Editors --- "Preclusion period: person over 65 years; costs." [2012] SocSecRpr 10; (2012) 14(2) Social Security Reporter, Article 1

• KEECH and SECRETARY TO THE DFHCSIA
• Background
• Issues
• Submissions
• Findings
• The issue of age
• The issue of costs
• Formal decision

---

Preclusion period: person over 65 years; costs.

KEECH and SECRETARY TO THE DFHCSIA

(2012/147)

Decided: 2nd March 2012 by K. Hogan

Background

Keech was injured at work on 2 February 2007 and received compensation payments until 2 February 2008. She was granted age pension from 9 April 2008. On 13 January 2009 her compensation claim was settled by consent judgment in the District Court for $100,000 and costs of $20,000. Centrelink calculated that 50% of the lump sum was $60,000 and applied a preclusion period from 3 February 2008 to 14 August 2009 (80weeks) and made the decision to recover $20,092 being age pension paid during the period 9 April 2008 to 15 August 2009.

Keech contended that there was no component of economic loss in the settlement of her claim and that, if therewas a preclusion period, the component relating to costs should not be included in the calculation.

Issues

The AAT had to determine if Keech was precluded from receiving age pension and, if so, for what period; whether the amount of $20,092 was correctly recovered and whether there were any special circumstances to warrant disregarding any part of the preclusion period.

Legislation

Under s.17 (1) of the Social Security Act 1991 (the Act) age pension is a compensated affected payment and is subject to s.1160:

1160(1) This Part operates in certain specified circumstances to do one or more of the following:

(a) reduce a person’s compensation affected payment;

(b) render a person’s compensation affected payment not payable;

(c) require the repayment of some or all of a person’s compensation affected payment; because of the receipt ofcompensation by the person or theperson’s partner.

1160(2) This Part applies whether or not there is any connection between the circumstances that give rise to the person’s qualification for the compensation affected payment and the circumstances that give rise to the receipt of compensation by the person or the person’s partner.

Section 1170 of the Act deals with the situation where a person receives both periodic payments and a lump sum payment of compensation and how to ascertain the compensation part of the lump sum and the income cut-out amount.

Section 17(3)(a) of the Act defines the compensation part of a lump sum payment to be 50% of the payment where:

(i) the payment is made (either with or without admission of liability) in settlement of a claim that is, in whole or in part, related to a disease, injury or condition; and

(ii) the claim was settled, either by consent judgment being entered in respect of the settlement or otherwise

Section 1182 directs that the Department must issue notice of the intention to recover an amount from the person and from the insurer for amounts of compensation affected payments made during a preclusion period.

Section 1184K(1) of the Act allows for some or all of the lump sum payment to be disregarded:

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.

Submissions

Keech contended that the lump sum paid under the the Workers’ Compensation and Injury Management Act 1981 plus costs of $21,000.00 should not have been interpreted by Centrelink as compensation. Keech contended that the settlement document from the District Court had no component of economic loss. Keech further contended that money not received and costs incurred should not be included in the preclusion calculation and cited Fuller v Secretary, Department of Family and Community Services [2004] AATA 615.

The Department argued that the Particulars of Damage filed in the District Court on behalf of Keech included a claim for past and future loss, and lost superannuation, so it was reasonable to infer that the settlement lump sum included a component of economic loss and that 50% of the whole should be subject to the preclusion calculation. The Department also argued that theappropriate recovery notices had been sent to Keech and the Insurance Commission of WA and that the $20, 092 was a debt to the Commonwealth and should be recovered.

Findings

The AAT accepted that Keech had been injured at work and received compensation payments until 2 February 2008; and that she was in receipt of age pension from April 2008 until settlement in January 2009. The AAT also found that Keech had been unaware that the settlement would affect her age pension, that there had been no evidence about her current financial situation and therewas not enough evidence to find special circumstances.

The issue of age

The Tribunal found that whilst Keech was not entitled to weekly payments of compensation pursuant to the Workers’ Compensation and Injury Management Act 1981 by virtue of her age, such restrictions did not apply to claims for damages issued in the District Court and indeed the Particulars of Damages which were filed on her behalf by her solicitors specified a claim for compensation for her economic loss arising out of her inability to continue to work to an age past the age of 65.

Whilst it was argued on Keech’s behalf that special circumstances should apply to the applicant because she was unaware that settlement of her claim would affect her entitlement to the age pension, the Tribunal commented that the possibility that the applicant did not know about the preclusion period was a matter between her and her solicitors.

The issue of costs

The Department submitted that PG vK and the Secretary, Department of Family Housing Community Services and Indigenous Affairs (2008) AATA301 rejected the contention that Fuller stands for the proposition that legal costs should be automatically treated as not having been made. The Secretary’s representative advised that when costs are known, it is Centrelink’s policy not to include those costs when calculating the preclusion period. In the present case however, the evidence was that the amount of $20,000.00 inclusive of disbursements may not have been the entire amount of the costs charged by the applicant’s solicitors, however it was not disputed that an amount of $20,000.00 represented party-party costs and was at least a proportion of the costs that the applicant had been charged.

The Tribunal found that there was sufficient evidence that an amount of at least $20,000.00 was charged to Keech by way of costs and that therefore that is an amount that should be excluded when calculating the preclusion period.

Formal decision

The AAT referred the matter back to the Department to calculate the preclusion period applicable to Keech’s age pension by reference to a compensation paymentof $100,000.[M.R.]