Aldworth and Secretary, Department of Family and Community Services

[2004] AATA 1197

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 1197

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No  Q2004/643

GENERAL ADMINISTRATIVE DIVISION		)
Re		MARK ALDWORTH

Applicant

And SECRETARY, DEPARTMENT
OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal   Ms M J Carstairs, Member

Date  12 November 2004

Place  Bundaberg

Decision   The Tribunal affirms the decision under review.

….................[Sgd].......................

M J Carstairs

Member

CATCHWORDS

SOCIAL SECURITY – lump sum compensation – preclusion period – purchase of property and other items – whether special circumstances exist

Social Security Act 1991 ss 17, 1170, 1184K

Director-General of Social Servicesv Hales (1983) 47 ALR 281
Groth v Secretary, Department of Social Security (1996) 40 ALD 541

Re Beadle and Director-General of Social Security (1984) 6 ALD 1

REASONS FOR DECISION

12 November 2004 Ms M J Carstairs, Member

1.      This is an application by Mark Aldworth (the applicant) for review of a decision made by the Social Security Appeals Tribunal (SSAT) on 13 July 2004, affirming a decision of a Centrelink delegate imposing a compensation preclusion period until 2 October 2007 and concluding that there were no special circumstances to disregard the preclusion period that affects a person’s entitlement to social security payments. 

2.      At the hearing the applicant was represented by his wife Mrs T Aldworth.  The respondent was represented by its advocate, Ms J Dwyer. 

3. The Tribunal had before it the documents lodged under s37 of the Administrative Appeals Tribunal Act 1975 as well as exhibits marked A1-A2 for the applicant and R1 for the respondent.

BACKGROUND

4.      The applicant is aged 38.  He sustained a head injury in November 1997 when he was working as a security guard and was attacked with a sledgehammer.  He claimed workers’ compensation and received weekly payments until February 1999 (T32).  The applicant’s claim for compensation was settled in the sum of $493,177 on 14 March 2002.  He was later paid $20,000 in a public liability settlement, this occurring on 12 August 2003. 

5.      Under the Social Security Act 1991 (the Act) there is provision to work out, by applying the statutory formula to the amount of the settlement, a period in which a person will not be entitled to access social security payments.  One feature of the legislation is that a person is not entitled to both compensation (as long as this is related to a loss of earning capacity) and social security payments.  This period of time is referred to as the preclusion period.  In the applicant’s case it ran from 29 January 1999 to 2 October 2007. 

6.      The applicant’s wife receives carer payment under the Act and family tax benefit for one school age child. 

7.      On 10 October 2003 the applicant requested a review of the decision in regard to the preclusion period and provided a statement about the way the monies from the settlement had been expended.  This decision has been reviewed by an authorised review officer and by the SSAT and both have agreed that the compensation preclusion period must stand and that there are no special circumstances to disregard its effect. 

EVIDENCE

8.      The documentary materials included a statement dated 1 November 2002 setting out that the settlement money, a net sum of $326,000, had been expended in the following manner:

·     House  $185,000

·     Vehicle  $  65,000

·     Two loans  $  20,000

·     Household furnishings             $  17,100

·     Boat  $  25,000

·     Ride-on Lawn Mower               $    3,500

TOTAL  $321,600

9.      In a statement received by Centrelink on 10 October 2003 the applicant set out that the house on 50 acres at Targinnie (referred to above) was compulsorily resumed by the Department of Natural Resources and Mines in 2003 and the family were required to find another suitable home that accommodated the applicant’s disabilities.  In the statement the applicant referred to the costs incurred by his need for regular specialist consultations in Rockhampton and Brisbane.  Additionally, the applicant said he had been diagnosed with sleep apnoea and diabetes and the two children were experiencing difficulties dealing with the applicant’s disabilities arising from his head injury. 

10.     Mrs Aldworth said that there were several unexpected circumstances that had occurred after the applicant received the settlement money.  She said that they did not know about a preclusion period until April 2002 and by then they were already committed to a contract to purchase the property at Targinnie.  She said that she understood there would be a preclusion period but expected that it would only be for five or six years whereas it is effectively ten years, taking into account that the injury was sustained by her husband in 1997. 

11.     Mrs Aldworth said that they had received about $220,000 when the property at Targinnie was resumed.  She acknowledged that they received more than they had paid for the property but she said that they had to borrow to make changes to the second house to accommodate her husband’s disabilities.  She said that they took out a mortgage of about $70,000 over the second house which they are paying off at the rate of $216 per fortnight.  In February 2004 they borrowed more to install a pool for her husband.  She said that because of her husband’s medical condition he does not like crowds and his doctor believed that he would benefit from having access to a pool.  The costs of the pool included $16,000 to have the yard levelled.

