Bazzi; Department of Family and Community Services
[2000] AATA 794
•8 September 2000
DECISION AND REASONS FOR DECISION [2000] AATA 794
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N1999/1875
GENERAL ADMINISTRATIVE DIVISION )
Re SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Applicant
And GANDOURA BAZZI
Respondent
DECISION
Tribunal Dr JD Campbell
Date8 September 2000
PlaceSydney
Decision The decision of the SSAT is set aside, and in substitution therefor the termination payment used to calculate the income maintenance period is reduced by an amount representing the Respondent's reasonable costs of living during the period of severe financial hardship, being $6136.35
…………………………………….
Member
CATCHWORDS:
Social Security – income maintenance period – waiver – severe financial hardship - unavoidable or reasonable expenditure – reasonable costs of living – gambling habit
Social Security Act (1991) ss 1068A-E4, 1068A-E7, 1068A-E9, 14A(1) and 19C(2), (4), (5) and (6)
Re Secretary, Department of Social Security and Chadwick (1996) 44 ALD 479
Opera House Investment Pty Ltd v Devon Buildings Pty Ltd (1936) 55 CLR 110
Gidaro v Secretary, Department of Social Security (1998) 83 FCR 139
Secretary, Department of Social Security v Cooper (1990) 21 ALD 155
Secker v Secretary, Department of Family and Community Services [2000] AATA 290
Re Males and Secretary, Department of Family and Community Services (1999) 57 ALD 793
Re Secretary, Department of Family and Community Services and Rankin [1999] AATA 496
REASONS FOR DECISION
This is an application by the Secretary, Department of Family and Community Services ("the Applicant") for review of a decision of the Social Security Appeals Tribunal ("the SSAT") made on 29 October 1999. The SSAT set aside a decision of the Applicant dated 1 July 1999 and an authorised review officer dated 24 August 1999, to impose an income maintenance period in relation to the claim of Gandoura Bazzi ("the Respondent") for parenting payment. The Applicant lodged an application for review by the Administrative Appeals Tribunal ("the Tribunal") on 13 December 1999.
On 13 December 1999 the Applicant lodged an application with the Tribunal for a direction to stay the decision of the SSAT dated 29 October 1999. Up until this point in time, the decision of the SSAT had not been implemented by the Applicant due to problems with paying money into the Respondent's bank account. The application to stay the decision was heard by Senior Member Ettinger on 22 December 1999 and a partial stay was granted, resulting in the operation of the decision of the SSAT from 22 December 1999 only.
The hearing for the application for review was held in Sydney on 1 August 2000. The Applicant was represented by Angela Smith of Centrelink. The Respondent was represented by Sandra Koller of the Welfare Rights Centre.
The Respondent provided oral evidence. The following written material was also placed in evidence before the Tribunal:
Material prepared pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 T1 – T25, pp 1-62
Applicant's statement of facts and contentions dated 3 April 2000 Exhibit A1
Letter from Applicant to Respondent dated 1 July 1999 Exhibit A2
Applicant's written submission dated 31 July 2000 Exhibit A3
Respondent's statement of facts and contentions dated 3 May 2000 Exhibit R1
issues
The issues before the Tribunal are as follows:
a)whether the Respondent is subject to an income maintenance period in respect of her claim for parenting payment on 1 July 1999; and if so
b)whether there are any grounds for waiver of the income maintenance period in whole or in part.
legislation
The relevant legislation is the Social Security Act 1991 ("the Act") and in particular sections 1068A-E4, 1068A-E7, 1068A-E9, 19C and 14A which provide:
"1068A-E4. If:
(a)a person's employment has been terminated; and
(b)the person receives a leave payment (whether as a lump sum payment, as a payment that is one of a series of regular payments or otherwise);
the person is taken to have received ordinary income for a period (the income maintenance period) equal to the leave period to which the payment relates.
…
1068A-E7. If the person is covered by point 1068A-E4, the income maintenance period starts, subject to point 1068A-E8, on the day the person is paid the leave payment.
…
1068A-E9. If the Secretary is satisfied that a person is in severe financial hardship because the person has incurred unavoidable or reasonable expenditure while an income maintenance period applies to the person, the Secretary may determine that the whole, or any part, of the period does not apply to the person.""19C(2) A person who is not a member of a couple and who makes a claim for parenting payment, austudy payment or one of the following allowances…is in severe financial hardship if the value of the person's liquid assets (within the meaning of subsection 14A(1)) is less than the fortnightly amount at the maximum payment rate of the payment or allowance that would be payable to the person:
(f)if the person's claim were granted; and
(g)in the case of a person to whom a income maintenance period applies, if that period did not apply.
