Anderson and Secretary, Department of Family and Community Services
[2000] AATA 431
•2 June 2000
DECISION AND REASONS FOR DECISION [2000] AATA 431
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2000/209
GENERAL ADMINISTRATIVE DIVISION )
Re GARY JAMES ANDERSON
Applicant
And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION
Tribunal Deputy President A M Blow OAM, QC.,
Date2 June 2000
PlaceSydney
Decision The decision under review is varied by treating as not having been made such part of the applicant's compensation payment as will result in his preclusion period ending on 4 July 2000.
[Sgd A M Blow]
Deputy President
CATCHWORDS
Social Security – disability support pension – compensation recovered for injury – preclusion period – special circumstances – hardship and gambling.
Social Security Act 1991 – ss.17(1), 17(3), 1165(5), 1165(8), 1165(9), 1184.
REASONS FOR DECISION
2 June 2000 Deputy President A M Blow OAM, QC.,
This is an application for the review of a decision made by a delegate of the respondent on 13 July 1999. That decision was affirmed by the Social Security Appeals Tribunal ("SSAT") on 25 January 2000. On 13 July 1999 the applicant received $60,000 by way of lump sum workers' compensation, representing a commutation of future weekly payments and medical expenses. The delegate decided that, as a result, he was precluded from receiving a disability support pension for a preclusion period of 71 weeks running from 14 July 1999 until 21 November 2000.
The applicant contends that, in calculating the appropriate preclusion period, the fact that he would have been capable of earning some $750 to $1,000 per week had he not been injured ought to have been taken into account. He also contends that there are special circumstances by reason of which some or all of the payment of $60,000 ought to be treated as not having been paid.
Calculation of the Preclusion PeriodThe Social Security Act 1991 ("the Act") contains specific provisions as to how a preclusion period is to be calculated after a payment of compensation has been made. Neither this Tribunal nor any other decision-maker has any discretion as to how a preclusion period ought to be calculated, apart a discretion under s.1184, exercisable in special circumstances, to treat some or all of the compensation payment as not having been made. In this case, I am satisfied that the period of 71 weeks has correctly been calculated. I will set out, fully and tediously, the relevant statutory provisions and details of how they apply to the facts of this case.
The starting point is s.17(2) of the Act, which defines "compensation". That subsection includes the following:
"For the purposes of this Act, compensation means:
(a) …(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) …
(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) that is:
(e) made wholly or partly in respect of lost earnings or lost capacity to earn …".
It is clear that the payment received by the applicant amounted to compensation under s.17(2) of the Act. Provisions as to the consequences of recovering compensation are contained in Part 3.14 of the Act. Specifically, s.1165(1A) provides as follows:
"If:
(a) a person receives or claims a compensation affected payment; and
(b) the person is not a member of a couple; and(c)the person receives a lump sum compensation payment (whether before or after the person receives or claims the compensation affected payment) on or after 20 March 1997;
no compensation affected payment is payable to the person for the new lump sum preclusion period."
The meaning of the term, "the new lump sum preclusion period", is to be found in s.1165(5), (8) and (9) which read as follows:
"(5) If periodic compensation payments are made in respect of the lost earnings or lost earning capacity, the 'new lump sum preclusion period" is the period that:
(a) begins on the day after the last day of the periodic payment period; and
(b) ends after the number of weeks worked out under subsections (8) and (9)."
"(8) If a compensation lump sum is received on or after 20 March 1997, the number of weeks in the preclusion period is the number worked out under the following formula:Compensation part of lump sum
Income cut-out amount(9) If the number worked out under subsection (4) or (8) is not a whole number, the number is to be rounded down to the nearest whole number."
The term "compensation part of lump sum" is defined in s.17(3) of the Act, the relevant parts of which read as follows:
"For the purposes of this Act, the compensation part of a lump sum compensation payment is:
(a) 50% of the payment if the following circumstances apply:(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, on or after 9 February 1988; or
(ab) 50% of the payment if the following circumstances apply:
(i)the payment represents that part of a person's entitlement to periodic compensation payments that the person has chosen to receive in the from of a lump sum; and
(ii)the entitlement to periodic compensation payments arose from the settlement (either with or without admission of liability) of a claim that is, in whole or in part, related to a disease, injury or condition; and
(iii)the claim was settled, either by consent judgment being entered in respect of the settlement or otherwise, on or after 9 February 1988;
(b) …".
