Baroutsos and Secretary, Department of Family and Community Services - [2002] AATA 403

DECISION AND REASONS FOR DECISION [2002] AATA 403

ADMINISTRATIVE APPEALS TRIBUNAL )

) No N2002/27

GENERAL ADMINISTRATIVE DIVISION       )
           Re      Panagiota Baroutsos
  Applicant
           And    Secretary, Department of Family & Community Services
  Respondent

DECISION

Tribunal MS N P BELL, Member

Date29 May 2002
PlaceSydney

Decision The Tribunal determines that the decision under review is affirmed.

[SGD]Ms N P Bell
Member

CATCHWORDS
SOCIAL SECURITY- lump sum workers' compensation payment- preclusion period- whether special circumstances exist to justify the exercise of the discretion to disregard all of part of the compensation payment

Social Security Act 1991 – section 17, 1165, 1184(1)

REASONS FOR DECISION

This is an application for review by Mrs Panagiota Baroutsos, ("the Applicant") in these proceedings, for a review of a decision of a delegate of the Secretary, Department of Family and Community Services ("the Respondent") dated 3 October 2001 to cancel disability support pension and to impose a preclusion period preventing social security benefits from 29 May 1998 to 20 October 2005 (T24).This decision was affirmed by an authorised review officer on 31 October 2001(T29) and then by the Social Security Appeals Tribunal ("the SSAT") on 13 December 2001 (T2).
A hearing was held before the Tribunal on 17 May 2002. The Applicant appeared on her own behalf, providing oral evidence to the Tribunal. The Respondent was represented by Ms Mantaring, an advocate from the Advocacy and Administrative Law Team at Centrelink.
The following material was placed into evidence before the Tribunal:
Exhibit         Description Date
TD1 Documents lodged under section 37 of the Administrative Appeals Tribunal Act 1975 being T1-T33,pp1-82
A1      Applicants letter to Centrelink and Attachments 18 April 2002
A2      Bundle of Bank Statements relating to the Applicant's accounts
R1      Respondent's Statement of Facts and Contentions

