Armstrong and Secretary, Department of Family and Community Servi Ces

[2003] AATA 804

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2003] AATA 804

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2002/576

GENERAL ADMINISTRATIVE DIVISION		)
Re		MELANIE ARMSTRONG

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Ms J Cowdroy, Member

Date15 August 2003

PlaceBrisbane

Decision The Tribunal sets aside the decision under review and remits the matter to the respondent for reconsideration with a direction that an amount of $12,000 should be disregarded in the calculation of the preclusion period applicable to the applicant. 

....................(Sgd).....................

J Cowdroy
  Member

CATCHWORDS

SOCIAL SECURITY – benefits and entitlements – preclusion period – whether there are any special circumstances that justify treating part or all of the compensation monies received by the applicant not having been made

Social Security Act 1991

Beadle v Director-General of Social Security (1985) 7 ALD 670
Re Beadle and Director-General of Social Security (1984) 1 AAR 362
Groth v Secretary, Department of Social Security (1995) 40 ALD 541

REASONS FOR DECISION

15 August 2003 Ms J Cowdroy, Member    

1.      The applicant seeks review of a decision of the Social Security Appeals Tribunal dated 28 June 2002..  The Social Security Appeals Tribunal set aside the decision of the respondent to apply a lump sum preclusion period to the payment of social security benefits to the applicant, and remitted the matter to the respondent for reconsideration in accordance with a direction that the length of the preclusion period be recalculated treating the following sums of money as not having been paid to the applicant:

§$12,771, which represents a quotation from Denbury Building Services for the cost of fixing the structural defects in the house which was purchased using Mrs Armstrong’s lump sum settlement; and

§$64,000 of the legal expenses incurred in defending Mr Armstrong at his criminal trial.

2.      The effect of the Tribunal’s decision is that $76,771 of the monies paid to the applicant were to be disregarded by the respondent in the calculation of the lump sum preclusion period to be applied to the applicant. On 2 July 2002, the applicant applied to this Tribunal for a review of that decision.  The applicant contends that there are special circumstances in her case that would justify a further reduction in the length of the preclusion period.

3.      This matter was heard by the Tribunal on 20 January and 20 February 2003.  The applicant attended the hearing and gave evidence.  Mr P Armstrong, the applicant’s husband, also gave evidence.  The applicant was represented at the hearing by Mr Brennan of counsel.  The respondent was represented by Ms Shea, a Departmental Advocate.

4. The Tribunal had before it the documents lodged pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (the T documents) as well as a large number of documentary exhibits.

Issues Before the Tribunal

5. The applicant does not dispute that she received a lump sum payment of $450,000 by way of compensation for injuries she sustained in an accident (see T4). Therefore, the sole issue before the Tribunal is whether special circumstances exist in this case that would warrant the exercise of the discretion, in s 1184K(1) of the Social Security Act 1991 (the Act), to treat all or part of the compensation payment received by Mrs Armstrong as not having been made.

Applicant’s Case

6.      The applicant was born on 16 April 1965.  She married Peter Armstrong on 17 November 1990, and they have three children, James, Matthew and Sarah.

7.      On 4 November 1995, the applicant and her children were involved in a motor vehicle accident.  As a result of that accident, Mrs Armstrong suffered a variety of spinal, neck and wrist injuries, as well as psychological complications arising from the accident and as a consequence of her injuries. 

8.      She commenced a common law action for damages in relation to her injuries, which she settled for $450,000 on or around 21 August 1998 (T4).  After legal and medical costs were deducted, the applicant states that she received approximately $355,000 of the settlement monies.

9.      On 28 August 1998, the respondent advised Mrs Armstrong that, as a result of her lump sum compensation payment, she would be precluded from receiving “compensation affected benefits” (which includes disability support pension) from 4 November 1995 until 5 May 2006 (T5). 

10.     Following receipt of financial advice, the applicant decided to purchase a house (in September 1998 for $155,000 (T28)), a motor vehicle ($27,000 (T34)) and some household furniture ($21,000 (T34)).

11.     After purchasing the house, the applicant became aware of a number of problems in the property.  The house has extensive white ant and termite problems, which have caused structural damage to the property.  The house is also in need of repairs to the roof, bathrooms, windows and pool. The family has attempted to sell the property without success, and the applicant contends that, in light of its current state of disrepair, it is unlikely that they will be able to sell the property.

