Bell and Department of Social Security

[1998] AATA 284

Administrative
Appeals
Tribunal

DECISION AND REASONS FOR DECISION

ADMINISTRATIVE APPEALS TRIBUNAL  )
  )              No       V97/1548

GENERAL ADMINISTRATIVE  DIVISION  )

ReBRYAN BELL

Applicant

AndSECRETARY, DEPARTMENT OF SOCIAL SECURITY

Respondent

Decision No 12828

DECISION

TribunalMs L.S. Rodopoulos, Member

Date24 April 1998

PlaceMelbourne

Decision         In exercising its discretion to waive part of the lump sum compensation      settlement preclusion period, the Tribunal sets aside the decision under           review.   The Tribunal determines that payment of the Disability Support       Pension is subject to a preclusion period from 13 June 1997 until 30 June          1998.

(Sgd.)  L.S. Rodopoulos
  Member

CATCHWORDS

SOCIAL SECURITY - disability support pension - lump sum compensation payment - preclusion period - discretion to treat whole or part of compensation payment as not having been made - incorrect departmental advice - whether special circumstances exist - discretion to waive part of lump sum payment exercised - decision set aside

Social Security Act 1991 - ss 17(1),17(2),17(2A), 17(3), 1184

Re Beadle & Director-General of Social Security (1984) 6 ALD 1
Re Akesson & Secretary, Department of Social Security (AAT No. 12682, 5 March 1998, unreported)
Re Secretary, Department of Social Security and VYS (1996) 40 ALD 745
Re Napolitano & Secretary to the Department of Social Security (AAT 8461, 23 December 1992, unreported)
Re Doyle & Secretary, Department of Social Security (1986) 10 ALN 193
Re Parezanovic & Department of Social Security (AAT No. 8761, 4 June 1993, unreported)
Re Secretary, Department of Social Security & VXY (AAT 8559, 3 March 1993, unreported)

REASONS FOR DECISION

24 April 1998  Ms L.S. Rodopoulos, Member

1.      The applicant seeks review of the decision of the Social Security Appeals Tribunal (“SSAT”) dated 27 November 1997 affirming a decision of an Authorised Review Officer (“ARO”) dated 2 October 1997 (T26, pp62-63) that the payment of the Disability Support Pension (“DSP”) is subject to a preclusion period, being from 13 June 1997 until 30 June 1999, due to his having received a lump sum compensation payment (refer to T2).

ISSUES AND LEGISLATION

2.      The three issues, therefore, before the Tribunal are

1. whether or not the $86,880 settlement received by Mr Bell, by way of his Disability Income Policy with Norwich Union Insurance should be treated as a lump sum compensation payment, pursuant to ss 17(1), 17(2), 17(2A) and 17(3) of the Social Security Act 1991 (“the Act”):

   “Compensation recovery definitions

   17.(1)In this Act, unless the contrary intention appears:

   "average weekly earnings", in relation to an old lump sum preclusion period, means the amount;

   (a)estimated as the average total weekly earnings, during a particular month, of all   employees (all persons) in Australia; and

   (b)       last published by the Australian Statistician before the lump sum compensation              payment became payable.

   Compensation

   17.(2)For the purposes of this Act, compensation means:

   (a)a payment of damages; or

   (b)a payment under a scheme of insurance or compensation under a              Commonwealth, State or Territory law, including a payment under a contract entered into under such a scheme; or

   (c)a payment (with or without admission of liability) in settlement of a claim for damages or a claim under such an insurance scheme; or

   (d)any other compensation or damages payment;

   (whether the payment is in the form of a lump sum or in the form of a series of periodic payments) that is:

   (e)made wholly or partly in respect of lost earnings or lost capacity to earn; and

   (f)made either within or outside Australia.

