incapacity the Claimant has lost earnings at the rate of $500.00 net per week (as adjusted for CPI) from 22 October 2003 to 16 July 2020. > > 5. The workers compensation insurer has paid the Claimant for periods of time off work. > > 6. There will be credit given for all earnings received from the defendant during the period claimed. > > 7. In addition, or in the alternative, there will be a claim for loss of earning capacity on the basis that the Claimant's injuries and disabilities substantially diminished her mobility and capacity within the labour force. > > 8. There will be a claim for loss of past superannuation contributions at the rate of 9% based on the amount determined for past loss of income. > > 9. The Claimant claims a sum in respect of tax paid on their compensation payments pursuant to the principles of Fox v Wood. > > (b) the contemporaneous correspondence from Mrs MCJL's solicitors supporting that the Deed of Release reflected the confined period of compensation, including the following (part of Exhibit A5): > > (i) letter from Mrs MCJL's solicitors to the EML's solicitors dated 10 August 2023 including particulars required by section 282 of the Workplace Injury Management and Workers' Compensation Act 1998 (NSW), including as follows: > > Past Loss of Earnings > > 1. The Claimant makes a claim for $500 net per week (as adjusted with increases in the CPI) from 22 October 2003 to the date of her retirement at age 68 on 16 July 2020. > > 1. In accordance with the principles of Najdovski v Crnojovic [2008] NSWCA 175, the Claimant makes a claim for past loss of superannuation at the rate of 11%. > > (ii) email from Mrs MCJL's solicitors to the EML's solicitors dated 10 August 2023 including as follows: > > Please find attached, Section 282 particulars. > > Please note that our claim is pleaded (and subsequently settled) on the basis of economic loss up to our client's retirement age being 66 years of age. > > It would be appreciated if the Deed could please reflect this so that the settlement does not adversely affect her aged pension. > > Any problems, let me know. > > (iii) email from Mrs MCJL's solicitors to EML's solicitors dated 18 August 2023, including as follows: > > As per my email of 10 August 2023, could we please include a provision in the Deed that reflects the Plaintiff's claim (and subsequent settlement) is restricted to the period 22 October 2003 to 16 July 2020. > > Although I appreciate the s282 particulars and PFS reflect this, presumably only the Deed is considered by Centrelink and it would be preferable that it be clear so that our client's ongoing Centrelink benefits are not affected. > > Could I suggest adding a clause before 2.1 such as: > > 2.1 It is acknowledged that the Plaintiff's claim covers the period from 22 October 2003 to 16 July 2020. > > (iv) email from Mrs MCJL's solicitors to EML's solicitors dated 1 September 2023 enclosing, amongst other things: > > 1. Deed of Release (with handwritten amendment, initialed (sic)) > > (c) the initialled handwritten notation in the Deed of Release acknowledging the claim period as 22 October 2003 to 16 July 2020; and > > (d) the oral evidence of Mrs MCJL's solicitor at hearing clarifying that no post-age pension qualification economic loss was claimed or part of the settlement.

3. It was submitted on behalf of Mrs MCJL that because the $40,000 payment related solely to arrears of periodic compensation, it is excluded from the definition of a "lump sum compensation payment" by subsection 1169(2)(b) of the Act, with the consequence that no compensation preclusion period arises. Oral submissions included that although Mrs MCJL had been previously paid periodic weekly compensation payments, those payments were only a percentage of Mrs MCJL's normal wage and the claim for 'work injury damages', was a claim for the difference between the percentage paid and her usual wage.
4. The Secretary submitted that the $40,000 paid to Mrs MCJL on 4 September 2023 constituted a lump sum compensation payment within the meaning of section 1169 of the Act. The Secretary relied upon the objective legal character of the payment, determined primarily by the terms of the Deed of Release which provided that the agreed sum was paid in "respect of all injuries", in full and final settlement of Mrs MCJL's claim and was additional to weekly compensation previously paid. The Secretary submitted that the Deed of Release does not identify the $40,000 as referrable to arrears of periodic compensation, nor does it identify any calculation by reference to weekly rates or unpaid periods but reflects a broader damages settlement including economic loss.
5. The Secretary further submitted that the exclusion in subsection 1169(2)(b) of the Act does not apply because the $40,000 was not solely for arrears of periodic compensation with the Pre-Filing Statement and particulars of loss indicating that Mrs MCJL claimed loss of earnings, loss of earning capacity and past superannuation contributions, demonstrating the settlement included a component of economic loss beyond mere arrears.
6. The Secretary acknowledged the handwritten notation on the Deed of Release but submitted that this notation does not establish that the lump sum was calculated solely by reference to arrears of weekly compensation for that period.
7. In response to Mrs MCJL's reliance on section 151IA of the NSW Act, the Secretary submitted that limitations under state workers' compensation legislation do not determine whether a payment is compensation for the purposes of the Act and submitted that even if Mrs MCJL could not legally recover post-pension-age economic loss, this does not preclude the payment being compensation for the purposes of the provisions of the Act.

