Barba Applicant And: Secretary, Dept of Families, Housing, Community Services and Indigenous Affairs

[2010] AATA 403

Administrative Appeals Tribunal

ADMINISTRATIVE APPEALS TRIBUNAL        )

)         No: 2009/1856

General Administrative Division           )

Re: Andre Barba
Applicant

And: Secretary, Dept of Families, Housing, Community Services and Indigenous Affairs
Respondent

CORRIGENDUM

TRIBUNAL:             Senior Member A K Britton

DATE:                      16 June 2010

PLACE:                   Sydney

The Tribunal directs the Registrar, pursuant to subsection 43AA(1) of the Administrative Appeals Tribunal Act 1975, to alter the text of the decision in this application as follows:

In paragraph 22, remove the phrase “the preclusion period would be if he bought a house”; replace with “the preclusion period would be reduced if he bought a house.”

In paragraph 35, remove the phrase “Mr Barba must explore various options if he is to face severe hardship”; replace with “Mr Barba must explore various options if he is to avoid facing severe hardship”.

...................................................................

District Registrar

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 403

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2009/1856

GENERAL ADMINISTRATIVE DIVISION		)
Re		Andre Barba

Applicant

And Secretary, Department of Families, Housing Community Services and Indigenous Affairs

Respondent

DECISION

Tribunal Senior Member A K Britton

Date1 June 2010  

PlaceSydney

Decision The Tribunal sets aside the decision under review and substitutes a decision that the preclusion period be reduced to end on 7 June 2013. 

......................[SGD].....................

Senior Member

CATCHWORDS

SOCIAL SECURITY – Disability Support Pension – lump sum compensation payment preclusion period – special circumstances favouring shortening of that period.

Social Security Act 1991 — ss 1169, 1184K

Beadle v Director-General of Social Security [1984] AATA 176; (1985) 60 ALR 225 at 228
Boscolo v Secretary, Department of Social Security [1999] FCA 106; (1999) 90 FCR 531
Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541
Secretary to the Department of Family & Community Services v Allan [2001] FCA 1160
Secretary Department of Social Security v Hodgson [1992] FCA 338; (1992) 37 FCR 32

REASONS FOR DECISION

1 June 2010   Senior Member A K Britton           

1.        In 1989, Mr Andre Barba then aged 19, was involved in a serious accident and became a quadriplegic. He resides in a granny flat behind his parents’ house. It is uncertain how long Mr Barba will be able to remain in the family home as his parents are elderly and their health is failing. Mr Barba receives daily care from external providers and much needed assistance from family members.

2.        In 2002, Mr Barba received about $1.1M ($1.5M gross) in settlement of his claim for compensation in respect of the 1989 injury.  A delegate of the respondent Secretary decided that by the operation of the Social Security Act 1991 (Cth), the disability support pension was not payable to Mr Barba until 7 December 2014.  Furthermore the delegate decided that Mr Barba was required to repay Centrelink $117,497 for pension instalments received for the period, 2 December 1989 until 2 April 2002.  In 2002 Mr Barba unsuccessfully applied to the respondent Secretary for review of that decision. That decision was affirmed on review by the SSAT.

3.        In 2007 Mr Barba took steps to purchase a block of land and build a house in which he, his parents and brother could live.  On his account he made that decision to avoid being  “forced into a nursing home” and because the flat was in urgent need of repair and unable to accommodate the electric wheelchair his doctor had recommended he use because of developing shoulder and arm problems.

4.        In 2008, Mr Barba again sought reconsideration of the decision to impose a preclusion period ending December 2014 and was again unsuccessful. On review by the SSAT that decision was affirmed. That decision is the subject of Mr Barba’s application to the Administrative Appeals Tribunal.

Legislative provisions

5. Under s 1169 of the Act if a person is in receipt of a "compensation affected payment" and also receives a "lump sum compensation payment" no compensation affected payment is payable to the person for the "preclusion period". "Compensation affected payment" is defined to include a disability support pension (DSP): s 17.

6.        The "preclusion period" is defined in s 1170. In short it begins on the first day on which the person's loss of earnings or loss of earning capacity began and ends after the number of weeks worked out under subss (4) and (5). It is not in issue that in this case the length of the "preclusion period" was correctly calculated.

7. Section 1184K gives the decision maker the power to reduce the preclusion period:

Secretary may disregard some payments

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 appropriate to do so in the special circumstances of the case.

background

8.      Assets and Expenditure: Mr Barba’s sole remaining asset, apart from the land and house, is savings of about $145,000. He is currently living on about $700 per month, being the interest from his savings.

9.      The land purchased by Mr Barba is on a one acre block on the outskirts of Sydney. It cost $435,000. The contracted building costs are about $300,000. The house is incomplete. Apparently the builder had financial problems and building came to a stand still for over 12 months. According to Mr Barba he has instructed solicitors to commence proceedings against the builder in the Consumer Trader and Tenancy Tribunal (CTTT) challenging the final instalment payment of just under $40,000.  He claims that much of the building work is defective.  He anticipates that he will incur legal costs of about $5000.