   17.(2A)Paragraph (2)(d) does not apply to a compensation payment if:

   (a)the recipient has made contributions (for example, by way of insurance premiums) towards the payment; and

   (b)the agreement under which the contributions are made does not provide for the amounts that would otherwise be payable under the agreement being reduced or not payable because the recipient is eligible for or receives payments under this Act that are compensation affected payments.

   ...

   Compensation part of a lump sum

   17.(3)For the purposes of this Act, the compensation part of a lump sum compensation payment is:

   (a)50% of the payment if the following circumstances apply:

   (i)settlement of a claim that is, in whole or in part, related to a disease, injury or  condition; and the payment is made (either with or without admission of liability) in

   (ii)the claim was settled, either by consent judgement being entered in respect of the settlement or otherwise, on or after 9 February 1988; or

   (ab)50% of the payment if the following circumstances apply:

   (b)the payment represents that part of a person's entitlement to periodic compensation payments that the person has chosen to receive in the form or a lump sum; and

   (c)the entitlement to periodic compensation payments arose from the settlement (either with or without admission of liability) of a claim that is, in whole or in part, related to a disease, injury or condition; and

   (d)the claim was settled, either by consent judgement being entered in respect of the settlement or otherwise, on or after 9 February 1988; or

   (e)if those circumstances do not apply—so much of the payment as is, in the Secretary's opinion, in respect of lost earnings or lost capacity to earn.”

2. whether there are special circumstances such that the Tribunal should exercise the discretion under s.1184 of the Act to disregard the whole or part of a lump sum compensation payment:

   “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.”

and

1. whether the consideration of special circumstances should take account of             the advice given to the applicant by the department regarding the effect of                   the lump sum compensation payment.

2. The applicant, Mr Bryan Bell, was assisted by his daughter, Briony. Mr Perdon presented the case for the Department. No other witnesses were called. In addition to the documents lodged pursuant to s37 of the Administrative Appeals Tribunal Act 1975 (the “T” documents), and numbered T1 to T33, the Tribunal had before it a handwritten document, with attachments, setting down Mr Bell’s concerns (Ex. A1). [Note: the exhibit number was not formally recorded at the hearing.]

3. At the hearing the Tribunal took Mr Bell and his daughter through the Statement of Facts and Contentions as set down by the respondent.  Through this process it was ascertained that the applicant agreed with the following statement of facts, with additional comments against a., c. and f. as recorded:

   “a.The applicant was a carpenter/builder.  He had held disability income insurance since 1989 for which he was required to pay contributions in the form of premiums (DocT6p27).  The policy provided for payments to the applicant in respect of “total disablement” ie “continuous and total inability by reason solely of Injury or Sickness to perform the substantial and material duties of your usual occupation” (T6p28). The policy also provided offset from payments of any Social Security amounts paid or payable (T6p31).

   [Mr Bell added that his disability income insurance payment policy was not indexed to the rises in the cost of living.]

   b.The applicant injured his back in October 1994 (t7p33) and was paid disability insurance payments of $1,810 per month (equates to about $835 per fortnight) from that time (T8p35). Where incapacity continued, the policy provided for continuing payments until age 65 ie the year 2023 (T6p27).

   c.The applicant claimed DSP on 18/7/97 (T4).  He had settled his disability insurance claim for $86,880 on 7/7/97 (T3), periodic payments ceasing on 12/6/97 (T7p34),T8p35).  He was living with a relative and had the care of his 17 year old daughter.  He had investments of $53,952 (T4p22) returning $3,400 pa (about $130 pf) and assets of $57,000 (1977 Tahitian boat $50,000; 1987 Magna $4,500, household contents $2,500) (T5p26).