In this case, the applicant's claim for a lump sum payment was settled as a result of negotiations between solicitors. It follows that the compensation part of the lump sum he received was $30,000, that being 50% of $60,000.
To calculate the applicant's "income cut-out amount" for the purposes of s.1165(8), one must have regard to the definition of that term in s.17(1) of the Act, which reads as follows:
"income cut-out amount" means the amount worked out using the following formula:
2 (Maximum basic Pharmaceutical amount ) Ordinary free
( rate + for a single person ) + area limit___52
where:
"maximum basic rate" means the amount specified in column 3 of item 1 in Table B in point 1064-B1.
"pharmaceutical amount for a single person" means the amount specified in column 3 of item 1 in the Pharmaceutical Allowance Amount Table in point 1064-C8.
"ordinary free area limit" means the amount specified in column 3 of item 1 in Table E-1 in point 1064-E4. "
At the relevant time, the amount specified in column 3 of item 1 in Table B in point 1064-B1 of the Act was $9,396.40. That amount is therefore the relevant "maximum basic rate". At the relevant time the amount specified in column 3 of item 1 in the Pharmaceutical Allowance Amount Table in point 1064-C8 of the Act was $140. That is therefore the relevant "pharmaceutical amount for a single person". At the relevant time the amount specified in column 3 of item 1 in Table E-1 in point 1064-E4 of the Act was $1,652. That is therefore the relevant "ordinary free area limit".
The relevant "income cut-out amount" is therefore as follows:
2 ($9,396.40 + $140.40) +$1,326 = $417.80
The preclusion period was correctly calculated as 71 weeks by taking the compensation part of the lump sum ($30,000) and dividing that figure by the income cut-out amount ($417.80). The delegate had no discretion to adopt a larger divisor (e.g. $750 or $1,000) on the basis of what the applicant could have earned if he had not been injured.
Special CircumstancesThe applicant was injured at work on 23 July 1994. Prior to that date he had pursued a career as a self-taught sheetmetal worker. On the day of his accident, he fell about 3.5 or 4 metres, and suffered serious permanent injuries to his low back and his neck. He was nearly killed. As a result he is suffering from post-traumatic stress disorder.
The applicant gave evidence that he no longer had any of the $60,000 that he had received in July 1999. He said he had used $10,000 to repay money he borrowed from a friend, and had spent and gambled away the rest of the money, which finally ran out about a month before the hearing, i.e. about mid-April 2000.
The applicant has consistently stated that, at the time of receiving the lump sum, his lawyers did not tell him that he would be precluded from receiving a disability support pension for 71 weeks or thereabouts. I am not prepared to accept his evidence on that point. The solicitor who negotiated the settlement for him has stated in a letter to the respondent's advocate that she told the applicant that if a settlement figure of $60,000 was reached he would have a preclusion period of approximately 75 weeks. She sent with that letter a photocopy of a handwritten file note of a conversation that she had with the applicant. She has written, "…he has to remember that he will be on his own and without DSS also – on $60K my calculation is about 75 weeks." She said in her letter that there was an approval hearing before a judge at which the applicant was asked under oath whether he had had the effects of the commutation explained to him, and that he specifically acknowledged that he understood there was a 73 week preclusion period. She also forwarded a copy of the notes of the applicant's counsel at that hearing, which include a line reading "73 week preclusion period". Although none of that evidence was tested by cross-examination, it is sufficient to lead me not to accept the applicant's evidence that he was not told of the preclusion period and its approximate length.
