Editors --- "Compensation preclusion period: reduction due to special circumstances" [2006] SocSecRpr 18; (2006) 8(2) Social Security Reporter, Article 7

• BUS and SECRETARY TO THE DEWR
• The facts
• The issue
• The law
• The decision

---

Compensation preclusion period: reduction due to special circumstances

BUS and SECRETARY TO THE DEWR

(2006/155)

Decided: 24th February 2006 by J. Handley

The facts

In 1994 Bus sustained severe back injuries while working as a nurse. In November 1999, Bus settled a claim for compensation in relation to those injuries in the amount of $400,000.

It was accepted by both parties that because of the receipt of this lump sum compensation Bus was precluded from applying for a Centrelink payment from November 1999 to 1December 2008.

Bus was advised by her solicitors in the compensation action that they considered she could get substantially more should she proceed to hearing. Bus told the AAT that, at the time of the settlement, her husband, whom she described as abusive and threatening, was pressuring her to settle. Bus also claimed that at the time of settlement, she was overwhelmed by strong painkilling medication including morphine.

Between the date of settlement and October 2005 Bus depleted all of her compensation payment. Her purchases included a new home for herself and her children after she and her husband separated and replacing property damaged by her violent 19 year-old son. It was also stated by the AAT that Bus was ‘unfortunately [not able] to manage monies’ (Reasons, para. 15).

Bus had attempted to find some employment but for various reasons, she had not been successful.

Between October 2005 and the date of the hearing Bus had been living off her children’s Centrelink payments which included youth allowance and carer payment.

The issue

The issue was whether Bus’s preclusion period could be reduced on the basis of her special circumstances.

The law

Section 1184K of the Social Security Act 1991 (the Act) gives a discretion to the Secretary to treat the whole or part of a compensation payment as either not having been made or not liable to be made if the Secretary thinks it is appropriate to do so in the special circumstances of the case.

Discussion

In making its decision, the AAT referred to Secretary to the Department of Family and Community Services v Allan [2001] FCA 1160; (2001) 66 ALD 147 in which Heerey J commented that ‘with a very large compensation sum, the preclusion period might be very long. The longer the period, the greater potential for unforeseen circumstances to create hardship.’

• While the AAT did not consider that Bus’s injuries or legal costs constituted ‘special circumstances’, they did consider that the following circumstances were ‘special’:

• The effect of Bus’s injuries (excluding her spinal injury for which compensation had already been paid) including multiple operations, constant pain and emotional injuries;

• The effect that Bus’s emotional injuries (which included depression, anxiety and obsessive and irrational behaviour) had on the manner in which she had spent her compensation payment, for example the ‘stockpiling’ of enormous quantities of food and clothing for the future;

• That Bus settling for a sum of $400,000 was not ‘an informed or willing compromise’ by reason of her husband’s abuse and her painkilling medication.

The AAT did not consider that Bus’s expenditure was excessive or reckless, as was argued by the Department, but instead was spent on unforeseen costs such as a house, and medical costs for her children that were not recoverable through private health insurance.

The AAT also noted that Bus’s daughter Laura was leaving to be married and would therefore no longer qualify for carer payment. With two years and ten months remaining, Bus would be left with virtually no income.

Finally, the AAT noted that Bus was not a person ‘who has wasted monies, either by choice or addiction on drugs or alcohol or gambling’. Being a52 year-old woman in country Victoria with ‘gross disabilities’ she was also unlikely to be able to gain employment.

The decision

Having examined Bus’s circumstances and the events giving rise to them, the AAT found her circumstances were ‘special’ and the decision of the SSAT that the preclusion period stood until 1 December 2008 was set aside.

[J.C.]