Anastasiadis and Department of Family and Community Services

[2001] AATA 671

DECISION AND REASONS FOR DECISION [2001] AATA 671

ADMINISTRATIVE APPEALS TRIBUNAL      )

)     No    N2000/1457

GENERAL ADMINISTRATIVE DIVISION          )          

Re      DIMITRA ANASTASIADIS

Applicant

And    Secretary, Department of Family and Community Services         

Respondent

DECISION

Tribunal       Rear Admiral A R Horton AO, RAN (Rtd), Member       

Date26 July 2001

PlaceSydney

Decision      The Tribunal affirms the decision of the Secretary, Department of Family and Community Services ("the Respondent") dated 12 August 1999 that imposed a lump sum preclusion period from 6 July 1999 to 26 August 2002 on Dimitra Anastasiadis ("the Applicant").            

[sgd] Rear Admiral A R Horton AO, RAN (Rtd)  Member
CATCHWORDS

SOCIAL SECURITY – imposition of lump sum compensation preclusion period – calculation of preclusion period – claim for disability support pension rejected - whether special circumstances should apply vide section 1184 of the Act

Social Security Act 1991 –s 1184

Beadle v Director General of Social Security (1985) 7 ALD 670
Re Beadle v Director General of Social Security (1984) 6 ALD 1
Re Green and Secretary Department of Social Security (1990) 21 ALD 772
Re Szoke and Secretary, Department of Family and Community Services (2001) AATA 353
Secretary Department of Social Security and Hulls and Others (1991) 22 ALD 570

REASONS FOR DECISION

Rear Admiral A R Horton AO, RAN (Rtd), Member

This is an application for review of a decision of the Social Security Appeals Tribunal ("the SSAT") made on 10 August 2000.  On 12 August 1999, a delegate of the Secretary, Department of Family and Community Services ("the Respondent"), imposed a lump sum preclusion period from 6 July 1999 to 26 August 2002 in accordance with the Social Security Act 1991 ("the Act") on Dimitra Anastasiadis ("the Applicant"). This decision was affirmed by an Authorised Review Officer on 23 May 2000 and further affirmed by the SSAT. The appeal arose from a decision by the Respondent to reject a claim for the disability support pension on 21 February 2000, this being within the compensation preclusion period. The Applicant lodged an application for review by this Tribunal on 11 September 2000.

At the hearing before the Tribunal on 10 April 2001, the Applicant was self- represented. Mr Bernard Slattery, advocate, appeared for the Respondent.
The Tribunal had before it the documents provided by the Respondent pursuant to section 37 of the Administrative Appeals Tribunal Act 1975. . The following documents were tendered by the Applicant:

• Letter to the Applicant from the Legal Services Commissioner dated 28 March 2001 (Exhibit A1)

• Letter to the Applicant from D Riggio & Associates dated 28 March 2000 (Exhibit A2)

• Account deposit slips relating to various financial payments made by the Applicant (Exhibit A3)

• Letter from Aussie Loan Office dated 25 September 1999 (Exhibit A4)

• Credit Union payment slip for $5000 dated 25 August 1999 (Exhibit A5)

• Cheque Stubs from 3 September 1999 to 9 September 1999 (Exhibit A6)

• Cheque Stubs from 25 August 1999 to 26 August 1999 (Exhibit A7)

• Various electricity and telephone accounts for the period August/September 1999 (Exhibit A8)

• Commonwealth Bank cheque stub for $800 dated 1 September 1999 (Exhibit A9)

BACKGROUND
On 8 July 1999, the Applicant settled a compensation claim for a total lump sum of $137,500.  This claim was in relation to an injury she incurred during her employment at Qantas Airways Limited.  On 12 August, MMI Insurance was advised that no amount was recoverable by Centrelink.
On 12 August 1999, the Applicant was notified by the Respondent (T4) that consequent upon the lump sum compensation payment, (part of which was considered to be for "lost earnings or lost capacity to earn"), a preclusion period from 6 July 1999 to 26 August 2002 would be applied.   The notice went on to say:

"This means that during the period 6 July 1999 to 26 August 2002 you will not be able to receive social security payments, with the exception of payments made for children."