Issue 1: Did Mrs MCJL receive a lump sum compensation payment for the purposes of section 1169 of the Act?

1. Pursuant to subsection 17(2) of the Act, compensation payments are compensation as defined and, unless excluded by subsection 1169(2) of the Act, are taken into account for the purposes of section 1169 of the Act if they were payments made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury. Of potential relevance to Mrs MCJL's circumstances, subsection 1169(2)(b) of the Act provides that a lump sum compensation payment is not included if it relates only to arrears of periodic compensation payments.
2. The payments of $53,949.10 and $15,000 received by Mrs MCJL were referable to her whole person impairment due to the compensable incident on 22 October 2003. It follows that those payments were not made wholly or partly in respect of lost earnings or lost capacity to earn and are therefore not compensation as defined.
3. As regards the $40,000 payment, I am satisfied based upon Ms Sutcliffe's evidence, the Deed of Release and the correspondence contemporaneous to the signing of the Deed of Release that the $40,000 payment was compensation limited to the period 22 October 2003 to 16 July 2020 and was not for economic loss arising after 16 July 2020. However, it is does not necessarily follow that it related only to arrears of periodic compensation payments. Mrs MCJL's claim was not confined to compensation for past weekly payments that had accrued prior to 16 July 2020 (whether for the difference between periodic compensation paid and her usual wage or otherwise). Rather, the claim also included components for loss of earning capacity and superannuation entitlements as is apparent from the pre-filing material, the correspondence exchanged and the terms of the Deed of Release. The payment cannot be found to be relating 'only to arrears of periodic compensation payments'.
4. It follows that the exclusion in subsection 1169(2)(b) of the Act does not apply.

Issue 2: What is the amount of the lump sum compensation payment to be taken into account for the purposes of section 1169 of the Act and the resulting preclusion period?

5. Section 1171 of the Act deals with aggregation where a person receives 2 or more lump payments in relation to the same event that gave rise to an entitlement to compensation where at least one of those payments was made wholly or partly in respect of lost earnings or lost capacity to earn. Where those criteria are met, the person is taken to have received one lump sum compensation payment equal to the sum of all of the lump payments.
6. I have found that the $53,949.10 and $15,000 payments received by Mrs MCJL are not lump sum compensation payments as defined. However, they are lump sum payments. Mrs MCJL does not take issue with the formula in section 1171 of the Act or its general application but submits that no aggregation should occur in respect of these initial 2 lump sum payments. Mrs MCJL contends that the $53,949.10 payment was payable in respect of the compensable event of 22 October 2003 and that the $15,000 payment was payable in respect of a further impairment arising from an aggravation, acceleration or deterioration of a disease process, which it was submitted is a separate compensable event to which she was not previously entitled to receive compensation.
7. The Secretary submitted that this approach is inconsistent with established authority including Secretary, Department of Social Security v Banks [1990] FCA 196 (Banks), in which the Federal Court made clear that a lump sum compensation payment may comprise several amounts paid separately or at different times, and that where payments arise from the same underlying injury or disease, they may properly be characterised as one lump sum for the purposes of the Act, notwithstanding differences in timing, assessment or heads of loss.
8. The Secretary also relied on Secretary, Department of Social Security v Cunneen [1997] FCA 1033, where the Federal Court emphasised that the legislation requires the Tribunal to characterise the total sum payable, rather than disaggregating individual components. Consistently with that approach it was held in Fuller v Secretary, Department of Family and Community Services [2004] AATA 615 that, where multiple lump sum payments are made in relation to the same event that gave rise to an entitlement to compensation, section 1171 of the Act deems them to be one lump sum.
9. I accept the Secretary's submission. Although the $15,000 payment was made at a much later time and followed an acceptance of further impairment, it nonetheless clearly arose from the same compensable event, the injury of 22 October 2003. The later manifestation, deterioration or reassessment of impairment does not convert the payment into one arising from a different distinct compensable event for the purposes of section 1171 of the Act. To hold otherwise would permit artificial fragmentation of compensation arising from a single injury or disease process. It is not relevant to the consideration of section 1171 of the Act whether or not 'double dipping' exists. Further, for similar reasons as in relation to the subsection 1169(2)(b) exclusion not applying, subsection 1171(2) of the Act does not operate to exclude the $40,000 from the calculation.
10. Turning then to the calculation of the preclusion period, pursuant to subsections 17(1), 17(3)(a), subsections 1170(1) and (4) and subparagraph 1171(1)(d)(i) of the Act, the preclusion period is the 46-week period from 2 August 2021 to 19 June 2022.[11] Pursuant to section 1178 of the Act, a charge (and resulting debt) amounting to the total compensation affected payments (age pension) received in that period results.