   [Mr Bell told the Tribunal that whilst he was in overall agreement with this statement, he was not “quite in agreement” because the whole situation had “got out of control”.  He had been told that he could get the DSP and this was the reason why he had agreed to the periodic payments ceasing on 12 June 1997.  It was now apparent that “someone had made an error” and that he had been wrongly advised by the Department.]

   d.The applicant is medically qualified for DSP.  At the time the maximum DSP rate was $347.80 pf.

   e.On 4/8/97 the applicant was notified that the payment to him of DSP was precluded until 1/7/99 under the compensation preclusion provisions of the Act (T14).

   f.The applicant stated that he had made a personal and a telephone enquiry of the respondent concerning the payability of Social Security payments prior to settling his disability insurance claim (T15, T17, T22).  He also told the SSAT that he had made a second telephone enquiry (T2p7).  The respondent does not hold any file or computer record of these enquiries (T25, T26p62).  The applicant states that he told the relevant officers that the claim was not related to worker’s compensation but was a disability insurance policy or income protection policy that he had taken out himself (T2pp6-7).  The applicant was advised that the only Social Security effect was as an asset;

   [Notwithstanding these enquiries, Mr Bell claims that he was wrongly advised by the Department.]

   g.The applicant told the SSAT that he had taken the settlement because he was in considerable debt, having no private health insurance, and he had been finding it difficult to live on the monthly disability payments.  He also took the settlement because he thought that he would receive DSP.

   h,The applicant told the SSAT that he had received the payout on 11/7/97.  He had repaid medical, physiotherapy and personal debts of $36,500 on 17/7/97.  He had spent $6,301 on living costs to the end of November.  He had paid back taxes for the last 3 years of $9,205 on 27/11/97.  His tax liability for 1997/98 would be $10,000-$12,000.  He had $22,078 remaining after these expenses (T29p71).

   i.The applicant also told the SSAT that the boat would only be worth $50,000 after fit-out and most of that was still required to be completed.  He intended to live on the boat when it was completed (T2p8).

   j.The applicant advised on 18/2/98 that he had $27,091 at bank.  He anticipated a 1997/98 tax bill of $10,000-$12,000 and the boat fit-out was estimated at $7,500.”

4. The applicant argued, and the respondent accepted, that when he went to the offices of the Department at Aitkenvale and at Townsville, and when he made telephone calls enquiring about his entitlement, he was told that there “shouldn’t be a problem”.  He was clearly told that his disability income insurance was not worker’s compensation and was treated like payments entailed in a “marriage break-up”.  He received no receipt for his telephone calls - and felt that the entire process was a “slur to his character”.  He “had little left, but his good character”.  As Mr Bell stated in his letter to the Social Security Appeals Tribunal, dated 2 November 1997, and pointed out to this Tribunal, he was wrongly advised by the Department.  He wrote:

   “As I’ve tried to point out to your office in the past, seeing I was ill advised by your staff, and foolishly accepted a payout due to I repeat again ill advice by your staff, which has financaly [sic] disadvantaged myself and my daughter.  It appears that your department is totaly [sic] ill equipt [sic] in looking at the ishue [sic] until now which I appreciat [sic], and have looked forward to for sometime to talk to a desion [sic] maker, as they seem to be very thin on the ground in your orgonation [sic].  However I now find I have another complication as I have had to fly down to Melbourne to take care of my ageing parents due to their deteareating [sic] health, as I have no idear [sic] at this stage how long I will be hear [sic], which is a real worry with my daughter doing her final year exzames [sic] at present.  I don’t no [sic] where this leaves my claim for the DSP ...”.

5. At the hearing Mr Bell put the view that departmental officers giving information to the public should be properly trained to do so.  He referred to a book entitled “Clients Beware” which, according to him, states that the Office of the Ombudsman through John Wood, considers that 50% of the information given to enquirers is incorrect, and that there is “also a tollerance [sic] for a 5% error in telephone operators advice” (Ex. A1).  Mr Bell questioned whether departmental officers were to be reprimanded for giving incorrect advice. This query arises from action taken by Mr Bell with the Office of the Ombudsman and advice to Ms Coralie McLean, the Townsville Regional Manager, of his intention to put the matter in the hands of the Commonwealth Ombudsman, stating:

   “I write this day regarding the above mentioned claim for the disability support pension rejected under section146B of the Social Security Act 1991.