BACKGROUND

It is not in dispute that the Respondent was injured in a motor vehicle accident on 22 April 1996 (T2, pp4) and on 23 July 2001 she settled her compensation claim by consent judgment for a lump sum worker's of $455,000 gross (T12, p24).
On 3 August 2001, it was decided by a Centrelink officer that Mrs Baroutsos was precluded from receiving social security benefits from 29 May 1998 (the day following the last periodic workers compensation payment made to the Applicant) to 20 October 2005, due to receiving her lump sum worker's compensation payment. The Respondent also recovered a charge amounting to $13,724.58 (T17).
The Applicant was advised of the cancellation of her disability support pension and of the preclusion period by letter dated 6 August 2001 from the Respondent (T19).
ISSUES & LEGISLATION
After some clarification at the hearing, it was agreed between the parties that it is not in dispute that the preclusion period imposed on the Applicant was correctly imposed and calculated at 386 weeks from 29 May 1998 to 20 October 2005.
However, the issue to be considered in this applicant is whether it is appropriate, in the special circumstances of the case, to disregard any part or the whole of the compensation paid to the Applicant for the purposes of calculating the preclusion period. The relevant legislation in this matter is the Social Security Act 1991 ("the Act") particularly sections 17, 1165 and 1184(1).
THE APPLICANT'S EVIDENCE
Mrs Baroutsos, in oral evidence before the Tribunal, said that from her compensation settlement of $455,000 she received approximately $221,000 in her hand after payment of medical, legal and other expenses. She said she received her settlement moneys about three weeks after her case settled on 23 July 2001.
The Applicant stated that from the $221,000 she had deposited in the bank, she had used about $10,000 for living expenses and the remaining $211,000 was still in her bank account.
The Applicant also stated that the current mortgage repayments amounted to $205 per week.
In relation to the notification of the preclusion period, the Applicant conceded that she had been informed by her solicitor who represented her in her worker's compensation claim, that a preclusion period would be imposed. The Applicant, however, stressed that the solicitor had told her that the amount on which this preclusion period would be calculated was the amount left over after all her debts had been repaid.
The Applicant stressed that all her debts arose as a result of the accident and that she has not incurred any expenses unnecessarily.
The Applicant explained that as a result of the accident and the resulting injuries, she was unable to walk up and down the stairs in her house, and ended up sleeping on a mattress downstairs. She said her doctors advised her that it was necessary for her to purchase a new house without stairs.
Mrs Baroutsos said she took out a relocation loan in order to purchase a house without stairs, whilst trying to sell her current property. However, the Applicant explained that the old property did not sell for twelve months, and in order to achieve a sale and meet her relocation loan obligations she was forced to sell the old house for $310,000, which was around $55,000 less than the market value of the property.
The Applicant said that she had three children. She explained that her son, who is 22 years old, was added to the title of the property so that his income could be taken into account in obtaining the relocation loan. She said her son has been making all the mortgage repayments for the new property.
The Applicant stated that she would like to relieve her son of his mortgage repayment obligations, so that he can move out of home and buy a property of his own.
In relation to the other debts she owed to her family members, the Applicant stated her father had lent her $100,000 after her accident in 1996 and a further $6000 to fund a trip to Greece. The Applicant conceded that this money had now become a gift from her father rather than a loan, and that there was a private arrangement between her and her brother to make the necessary adjustment from their respective shares of their father's estate.
The Applicant also stated she owed her son over $20,000, which was the sum her son had contributed towards the mortgage repayments on their house. She also said she owed her two cousins a total of $5000.
The Applicant said that she was seriously considering repaying all her debts in the near future, including her mortgage, in order to release her son from his financial obligations to the bank. To discharge the mortgage the Applicant said she needed around $119,000.00. She said she would then pay herself, from the remaining money a regular amount equivalent to the disability support pension.
The Applicant said that her husband is in receipt of disability support pension. She said that he is also very depressed.
As to her own health, the Applicant said she has just recently undergone back surgery, which has limited her movements severely. She said that she cannot cook, clean or walk for any length of time without feeling severe pain and her back problems worsening. She explained that with the several medications she takes on a daily basis, she is asleep throughout the day, and if she attempts to go out and exert herself in anyway her condition worsens.
The Applicant also commented that she is generally very irritable, anxious and depressed about her medical condition.
The Applicant also gave evidence about her younger son's health. She said that he suffers from a blood disorder which makes him sensitive to certain foods, chemicals and medications, and which may result in excessive bleeding. The Applicant explained that this condition requires very careful supervision of her son's dietary intake. She also said that her son suffers from asthma.
OTHER EVIDENCE
Document T4 dated 10 October 2000, is a letter from Centrelink sent to the Applicant's solicitor explaining the recoverable charge by the Respondent and the preclusion period that would be imposed on an estimated lump sum compensation payment of $200,000.
On 5 July 2001, a similar letter was sent to the Applicant's solicitor, but this time the calculations were based on a lump sum settlement figure of $300,000 (T11).
CONSIDERATION AND FINDINGS
There was no dispute in this application as to whether the compensation preclusion period imposed from 29 May 1998 to 20 October 2005 was imposed correctly. The only issue to be considered by the Tribunal is whether any special circumstances exist that would justify the exercise of the discretion under section 1184 of the Act to disregard part, or all, of the Applicant's compensation payment.