Issue 3: Is it appropriate in the special circumstances of the case to treat the whole or part of the compensation payment as not having been made?

1. Pursuant to section 1184K of the Act, there is discretion to disregard the whole or part of a compensation payment and thus reduce or remove a compensation preclusion period if appropriate to do so in the special circumstances of the case.
2. "Special circumstances", as required for the application of section 1184K of the Act, is not defined in the Act. However, the term has been extensively considered by courts and tribunals. The views of the AAT in Re Ivovic and Director-General of Social Services [1981] AATA 57; (1981) 3 ALN N95 relating to special circumstances were quoted with approval by the Federal Court in Secretary, Department of Social Services v Hulls (1991) AAR 414. Here it was said that the word "special" is intended to allow a decision maker the fullest opportunity to consider the particular circumstances of each case. However, it was also said that the exercise of the discretion should not frustrate the aims of the compensation provisions.
3. In Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541 and Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25, the Federal Court indicated that for special circumstances to exist there would need to be something which distinguishes a case from the usual or ordinary case. This would occur were one to conclude that something unfair, unintended or unjust had occurred. Further, in Dranichnikov and Centrelink [2003] FCAFC 133, the Court stated that for special circumstances to be considered, they need to be 'unusual, uncommon, or exceptional', markedly different from the usual run of cases, distinguishable from the ordinary and have a particular quality of unusualness; and, further, they need to be considered in the statutory context in which they appear.
4. It was submitted on behalf of Mrs MCJL that her compensation was in respect of lost earnings or lost capacity to earn prior to receiving age pension, such that the payments fall outside the intended scope of the compensation recovery provisions. It was submitted that the unintended consequence for Mrs MCJL is a significant deduction from her modest settlement sum not contemplated and, further, that Mrs MCJL has not received compensation for any period in which she received age pension such that there was no 'double-dipping". It was further submitted that Mrs MCJL's bank account balance is now approximately $18,000 and she is solely reliant on age pension with no other form of income, with ongoing medical treatment and expenses.
5. Submissions on behalf of Mrs MCJL distinguished the cases of Secretary, Department of Family & Community Services v Chamberlain [2002] FCA 67 (Chamberlain) and Clark v Secretary, Department of Employment & Workplace Relations [2007] FCA 1076 (Clark) where it was found that the application of the statutory formulae resulting in an unfair outcome was not sufficient to find special circumstances. It was submitted that it is not the formula that gives rise to unfairness in Mrs MCJL's case but rather the interaction with section 151A of the NSW Act, which limits Mrs MCJL's ability to claim economic loss after pension age in the case of a damages claim. It was further submitted that, unlike in Chamberlain and Clark, there was no issue as to what parts of the lump sum claim reflected future economic loss, with no element of economic loss being compensated after 16 July 2020 being possible for Mrs MCJL, such that it is legislatively impossible for Mrs MCJL to have received a double payment from both age pension and compensation at the same time given she did not commence receiving age pension until 17 July 2021.
6. Reliance was placed on the case of Kertland v Secretary, Department of Family Services [1999] FCA 1596 (Kertland) as dealing with a not dissimilar situation where there could be no economic loss component in that settlement due to the statutory scheme precluding a person, who had been unemployed[12] at the time of the injury, from receiving compensation for economic loss for a period of eighteen months. It was found that special circumstances existed in that case. It was submitted that circumstances may be special, and are in Mrs MCJL's case, where the structure of the statutory scheme prevents economic loss being claimed, yet the social security legislation proceeds on the assumption that such loss has been compensated.
7. The Secretary submitted that Mrs MCJL's circumstances are not special so as to justify exercise of the discretion in section 1184K of the Act. It was noted that Mrs MCJL owns her own home, has access to $23,000 savings (now $18,000) and although having treatment and medical costs, those costs are not so unique or out of the ordinary to support exercising the discretion. It was further submitted that given the charge (debt) has been repaid, if waived (or the discretion exercised), Mrs MCJL would gain a 'windfall' by way of refund, with social security payments recognised as being a 'safety net' not a hammock (Miller and Secretary, Department of Employment, Education, Training and Youth Affairs [1998] AATA 258 and Ward and Secretary, Department of Social Services [2022] AATA 57).
8. As regards the submission on behalf of Mrs MCJL that it is legislatively impossible for there to be double payment in her circumstances, the Secretary disagreed. It was submitted, at paragraph 9 of the Secretary further submissions,[13] that accepting the notation in the Deed of Release confirmed limitation of the claim to the period 22 October 2003 to 16 July 2020 did not mean that the $40,000 was solely for arrears of periodic compensation and that there was still a component referrable to economic loss to appropriately set in motion the application of the compensation recovery provisions of the Act.
9. In oral submissions, the Secretary further submitted that no special circumstances exist within the meaning of section 1184K of the Act, contending that the operation of the statutory formula, even when it produces a harsh or unintended outcome, does not of itself justify the exercise of discretion, relying on Clark and Chamberlain, and that Mrs MCJL's circumstances are not unusual, unique or exceptional.
10. Section 1184K of Act provides a discretion to treat all or part of a lump sum compensation payment as not having been made where special circumstances exist. The discretion is not at large and must be exercised consistently with the statutory scheme.
11. The authorities establish that 'special circumstances' are not confined to matters external to the legislation. Rather, the enquiry requires consideration of whether, having regard to the interaction between the statutory provisions and the particular facts of the case, the operation of the scheme would otherwise produce an outcome that is unfair, unreasonable or inappropriate in the particular circumstances. The discretion exists to ameliorate such outcomes, without undermining the scheme itself. I accept that the discretion cannot be exercised in a manner that defeats the operation of the compensation provisions or rewrites the statutory formula.
12. In considering whether the discretion should be exercised, I note the following matters:

