Editors --- "Youth allowance: compensation preclusion; third party payments" [2009] SocSecRpr 2; (2009) 11(1) Social Security Reporter, Article 2

• SECRETARY TO THE DEWR and MORRISON
• Background
• Legislation
• Issues
• Lump sum
• Receives
• Decision

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Youth allowance: compensation preclusion; third party payments

SECRETARY TO THE DEWR and MORRISON

(2008/1017)

Decided: 12 November 2008 by P. Downes, R. J. Groom and A. F. Cunningham

Background

Following a January 2006 motor vehicle accident in which he sustained head injuries, Morrison was hospitalized. The Tasmanian Motor Accidents Insurance Board (MAIB) made thirty-three payments totalling $51,528.56 to the hospital and related third parties involved in Morrison’s care and recovery. A common law action for damages was settled on 8 November 2007 and judgement for Morrison entered in the amount of $50,000. The sums paid by MAIB noted above were not entered into the judgement because, under the Tasmanian scheme, they were paid under a Tasmanian no-fault liability scheme, access to which is not predicated on a successful claim in negligence.

On 11 January 2008, the authorised review officer affirmed a decision of Centrelink to include the$51,528.56 paid by MAIB to third parties in the sum considered to have been received by Morrison for the purposes of calculation of a compensation preclusion period, making a total of $101,528.56, after deduction of the periodic motor accident disability allowance paid by MAIB.

This decision was set aside by the Social Security Appeals Tribunal on 1 April 2008, with the matter being remitted to Centrelink for calculation of the preclusion period based on a finding that the lump sum received was $50,000.

Legislation

The Social Security Act 1991 (the Act)ss.17(1) and 23(1) define compensation affected payments and the compensation part of a lump sum. Part 3.14 of the Act deals with lump sums and periodic compensation payments. Most relevantly, section 1169 of the Social Security Act 1991 (‘the Act’) provides:

(1)If:

(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.

Issues

The issues were reduced by the Tribunal to two. Were the Payments made by MAIB lump sum payments? Secondly, did the respondent receive the payments?

Lump sum

The MAIB payments under consideration were noted as made at different times and paid in batches at times not always synchronous with the invoice. The Tribunal refined the issue in the matter as,‘... more squarely, what is a lump sum, and what are the outer boundaries of what a lump sum can be.’(Reasons, paras. 35 and 36)

In exploring this limit, the Tribunal referred to Secretary to the DSS and Banks (1990) 23 FCR 416,at 422, where Von Doussa J had said a lump sum is ‘simply one which includes a number of items’. The Tribunal went on to say, in considering what may be the intent of the legislature, it would not run to differentiating between payments for multiple hospital days and single consultations. It said:

We have concluded that, wherever the limit is to be found, more is required to amount to a lump sum payment for the purposes of the scheme than a set of payments for medical services whose grouping is neither entirely logical nor uniform which links together in some cases but not in others. (Reasons, para.38)

The Tribunal stressed that consideration of what is a lump sum must be done in light of the mischief the legislation intends to cure, namely that of artificial structuring of settlements for social security purposes. It rejected four arguments to the contrary put forward by the Secretary, namely that the terms ‘periodic payment’ and ‘lump sum payment’ were intended to cover the field, or that the payments in question had the effect of lowering the damages award, or that the batching of these payments created lump sums, or finally that a purposive interpretation should be applied when considering a ‘lump sum’.

The Tribunal summed up its view of ‘lump sum’ as follows:

...whatever is the precise ambit of the phrase ‘lump sum payment’,... it does not cover a schedule of payments for medical expenses not dependant on fault and paid continuously over a period of time and not lumped in any organized way or ordered way for the purpose of payment and where many items could not be lump sums. (Reasons, Para. 46)

Receives

Following this finding, the Tribunal went on to consider the meaning of ‘receives’ in s.1171 of the Act. It was argued that a purposive approach was warranted to avoid ‘double dipping’, citing Comcare v Fyfe [1999] FCA 1368, per Finn J. The Tribunal averred there was no double benefit; the ‘payments were for hospital and medical expenses and were not in any sense income or income related payments’, and further stating that ‘(a) strained interpretation of the meaning of ‘receives’ was not justified in these circumstances’ (Reasons, para. 47). Although paid on his behalf or for his benefit, the Tribunal did not consider that the payments for Morrison’s medical expenses had in fact been received by Morrison.

Nor did the Tribunal finds.17(5) to be relevant, which defines the term, ‘receives compensation’. The Tribunal went on to find that, were the section relevant, the payments in question would fail the test as they were ‘not received on the respondent’s behalf or at his direction’ (Reasons, para. 49).

The compensation part of the lump sum was determined to be $25,000 resulting in a preclusion period of thirty-three weeks.

Decision

The decision under review was affirmed.

[J.S.]