…
19C(4) Unavoidable or unreasonable expenditure, in relation to a person who is serving a liquid assets test waiting period or is subject to a seasonal work preclusion period, or a person to whom an income maintenance period applies, includes, but is not limited to, the following expenditure:(a)the reasonable costs of living that the person is taken, under subsection (6) or (7), to have incurred in respect of:
…
(iii)if an income maintenance period applies to the person – that part of the period that has already applied to the person;
(b)the costs of repairs to, or replacement of, essential whitegoods situated in the person's home;
(c)school expenses;
(d)funeral expenses;
(e)essential expenses arising on the birth of the person's child or the adoption of a child by the person;
(f)expenditure to buy replacement essential household goods because of loss of those goods through theft or natural disaster when the cost of replacement is not the subject of an insurance policy;
(g)the costs of essential repairs to the person's car or home;
(h)premiums in respect of vehicle or home insurance;
(i)expenses in respect of vehicle registration;
(j)essential medical expenses;
(k)any other costs that the Secretary determines are unavoidable or reasonable expenditure in the circumstances in relation to a person.
However, unavoidable or reasonable expenditure does not include any reasonable costs of living other than those referred to in paragraph (a).
…
19C(5) The reasonable costs of living of a person include, but are not limited to, the following costs:(a)food costs;
(b)rent or mortgage payments;
(c)regular medical expenses;
(d)rates, water and sewerage payments;
(e)gas, electricity and telephone bills;
(f)costs of petrol for the person's vehicle;
(g)public transport costs;
(h)any other cost that the Secretary determines is a reasonable cost of living in relation to a person.
…
19C(6) For the purposes of paragraph (4)(a) the amount of reasonable costs of living that a person who is not a member of a couple is taken to have incurred, may not exceed:
…(c)in the case of a person to whom an income maintenance period applies – the amount of allowance or parenting payment (as the case may be) that would have been payable to the person during that part of the income maintenance period that has already applied to the person, if the period did not apply to the person."
"14A(1) …liquid assets, in relation to a person, means the person's cash and readily realisable assets, and includes:
…
(c) amounts due, and able to be paid, to the person by, or on behalf of, a former employer of the person;
but does not include:
(d) an amount that is a qualifying eligible termination payment…"
background
The Respondent's employment with Qantas Airways ended on 18 June 1999 and she was provided with an employment separation certificate, indicating that a total of $17407.24 gross in unused leave entitlements was paid to the Respondent on 18 June 1999 (T5). On 1 July 1999 the Respondent lodged a claim for parenting payment (T4). This claim was rejected due to an income maintenance period precluding entitlement to parenting payment until 22 February 2000. In calculating this period, the Applicant only took into account that portion of unused leave entitlements that related to annual leave and long service leave, which totalled $16230.82 (T8).
On 13 July 1999 the Respondent applied to have the income maintenance period waived by the original decision maker and made a written statement as follows:
"…I had taken excessive sick leave as my health had deteriorated…the termination was very unexpected.
…I have accumulated approximately $100,000 in debts from people in Australia and Lebanon…I visited my son in Lebanon almost every year. This is the main reason for my debts. As I had a steady job I was able to repay my debts slowly and regularly. The sudden termination of my job at Qantas was a great shock and I immediately paid $4,000 worth of debts to debtors in Australia.
My daughter…asked me to pay for bedroom furniture as she and her husband have recently moved to their own rented home with their new baby…the bedroom furniture cost $5000.
I was unaware that I would not be immediately eligible for a payment from Centrelink and therefore I maintain that the severe hardship I am experiencing was not forseeable.