10.     The SSAT estimated that after final building costs are paid and the costs of and an electric wheelchair, hoist, furnishings, air-conditioning etc are factored in, Mr Barba would have about $50,000 left from his settlement monies.  In these proceedings Mr Barba claimed that even if successful in his application to the CTTT he will not have any funds left because of a blow out in building costs and other unbudgeted costs such as fencing, drainage, and landscaping work.

11.     Mr Barba also claims that he owes his father $40,000. That claim is unsupported.

12.     Mr Barba estimates that when he moves into the house his living costs will be about $16,000. These costs include rates, insurance, food, transport and health costs.

13.     Reasons for constructing a house      Mr Barba stated that the primary reason for building the house was because he was concerned about his future, wanted greater independence and considered his existing accommodation to be sub-standard.  On his account when he decided to purchase the land in 2007, it was his expectation that his parents and brother would join him in the new house. These plans have now changed as his brother has married and bought his own house and his parents’ health is failing.  His father has been diagnosed as suffering from dementia. His mother has cancer and recently underwent chemotherapy.

14.     Mr Barba claims that he has financed the purchase of the land and construction of the house without assistance from other members of his family. In questionnaires prepared by the Welfare Rights Centre in April 2010, tendered in these proceedings, Mr Barba’s parents and his brother, Tony, each stated that they had never planned to contribute to the financing of the house.  Mr Barba (snr) and Mrs Barba claimed that they had now changed their mind about moving into the new house due to their deteriorating health. There is some evidence that Mr Barba’s parents had planned to sell their existing house and purchase a unit in a retirement village.  In these proceedings, Mr Barba made no mention of that plan and said that it was his understanding that they intended to try and remain in their current home for as along as possible.

15.     In evidence, Mr Barba suggested that the additional space in his house was now necessary to allow members of his family and a carer to periodically stay with him.

16.     Mr Barba’s accommodation requirements     Since 1991, Mr Barba has lived in a granny flat at the rear of his parents’ house.  The corridors are narrow and cannot accommodate an electric wheelchair. He finds it difficult to use the bathroom and laundry because of their size and layout.  The flat is outside the main house, and when he needs care his mother must walk across the unprotected backyard which becomes difficult during cold or inclement weather.

17.     The new house is located about 20 minutes from Campbelltown and is on a one acre block. It has been purpose built to accommodate a person with disabilities. When completed it will have four bedrooms, a large kitchen, living area, lounge room, bathrooms and laundry and a wrap around veranda. According to Mr Barba the latter will allow him to look out on the surrounding area — one of the few pleasurable activities he can undertake without assistance. The design of the house will enable Mr Barba to access all parts of the house and on his account this will allow him to undertake a larger number of activities of daily living than he can now undertake.  Mr Barba believes that the new house – which he described as “no larger than any ordinary house” — will give him a greater degree of independence. 

18.     Mr Barba has also incorporated other features he considers are necessary because of his disability, including an electric lift and air conditioning.

19.     Mr Barba tendered in these proceedings an excerpt from a NSW Department of Infrastructure, Planning and Natural Resources pamphlet entitled “Housing for Seniors and People with a Disability” dated May 2004. That excerpt calculates that the cost of adapting a house for a person with a physical disability in the design phase can add about 1-5% to construction costs, compared with around 12-35% in additional costs when modifying an existing house. 

20.     Management of finances prior to property purchase   Prior to the purchase of the house and land, Mr Barba’s settlement monies were invested under a financial plan that had been drawn up in 2002. By 2007, Mr Barba had spent about $300,000 of the capital from that those funds and had been living off a small income. It is not in issue that Mr Barba has, and continues, to live frugally. 

21.     According to Mr Barba one of the reasons he decided to invest in real estate was because of what he considered to be excessive bank and management fees and his concern that the value of assets had gone into free fall following the global financial crisis.

22.     Knowledge of preclusion period:    Mr Barba does not dispute that when he took steps to purchase the property he knew he would not be eligible for the DSP until 2014. He claimed that he had been told by an acquaintance he met through the Quadriplegia Association that the preclusion period would be if he bought a house and spent all his money.

Do “special circumstances” exist?

23. Section 1184K(1) of the Act provides that a decision-maker may treat the whole or part of a compensation payment as “not having been made” if s/he thinks it is appropriate to do so in the special circumstances of the case. Accordingly it is necessary to decide whether “special circumstances” exist in this case and, if so, whether the discretion to treat Mr Barba’s compensation payments as not having been made, should be exercised.

24.     The meaning of the term “special circumstances” has been the subject of exhaustive consideration by the AAT and the Federal Court.  The Federal Court has declined to adopt a prescriptive formula about the meaning of the term. (See for example Beadle v Director-General of Social Security [1984] AATA 176; (1985) 60 ALR 225 at 228; French J in Boscolo v Secretary, Department of Social Security [1999] FCA 106; (1999) 90 FCR 531 at 535). Nonetheless the Court has emphasised that the term denotes a requirement that there be “something which distinguishes [the claimant’s] case from others, to take it out of the usual or ordinary case”: per Kiefel J in Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541 at 545. This however is not to be interpreted as a requirement that the claimant’s circumstances be “extremely unusual, uncommon or exceptional“ per Hill J in Secretary Department of Social Security v Hodgson [1992] FCA 338; (1992) 37 FCR 32 at 42.