   I was totally amazed at this decision by your department as your staff have never made me aware that such an act existed.

   In February this year I went to your general enquiry desk at Aitkenvale and spoke to a middle aged lady.  I explained to her that I had the option of getting an insurance payout and I needed to know if this would affect my application for the DSP.  She advised me that as long as the payout an assessts [sic] were under the prescribed threshold I would  [be] entitled to the DSP if I qualified medically.  She gave me all the paper work.

   Some two months later I telephoned DSS with a general enquiry of the same details.  Again I was advised the same.

   At no time did either DSS officer advise me that there was a section 146B of the Social Security Act 1991, which would preclude me from getting the DSP.

   The day I lodged my paper work for the DSP, which was after I received my insurance payout, (25Jul97), I was informed that there could be a problem.  However the officer was not sure and made an appointment with the commonwealth medical officer for an assessment.  So even at this stage no one was sure that act 146B precluded me.

   [Note:s146B refers to changes by payments by computer - the Tribunal did not explore this reference with the applicant, but assumes he was generally referred to s146B which refers to cancellation or suspension determination of the DSP.]

   I put to you Ms Mclean, had I have been advised of this when I made both of my enquiries, I wouldn’t have accepted the Lump sum paypout [sic].  I have been incorrectly advised by officers of the Department of Social Security, who can not be blamed as it is a reflection of their lack of training, but where does this leave me.  Your department worked out my yearly income now to be $2629.12, could you live on this amount, I think not, plus I have Taxes to pay out of the money, so that lowers my income again.

   I hold The Department of Social Security soley [sic] responsible for this financial hardship, that your department have placed me in.”

In an undated, but later, letter addressed to Ms Dot Vardy, the ARO at Centrelink, Townsville, Mr Bell raised the question of Duty of Care.  He wrote:

“I am in receipt of your letter dated 2 October 1997, and note its contents.

Your letter was very specific, but failed to address the main issue.  I went to your Aitkenvale office in June and sort [sic] advise and instruction from a staff member.  After the officer advised me that my insurance payment would not preclude me from getting income support, I then went and made an informed decision based on the information received from the government body concerned.

I realise that I do not know the name of this government employee, but I am quite prepared to come into the office and identify the person who gave me this information.

I am of the understanding that you have responsibilities and obligations under DUTY OF CARE.  And I am going through Financial Hardship as a direct result, of the actions of a government employee.

I would also like to take thls opportunity to register my complaint about the length of time it has taken for you to forward this information.  It has been over three (3) months and it would appear that nobody wanted to make a decision, considering the length of time it took to get back with a response.

I wish to lodge a GREAVANCE [sic] pertaining to the length of time in processing my claim, not even acknowledging the fact in your letter dated 2 October 1997, that I was given the wrong information from a government.

I am lodging my APPEAL, however I would like your response to my request for DUTY OF CARE.”

1. In response to questions from Mr Perdon regarding their financial situation, Mr Bell and Briony confirmed that while still in Queensland they had borrowed $36,500 from their ex-wife/mother to cover accrued debts arising from car, education, medical - including physiotherapy expenses, and the $175/$200 rent required to remain in a “shit of a house” in Townsville.  Briony indicated that she had kept a diary of the accumulated debts owed to her mother.  She had not been eligible for AUSTUDY because of her parents’ income.  Mr Bell said that he was to repay his wife only when he could.  He was not prepared to initiate divorce proceedings as he was not able to meet the costs.