…I am in severe hardship and my doctor has referred me to see a psychiatrist, Friday 16th July as my present situation is causing me great worry and depression…" (T7)During the course of the review by the original decision maker, the Respondent provided bank statements of her Qantas staff credit union account, showing a cash withdrawal of $4000 and a cheque of $16500, both drawn on 23 June 1999 (T13, T14), and declarations from two people stating that money had been repaid to them in the amounts of $2000 in late June 1999 and $4000 on 28 June 1999 (T15, T16). The Respondent's daughter also provided a statutory declaration confirming the receipt of $5000 from the Respondent on 24 June 1999 for the purchase of an Italian bedroom suite (T17). A note from the Salvation Army showed that the Respondent presented with a gambling problem on 20 July 1999 and was referred to the Inner City Gambling Counselling Service and Gamblers Anonymous (T19). On 29 July 1999, Sondra Kalnins, co-ordinator of the Inner City Gambling Counselling Service, provided a letter stating the following:
"Gandoura Bazzi is currently seeking treatment and counselling for problem gambling. She has attended two sessions and been assessed by this service.
…
Gandoura was unaware of changes to income laws which led to her spending all her employment termination money. Some of her money was spent on necessary household articles and also on long standing debts which may or may not be as a result of her gambling problem…
I ask that Centrelink look at her case with some compassion and awareness that Gandoura's problem is now widely accepted as a medical problem for which treatment is required. Gandoura is in treatment now and has accepted the fact that she has a problem…
…" (T18)On 4 August 1999, the original decision maker affirmed the decision to impose an income maintenance period, finding that the expenditure was not unavoidable and not reasonable (T21). The original decision maker noted that Qantas Airways personnel had stated during a telephone enquiry that the Respondent had been given two months notice of the termination of her employment (T9). On 24 August 1999 an authorised review officer varied the original decision, retaining the imposition of an income maintenance period but reducing the amount of money used to calculate the period to $15,956, being the money used by the Respondent to repay loans, the money used to purchase her daughter's bedroom furniture and the tax component of the termination payment (T24). The authorised review officer considered that the balance of money spent because of ongoing day to day expenses and an addictive gambling condition was not a forseeable expense and therefore should not be taken into account in calculating the income maintenance period.
On 18 August 1999 the Respondent received a payment of superannuation in the amount of $75,862.19, which was deposited into her Commonwealth Bank account (T6). On 19 August 1999, the Respondent withdrew two amounts of $20,000 each; on 23 August 1999, the Applicant withdrew $35160; and on 24 August 1999, the Applicant withdrew $2200. The issue of the effect of this amount on the Respondent's Centrelink entitlements was not raised until review by the SSAT occurred.
On 29 October 1999, the SSAT set aside the original decision and directed that the application of the whole of the income maintenance period be waived under the provisions of section 1068A-E9 of the Act. The SSAT found that Centrelink's decision to impose an income maintenance period from 18 June 1999 was correct, but that the income maintenance period should be waived by taking into account all expenditure incurred by the Respondent during the income maintenance period and severe financial hardship incurred with regard to payments of debts, selling of possessions to pay bills, and obtaining assistance from charity. The SSAT noted that the authorised review officer had accepted that the Respondent has a gambling problem which is an addictive condition, which in the SSAT's view lead to unavoidable expenditure. The SSAT considered that the $5000 given to the Respondent's daughter for bedroom furniture was reasonable expenditure in the circumstances and that the remainder of all termination monies were absorbed by living expenses and gambling (T2).
On 13 December 1999 the Applicant applied to the Tribunal for review, stating that the decision under review is wrong (T1).
oral evidence of the respondent
The Respondent stated that she was born in Lebanon in 1952 and now lives in a home provided by the Department of Housing. She has been divorced for 17 years, and has three children who now all live in Australia, the youngest of which is 16 years of age. She worked for 12 years with Qantas Airways as an airline service operator, which involved cleaning, and lost her job through a 'letter to quit the job'. The Respondent told the Tribunal that this lead to feelings of depression and an increase in gambling.
The Respondent stated that on 18 June 1999 she received her first termination payment. She gave her daughter $5000 for the purchase of a bedroom suite, because she was currently sleeping on the floor and her fiance was out of work and newly arrived in Australia, so did not qualify for Centrelink payments. The termination payment was also used to repay debts to the Respondent's brother and to repay other people that she had borrowed money from. The rest of the money was gambled.
The Respondent stated that she had always gambled, but that it did not become a problem until she experienced the extreme dissapointment of losing her job at Qantas Airways. She stated that she is a very social person and is well known in her society. For this reason she couldn't admit to having a gambling problem and didn't tell her children about the money. She gambled at the TAB, at clubs, casinos, through scratchies, lotto, the lottery or 'anything'. The Respondent stated that the frequency of her gambling was sometimes every day, and sometimes four to five days per week after she finished work.
