ANDREW ROBB and SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

[2009] AATA 461

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 461

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2008/4863

GENERAL ADMINISTRATIVE DIVISION		)
Re		ANDREW ROBB

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Dr M Denovan, Member

Date24 June 2009

PlaceBrisbane

Decision The Tribunal affirms the decision under review.

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

Member

CATCHWORDS

SOCIAL SECURITY – Pensions, benefits and allowances – Settlement of compensation claim – Imposition of lump sum preclusion period – Legislative intent – Applicant’s circumstances are not unusual, uncommon or exceptional  – No special circumstances exist – Whole of compensation payment treated as having been made – Decision affirmed.

Social Security Act 1991 (Cth), ss 1169(1), 1170(4), 1184K(1)

Social Security (Administration) Act 1999 (Cth)

Dranichnikov v Centrelink (2003) 75 ALD 134

Groth v Secretary, Department of Social Security (1995) 40 ALD 541

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

Re Colaiacolo and Secretary to the Department of Social Security (AAT 2109, 24 April 1985)

Re Hartstang and Secretary, Department of Social Security (AAT 9335, 1 March 1994)

Re Ivovic and Director-General of Social Services (1981) 3 ALN 61

Re Platel and Secretary, Department of Social Security (AAT 8250, 17 September 1992)

Re Secretary, Department of Family and Community Services and Zugul [2005] AATA 425

Re Testa and Secretary, Department of Social Security (1989) 17 ALD 702

Re Zaccardi and Secretary, Department of Social Security (1995) 40 ALD 760

REASONS FOR DECISION

24 June 2009 Dr M Denovan, Member    

INTRODUCTION

1.      Mr Andrew Robb (the applicant) injured his back whilst working as a chef in January 2003.  Mr Robb’s compensation claim settled out of court in August 2005, and he received a lump sum that included a component for economic loss.  He then made a claim for disability support pension (“DSP”), which Centrelink rejected on the basis that he is subject to a lump sum preclusion period.  Mr Robb claims he is entitled to DSP because of his special circumstances, namely that he is in dire financial straits and his medical condition has worsened, leaving him unable to work.

2.      In order to resolve the dispute in this case, I must decide whether special circumstances exist that make it appropriate to treat the whole or part of the compensation paid to the applicant as not having been made.

BACKGROUND

3.      On 26 January 2003, Mr Robb injured his back at work.  He received periodic compensation payments up to and including 9 December 2004.

4.      Mr Robb was granted DSP from 14 December 2004.  On 18 August 2005, the applicant agreed to settle out of court for a gross sum of $466,195.22.  That amount included a $166,195.22 WorkCover refund.  After other deductions, Mr Robb received a nett amount of $257,790.19.

5.      Centrelink cancelled the applicant’s DSP on 25 August 2005.  Centrelink calculated a lump sum preclusion period for the applicant of 10 December 2004 to 16 December 2010.

6.      On 29 July 2008, the applicant lodged a claim for DSP.  That claim was rejected on 31 July 2008 on the basis of the preclusion period.  The applicant asked for a review of that decision and, on 25 August 2008, it was affirmed by an authorised review officer.  On 29 September 2008, the Social Security Appeals Tribunal also affirmed that decision.  The applicant applied to the Administrative Appeals Tribunal (“the Tribunal”) for review on 16 October 2008.

LEGISLATION

7.      The relevant legislation is contained in the Social Security Act 1991 (“the Act”). Under s 1169(1) of the Act, Mr Robb’s compensation payment has the effect that DSP is not payable to him for the duration of the lump sum preclusion period. The formula to calculate the length of the preclusion period is contained in s 1170(4) of the Act.

8.      When calculating the length of the preclusion period, the whole or part of a compensation payment may be disregarded in “special circumstances”[1].

[1] Social Security Act 1991, s 1184K(1).

FINDINGS OF TRIBUNAL

9.      I have checked the calculations of Centrelink and I am satisfied that the preclusion period has been correctly calculated.  This means that Mr Robb is precluded from receiving DSP for the entirety of that period unless the whole or part of his compensation payment is disregarded because of special circumstances.

10. Whilst the expression “special circumstances” is not defined in the Act or the Social Security (Administration) Act 1999, the approach to be taken in interpreting and applying discretionary provisions has been dealt with by the Tribunal and the Federal Court in numerous circumstances.

11.      In Re Beadle and Director-General of Social Security[2] it was said that:

“The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional.  Whether circumstances answer any of these descriptions must depend upon 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”.

[2] (1984) 6 ALD 1 at 3.

12.     In Dranichnikov v Centrelink[3], the Full Federal Court when considering the meaning of “special circumstances” observed:

“… what is required will be circumstances which distinguish the case in consideration from the usual case.  There will be a requirement that the circumstances are such that takes the case out of the ordinary …”

[3] (2003) 75 ALD 134 at 148 [66].

13.     Mr Robb admits that the compensation money he received should have been enough to support himself.  He said that his lawyers provided him with estimates of the preclusion period shortly after reaching a settlement in his personal injuries claim.

14.     Mr Robb has very few assets.  He has spent and disbursed the majority of the money he received from the compensation payment.  A large amount was lost in bad investments.  Mr Robb planned to make money importing cars and reselling them.  He estimated the likely return he would gain from this venture, and was told by a Commonwealth Bank financial adviser that investing the money in a bank would not return such high yields.  Mr Robb had no prior experience in importing or selling cars, and he appears to have dived into a business venture after very limited research as to its likely success.  Over a period of approximately two years he imported seven cars.  The cost of repairs on the cars far exceeded his expectations, and the resale value was far less than he anticipated.  As a result, Mr Robb lost a large amount of money, approximately $100,000.