With that exception, I accept the evidence of the applicant. He was not legally represented. If he had been represented by a competent barrister or solicitor, I expect I would have been provided with various sorts of corroborative evidence, particularly medical reports, statements from friends or acquaintances as to his gambling habits, and bank statements. I appreciate that it is very easy for a pension claimant say that he has gambled away all his money, and that an administrative decision-maker should rarely accept an uncorroborated assertion that someone asking for money is broke. However the applicant's demeanour at the hearing was that of a man with psychiatric problems. He seemed very anxious. He was easily irritated and often over-reacted to questions asked of him. He seemed very ashamed of himself when he discussed his gambling losses. What he said about his gambling was corroborated by a short note from a woman in whose spare room he has been living. His assertion that he was broke was corroborated to a degree by correspondence between the respondent's advocate and an officer of the applicant's bank, which showed that he had opened a term deposit account with $36,000 on 30 July 1999 and made a series of withdrawals, finally withdrawing $5,646.80 and closing the account on 17 February 2000. The correspondence also showed that he had a savings account with only $9.02 in it as at 1 May 2000. That is the extent of the corroborative evidence. Although it is less than ideal, I am reasonably satisfied that the applicant has told the truth about his gambling problem and his financial position.
In addition to the $60,000 that the applicant received in July 1999, he had previously received $82,270 as a result of a workers compensation hearing that was held on 15 May 1997. That sum comprised $47,270 in respect of his permanent injuries, paid pursuant to s.66 of the Workers Compensation Act 1987 (NSW), and a further $35,000 in respect of pain and suffering paid pursuant to s67 of that Act. The applicant has spent and gambled away all of that money as well, apparently wasting the bulk of it on alcohol and gambling. It appears from his evidence that he was in the habit of gambling away hundreds of dollars per day on poker machines in clubs. He said that his consumption of alcohol diminished over time as his gambling activities grew. He began attending Gamblers Anonymous meetings in or about November 1999, but apparently was unwilling to acknowledge the extent of his gambling problem until he reached the stage where he had run out of money.
He has had no income since he received the settlement money in July 1999. Before that he was living on workers compensation payments of about $412 per fortnight after tax. He does not have a home of his own. He is staying with a female friend, in her spare room, and has often stayed with her over the last 16 years. He has elderly parents at Wauchope, and also stays with them from time to time. Before he was injured, his work used to take him to industrial sites in various states. He would work on a particular project for weeks or months, and then move on. He appears not to have a permanent home for many years. His only asset now is a Ford Laser vehicle that is 16 years old.
As I have said, s.1184 of the Act confers a discretion that can be exercised in special circumstances. That section reads as follows:
'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."
In this case I am satisfied that there are special circumstances, i.e. unusual, uncommon and exceptional circumstances, which warrant the exercise of the discretion conferred by s.1184. The first special circumstance is that the applicant has a gambling problem that is apparently related to his post-traumatic stress disorder, which in turn appears to be a consequence of the incapacitating accident that occurred on 23 July 1994. The second special circumstance is that the applicant is likely to suffer extreme hardship if the preclusion period is not shortened. He could stay with his parents, but he is not prepared to tell them of his gambling problem. He can continue to stay at the home of his female friend, but she is a disability support pensioner, and it would not be reasonable to expect her to support him. He could sell his car, but I do not think the proceeds of sale of a 16 year old Ford Laser would be sufficient to cover minimal necessary living expenses until 21 November 2000, when the preclusion period is due to expire.
Because of those circumstances, I think that this is an appropriate for the discretion conferred by s.1184 to be exercised in the applicant's favour. I do not think it is appropriate to make a decision which would have the effect of giving him a lump sum in respect of any past period. He would be likely to gamble that money away. I think it is appropriate in the circumstances for the applicant to sell his car and to make the proceeds of sale last for several weeks at least. In the circumstances therefore, I think the appropriate decision is one shortening the preclusion period so that it will expire on 4 July 2000. I have therefore decided to vary the decision under review accordingly.
I certify that the 21 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President A M Blow OAM, QC.,
Signed: .....................................................................................
Personal AssistantDate/s of Hearing 17 May 2000
Date of Decision 2 June 2000
Counsel for the Applicant Applicant appeared in person.Representatives for the Respondent Ms S Mantaring, Ms S Antcliffe (Centrelink)
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