12.     Mrs Aldworth said that at the time the applicant received the settlement monies he was not suffering from sleep apnoea and diabetes and the additional costs incurred for this treatment were part of the special circumstances on which they relied.  She said also their 15 year old son has left school to obtain employment but does not to contribute to the household because the work is unpredictable.  She said that she no longer receives family tax benefit for him and this has affected the family’s financial circumstances.  Mrs Aldworth also referred to a reduction in child support payments from the children’s natural father but said she has not sought a review by the Child Support Agency about the new level of payment. 

13.     Mrs Aldworth referred to the respondent’s statement of facts and contentions in which it was asserted that the decision to purchase real estate was part of the reason why they are now in financial difficulties and that those assets should be realised rather than retained.  Mrs Aldworth said that over a three year period she had estimated that it would cost them $14,000 more to rent than they would obtain by selling the house.  She also had prepared a revised statement of financial circumstances which showed that they have fortnightly expenditure of $791 and fortnightly income of $735. 

CONSIDERATION OF THE ISSUES

14. Section 17(1) of the Act provides that compensation affected payment includes disability support pension. Section 17(2) of the Act provides:

17.(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.

15. Under s17(3) of the Act, 50 per cent of a lump sum settlement payment is the compensation part of the payment. Section 1170 of the Act sets out the method of calculating a compensation preclusion period, which commences on the day following the last day of periodic payments (s1170(1)(a)). Section 1170(1)(b) provides that the end of the period is calculated according to a formula by which the compensation part of the lump sum payment is divided by the income cut-out amount (s1170(4) and (5)). 

16. Section 1184K(1) of the Act provides:

1184K(1) 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.

17.     In reaching its decision the Tribunal takes into account the oral evidence and written material, including the submissions made by the parties.  The Tribunal was satisfied that the lump sum preclusion period has been correctly calculated to expire on 2 October 2007. 

18. Section 1184K(1) of the Act gives the decision‑maker discretion to treat the whole or part of a compensation payment as not having been made or not liable to be made, if the decision-maker thinks it is appropriate to do so in the special circumstances of the case.  However, in order for the decision-maker to use this discretion, there must be something to make the case stand out from the usual or the ordinary (Groth v Secretary, Department of Social Security (1996) 40 ALD 541). In Re Beadle and Director‑General of Social Security (1984) 6 ALD 1 the Tribunal held that special circumstances must be unusual, uncommon or exceptional. 

19.     The Tribunal is satisfied that the applicant was aware that a preclusion period would be imposed.  All settlement monies have been expended and the family have incurred debts.  It needs to be taken into account that they sold the first house for more than they paid for it and that by the time they purchased the second house they were well aware about the preclusion period, yet they have continued to expend money on capital and other improvements.  The Tribunal accepts that expenditure of the settlement money on the purchase of houses, vehicles and improvements to the second house has caused the family to live in straitened circumstances.  However, financial hardship must go beyond straitened circumstances to constitute special circumstances (Director-General of Social Servicesv Hales (1983) 47 ALR 281). Therefore, the applicant’s straitened circumstances do not constitute special circumstances.

20.     The Tribunal accepts the respondent’s submission that the purpose of the compensation payment was to provide a substitute for the applicant’s income when he lost the ability to earn a wage and was not for the purpose of allowing the family to own their own home.  The Tribunal accepts that the house is a substantial asset that should be realised or borrowed against to assist the household with the ongoing expenses of living.  The Tribunal takes into account that the applicant has suffered a serious injury and, additionally, since the time of that injury now suffers with sleep apnoea and diabetes.  However, ill health on its own is not a sufficiently special circumstance to justify the exercise of the discretion especially when ill health is a common feature of these cases and not an exceptional circumstance. 

21.     The Tribunal also notes that the household receives other forms of income support in payments of carer allowance and family tax benefit.      

22.     The Tribunal concludes that the applicant did not make a reasonable effort to keep sufficient funds in reserve for living and other expenses during the preclusion period.  After considering all relevant matters and viewing the applicant’s case in its entirety, the Tribunal is not satisfied that the matters raised by him, including his financial state and more recent health circumstances are such as to make his circumstances unusual, uncommon or exceptional. His circumstances, while difficult, are not special circumstances. Therefore, it is not appropriate for the Tribunal to exercise the discretion under s1184K(1) of the Act, to disregard the compensation preclusion period.

DECISION

23.     The Tribunal affirms the decision under review.

I certify that the 23 preceding paragraphs are a true copy of the reasons for the decision herein of Ms M J Carstairs, Member

Signed:         Denise Burton
  Administrative Assistant

Date/s of Hearing  10 November 2004 (Rockhampton)
Date of Decision  12 November 2004 (Bundaberg)        
The Applicant was represented by his wife
For the Respondent                  Ms J Dwyer, Departmental Advocate