25.     In Secretary to the Department of Family & Community Services v Allan [2001] FCA 1160 Heerey J observed at [1] that the “basic policy”, underlying those provisions which operate to suspend social security benefits where recipients have received compensation for loss of earnings, is to avoid "double dipping" that is, “people should not receive social security payments for loss of earnings where they have received compensation for that same loss of earnings from another source”.

26.     Until the proceedings before the CTTT are finalised it will not be possible to precisely calculate the total building and associated costs for which Mr Barba will be liable and therefore the balance (if any) remaining from the settlement monies. On what is before me it would seem that even if Mr Barba were to be successful in those proceedings, after factoring in what are arguably necessary expenses, such as the purchase of an electric wheelchair, installation of air conditioning and the completion of basic landscaping and fencing work, it is unlikely he will have sufficient funds to support himself for the balance of the preclusion period.

27.     Continuing to reside in his parents’ home on an indefinite basis is no longer a feasible option for Mr Barba given their advanced age and failing health. While it is not possible to predict how long the current accommodation arrangements can continue it is at best short term.

28.     Mr Barba has a significant disability, is entirely dependent on others for most aspects of his daily care, can no longer rely on the care and support provided by his parents and must find an alternative to his current accommodation. Coupled with the likelihood that he will have insufficient funds to support himself for the balance of the preclusion period, leads me to conclude that the circumstances of his case can be described as “special”.  The real issue is whether the discretion to reduce the preclusion period should be exercised.

29.     There can be no argument that Mr Barba has special accommodation needs.  He has a particular need for security of tenure given that he is dependent on others to source and inspect suitable accommodation and relocate him to new accommodation.  Coupled with his need for modified accommodation, makes it unlikely that he could find suitable housing on the private rental market.

30.     The respondent Secretary agrees that it is necessary that Mr Barba obtain alternative accommodation but contends that his needs could have been met by a more modest outlay than that to which to he is now committed. Mr Barba disputes that contention and has provided some evidence which indicates that the cost of modifying an existing house for a disabled person can be significant. He also contends but has provided no evidence in support, that had he built a smaller house on a smaller block in the same area, the savings would have been insignificant.

31.     Neither party have provided any firm evidence to support their respective claims about comparative housing costs. As a matter of commonsense it seems self evident that Mr Barba could have purchased a suitable but smaller property in the same area for less than the amount for which he is now committed. Had he done so it is apparent that he would not find himself in the position he now faces where he will unable to support himself for the balance of the preclusion period.

32.     The decision to purchase a new home was made at a time when Mr Barba came to the realisation that his time in the family home where he has lived all his life, was limited.  I accept his claim that he believed that unless he acted quickly he might find himself in a nursing home. In my opinion this to some extent explains why Mr Barba embarked on a venture he can ill afford. However that only partly explains his decision.  It is plain that it was also influenced by the “hope” that if he were he spend his remaining funds on a property, the decision-maker will be forced to acquiesce and reduce the preclusion period.

33.     As the respondent Secretary points out there are a number of options available to Mr Barba which would allow him to support himself for the remainder of the preclusion period without receiving the DSP. These include taking in boarders or selling the house and buying a more modest property.

34.     Mr Barba found himself a quadriplegic at a very young age. He has little education, has never worked and for the past twenty years has lived what he describes as a “hermit like” existence. While not unintelligent it is apparent that he is somewhat naïve. His decision to spend the balance of his settlement monies and “hope for the best” while demonstrating a reckless and undesirable attitude is in part attributable to his lack of business acumen and social isolation. It should be added that it is also uncharacteristic and at odds with Mr Barba’s conduct prior to the decision to purchase a property, during which he led a relatively frugal existence spending only a fraction of the capital from his settlement monies. 

35. In exercising the discretion under s 1184K it is necessary to have regard to the policy that underpins the concept of the preclusion period, that is, that a person who receives a compensation settlement which includes a component for loss of earnings should not be allowed to “double dip”. The respondent Secretary argues that Mr Barba having made a reckless decision should not be entitled to now turn to the tax payer for support. While a powerful argument I have decided that having regard to the difficult circumstances in which Mr Barba finds himself in, together with his lack of business acumen, some indulgence ought be granted and for this reason I have decided to reduce the preclusion period by 18 months. In reaching that decision I am mindful that Mr Barba must explore various options if he is to face severe hardship for the balance of the preclusion period.

36.     For these reasons I have decided to set aside the decision under review and substitute a decision that the preclusion period be reduced to end on 7 June 2013.  

I certify that the 36 preceding paragraphs are a
true copy of the reasons for the decision
herein of Senior Member A K Britton

Signed: .................................[SGD]...........................................
           Associate to Senior Member Britton

Dates of Hearing:  18 May 2010

Date of Decision:  1 June 2010

Applicant:Self-represented

Representative for the Respondent:               H Schuster, Centrelink Advocacy Branch