The Respondent saw Dr Mustafa about her problems and 'got good advice' and Efexor tablets for stress, but this had no effect on her gambling problem. She stated that she had been suicidal four or five times and thought about overdosing on tablets, but her sixteen year old daughter stopped her. She stated that when she received the superannuation payment she gambled the entire amount, and that her family did not know about this money. After the money was gone, the Respondent again began borrowing money from family members and friends. Approximately $5000 of the money borrowed was used to replace the Respondent's video, television, microwave, stereo and television cabinet.
The Respondent also advised the Tribunal that she hurt her shoulder in an accident and now takes Voltaren and has injections for the pain. She also has problems with her back, knee and left ankle and believes that the combined effect of all of her problems has resulted in her depressive state.
In cross examination, the Respondent stated that the amount of $2000 was repaid to her cousin, Norman Bazzi, and $4000 to her brother, Hassan Bazzi. Ms Smith for the Applicant, directed the Respondent to T7 where the Respondent had stated that she had accumulated approximately $100,000 in debts to people in Australia and Lebanon, during her working life. The Respondent stated that this debt accumulated because she visited her son in Lebanon almost every year, but that her intention was to repay the money slowly and regularly from her wages. Her son has since moved to Australia. The Respondent stated that her relationship with her cousin, from whom she borrowed most of the money, is still good. She currently has a St George Bank credit card on which nothing is owed. She told the Tribunal that the money in her account prior to receipt of the termination payment (T13) was made up of savings from her wages.
The Respondent was questioned about the withdrawals from her Commonwealth Bank account on 19 August 1999 (two withdrawals of $20000 each) and 23 August 1999 ($35160) (T6). She stated that she was given cash on all occasions. Her cousin was with her on 19 August and at that time $20000 was the maximum that the bank would give her. However, on 23 August she insisted on being given the money and was therefore provided with the full amount of $35160 in cash. She stated that most of these funds were used gambling at the casino, on poker machines and on 'the horses'. Some of the money went back to Lebanon 'with somebody'. She sent four amounts of $5000 with friends or family when they travelled back to Lebanon, a total of $20000. This money repaid debts for trips to see her son, and for her daughters wedding. The Respondent had forgotten what she did with the rest of the money.
The Respondent stated that she didn't give her daughter the money for the bedroom suite from savings prior to the receipt of termination payments and superannuation because she 'didn't want to give the money away straight away because of other debts'.
The Respondent is currently looking for a light job but her health is very bad. She saw Dr Ali once 1999 for stress and depression and now sees Dr Mustafa approximately once per month. For her gambling problem she has seen a 'lady in the city', but she has not attended for nine or ten months because she now sees Dr Mustafa only. She stated that she continues to gamble, but that it has reduced because she has no more money. On the day of the hearing, the Respondent stated that she had $34 in her bank account.
The Respondent told the Tribunal that she gambles because she has no personal life, has struggled through her life by herself and that her life is 'not easy'.
submissions
Ms Smith for the Applicant submitted that there are no grounds for exercising the discretion to reduce the Respondent's income maintenance period in full or in part in accordance with section 1068A-E9 of the Act. The Applicant contends that severe financial hardship has a specific definition as per subsection 19C(2) of the Act, being that the person has liquid assets (as defined in section 14A of the Act) of less than the equivalent of two weeks worth of benefit. The Respondent's superannuation payment would be considered as a liquid asset by virtue of section 14A(1)(c) of the Act, as it was a payment due to the Respondent by or on behalf of her former employer. Therefore, the Respondent was not in financial hardship up until the date that the superannuation payment was withdrawn on 24 August 1999, because her liquid assets exceeded $371.90.
Further, Ms Smith submitted that at the time when the Respondent may have been in severe financial hardship, this hardship was not brought about because she incurred unavoidable or reasonable expenditure in accordance with subsections 19C(4) and 19C(6) of the Act. She submitted that the test of reasonableness is an objective one and relied on the decision in Re Secretary, Department of Social Security and Chadwick (1996) 44 ALD 479, to support this objective test. Ms Smith stated that a reasonable person would have made enquiries about Social Security entitlements before expending her resources, and that the amounts used to repay debts and to pay for bedroom furniture were not unavoidable or reasonable.