12.     In T34, the applicant indicated to the respondent that she had spent $17,300 on repairs to the property and moving costs, $9,000 on fencing and clearing the property, and $11,500 on the pool. 

13.     In late 1998, Mr Armstrong was tried in relation to a number of criminal offences of a sexual nature, however the trial was aborted.  He was re-tried in March 2000 and was found guilty of one offence. He was sentenced to three months imprisonment and was released from gaol in mid June 2000.   There were airfares, accommodation, and living costs associated with the applicant giving evidence at one of her husband’s trials in New South Wales.  There were similar costs involved when she and the children flew to New South Wales to meet her husband when he was released from gaol. 

14.     The applicant advised the Tribunal that, as she had monies remaining from the settlement, her husband was refused Legal Aid for his criminal trials.  His legal fees for defending the charges amounted to $94,000.  After paying these legal fees, Mrs Armstrong was left with very little of her settlement monies.  At T34, she indicated that she spent $17,200 of her settlement monies on living expenses during the time her husband was incarcerated.

15.     The applicant advised that the extremely precarious nature of the household finances meant that the children could not attend school excursions or undertake sporting activities.  The family does not go out other than to go shopping or attend doctors’ appointments.  She said that they struggled to put food in the house and at times they have resorted to charitable institutions for the provision of food and clothing for the children. 

16.     Mr Armstrong informed the Tribunal that he had been off work from 1995 due to work-related stress. Mr Armstrong suffers from depression, panic and anxiety disorder, and takes medication to assist him with these conditions.  It was contended that, even if Mr Armstrong was well enough to work, he would have trouble obtaining employment due to his criminal conviction.  As such, the family is reliant upon social security payments to meet their day-to-day expenses.

17.     In June 2000, Mr Armstrong was awarded a compensation payment, relating to his prior employment, of $65,000.  He was subject to a social security preclusion period from 21 June 2000 to 27 November 2001.  In December 2001, the respondent granted Mr Armstrong a carer allowance, which he continues to receive.

18.     On 1 February 2002, the Victims Compensation Tribunal (NSW) ordered Mr Armstrong to pay $30,000 compensation by way of restitution in relation to the offence for which he was convicted.  The order provides that the $30,000 is to be paid by way of $40 monthly instalments commencing on 21 March 2002.  Those payments have not been made for some time. 

19.     Mr Armstrong estimated he had spent more than $19,000 on equipment for a gilding business since he received his compensation payment. He had been attempting to make an income by producing and selling gilded items since about 1996.  The activity has never produced a profit.  He had tried selling items at markets but the logistics of transporting the items from Macleay Island made it uneconomical.     He still has the equipment, but apart from engraving tools valued at $120, some shelving, desks, containers of gold leaf and other small items, the equipment is of little value. 

20.     It was contended that Mr and Mrs Armstrong’s marriage has suffered as a result of the stress arising from their straitened financial circumstances and their ill-health.  Mrs Armstrong’s health has deteriorated recently, to the point where she is bed-ridden for most of the day.  Both expressed concerns about the welfare of their three children, and stated that, in light of the family’s financial circumstances, they are not able to afford the children’s school uniforms, books or tutoring.

21.     Mr and Mrs Armstrong also expressed concern about the trauma their children have suffered as a result of Mr Armstrong’s imprisonment, and the additional stress the allegations against him have placed upon the family.  The Tribunal was advised that the family had been forced to change their name (to Armstrong) due to the nature of the offences that Mr Armstrong was accused.  It was contended that the children would suffer further trauma if the family were required to liquidate its only asset (that is, the house) and relocate to a new area.  Further, it was contended that it is not a realistic option to liquidate the property given its state of disrepair.

Legislative Framework

22.     Under s 1165(2) of the Act, a person who has received a lump sum compensation payment is not entitled to receive social security payments during the length of a preclusion period calculated under s 1165(8) of the Act.  Section 1184K, however, provides an exception to that general rule.  Section 1184K provides:

“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.”

