Post by Banjo on Nov 7, 2016 15:47:39 GMT 7
REASONS FOR DECISION
Mr S. Webb, Member
28 October 2016
Wendy McLeod was injured in employment. She claimed and was paid compensation. Shortly before reaching pension age, she claimed Age Pension. A delegate of the Secretary rejected her claim on grounds that a compensation lump sum preclusion period applied. Ms McLeod pressed her rights of review in respect of this decision, thus far without success. She applied for further review by the Tribunal.
Does a compensation lump sum preclusion period apply?
Ms McLeod disputes that the compensation recovery provisions of the Social Security Act apply in the particular circumstances of her case. She argues that the $135,000 lump sum she received was only paid in respect of past lost earnings, with no component for future financial or economic loss. The Deed setting out terms on which she settled her compensation claim is subject to the NSW Act which precludes, so the argument goes, compensation in consideration of lost earning capacity once pension age is reached. She asserts that, as settlement negotiations were finalised on 13 March 2015, only a few weeks before she reached pension age, it was agreed that in addition to the lump sum payment of past lost earnings, weekly payments of compensation would be made from the date of the settlement to the date on which the agreed lump sum payment was drawn. In Ms McLeod’s submission, the lump sum payment was calculated only in respect of past lost earnings and for this reason it is not a lump sum compensation payment and she is not precluded from payment of Age Pension.
The Secretary does not agree and maintains that the compensation recovery provisions in Part 3.14 of the Social Security Act apply. The reason for this is said to be that the compensation settlement Ms McLeod entered into was in relation to past and future economic losses. In the Secretary’s submission, it does not matter that the future loss component might be small, if provision is made for payment of compensation in relation to a claim for future economic loss, the compensation recovery provisions apply and a compensation lump sum preclusion period will arise during which Age Pension is not payable.
In the Secretary’s submission, the lump sum preclusion period commences on 1 May 2015 and ends on 18 May 2017.
In order to address these submissions, it is necessary to consider the interlinked provisions of the Social Security Act. The word ‘compensation’ is given meaning in s 17(2) –
(2) Subject to subsection (2B), for the purposes of this Act, compensation means:
(a) a payment of damages; or
(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.
Conclusion
Ms McLeod received compensation in relation to the injury. She agreed terms with her former employer in settlement of a claim for common law damages. The terms included a lump sum payment. The lump sum payment was solely comprised of arrears of periodic compensation payments. The lump sum payment is not a ‘lump sum compensation payment’ for the purposes of the Social Security Act.
It follows that payment of Age Pension to Ms McLeod, pursuant to her claim, is not precluded by operation of s 1169 of that Act.
Decision
The decision under review is set aside. Ms McLeod is not precluded from payment of Age Pension as of 2 June 2015. The application is remitted to the Secretary to determine Ms McLeod’s Age Pension entitlements.
www.austlii.edu.au/au/cases/cth/AATA/2016/853.html
Mr S. Webb, Member
28 October 2016
Wendy McLeod was injured in employment. She claimed and was paid compensation. Shortly before reaching pension age, she claimed Age Pension. A delegate of the Secretary rejected her claim on grounds that a compensation lump sum preclusion period applied. Ms McLeod pressed her rights of review in respect of this decision, thus far without success. She applied for further review by the Tribunal.
Does a compensation lump sum preclusion period apply?
Ms McLeod disputes that the compensation recovery provisions of the Social Security Act apply in the particular circumstances of her case. She argues that the $135,000 lump sum she received was only paid in respect of past lost earnings, with no component for future financial or economic loss. The Deed setting out terms on which she settled her compensation claim is subject to the NSW Act which precludes, so the argument goes, compensation in consideration of lost earning capacity once pension age is reached. She asserts that, as settlement negotiations were finalised on 13 March 2015, only a few weeks before she reached pension age, it was agreed that in addition to the lump sum payment of past lost earnings, weekly payments of compensation would be made from the date of the settlement to the date on which the agreed lump sum payment was drawn. In Ms McLeod’s submission, the lump sum payment was calculated only in respect of past lost earnings and for this reason it is not a lump sum compensation payment and she is not precluded from payment of Age Pension.
The Secretary does not agree and maintains that the compensation recovery provisions in Part 3.14 of the Social Security Act apply. The reason for this is said to be that the compensation settlement Ms McLeod entered into was in relation to past and future economic losses. In the Secretary’s submission, it does not matter that the future loss component might be small, if provision is made for payment of compensation in relation to a claim for future economic loss, the compensation recovery provisions apply and a compensation lump sum preclusion period will arise during which Age Pension is not payable.
In the Secretary’s submission, the lump sum preclusion period commences on 1 May 2015 and ends on 18 May 2017.
In order to address these submissions, it is necessary to consider the interlinked provisions of the Social Security Act. The word ‘compensation’ is given meaning in s 17(2) –
(2) Subject to subsection (2B), for the purposes of this Act, compensation means:
(a) a payment of damages; or
(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.
Conclusion
Ms McLeod received compensation in relation to the injury. She agreed terms with her former employer in settlement of a claim for common law damages. The terms included a lump sum payment. The lump sum payment was solely comprised of arrears of periodic compensation payments. The lump sum payment is not a ‘lump sum compensation payment’ for the purposes of the Social Security Act.
It follows that payment of Age Pension to Ms McLeod, pursuant to her claim, is not precluded by operation of s 1169 of that Act.
Decision
The decision under review is set aside. Ms McLeod is not precluded from payment of Age Pension as of 2 June 2015. The application is remitted to the Secretary to determine Ms McLeod’s Age Pension entitlements.
www.austlii.edu.au/au/cases/cth/AATA/2016/853.html