In the recent matter of ZZXM v CEO National Disability Insurance Agency [2024] ARTA 24, the applicant, ZZXM (a pseudonym), commenced proceedings against the respondent, the National Disability Insurance Agency, in the Administrative Appeal Tribunal in relation to NDIA/NDIS refund from a personal injury claim.
The applicant suffered spinal injuries leading to quadriplegia in a balcony collapse fall. She brought personal injury proceedings against those responsible and that action was ultimately settled for the sum of $3m. Prior to that settlement, she had accessed supports under the NDIS to the value of $449,540.71 and that amount would ordinarily be recoverable from the settlement by the Agency under the applicable provisions of the National Disability Insurance Scheme Act 2013 (“the NDIS Act”). The main issue before the Tribunal was whether that recoverable amount should be reduced due to the “special circumstances” of the applicant’s case.
The Tribunal varied the earlier decision of the NDIA such that the amount which was to be treated as not having been fixed by the settlement was the amount which would result in the amount repayable to the Respondent being reduced from $449,540.71 to $150,000.
The Tribunal noted at [21] that although it is not possible to devise an exhaustive list, factors which may constitute or contribute to special circumstances include financial hardship, fraud, the circumstances of the compensable event, errors by others and incorrect or insufficient legal advice. It is also clear from the case law in the social security context that significant injustice or unfairness arising from the application of the statutory formula has been found to amount to a special circumstance such that a strict application of the statutory formula is inappropriate and should be ameliorated in the circumstances of a particular individual.
The Applicant put forward a range of matters in support of her contention that her circumstances are “special” in the relevant sense. The facts and circumstances relied on included:
(a) For complex and unusual reasons, her personal injury matter was ultimately settled for much less than the full value of the claim. These factors included the impact of the action and negotiations on her family relationships and her own health, and the impact of the COVID pandemic on her action and the manner in which settlement negotiations were conducted;
(b) The legal advice she received with respect to her personal injury action was inadequate;
(c) The Applicant’s health is worsening, her ability to work is reducing and she was recently made redundant. Unless the amount to be recovered from her settlement is reduced, she is at grave risk of suffering financial hardship in the future;
(d) She needs to purchase a home which meets her disability-related needs. Unless the amount deducted from her settlement is reduced, the Applicant will not be able to afford to do this, and have sufficient funds remaining to support herself; and
(e) She faces additional costs related to living with a spinal cord injury that are not covered by the NDIS.
The Tribunal concluded that there were aspects of the applicant’s circumstances which render them “special” in the relevant sense. The Tribunal said at [80] – [81]:
In particular, I consider there were unusual stresses and pressures placed on the Applicant in the context of the settlement negotiations which contributed to her ultimately accepting a very low settlement amount in the context of catastrophic and profoundly life-changing injuries. These pressures also operated in combination with the circumstances surrounding the first defendant’s insurance policy, which created real doubt as to whether the insurer was liable to compensate the Applicant at all. If the first defendant had not been a family member or the insurer had not contested liability, it is likely the applicant’s settlement would have been significantly higher.
One of the things I must take account of is that the amount required to truly compensate the Applicant for her injuries was calculated to be in the order of $18m. In the context of that amount, the recoverable amount would have represented about 2.5% of the settlement. However, in the context of the actual settlement, it represents 15% of the settlement.
Also considered relevant was the very unusual circumstance of the relevant settlement conference being conducted by telephone in the early days of the COVID pandemic, which placed additional stress on the Applicant, reduced the support available to her, and contributed to the outcome of the negotiations; and the recent deterioration in the Applicant’s health, the complexity of her housing situation, and the likely application of a (future) CRA.
While none of these circumstances were said to be especially unusual in themselves, in combination they magnified the impact on her of the very low settlement she received given her injuries and contribute to the significant risk of financial hardship and unfairness in her case and thus her overall circumstances being special in the relevant sense.
Ultimately, the recoverable amount was reduced to 5% of the actual settlement amount of the personal injury claim.
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