23.     The Act provides no guidance as to the meaning of the term “special circumstances” in that section of the Act.  In Beadle v Director-General of Social Security (1985) 7 ALD 670, the Full Court of the Federal Court was dealing with the phrase in another provision of the Act but one which has a similar overall purpose as sub-section 1184K. The Court stated that it was not possible to lay down precise limits or precise rules for the meaning of the term, but indicated that this would depend upon the circumstances of each particular case, commenting that, even though the term lacks precision, it was sufficiently understood “not to require judicial gloss" (at 674).  There, the Court affirmed the decision of the Tribunal (Re Beadle and Director-General of Social Security (1984) 1 AAR 362) where (at 364) the Tribunal had acknowledged that the term was "incapable of precise or exhaustive definition" and that, to be special, the circumstances must be “unusual, uncommon or exceptional” and must have “a particular quality of unusualness that permits them to be described as special”.

24.     In Groth v Secretary, Department of Social Security (1995) 40 ALD 541, Kiefel J, after referring to the Federal Court's decision in Beadle, observed (at 545) that special circumstances:

“would require something to distinguish... [the] case from others, to take it out of the usual or ordinary case. … It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.”

Contentions of the Parties       

25.     The applicant contends that there are special circumstances in her case that would warrant part or all of the compensation monies being treated as having not been received.  She contends that the purchase of the house and motor vehicle, and the costs incurred in buying furniture and repairing the house, were reasonable, and that she has not spent her compensation monies in a frivolous or reckless manner. 

26.     The applicant contends that the following matters would amount to special circumstances in her case:

§Extreme financial hardship;

§The applicant’s ill-health;

§Mr Armstrong’s ill-health and his inability to obtain employment;

§The unexpected expenditure incurred in defending criminal charges;

§The unexpected costs of repairs to the family home; and

§The effects of stress upon the family unit.

27.     The Tribunal was provided with a number of documents which it was said support the applicant’s claim that she is suffering financial hardship, including bank statements and statements of financial circumstances.  It was submitted that the applicant was in extreme financial hardship, her fortnightly expenditure exceeding her fortnightly income.  It was contended that the family has debts of over $40,000.  A reduction in the length of the preclusion period would provide the applicant with sufficient additional income, by way of disability support pension, to allow her to meet her fortnightly obligations.

28.     It was submitted on behalf of the applicant that there was evidence before the Tribunal, both in the T documents and in reports lodged with the Tribunal, that demonstrate the applicant’s ill health, and the effects of her ill health and associated stress on the family, her relationship with her husband and on the children. 

29.     The respondent contends that the applicant is not suffering extreme financial hardship. It contends that from 11 August 1998 to 29 December 1998, the applicant and her husband received $481,910 into their bank accounts, not including social security benefits, and that their bank accounts demonstrate that they had amounts in credit in their accounts throughout most of the relevant period. Further, the respondent contends that there is no evidence before the Tribunal to establish the existence of the debts of over $40,000 claimed by the applicant.

30.     Whilst the respondent concedes that the purchase of the house by the applicant was reasonable, it submits that the decision to move interstate whilst the criminal proceedings were outstanding was unreasonable.  The decision to move to Queensland meant that Mr Armstrong would incur additional expenditure in travelling to New South Wales to defend the charges.    

31.     Additionally, the costs of the family travelling to New South Wales and staying in motels for some days was unreasonable given that the applicant claimed that her financial situation at that time was desperate.  In this context, the respondent pointed to the fact that, by letter dated 9 June 2000, the applicant first sought relief from the preclusion period, claiming she was “under extreme financial hardship”.  At that time, the applicant had $7,000 in accounts in her sole name at Suncorp Metway and Westpac Bank.

32.      The respondent further contends that the decision to purchase a pool was unreasonable.  Further, there is no evidence of any cost comparison for alternative venues for the hydrotherapy.

33.     Further, the respondent contends that the monies spent on the applicant’s new motor vehicle were excessive and therefore unreasonable.  The respondent contends that the applicant could have obtained a cheaper vehicle, and raised the question of whether the applicant received any insurance pay-out following her car being written-off after the accident.  There is no evidence before the Tribunal on this point.

34.     In relation to the purchase of furniture from the compensation monies, the respondent contends that there is insufficient evidence before the Tribunal of the need to purchase the furniture and white goods purchased by the applicant.  The respondent contends that some of the applicant’s existing furniture may not have needed repair, or may have been sold prior to moving to Queensland.  Therefore it contends that, with the exception of the special bed required by the applicant, the purchase of the furniture without further evidence and independent corroboration of the need to replace the furniture, was unreasonable.

Consideration

35.     The applicant contends that she is suffering financial hardship.  She also contends that she has used all of her compensation monies and that the lump sum preclusion period applicable to her should be reduced to ease her financial hardship.  She contends that she has spent the compensation monies in a reasonable fashion.

