Editors --- "Compensation preclusion period: natural justice and dealing with all submissions" [2006] SocSecRpr 42; (2006) 8(3) Social Security Reporter, Article 19

• SECRETARY TO THE DFaCS v BARRINGTON
• Background
• The basis of the appeal
• Failure to deal with submission
• Formal decision

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Compensation preclusion period: natural justice and dealing with all submissions

SECRETARY TO THE DFaCS v BARRINGTON

Decided: 10th May 2006 by Heerey J.

Background

Barringtonwas injured in 1999. He claimed compensation and received a lump sum of $285,000 including legal costs of $47,500.

In October 2004 he claimed newstart allowance which was rejected on the basis of a lump sum preclusion period applying from September 2002 until April 2007.

The lump sum was spent on the purchase of a house inTasmania ($71,500), furniture and renovations ($50,000), a car ($39,500),relocation toTasmania and general living from September 2002.

Barrington’s assets at the date of claim were the house and a car ($3,500) which had been purchased when the other car was sold. He had debts of approximately $4,500 and had been unsuccessful in borrowing against the security of the house.

Barrington ultimately appealed to the AAT who set aside the decision on the basis that there were special circumstances, namely:

· Barrington’s health which had deteriorated since he received his compensation payment;

· His health, combined with the employment market where he lived, made it more difficult than expected to find suitable part-time work;

· There was no evidence that he had been reckless or irresponsible in spending his lump sum payment;

· The house he had purchased was modest;

· A significant portion of his compensation payment was for legal costs and, when agreeing to settlement, he did not fully appreciate the significance of these costs.

The basis of the appeal

The Department submitted that the AAT made two errors of law:

1. It failed to deal with a submission put by the Department which was worthy of consideration. This being thatBarrington’s purchase of a house after he had received notice of the preclusion period acted against the finding of special circumstances; and

2. It denied the Department natural justice by finding special circumstances regarding the payment of legal costs without giving the Department notice that it might treat the costs payment as relevant; having discouraged the Department from making submissions on this issue; and therefore denying the Department the opportunity to make submissions.

Failure to deal with submission

At the AAT hearing the Department relied on the Guide to the Social Security Law which provided at 4.13.4.10:

Each case must be examined on its own merits but as a general rule, special circumstances would NOT usually be applied where:

The person acquired realisable assets AFTER the person was advised of the preclusion period, and there is no impediment to the realization of those assets...

At the hearing, the Department conceded that if the property was not realisable then this may be a ground for special circumstances.

In dealing with the ground of appeal that the AAT had failed to deal with a submission put by the Department, his Honour noted s.43(2B) of the Administrative Appeals Tribunal Act 1975 which states:

43(2B) Where the Tribunal gives in writing the reasons for its decision, those reasons shall include its findings on material questions of fact and a reference to the evidence or other material on which those findings were based.

He then considered the case law dealing with obligations on the Tribunal to consider material put before them. In particular, he referred to the High Court decision of Minister for Immigration and Multicultural Affairs v Yusuf[2001] HCA 30; (2001) 206 CLR 323. In this case the High Court held that the Refugee Review Tribunal was required to set out the findings on which the decision was based, rather than findings ‘which the Tribunal had not in fact made’.

His Honour concluded that:

It was not a discrete legal or factual issue standing apart from the rest of the case as discussed in the Tribunal’s reasons. It was a part of the larger narrative which also included Mr Barrington’s plans and expectations when he bought the house, and how illness and lack of employment opportunities thwarted them. The omission by the Tribunal of any reference to a particular element of that narrative does not of itself lead to the conclusion that such element was ignored or overlooked: cfKentucky Fried Chicken Pty Ltd v Gantidis [1979] HCA 20; (1979) 140 CLR 675 at 680, 684. (Reasons, Para. 33)

The judge went on to find that the Tribunal had explored the issue of whether the house was realisable and had expressly pointed out that due to renovations, it might take 6-12 months to sell.

Consequently the Department’s argument on this point failed.

Legal costs – natural justice

Two issues were raised on this point. First, whether the legislation required legal costs to be included in the lump sum amount used for calculating the preclusion period. On this point, his honour found that this was the case and the Tribunal had applied the law correctly.

The second was whether the amount of the costs could be a relevant factor in assessing special circumstances.

On this point, his Honour found that the issue of costs was a consideration and that: ‘It was a matter for the forensic judgment of the Secretary’s counsel as to how much he should say on the topic, for example, whether he should provide details of the cases that he referred to in passing.’

The judge concluded that the Tribunal raised the issue, heard the Department’s submissions and simply declined the Department’s offer of more detailed submissions. This was not a case of failure to provide natural justice.

Formal decision

The appeal was dismissed with costs.

[R.P.]