Ms Smith further submitted that the fact that the Respondent drew money from her accounts is not evidence that she gambled the money, and requested that the Tribunal consider whether or not the Respondent:
"…may have had a gambling problem of the severity needed to qualify for some sort of medical condition as was suggested by the SSAT in their decision. The Applicant submits that the evidence doesn't point to Ms Bazzi having an entrenched long term gambling addiction or compulsion or problem of such a degree that would qualify as some sort of medical problem.
What points away from a gambling problem is that Ms Bazzi has managed to maintain a steady job for 11 years. She has maintained stable accommodation for over 8 years. She has managed to accumulate savings of more than $8000 just prior to having lost her job…She says that she has regularly repaid loans or attempted to make regular payments…" (Transcript, p3)
The Applicant noted that the issue in this matter is not one of special circumstances, as might be argued with regard to a compensation preclusion period or waiver of a debt. Therefore, the Respondent's health complaints cannot be regarded as relevant unless they impinge directly on the fact that she had unavoidable or unreasonable expenditure.
In her statement of facts and contentions (Exhibit A1), Ms Smith conceded that an amount in relation to reasonable costs of living could be taken into account, that being the rate of $371.90 per fortnight from the earliest date that the Respondent satisfied the definition of being in severe financial hardship, which in the Applicant's view was 24 August 1999, totalling $1806.37.
Ms Koller for the Respondent submitted that at the time the Respondent expended money on the repayment of debts and her daughter's bedroom furniture she had some savings and had not yet received her superannuation, so was not putting herself in a perilous financial position. Further, the Respondent's expenditure was reasonable in the circumstances and, despite the fact that her 'uncontrollable gambling' was the primary cause of severe financial hardship, section 1068A-E9 does not require that all of a person's expenditure be either unavoidable or reasonable (Exhibit R1).
However, at the date of claim for parenting payment, the Respondent had expended all of her termination payment and not yet received her superannuation, putting her in severe financial hardship. It is not known whether the superannuation is a qualifying eligible termination payment or whether the amount was due and payable to her on behalf of her employer. Ms Koller submitted that all that can be taken as fact is that by 24 August 1999 the Respondent had expended her funds and from this date, if not before, she was in severe financial hardship as defined by section 19C(2) of the Act.
In relation to the issue of the Respondent's gambling habits Ms Koller stated that she concedes that the gambling related expenditure was not reasonable, but it was unavoidable. Further, the loss of the benefit of the money is exactly what the legislation is intended to cover. Ms Koller submitted that the Respondent's gambling is uncontrollable and impulsive, and that it is clear from her demeanour and the stress and shame she has suffered that this is an authentic situation of somebody who simply does not have the skill or psychological tools to be able to retain sums of money for any particular time. Ms Koller asked the Tribunal to consider that by it's very nature, gambling is the kind of activity for which receipts cannot be provided, so the Tribunal can only rely on the Respondent's oral evidence and the fact that the Salvation Army appear to have identified gambling as a problem and consequently referred the Respondent for further assistance. The compulsive nature of the Respondent's gambling is illustrated by the fact that it did not cease, even after 'the scare' of having no money left after expending her first termination payment.
Ms Koller contested the Applicant's submission that it is not a feature of gamblers to hold down a job, stating the it is a feature of gamblers to hold down as many jobs as they possibly can because:
"…'you can only feed the gambling by finding different ways to get money and so that's, we think, why it was such an enormous crisis to lose the job." (Transcript, p10)
Ms Koller stated that the Respondent's gambling seems to have a very strong emotional attachment, a social element and is an 'escape from every day worries'. She noted that as well as a pattern of compulsive gambling, there is a pattern of compulsive spending, which became a crisis problem only when the Respondent lost her job which was the means that she had to support these habits.
In considering the issue of reasonable expenditure, Ms Koller relied on the case of Opera House Investment Pty Ltd v Devon Buildings Pty Ltd (1936) 55 CLR 110, where Latham CJ states:
"The word reasonable has often been declared to mean reasonable in all the circumstances of the case. The real question, in my opinion, is to determine what circumstances are relevant. In determining this question, regard must be had to the nature of the transaction."
Ms Koller stated that the Tribunal should consider what is reasonable in all the circumstances of the case and by looking at the particular legislative context. Similarly, the case of Gidaro v Secretary, Department of Social Security (1998) 83 FCR 139 applied a test of what was reasonable in the circumstances.