On 18 August 1999, in response to a telephone call, the Applicant was apparently advised by a Centrelink officer (T6) that her debts 'could not be taken into account as special circumstances to reduce the preclusion period'.  On 18 October, the Applicant's solicitors wrote to Centrelink (T7) on behalf of their client, advising that legal expenses had reduced the available lump sum payment to about $105,000, and that the repayment by the Applicant of outstanding debts as listed, had left her in a difficult financial position.  A review of the preclusion period was therefore requested.  There is no evidence on file as to whether Centrelink responded to this request made by the Applicant's solicitors.
On 11 February 2000, the Applicant lodged a claim for disability support pension. This claim was rejected on 21 February 2000 on the grounds that the preclusion period remained extant (T11). On 23 February 2000 she sought a review of this decision, and subsequently also requested reconsideration of the preclusion period under the special circumstances provisions of the Act. In a letter from Centrelink dated 18 April 2000 (T24) the Applicant was advised that special circumstances did not apply to her case and thus the preclusion period still remained.
A re-consideration decision by an Authorised Review Officer dated 23 May 2000 (T26) affirmed  the decision dated 12 August 1999.  The effect of this re-consideration decision was that special circumstances did not exist and the preclusion period was to stand.
ISSUES AND LEGISLATION        
There is no dispute that the imposition of the lump sum preclusion period accords with the provisions of the Act, or that the period has been correctly calculated. The issue is whether this Tribunal should exercise the discretion in s 1184 of the Act, to treat some or all of the compensation payment as not having been made to the Applicant.
Part 3.14 of the Act relates to recovery and payment of compensation affected payments. In particular, where a person is in receipt of a lump sum compensation payment, s 1184 states:

"For the purpose 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."

FACTS AND EVIDENCE

The Applicant gave evidence that she is part of a 'very close' (Greek) family.  She is part owner of a house at Concord, bought as a single storey building in about 1986.  There are four owners in equal partnership; the Applicant, her brother Theo and his wife, and her sister Maria, each with a nominal responsibility for a portion of the mortgage payments.  The Applicant's sister now resides on the Central Coast, however her parents and her brothers two children live in the home.

1. In about 1990, a decision was taken to add a second story to the home.  Her brother, a builder, assisted by her brother-in- law Kevin, undertook the building work.  For most of the period, particularly when the Applicant was no longer in employment, they also funded the improvements.  The building and fit out progressed, as financial resources became available.   From the evidence, some internal facilities are still to be completed.

1. From 1985 until 1990, the Applicant worked in a gift shop at Marrickville.  To improve her earnings, particularly to meet house and mortgage commitments, she obtained work with a contract firm providing housekeeping services to Qantas and Ansett.  In 1994, she took up employment directly with Qantas in the catering department.  Her salary was $42,000 per annum.  In late 1995, following a work place accident, she was transferred to light duties.  About a year later, she ceased work, her income subsequently being about $500 per fortnight from MMI Insurance.

1. She gave evidence that after the accident she had minimal ability to meet her financial commitments to the home and the building extension.  From the $500 per fortnight, she paid substantial medical bills and her general living expenses, with little remaining to help the family.  She stressed the fact that her family accepted her situation, and they all contributed where they could.  Other friends lent money to assist.   Although obliged to meet a lot of the financial obligations, her brother said to her 'whenever you can you can pay me back – you know, don't worry about it'.  Notwithstanding, the close family relationships, the Applicant considered that her debts must be repaid as soon as the means to do so became available.

1. The Tribunal found it difficult to reconcile explanations as to the mortgage arrangements for the property, particularly as this would relate to the financial implications for the Applicant.  The evidence was that the home at Concord was bought for about $125,000 with a mortgage in the order of $115,000, and each part owner had responsibility for part of the mortgage payments.  Apparently the mortgage was transferred to City Bank in about 1990 at a relatively high interest rate, and then transferred to Wizard in March 1997, the loan amount being $191,000 (T15).   From the evidence, there appeared to be some issues with one or more solicitors which placed financial pressure on the mortgage arrangements.  The Applicant had stated that the intent when extending the home was not to borrow 'a lot of money' but to extend as money became available.  In the Applicant's words 'So we didn't want to go and say to the bank give us $40,000, $50,000 so we can build.  So we just (do) whatever we can or we can borrow from friends, $2000 here, $3,000 there'.  The Tribunal finds that the reason why the mortgage was significantly increased is unclear.  However, there is no doubt that the increase in mortgage also increased the overall financial liability of the Applicant after her accident.  In her evidence, she stated that she went to Wizard ' because the account was in a lot of arrears'.

1. The Applicant's evidence was that her solicitor suggested she should accept compensation.  Her evidence was that having accepted the compensation payment, he advised her of the preclusion period ' when I was following out with him', but indicated she would receive social security.  As earlier noted, advice as to the preclusion period was provided by the Respondent on 12 August, one month after settlement.  

In response to a question from the Tribunal as to whether she agreed that the preclusion period had been correctly calculated, the Applicant stated that she did not question it, because she did not know how the social security system worked.  The issue was that whilst she had no desire to accept social security, her financial situation was such that access to social security was being sought.