36.     The Tribunal was provided with copies of the applicant’s bank statements over the relevant period.  There are statements for four separate accounts.  Below is a summary of the applicant’s balances and transactions per month per account.

Suncorp Metway Account: Direct Access Account

Statement Date	Total Withdrawals $	Total Deposits $	Balance $
24/3/99 to 24/4/99	70000.00	70000.00	0.00
25/4/99 to 24/5/99	0.00	0.00	0.00
25/5/99 to 24/6/99	0.00	0.00	0.00
25/6/99 to 24/7/99	0.00	0.00	0.00
25/7/99 to 24/8/99	0.00	0.00	0.00
25/8/99 to 24/9/99	0.00	6.85	6.85
25/9/99 to 24/10/99	122.10	250.68	135.43
25/10/99 to 24/11/99	251.00	9873.16	9757.59
24/11/99 to 24/12/99	2060.77	114.84	7811.66
25/12/99 to 24/1/00	2070.45	19608.71	25349.92
25/1/00 to 24/2/00	17063.37	0.00	8286.55
25/2/00 to 24/3/00	3709.50	4.46	4581.51
25/3/00 to 24/4/00	22368.47	23197.50	5410.54
25/4/00 to 24/5/00	21017.65	41000.00	25392.89
25/5/00 to 24/6/00	34792.25	12000.00	2600.64
25/6/00 to 24/7/00	1188.29	0.00	1412.35
25/7/00 to 24/8/00	1287.62	30000.00	30124.73
25/8/00 to 24/9/00	1801.50	9.61	28332.84
25/9/00 to 24/10/00	1515.15	0.00	26817.69
25/10/00 to 24/11/00	1980.54	0.00	24837.15
25/11/00 to 24/12/00	2261.80	2.50	22577.85
24/12/00 to 24/1/01	1931.43	2.50	20648.92
25/1/01 to 24/2/01	3063.95	2.50	17587.47
25/2/01 to 24/3/01	4026.76	3017.56	16578.27
25/3/01 to 24/4/01	2590.36	2502.50	16490.41
25/4/01 to 24/5/01	3993.35	2.50	12499.56
25/5/01 to 24/6/01	4478.25	802.50	8823.81
25/6/01 to 24/7/01	1785.17	2.50	7041.14
25/7/01 to 24/8/01	1849.98	2.50	5193.66
25/8/01 to 24/9/01	2360.30	1504.19	4337.55
25/9/01 to 24/10/01	2755.39	0.00	1582.16
25/10/01 to 24/11/01	4771.50	4214.11	1024.77
25/11/01 to 24/12/01	742.78	0.00	281.99
25/12/01 to 24/1/02	214.50	0.00	67.49
25/1/02 to 24/2/02	57.30	0.00	10.19
25/2/02 to 24/3/02	4.00	0.22	6.41
25/3/02 to 24/4/02	2.50	0.00	3.91
25/4/02 to 24/5/02	2.50	0.00	1.41
25/5/02 to 24/6/02	2.50	0.00	-1.09
25/6/02 to 24/7/02	2.51	0.00	-3.60
25/7/02 to 24/8/02	2.54	38.00	31.86
25/8/02 to 24/9/02	24.00	0.00	7.86
25/9/02 to 24/10/02	2.50	0.00	5.36
25/10/02 to 24/11/02	2.50	0.00	2.86
25/11/02 to 24/12/02	31.65	120.00	91.21

Westpac Account:  (Account into which social security benefits paid)