Although not disputed at the hearing, the Tribunal considered the calculation of the preclusion period. The Applicant's lump sum payment of $455,000 falls within the definition of compensation pursuant to subsection 17(2) of the Act, which defines compensation as a payment of damages or a payment of under a scheme of insurance or a payment in settlement of a claim for damages. As the compensation payment was received by way of settlement, subsection 17(3) applies. Pursuant to subsection 17(3) of the Act, the compensation part of a lump sum compensation payment is 50 per cent of the payment where the payment is made in settlement of a claim that is, in whole or in part, related to a disease, injury or condition. Section 71(4) provides that the calculation of 50 per cent of the lump sum is made after deduction of any 'repaid periodic compensation' amount. In this case an amount of $17,584.77 had been refunded from the lump sum to the workers compensation insurer. It follows that the compensation part of the payment in this case is $218,707.61.
The preclusion period in relation to this amount is calculated in accordance with section 1165 of the Act. Subsection 1165(5) provides that the preclusion period commences on the day after the cessation of the periodic compensation payments that the Applicant was receiving, that is, 29 May 1998. The number of weeks in the preclusion period is calculated by the formula in subsection 1165(8), that is, by dividing the compensation part of the payment which is $218,707.61 by the income cut-amount, which at the relevant time was $565.75 (T13). Thus the number of weeks of the preclusion period is 386. (T26)
The result is that a compensation affected payment is not payable to the Applicant for the duration of 386 weeks, pursuant to subsection 1165(1A) of the Act, unless special circumstances exist which would allow the Tribunal to exercise the discretion in section 1184 of the Act and treat the whole or part of the compensation payment as not having been made. The Tribunal now turns to consider whether there are such special circumstances in the Applicant's case.
Section 1184(1) (as it then was) provided:
Secretary may disregard some payments
1184.(1) 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 the leading case of Beadle v Director-General of Social Security (1985) 7 ALD the Full Federal Court held that it was not possible to lay down precise rules but rather, a consideration of special circumstances would depend upon the facts of the case. Further, even though the phrase 'special circumstances' lacks precision, it "is sufficiently understood in our view not to require judicial gloss". In Re Beadle v Director-General of Social Security (1984) 6 ALD 1, the Tribunal held that the phrase 'special circumstances' is "incapable of precise or exhaustive definition" but said at ALD 3 that the circumstances:
"…must have a particular quality of unusualness that permits them to be described as special…the qualifying adjective looks to circumstances that are unusual, uncommon or exceptional".
The Full Federal Court in Beadle v Director-General of Social Security (supra), also said that the discretion provided for should be exercised consistently with the objects and purposes of the legislation, that is, to prevent "double dipping", by receipt of both compensation and social security payment, unless it would be unjust to enforce the liability for which the legislation otherwise provides.
In Groth v Secretary, Department of Social Security (1995) 40 ALD 541, at 545, Kiefel J stated that special circumstances would require something "to take it out of the usual or ordinary case".
The Tribunal has no reason to doubt the evidence given by the Applicant in the hearing. Mrs Baroutsos also impressed the Tribunal as having been extremely prudent in managing her settlement monies.
The Tribunal notes that the Applicant was informed by both Centrelink and her solicitor that a preclusion period would be imposed. Further, Centrelink replied to a request for an estimate of charge and preclusion period made by the Applicant's solicitors on two different settlement figures. (T4, T11). It appears, then, that the Applicant's solicitor had received some advice from the Respondent as to the operation of the preclusion period. However, according to the Applicant this information had not been sufficiently and accurately been explained to her.
The Applicant said that she understood at the time of her lump sum compensation payment that there would be a preclusion period, but she did not understand the calculations in the correspondence sent to her by Centrelink, and she stressed that her solicitor failed to give her accurate advice regarding the amount on which the preclusion period would be calculated.
In relation to the alleged failure by her solicitor to advise her accurately, the Tribunal takes the view that while there maybe some circumstances where such lack of advice may justify alteration of a preclusion period, this is not justified in the circumstances of the case. There are other remedies available to the Applicant against her legal advisers.
The Applicant stated that she plans to discharge her mortgage in full in order to remove her son from his role as a co-mortgagor and a co-proprietor of the property. She stated that the remaining monies will be spent on repayments to her son and her cousins amounting to around $25,000.
The Tribunal notes that even after repayments of all of the Applicant's debts she will still be left with over $65,000 to live on until the end of the preclusion period.
The Applicant also stated that her husband is in receipt of disability support pension, and so her household is not completely without income.
As to the Applicant's health, while the Tribunal has sympathy in relation to her condition, it notes that the vast majority of people who receive compensation lump sums suffer from continuing ill health or conditions that require treatment or prevent paid work. The health of the Applicant's family, particularly her son, although a matter of concern, is not a matter that is "out of the usual or ordinary case" as described in Groth v Secretary, Department of Social Security [supra].
Unfortunately, it is also not unusual for a person who has had a period of unemployment, arising out of an accident or otherwise, to have accumulated some debts or to have continuing physical limitations on his or her ability to work. Indeed, the Applicant is in a somewhat better situation than many people to whom preclusion periods apply, given that she will still have over $65,000 in her bank account after payment of all her debts to sustain her until the end of the preclusion period. This is also significantly more than she would receive if she was still dependant on social security payments.
The Tribunal is also of the view that in the Applicant's case there is no overriding issue of fairness or need sufficient to displace the operation of the legislation's purpose of preventing "double dipping".
For these reasons, the Tribunal does not consider that it is appropriate in the circumstances of this case, to exercise the discretion in section 1184(1) of the Act.
DETERMINATION
The Tribunal determines that the decision under review is affirmed.

I certify that preceding 46 paragraphs are a true copy of the reasons for the decision herein of
Signed:         S. Swamy           .....................................................................................
  Associate
Date of Hearing  17 May 2002
Date of Decision  29 May 2002
Representative for the Applicant   Self Represented
Advocate for the Respondent       Susan Mantaring