The Applicant said she was aware of the preclusion period prior to receiving some $90,000 through her solicitor and some short time later, a further $12,000 from Medicare, however she felt obligated to pay her debts.  She stated:

"I learn in my life, that's why people respect me … When you are getting something from someone, you have the obligation to.., and when I got that money, like, social security turn around and say to me, "you shouldn't pay anybody, just keep your money until your time finished", and I said to them, "I'm sorry, no, I will never do that to people".   I did owe money because as far as I am concerned that's cheating, and I wouldn't like to cheat anyone."

She further stated that she was not prepared to accept the advice from Centrelink that she should maintain her independence until the completion of the preclusion period, when alternative accommodation arrangements could be made.  She remains adamant to meet her responsibility to maintain a home for her parents and considers there is no financial option for her brother, for instance, to buy out her part of the house.  In evidence, the Applicant stated that in view of the letter written on her behalf by her solicitor to Centrelink, she was of the opinion that the preclusion period would be reduced.       

1. In her dealings with Centrelink and before the SSAT, the Applicant was generally unable to produce evidence to confirm that payments had been made as claimed.  Before the Tribunal, documentary evidence in support of various payments was produced in a reluctant and haphazard manner. The Applicant was often unable to provide a lucid and rational explanation of the circumstances of either the original debt or the basis and manner of repayment of that debt.  She further insisted that much of this documentary evidence had been earlier provided, but that does not appear to have been the case.  Nonetheless, much of the debt payments listed in the letter by Pavlis and Co, (T7) were eventually identified before the Tribunal as having been paid to relevant bank accounts.  However the formal basis of those debts remains unclear, as is evidenced in the following exchange between the Applicant to the Respondent:

"Can you just account for that $10,000 to Kevin (brother-in-law)?   How did you come to owe him that? …He paid slowly, material for the house.   He spent slowly (on) things for the house.
Did you keep any records of what you owed him…I knew what I owed him.
How did you know that?…Because I just put it down somewhere and it's like, he gave me $1,000, $2,000, $3,000
Right, and it comes to exactly $10,000?…Well, it comes to more than that but I didn't put it down."

1. The Applicant gave further evidence as to her continuing difficulties in meeting payments relating to medical expenses, payments outstanding to the Qantas Credit Union, and mortgage and other house related payments.  She referred the Tribunal to her own limited needs in order to retain some independence.

Submissions 

1. The Applicant summarised her situation by stating that she was obligated to pay her debts, and did so to the best of her financial ability.  She considered her family admired and loved her, and whilst they did not say anything about her financial difficulties, they in turn supported her with difficulty.  Her parents were not in good health, but it was her duty and desire to support them to the fullest extent.  She reluctantly accepted that she was seeking assistance in order to alleviate financial problems, and felt humiliated in so doing.  

1. The Respondent submitted that over a period, including when she was in receipt of regular compensation payments, the Applicant accrued extensive debts, including monies owed to credit unions and commercial entities.  It was submitted that the Applicant received lump sum compensation money on 23 August 1999 to the amount of $90,950.  By 18 October 1999, less than two months later, an amount of around $84,950 had been spent, with $6,000 remaining. The Applicant claims this was to repay loans, some of which she had proven at the hearing.  However, it was submitted for the Respondent that there was still the problem about a gap in the evidence as to where that money went.

1. The Respondent submitted that on the evidence, there is no suggestion that the Applicant's solicitor provided incorrect advice as to the implications of the preclusion period.  The Applicant was formally advised by Centrelink letter on 12 August 1999 (T4) of the preclusion period, and this was followed up with a telephone discussion on 18 August 1999 (T6), well before she received the compensation payment.  A letter seeking reconsideration of the preclusion period in the light of her payments and financial situation was forwarded to Centrelink by her solicitor on 18 October 1999 (T7).  The Respondent expressed surprise at the Applicant's denial that she had instructed the solicitor to do so, albeit to do so would clearly have been in her interests.    

1. The Respondent further submitted that in the circumstances, the Applicant is adequately housed – in a home that she part owns – and is supported by her family.  The precise knowledge of the Applicant's financial liabilities is difficult to determine from the evidence. The Respondent noted that the Applicant made a decision in respect of the expenditure of the compensation payment, notwithstanding advice given to her as to the implications of the preclusion period.  However, in the absence of a clearer picture the Respondent was unable to support the application to reduce the preclusion period.