Statement Date	Total Withdrawals $	Total Deposits $	Balance $
11/8/98 to 11/9/98	49561.44	250020.00	200458.56
11/9/98 to 9/10/98	170381.13	1366.44	31443.87
9/10/98 to 11/11/98	15758.71	45948.45	61633.61
11/11/98 to 11/12/98	14754.14	1034.00	47913.47
11/12/98 to 11/1/99	8253.00	61201.15	100861.62
11/1/99 to 11/2/99	2983.19	1640.70	99519.13
11/2/99 to 11/3/99	6055.74	1093.80	94557.19
11/3/99 to 9/4/99	77836.52	1337.31	18057.98
9/4/99 to 11/5/99	2989.54	1093.80	16162.24
11/5/99 to 11/6/99	3508.07	867.90	13522.07
11/6/99 to 9/7/99	3494.30	623.00	10650.77
9/7/99 to 11/8/99	2200.00	1419.78	9870.55
11/8/99 to 10/9/99	4049.88	1388.10	7208..77
10/9/99 to 11/10/99	2185.95	927.67	5950.49
11/10/99 to 11/11/99	5736.52	977.80	1191.77
11/11/99 to 10/12/99	1378.80	1047.60	860.57
10/12/99 to 11/1/00	1376.97	1048.28	531.88
11/1/00 to 11/2/00	627.65	1599.84	1504.07
11/2/00 to 10/3/00	1426.07	1068.00	1146.00
10/3/00 to 11/4/00	1171.34	1068.43	1043.09
11/4/00 to 11/5/00	1333.92	1068.00	777.17
11/5/00 to 9/6/00	401.25	1068.00	1443.92
9/6/00 to 11/7/00	1973.24	1068.59	539.27
11/7/00 to 11/8/00	1802.50	1943.79	680.56
11/8/00 to 11/9/00	600.00	1313.36	1393.92
11/9/00 to 11/10/00	1640.25	1313.70	1067.37
11/10/00 to 10/11/00	1999.50	1313.36	381.23
10/11/00 to 11/12/00	1074.67	1313.36	619.92
11/12/00 to 11/1/01	1205.45	1975.18	1389.65
11/1/01 to 9/2/01	2166.27	1343.90	567.28
9/2/01 to 9/3/01	1666.31	1390.52	291.49
9/3/01 to 11/4/01	1352.38	1390.73	329.84
11/4/01 to 11/5/01	1624.53	1390.52	95.83
11/5/01 to 11/6/01	1056.25	1390.52	430.10
11/6/01 to 11/7/01	1478.00	1390.56	342.66
11/7/01 to 10/8/01	1944.15	2156.46	554.97
10/8/01 to 11/9/01	1182.85	1690.35	1062.47
11/9/01 to 11/10/01	2394.36	1627.66	295.77
11/10/01 to 9/11/01	1457.60	1442.60	280.77
9/11/01 to 11/12/01	1708.95	1442.60	14.42
11/12/01 to 11/1/02	1682.32	2063.16	395.26
11/1/02 to 11/2/02	1662.74	1356.00	88.52
11/2/02 to 11/3/02	1135.93	1356.00	308.59
11/3/02 to 11/4/02	1641.54	1356.00	23.05
11/4/02 to 10/5/02	1335.90	1356.00	43.15
10/5/02 to 11/6/02	1394.41	1356.00	4.74
11/6/02 to 11/7/02	1783.73	2043.99	265.00
11/7/02 to 9/8/02	1742.16	1488.06	10.90
9/8/02 to 11/9/02	2399.65	2428.74	39.99
11/9/02 to 11/10/02	1348.40	1451.06	142.65
11/10/02 to 11/11/02	1559.15	1451.06	34.56
11/11/02 to 11/12/02	1476.59	1480.22	38.19

Suncorp Metway Account: Fixed Term Deposit  (opened 31/3/99, closed 12/11/99)

Statement Date	Total Withdrawals $	Total Deposits $	Balance $
31/3/99 to 30/9/99	372.78	10372.78	10000.00
1/10/99 to 7/1/03	10058.90	58.90	0.00

Commonwealth Bank Account: Streamline Account in the name of Mr Armstrong

Statement Date	Total Withdrawals	Total Deposits	Balance
15 December 1998	3684.15	2923.09	-761.06
12 May 1999	2769.08	3846.73	316.59
23 July 1999	11453.88	11995.67	858.38
31 January 2000	11991.80	11138.69	5.27
8 August 2000	42941.50	67128.00	24191.77
24 January 2001	26177.65	3873.91	1888.03
2 August 2001	1872.00	0.67	16.70
8 February 2002	2257.50	2244.99	4.19
2 April 2002	1296.25	1292.41	0.35
28 June 2002	6360.00	6803.87	444.22
30 September 2002	4531.25	4093.57	6.54

37.     The Tribunal has reviewed the applicant’s bank statements and makes the following observations: 

§In relation to the Suncorp Metway Direct Access account:

·       from October 1999 to January 2002, the applicant had credit balances in the account, with several large deposits being made over that period.  Those deposits appear to be transfers from a term deposit or other investment account. Only a deposit made on 12 November 1999 relates to funds from the Suncorp Metway Fixed Term Deposit account, the details of which appear above.  The following deposits into the Direct Access account are described as “Direct Credit Suncorp Metway I Client 9006”:

24 January 1999             $19,608.71
12 April 2000                   $10,000.00
12 April 2000                   $12,000.00
8 June 2000  $6,000.00

8 June 2000  $6,000.00

The following are described as “Direct Credit Sm Inv Funds Client 9006”:

26 February 2001           $1,500.00
26 February 2001           $1,500.00
11 April 2001                   $1,000.00
11 April 2001                   $1,000.00
20 September 2001        $1,500.00
13 November 2001         $1,387.77

13 November 2001         $1,706.54

These appear to relate to three investment accounts held by the applicant with Suncorp Metway.  Exhibit 19 comprises statements for the investment accounts.  The statements show the following closing balances for the accounts as at 30 June 1999:

Regular Payment Fund  $19,837.83
Australian Shares           $20,152.23

Capital Growth                $19,844.31

No other statements were provided to the Tribunal to show the current status of these investment accounts.

·       There were also large withdrawals made from that account, often amounting to more than $1,000 a day. An example of large withdrawals can be seen in the period 10 June 2000 to 13 June 2000, where the applicant withdrew a total of $12,000 over three days. 

·       Many of the withdrawals were described by the applicant and Mr Armstrong as living expenses. The frequency and value of such withdrawals did not sit comfortably with such an explanation.  

§In relation to the Westpac account, the Tribunal notes that this is the main account into which Centrelink payments have been made.  With the exception of August, October and December 1998, Centrelink made the majority of deposits into that account, those deposits normally exceeding $1,000 per month.

§In relation to the Commonwealth Bank account, for the period July 1999 to July 2000, Mr Armstrong’s periodic workers’ compensation payments were made into this account.  From December 2000, he has received Centrelink payments into that account. The Tribunal notes that this account has only once been in debit.

§There is no evidence before the Tribunal to substantiate the claims that the applicant owes over $40,000 in debts.

38.     Although the Tribunal accepts that it was reasonable for the applicant to purchase a house for her family, a motor vehicle and the pool, given her need for hydrotherapy, much of the other expenditure is irreconcilable with the applicant’s explanation of “every day expenses”.  Consequently, it would seem that the rate at which the applicant spent much of her settlement monies was reckless, particularly as she would have been aware, in late 1998, that the family would incur continuing legal fees in defending the criminal charges against Mr Armstrong and on repairs to the house. 

39.     The frequency and amount of the withdrawals is inconsistent with the applicant’s and Mr Armstrong’s evidence that they only left the house to go shopping for food and to attend doctors appointments. In particular, the applicant’s evidence as to her reluctance to leave the house must be treated with caution, in view of the large number of cash withdrawals made whilst her husband was in prison. This is particularly significant, in view of a withdrawal at Alexandra Headlands, at a time when the applicant asserted that she had severe physical limitations in mobility.     

40.     The Tribunal is satisfied that the applicant was aware of the existence of the preclusion period and that she had received financial advice at the time of her settlement as to the appropriate manner to invest her monies.  The fact that she has spent her compensation monies does not mean that she should now receive social security benefits to which she is otherwise not entitled.  The legislation provides for preclusion periods in cases such as this to prevent “double dipping” by requiring compensation recipients to manage their payouts appropriately to ensure they provide themselves with a source of income during the length of the preclusion period.

41.     The legislation also provides, however, that in cases where there are special circumstances the preclusion period may be shortened. This is a discretionary provision, which the applicant contends should be exercised in her favour for a number of reasons. 

42.     The applicant contends that her ill-health and her husband’s ill-health would amount to special circumstances in this case.  The Tribunal does not accept this contention, in that it is not unusual, uncommon or exceptional for compensation recipients to be in poor health.  Although it was contended that the applicant’s health has declined in recent times, her circumstances are not so changed as to amount to special circumstances, given that the applicant’s inability to work has remained since the time of her accident.

43.     The applicant further contends that her husband’s inability to obtain work following his criminal conviction, and the stress that his conviction has placed on the family, would also amount to special circumstances.  Whilst the Tribunal is mindful of the fact that criminal trials are extremely stressful events for all concerned, it does not accept that the applicant is in an unusual situation compared to other people who have family members facing criminal charges.  The Tribunal is not satisfied in this case that it amounts to special circumstances for the purposes of the Act.