Ms Koller submitted that the definition of unavoidable or reasonable expenditure at section 19C(4) of the Act is not exhaustive. She stated that it is not appropriate to draw on meanings given to variations of the word 'reasonable' in an entirely different statutory context to the legislation relevant to this matter, as the purpose and surrounding statute will import a different construction. Therefore, in so far as the decision in United Kingdom case of Chadwick (supra) adopted this reasoning it ought not be followed. Similarly, an objective reasonable man is clearly not who the provision is for and the section is intended to cover a very broad range of expenditure.
Ms Koller further raised the case of Secretary, Department of Social Security v Cooper (1990) 21 ALD 155 and stated that this case deals with the question of construction when looking at the Act, pointing out that the Act is beneficial legislation and should be construed generously. In summary, she stated that in determining what is unavoidable the Tribunal should consider not what a reasonable person without a gambling compulsion would have avoided, but what the Respondent in the circumstances could have avoided.
In response to the cases on the Respondent's list of authorities, Ms Smith for the Applicant stated that the case of Cooper (supra) was decided before the introduction of the income maintenance period legislation in 1997. Further, the income maintenance period was introduced because parliament wanted income recipients to provide for themselves out of their own resources, before calling on the public purse. Therefore, the aim of the particular provisions in that case was different to the issues here. Ms Smith also stated that Cooper (supra) reinforces that the Tribunal should be concerned with practical realities rather than 'nice distinctions of definition', and should use a common sense approach. Further, Ms Smith stated that the case of Secker v Secretary, Department of Family and Community Services [2000] AATA 290 was decided prior to the changes made to the income maintenance period legislation on 1 July 1999 and therefore deals with the concept of what is not forseeable, which the Applicant does not accept as equating to the definition of unavoidable.
consideration and findings
In taking into account all of the material before it and the oral evidence provided at the hearing, the Tribunal makes the following findings of fact:
a)on 18 June 1999 the Respondent became entitled to receive a termination payment from Qantas Airways totalling $17407.24; and
b)of this termination payment, $16230.82 related to outstanding leave payments; and
c)also on 22 June 1999, the Respondent received the nett termination payment amount of $12450.99 in her Qantas Staff Credit Union account, taking the balance of that account to a total of $20544.10; and
d)on 23 June 1999, the Respondent withdrew a cheque for $16500 from her Qantas Staff Credit Union account; and
d)on 24 June 1999, the Respondent gave her daughter $5000 for the purchase of an Italian bedroom suite; and
e)on 28 June 1999, the Respondent repaid a debt of $4000 to Mr Norman Bazzi; and
f) in late June 1999, the Respondent repaid a debt of $2000 to Mr Hassan Bazzi; and
g)on 1 July 1999, the Respondent lodged a claim for parenting payment and an income maintenance period was imposed from 18 June 1999 to 22 Febuary 2000; and
h)on 18 August 1999, the Respondent received a superannuation payment of $75862.19 into her Commonwealth Bank account, taking the total balance of that account to $77261.75; and
i)on 19 August 1999, the Respondent and her cousin went to the Commonwealth Bank and made two cash withdrawals of $20000 per withdrawal; and
k)on 23 August 1999, the Respondent withdrew $35160 from her Commonwealth Bank account; and
l)on 24 August 1999, the Respondent withdrew $2200 from her Commonwealth Bank account.
The first issue for the Tribunal to decide is whether the Respondent is subject to an income maintenance period in respect of her claim for parenting payment made on 1 July 1999. The Tribunal finds that in accordance with section 1068A-E4 of the Act the Respondent's leave payments were correctly treated as ordinary income for an income maintenance period equal to the leave period to which the payment relates, being a total of 178 days. In accordance with section 1068A-E7 of the Act, this income maintenance period commences from the day the Respondent was paid the termination payment, being 18 June 1999.