(a) Mrs MCJL reached pension age prior to final settlement of her workers' compensation claim. By operation of section 151IA of the NSW Act, any award or damages for future economic loss was required to disregard earning capacity after age pension age. As a result, Mrs MCJL's settlement could not, and did not, as a matter of law, include compensation for loss of earnings or loss of earning capacity after that point. > > (b) Mrs MCJL ceased to be entitled to statutory weekly compensation prior to settlement. The lump sum settlement was therefore not capable of compensating Mrs MCJL for future loss of earnings in any meaningful sense. The character of the payment was necessarily constrained by the statutory limits on recovery in the NSW Act. > > (c) The evidence does not support a conclusion that Mrs MCJL received compensation in respect of any period during which she received age pension payments.

13. As regards the Secretary's submissions, the Secretary's disagreement with Mrs MCJL's submission that there could be no double payment is not fully explained. Although the Secretary contends that the lump sum was not paid solely as arrears of periodic compensation, the Secretary accepts, and I have found, that the payment related to a period ending on 16 July 2020. Mrs MCJL did not receive age pension until 17 July 2021. I am not persuaded that the mere inclusion of a component for economic loss, without any temporal overlap with a compensation affected payment, answers Mrs MCJL's submission that there was no prospect of double payment in this case.
14. In Kertland, the Federal Court emphasized that the absence of double payment did not arise merely because of the form of settlement, but because, by operation of the statutory scheme the applicant in that case was not an "earner" for the relevant period and could not lawfully receive compensation for loss of earnings or loss of earning capacity during that time. In those circumstances, the Court accepted that it was open to the Tribunal to conclude that no part of the compensation payment related to a period during which social security payments were payable, with the consequence that the exercise of the discretion was consistent with the policy and purpose of the legislation. Kiefel J in Chamberlain recognised that the Kertland case (and another case sharing similarities) were unusual cases stating as follows:

32. In each of Smith and Kertland it may be said that their Honours took into account the true position. The facts of those cases were unusual. It does not follow that the true facts in every case will have that quality. In those cases it could be seen, objectively, that there could not have been a double payment. In such a circumstance it might be concluded that the statutory assumption operated unjustly. This would not seem to me a situation which would often arise and sets these cases apart from the usual.