44.     The applicant contends that she is in extreme financial hardship.  She claims that the family has debts of $40,000, although there was no evidence before the Tribunal to substantiate this claim.  The only debt for which there is documentary evidence is the order of the Victims Compensation Tribunal (NSW) for the payment of $30,000 in restitution.  The evidence was that this amount is not being repaid, and has not been for some time.  The applicant has previously contended that the family was in extreme financial hardship, despite the presence of significant funds in her bank account.

45.     There was no evidence before the Tribunal of debts owed by the family, such as credit card debts or outstanding utility bills.  The family has on-going medical and education bills, however this is not unusual or uncommon such as to amount to special circumstances under the Act.

46.     The Tribunal was mindful of the applicant’s contention that if the preclusion period was not reduced, the home may have to be sold.  However, as at 23 January 2003, the applicant and her husband were receiving $1,184.95 per fortnight in social security benefits.  They own the home in which they reside, a motor vehicle and their household goods.  Whilst not suggesting that such an income is anything other than modest, many recipients of social security benefits who have children are encumbered with substantial mortgage or rent payments, and it could be argued that  the Armstrong family are in a better financial position than many families relying on social security benefits as their only means of support.   

47.     The Tribunal notes that the SSAT in this case decided to exercise the discretion in s 1184K by disregarding $76,771 of the applicant’s settlement monies when calculating the preclusion period.  This appears to have been done on the basis that the applicant was unable to predict the amount of money she would need to spend on repairing the house and the legal fees for her husband’s criminal trial. 

48.     The Tribunal has considered the cost of renovations to the house, namely $12,771, which the SSAT determined should not be counted in the calculation of the preclusion period.  It is unfortunate that the house is not as structurally sound as it was thought to be when purchased, however the Tribunal does not consider that that is a situation which is unique or that it puts the applicant’s situation in the realm of special circumstances. As such, the Tribunal finds that there are no special circumstances to warrant the amount of $12,771 being disregarded in the calculation of the preclusion period in this case. 

49.     In relation to Mr Armstrong’s legal fees, there were a number of solicitors involved and it is was not clear as to whether they had all been paid, and if so, whether the applicant’s funds were utilised. Although the applicant claimed that family income was used to pay $94,000 in legal fees, the evidence does not support such a finding.  However, there is evidence that the family’s finances were pooled and that there were transfers from Mr Armstrong’s account to that of his wife. The respondent acknowledges in paragraph 120 of its submissions that about $70,000 in legal fees was paid over a period. 

50.     Generally speaking, the Tribunal would not be satisfied that the cost of legal fees for another person would amount to special circumstances.  This is particularly so when the person charged with a criminal offence has received a compensation payment of $58,500.  Many persons who are charged with criminal offences face the prospect of incurring legal fees in defending those charges. Mr Armstrong faced trial in 1998 and it was a reasonable expectation that that trial would bring finality to the matter. However, the trial was aborted. Although I accept that, at that time, Mr Armstrong and the applicant would have been aware that they would incur additional legal fees when the case was re-heard, it was not an expenditure which had been anticipated, and the costs of an appeal against conviction and/or sentence was a further cost which was not foreseeable.   

51.     In those circumstances, I consider it reasonable to allow some component of the legal costs.  Given that Mr Armstrong received $58,000 in compensation, and on the assumption that he utilised those monies in meeting the legal costs which have been paid ($70,000), I am satisfied that $12,000 should be treated as having been used by the applicant in meeting the balance of those costs.    

52.     The Tribunal therefore finds that $12,000 of the compensation monies received by the applicant should be disregarded, pursuant to s 1184K of the Act, in the calculation of the lump sum preclusion period in this case.

53.     For all the above reasons, the Tribunal sets aside the decision under review and remits the matter to the respondent for reconsideration with a direction that an amount of $12,000 should be disregarded in the calculation of the preclusion period applicable to the applicant.

I certify that the 53 preceding paragraphs are a true copy of the reasons for the decision herein of Ms J Cowdroy, Member

Signed:         Sarah Oliver
  Associate

Dates of Hearing  20 January 2003 and 20 February 2003
Date of Decision  15 August 2003

Counsel for the Applicant         Mr Brennan
Solicitor for the Applicant          Welfare Rights
Solicitor for the Respondent     Ms Shea, Departmental Advocate