The Tribunal now turns to the issue of waiver of the income maintenance period. To satisfy section 1068A-E9 of the Act, the Respondent must first be found to have be in severe financial hardship. For this to occur, she must have liquid assets of less than $371.90. Liquid assets are defined in section 14A(1) of the Act as a person's cash and readily realisable assets, including amounts due and able to be paid by, or on behalf of, a former employer. The Tribunal finds that on the date of claim for parenting payment the Respondent's combined bank balance was approximately $150 and the Tribunal accepts that at this date, the termination payment had been expended in it's entirety. The Tribunal finds that the superannuation payment due to be paid to the Respondent was not able to be paid to the Respondent any earlier than the administrative process would allow, and would not therefore be considered as a liquid asset at any time before it was deposited into the Respondent's bank account on 18 August 1999. Therefore, the Tribunal finds that from 18 June 1999 to 18 August 1999, the Respondent was in severe financial hardship, irrespective of where the money had gone.
However, the Tribunal finds that after this date the Respondent had liquid assets greater than $371.90 for some period of time. The Respondent stated in her oral evidence that, after the withdrawals made on 19 and 23 August, she sent four amounts of $5000 with friends or family when they travelled back to Lebanon, to repay debts in Lebanon which she had acquired from travelling to see her son and for her daughters wedding. The Respondent must have retained possession of this money until it was distributed to friends or family when they travelled, leaving her with a cash amount greater than $371.90. The exact date of the last distribution of funds was not introduced into evidence before the Tribunal, and the Tribunal is therefore unable to determine the exact date at which the Respondent's available liquid assets may have reduced to an amount less than $371.90. However, the Applicant conceded in her statement of facts and contentions that the Respondent was in severe financial hardship from 24 August 1999 and the Tribunal so finds.
The Tribunal now turns to consider the second part of the requirements of the waiver provisions of section 1068A-E9 of the Act. Severe hardship alone is not sufficient for the Tribunal to waive the income maintenance period in whole or part. The reasons why the hardship came about must be established and the hardship must have occurred due to unavoidable or unreasonable expenditure while the income maintenance period applied. In consideration of the definition of the terms unavoidable and reasonable, the Tribunal acknowledges that the Act is beneficial legislation and that subsection 19C(4) of the Act is not intended to provide an exhaustive or limited list of unavoidable or reasonable expenses. However, the Tribunal considers that the purpose of section 19C(4) of the Act is to allow a person to cover expenses which are essential in nature. The Tribunal notes subsections 19C(4)(b), (e), (f), (g) and (j), all of which refer to essential expenses. In this sense, the Tribunal purports to use an objective test of reasonableness. However, the Tribunal also considers it necessary to allow an element of subjectivity into this test, in so far as the circumstances which the Respondent finds herself in at the particular time of her expenditure are considered.
The Tribunal notes that the Respondent made a written statement to the Applicant that the termination of her employment was very unexpected, which was why the severe hardship in which she found herself was unavoidable. This was reiterated in the letter from the co-ordinator of the Inner City Gambling Counselling Service. However, the Tribunal accepts that Qantas Airways informed Centrelink that the Respondent was given two months notice that her employment would be terminated. The Tribunal takes this into account in the following consideration of whether the Respondent incurred unavoidable or reasonable expenditure, in so far as assessing the subjective aspects of the matter and the circumstances surrounding the expenditure.
Unavoidable or reasonable expenditure is defined by section 19C(4) of the Act as including the reasonable costs of living, the amount of which cannot exceed $371.90 per fortnight in accordance with section 19C(6)(c) of the Act. The Tribunal finds that the Applicant is entitled to have the amount of termination payment to be taken into account, reduced by an amount equating to the reasonable costs of living as defined by the Act, for the period in which she was in severe financial hardship, being 1 July 1999 to 18 August 1999 and 24 August 1999 to 22 February 2000. The Tribunal calculates that this reduction equates to $1301.65, calculated over a seven week period, plus $4834.70, calculated over a 26 week period; a total of $6136.35, which should be reduced from $16230.82 in leave payments.
Evidence of the Respondents other expenditure was the gift of $5000 to her daughter for the purchase of an Italian bedroom suite, and the repayment of various debts to family and friends. Whilst the Tribunal acknowledges that providing assistance to her daughter was a generous and selfless gesture on the Respondent's part, it does not consider that this expenditure was essential expenditure. Nor was the expense of the bedroom suite incurred by the Respondent, but rather, her daughter. The Tribunal therefore finds that the gift of money for the purchase of a bedroom suite was not unavoidable or reasonable expenditure in the circumstances. Further, the Tribunal does not consider it unavoidable or reasonable to make sudden and full repayment on debts which were borrowed on the condition of gradual repayment over a period of time. In particular, the full repayment of debts after the Respondent was advised by the Applicant that she was to serve an income maintenance period, was not reasonable.