1. A similar interaction of statutory provisions arises in the present case. By reason of Mrs MCJL having reached pension age prior to settlement, and the operation of the workers' compensation legislation, the compensation payment could not relate to loss of earnings or loss of earning capacity during the period in which Mrs MCJL was paid age pension. As in Kertland, the consequence is that the statutory mischief of double recovery is not engaged. Mrs MCJL could not and did not receive compensation and income support in respect of the same period. Similar conclusions have also been reached in other cases decided by the AAT in analogous cases such as Department of Family and Community Services and Kelava [2003] AATA 834 and Bliznakovski and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 159.
2. I further note that, although of minor significance, Mrs MCJL's circumstances are not characterised by features commonly relied upon to deny the exercise of the discretion. There is no suggestion of reckless dissipation of compensation, deliberate manipulation of the scheme or access to substantial realisable assets. While Mrs MCJL owns her home and has some liquid assets, they are modest and she relies solely on the age pension for ongoing support. Further, although not unexpected given her age and injury, she has ongoing medical needs.
3. In combination I am satisfied that Mrs MCJL's circumstances are out of the ordinary, in particular the interaction between the workers compensation legislation to which Mrs MCJL's claim was subject and the social security compensations provisions treating her as having received compensation for a period where, by operation of law, she could not have done so. The application of the preclusion period in those circumstances produces an outcome that is not merely harsh but also misaligned with the factual and legal reality of the compensation received.
4. This is not a case where Mrs MCJL seeks relief merely because the scheme operates harshly or simply because she is in receipt an age pension, a payment usually paid once a person finishes working. Rather, the special circumstances arise from the convergence of several features of the statutory framework and Mrs MCJL's factual position and the terms of her settlement which together distinguish this case from the ordinary run of cases.
5. I am satisfied that this is the kind of case contemplated by the authorities in which the discretion under section 1184K of the Act may properly be exercised to avoid an outcome that is unfair or inappropriate in the particular circumstances, without undermining the broader statutory scheme. Consistent with Kertland, exercise of the discretion would give effect to the statutory purpose, rather than defeating it.
6. I therefore find that special circumstances exist for the purposes of section 1184K of the Act and it is appropriate to disregard all of the aggregate lump sum compensation payment with the consequence that there is no appliable preclusion period and no resulting charge or debt. I recognise that this results in a refund of monies to Mrs MCJL but I do not consider that this is a 'windfall' in the sense submitted by the Secretary. Rather, it is a recognition of the reality of Mrs MCJL's particular circumstances in the context of the statutory scheme, including the limits of the compensation she received.

Issue 4: Can any resulting debt to the Commonwealth be written off or waived?

1. Given my findings in relation to section 1184K of the Act, no charge or resulting debt exists and it is not necessary to consider this issue.

The Tribunal sets aside the decision under review and in substitution decides that, pursuant to section 1184K of the Social Security Act 1991, the aggregate lump sum compensation payment of $108,949 is to be treated as not having been made for the purposes of the compensation preclusion provisions, with the result that no compensation preclusion period applies.

[2] Section 151IA of the NSW Act relevantly provides 'In awarding damages for future economic loss due to deprivation or impairment of earning capacity ..., the court is to disregard any earning capacity of the insured worker after pension age (as defined in the Social Security Act 1991 of the Commonwealth for persons other than veterans).'

[3] Services Australia delivers social security payments and services and is overseen by the Department of Social Services. The Secretary, Department of Social Security (the Secretary) is responsible for the overall management and administration of the Department of Social Security. Centrelink is the Government Agency that delivers social security payments and services as part of Services Australia and as the Agency with whom pension and benefit applicants/recipients interact. The Secretary may be variously referred to as the Secretary or Centrelink in these Reasons.

[5] Exhibit R1, pages 75 to 76 and pages 164 to 165.

[6] 50% x $40,000 divided by the relevant divisor of $1,166 = 46 weeks rounded down.

[8] 50% x $108,949 divided by the relevant divisor of $1,166 = 17 weeks rounded down.

[9] Subsection 17(2B) relates to compensation for criminal injury and does not apply in this case.

[11]50% x ($53,949.10 + $15,000 + $40,000) / $1,166 = 46 weeks rounded down

[12] The Applicant's written submissions states 'employed' however the circumstances in Kertland were that Mr Kertland was unemployed at the relevant time and consequentially the limit on compensation.