Analysis of Evidence and Findings of Fact      

1. Section 1184 of the Act is applicable to this matter. As earlier noted, it provides that in "special circumstances" the whole or part of a compensation payment can be treated as not having been made. However, in order to make that decision, "special circumstances" must exist.

1. Whilst not defined in legislation, the meaning of "special circumstances" has been considered by the AAT and further addressed by the Federal Court.  In ReBeadle and Director General of Social Security (1984) 6 ALD 1, the tribunal, with Toohey J presiding, stated (at 3):

"An expression such as "special circumstances" is by its very nature incapable of precise or exhaustive definition.   The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional.   Whether circumstances answer any of these descriptions must depend on the context in which they occur.  For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases.  This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special."      

1. The Full Federal Court, in subsequently upholding the decision in Beadle vDirector General of Social Security (1985) 7 ALD 670, stated (at 674):

   "We do not think it possible to lay down precise limits or precise rules.   The matter is one for the Director General bearing in mind the purpose for which the power is given.   The phrase "special circumstances", although lacking precision, is sufficiently understood in our view not to require judicial gloss."

1. In Re Ivovic and Director General of Social Security(1981) 3 ALN N95, the tribunal made specific comment (under the previous Act), on the issue of hardship, that is of particular relevance in this matter.  That comment was later endorsed by O'Loughlin J in the Federal Court in Secretary General of Social Security v Hulls and Others (1991) 22 ALD 570 (at 581), and it bears repeating:

" Whilst we agree that hardship is a relevant consideration in the discretion conferred by s 115 (4A), we reject the submission …(for the applicant) that we should ignore the circumstances out of which the alleged hardship is said to have arisen.  The reference to special circumstances "by reason of which" a person liable "should be released" requires, in our view, that there must exist in the circumstances of the case, a factor of factors which justify the making of an exception in whole or in part to the principle of liability which the Act otherwise establishes. In the exercise of the discretion which s115 (4A) confers, the decision maker must have regard to whether, by exercising the discretion in a particular case, he will be achieving or frustrating ends or objects which are conformable with the scope and purpose of the Social Services Act 1947…Thus while keeping the dominant principle in mind, he must nevertheless be prepared to respond to the special circumstances of any particular case by reason of which strict enforcement of the liability created by the section would be unjust, unreasonable or otherwise inappropriate."

1. The Respondent also referred the Tribunal to Re Green and Secretary, Department of Social Security (1990) 21 ALD 772, stating that the tribunal in that matter provided 'a framework in which to consider a claim for special circumstances'. This Tribunal notes the issues addressed in that decision.

1. A more recent decision in Szoke and Secretary, Department of Family and Community Services (2001) AATA 353, has relevance to the matter before this Tribunal. In that decision the tribunal reasoned that "the clear intention of the Act is that where compensation in a lump sum amount has been provided, then payments under the Act are to be limited …in accordance with the provisions of the Act". In reaching a decision that special circumstances did not exist, the tribunal stated:

"In the ultimate the Respondent's (Szoke) case is that she is now impoverished by her failure to make financial provision for the lump sum preclusion period.   That was, on her own case, clearly the result of voluntary actions by the Respondent to dissipate the money received by her in settlement of her compensation claim.   She did not experience misfortune, nor did she experience circumstances not envisaged by the legislation.  
We are satisfied that the Respondent deliberately spent the money without regard to the consequences of her action…"

1. This Tribunal takes particular account of the close relationships between the Applicant and her family, and her evidence in respect of the circumstances of joint ownership of the family home and relevant mortgage and other responsibilities.  The Tribunal also acknowledges that the close family relationships may well have influenced the Applicant as to her liabilities to settle personal debts when funds became available.  Whilst this is admirable, account must nevertheless be taken of the fact that in spite of verbal and written advice from the Respondent as to the implications of the lump sum preclusion period, and in the light of her ongoing financial liabilities and medical circumstances and associated costs, her actions in dispersing the lump sum, some of which the Tribunal was unable to account for, was imprudent and inappropriate.       

2. On the evidence available, the Tribunal cannot be satisfied that 'special circumstances' exist in this matter.  The circumstances existing at the time cannot be said to be unusual, uncommon or exceptional (Re Beadle (supra)) but matters within the purview and control of the Applicant.

3. The decision under review is therefore affirmed.

   I certify that the 33 preceding paragraphs are a true copy of
   the reasons for the decision herein Rear Admiral A R Horton AO, Member

   Signed: R. Quinn     .....................................................................................
     Associate

   Dates of Hearing  10 April 2001
              Date of Decision   26 July 2001
              Solicitor for Applicant  Self represented
              Advocate for the Respondent      Mr B Slattery,