The Tribunal now turns to consider the submission that remainder of the Respondent's funds were dissipated on gambling activities. The Tribunal has no conclusive evidence before it that the Respondent engaged in gambling activities on the scale suggested. The Tribunal accepts that the Respondent attended both the Salvation Army and the Inner City Gambling Counselling Service, and that these organisations identified 'problem gambling' in respect of the Respondent. The Tribunal also accepts the Respondent's oral evidence that she has not attended the counselling service for nine or ten months and now sees Dr Mustafa only. The Tribunal notes that the Respondent stated that she continues to gamble but the frequency has reduced because she has no more money, despite access to a credit card and borrowed funds.
There is no doubt that Ms Koller is correct in her submission that the Respondent 'simply does not have the skill or psychological tools to be able to retain sums of money for any particular time'. However, the Tribunal sees much of the dissipation of funds as suggestive of impulsive spending rather than a compulsive gambling habit. The Tribunal also differentiates between merely gambling, and having a compulsive gambling habit. In considering whether a pattern of compulsive behaviour can be established, the Tribunal notes the case of Re Males and Secretary, Department of Family and Community Services (1999) 57 ALD 793, where Senior Member J Handley found that Mr Males did have a gambling habit which was 'out of control'. Senior Member Handley distinguished the facts in Males (supra) from those in Re Secretary, Department of Family and Community Services and Rankin [1999] AATA 496 by stating that in the latter case:
"…There was no evidence that the applicant was addicted to gambling, but attended the casino at the culmination of a number of traumatic events…"
Similarly, the Tribunal finds that there is no evidence that the Respondent has a compulsive gambling habit which lead to the demise of her termination and/or superannuation payments. In so finding, the Tribunal notes that the Respondent made some choices to repay indebtedness to family and friends overseas, and before the loss of her employment, whilst still somewhat lacking the capacity to maintain her finances, the Respondent seemed able to better manage her funds based on meeting her day to day expenses and making gradual repayments on debts.
In finding that there is no evidence that the Respondent has a compulsive gambling habit, the Tribunal turns to consider whether impulsive expenditure, particularly in relation to a traumatic event such as the loss of employment, could be considered as unavoidable or reasonable expenditure. The Tribunal, allowing for some element of subjectivity, appreciates the devastation that the Respondent in particular felt at losing her employment. However, the Tribunal agrees with the findings of Deputy President Gerber in Rankin (supra), in relation to the issue of impulsive spending, notwithstanding that this case dealt with the issue of special circumstances in order to reduce a preclusion period. Where Mr Rankin gambled some of the proceeds of his compensation payment away and his wife made some extravagant purchases, the Tribunal stated that:
"…the preclusion period cannot be accelerated by using the compensation payments for the acquisition of assets, let alone recklessly dissipating the proceeds on gambling and extravagant spending on luxuries, whether per se or per alium…"
The Tribunal finds that the Respondent's impulsive spending cannot be regarded as essential expenditure, nor unavoidable or reasonable in the circumstances.
In finding that the only reasonable expenditure of the Respondent was her reasonable cost of living during the period of severe financial hardship, the Tribunal considered Ms Koller's submission that not all of a person's expenditure need be unavoidable or reasonable in order to exercise the discretion to waive the income maintenance period in accordance with section 1068A-E9 of the Act. The Tribunal considers that the wording of this section of the Act, that is, "…the Secretary may determine that the whole, or any part, of the period does not apply to the person", suggests that the intention of the legislation is for the Secretary to waive that part of the period to which the unavoidable expenditure relates. The Tribunal does not find that the reasonable costs of living would allow for the income maintenance period to be waived in it's entirety, or indeed in any greater part than already calculated in these reasons for decision.
determination
The Tribunal determines that the decision of the SSAT be set aside, and substitutes that the termination payment used to calculate the income maintenance period be reduced by an amount representing the Respondent's reasonable costs of living during the period of severe financial hardship, being $6136.35.
I certify that the 48 preceding paragraphs are a true copy of the reasons for the decision herein of Dr JD Campbell.
Signed: .....................................................................................
AssociateDate of Hearing 1 August 2000
Date of Decision 8 September 2000
Representative for the Applicant Angela SmithRepresentative for the Respondent Sandra Koller
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