15.     Mr Robb also invested in surfboards.  He expected to sell the boards for a profit, but instead sold them for a total loss of approximately $11,000.

16.     Mr Robb loaned his mother $18,000 and his brother-in-law $12,000.  He also bought his mother a car to compensate her for looking after him whilst he was sick.  He bought three motorbikes but sold two and currently owns one.  The remainder of his compensation payment was spent on household items, personal effects and living expenses.  Since August 2008, Mr Robb has lived on the proceeds of the sale of two cars and has also used money he had in term deposits, a total of approximately $45,000. 

17.     Mr Robb lives with his mother in rented accommodation.  He shares expenses with her.  His share plus his personal ongoing expenses total approximately $540 per week.  He has the benefit of a health care card.  His mother receives an aged pension and carer allowance.

18.     Mr Robb returned to work for a brief period, however his condition then deteriorated.  He is no longer able to work.  Mr Robb anticipates this to be a temporary situation, as he believes a decompression operation would largely rectify the problem.  Mr Robb is awaiting an appointment at the Royal Brisbane Hospital’s neurosurgery clinic.  There have been some communication problems with that clinic, and Mr Robb is in the process of trying to reschedule his appointment.

19.     Mr Robb’s general practitioner has indicated that Mr Robb is depressed and suicidal.  Mr Robb has seen a psychologist on three occasions in relation to depression.  That psychologist refused to give him a letter for the purposes of this hearing.  He did not find the psychologist of benefit and no longer attends.  He has not been referred to a psychiatrist and has not been prescribed antidepressants.

20.     Mr Hamilton, counsel for the respondent, submitted that the applicant’s circumstances are not unusual, uncommon or exceptional.  Mr Hamilton submitted that the manner in which Mr Robb has chosen to spend his compensation payment precludes a finding that there are any special circumstances.  Mr Hamilton further argued that the applicant has assets that could be realised and used for his living expenses.

21.     Financial hardship has been considered as a possible component of special circumstances in a number of decisions.  It is well established that, by itself, such hardship is not enough[4], and that financial circumstances must not only be straitened but also exceptional[5].

[4] Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 4.

[5] Re Colaiacolo and Secretary to the Department of Social Security (AAT 2109, 24 April 1985); Groth v Secretary, Department of Social Security (1995) 40 ALD 541; Re Zaccardi and Secretary, Department of Social Security (1995) 40 ALD 760.

22.     Although the applicant's financial position is certainly difficult, I find that his circumstances are not exceptional.  I am sympathetic to the applicant's situation, given his current medical problems and limited financial resources.  However, the applicant exercised a choice over the expenditure of the lump sum compensation payment.  His financial troubles were brought about largely by his unsuccessful investments, in circumstances where returns were risky and not guaranteed.  Also, much of the applicant’s expenditure can not be regarded as essential.  Mr Robb gifted and loaned much of his lump sum compensation payment.  He is currently owed $30,000 by relatives, which he could use to support himself.

23.     I understand it is likely that the applicant spent the money believing he would return to work, and thus anticipated he would have a future cash flow.  Mr Robb’s poor health currently prevents him from working.  Poor health alone can constitute special circumstances, however, the condition for which compensation was received is not usually a factor which can be considered as relevant for the purposes of establishing special circumstances[6].

[6] Re Secretary, Department of Family and Community Services and Zugul [2005] AATA 425.

24.     When considering whether special circumstances exist, the courts and the Tribunal have had regard to the reasonableness of the person’s expenditure of the lump sum.  Frittering money away on non-necessities[7], loans to family members[8], and unsuccessful investments where returns were not guaranteed[9], have all been regarded as conduct militating against finding special circumstances.

[7] Re Testa and Secretary, Department of Social Security (1989) 17 ALD 702.

[8] Re Platel and Secretary, Department of Social Security (AAT 8250, 17 September 1992).

[9] Re Hartstang and Secretary, Department of Social Security (AAT 9335, 1 March 1994).

25. The discretion in s 1184K(1) of the Act to treat the whole or part of a compensation payment as not having been made should be considered in the context of the scope and purpose of the compensation provisions of the Act. The discretion ought not to be exercised in a manner calculated to frustrate legislative intent[10].  Those who receive a lump sum compensation payment are expected to support themselves from their own available resources for a period before seeking support from the taxpayer.  The question of whether there are special circumstances in this case must be asked with this in mind.

[10] Re Ivovic and Director-General of Social Services (1981) 3 ALN 61.

26.     When the relevant circumstances of the applicant are looked at in their entirety, they cannot be fairly described as unusual, uncommon or exceptional, so as to be “special” in the sense in which the legislature intended that term.

27. The application of s 1184K(1) of the Act in these circumstances would be inappropriate, as it would frustrate the purpose of the legislation.

CONCLUSION

28.     I consider that there is no injustice or unfairness in Mr Robb serving the entire lump sum preclusion period.  No special circumstances exist that could justify the whole or part of the compensation money being treated as not having been made.

DECISION

29.The Tribunal affirms the decision under review.

I certify that the 29 preceding paragraphs are a true copy of the reasons for the decision herein of Dr M Denovan, Member.

Signed: ................................[Sgd].........................................
  Mátyás Kochárdy, Research Associate

Date of Hearing  17 June 2009
Date of Decision  24 June 2009
Applicant was self-represented
For the Respondent                  Mr R Hamilton, Departmental Advocate