2. After they received the letter of 4 August 1997 from the Department regarding the preclusion period, father and daughter had made a lot of effort to curtail their expenses.  Before moving to Melbourne to take care of his ageing pensioner parents they had moved to a cousin’s place in Queensland and contributed to the grocery expenses, etc.  At that time when they had faxed their financial situation to the SSAT ($16,300) Briony had to have her gall bladder removed, incurring “heaps and heaps” of medical expenses, covered by her father privately to ensure that her schooling was not unduly interrupted by public hospital delays -  “Medicare only covers so much”.

3. Having moved to Melbourne they had to spend money on a “crook old car” and assisted Mr Bell’s ageing parents with the incidentals required to keep his car going.  They are spending over $1,000 per fortnight on “living costs and other things”, including expenses relating to working on the boat which they plan to make their home.  Whilst happy to look after their parents/grandparents, they consider it preferable to live on the boat.  Apart from paying their airfare to Melbourne (from Queensland) and “stuff like that” they have $25,000 left in a Cash Management Trust and an additional $300.   The applicant and his daughter anticipate that once they pay the outstanding lump sum tax of $10,000-$12,000 they will have around $6,000 left to see them through to the end of the preclusion period.  This calculation also takes into account the $7,500 required to make the boat livable.  (It will also require furniture.)

4. Briony explained that she has taken a year off University to help her father’s friend fit out the boat as a home.  The boat is in a paddock in Hastings. In doing so, the applicant and his daughter will avoid having to pay rent for accommodation.  Her father cannot do the work required. Her evidence reflected that she is a multi-skilled helper doing sanding and painting, etc., as well as carrying out domestic tasks for her grandparents. Briony drew the Tribunal’s attention to the following financial statement that she had prepared.

   “Financial Hardship

   From the 16th February till July 1999 is 67 weeks during this time I will have to pay tax on my payout and my estimation of the fit out of my boat.

   Tax being -) $10,000 to 12,000

   Fit out estimation -) $7,500

   Up to date bank balance $27,091.00

   
   

   Balance$27,091  $27,091

   Tax 10,000 12,000

   $17,091       $15,091

   Estimation   7,500    7,500

   $9,591         $7,591

   ¸ 67 weeks

   = $143.14 p/w  $113.29 p/w

   These figures are less than what I would recieve [sic] on the DSP.  That is $347.80 per f/n or $173.50.”

Mr Perdon did not challenge the estimation.  Earlier in the hearing he indicated that the DSP totalled $347 per fortnight.

CONSIDERATION

11. Turning now to the first issue before the Tribunal. As argued by Mr Perdon, the purpose of s.17(2)(d) and (e) of the Act is to ensure that pensions are not paid from two sources for the same time period. S.17(2A), does not apply as Part 6 of Norwich’s Disability Income Schedule, sets down a Limitation of Benefits as follows:

“PART 6 LIMITATION OF BENEFITS

The Monthly Benefit under this Policy shall be reduced by any amount which is paid or is payable under:

(I)any legislation including Workers Compensation, Accident Compensation, Social    Security or any other form of similar legislative benefit or legislative compensation,

(ii)any other disability income insurance policy or injury or sickness policy with other   insurers issued subsequent to the issue of this Policy.

We will not make any reduction for payments from any disability income insurance policy or injury or sickness policy if full and correct details of that policy were disclosed to us in the proposal and personal statement on which this Policy is based.”

1. The Tribunal, accordingly, finds that as s.17(2A) does not apply, the preclusion period has been correctly applied.

2. The Tribunal now turns to the second and third issues before it, namely, pursuant to s.1184, whether special circumstances apply. As pointed out by Mr Perdon, in Re Beadle and Director-General of Social Security (1984) 6 ALD 1, the Tribunal said:

   “... it is not helpful to focus too closely on each particular circumstance of the applicant and ask whether it is special.  Of itself it is unlikely to be special for there would be many in a similar situation.  The question is whether, when the relevant circumstances of the applicant are looked at in their entirety, they may fairly be described as unusual, uncommon or exceptional ...”

In Re Parezanovic & Department of Social Security (1991) 75 SSR 1092 the Tribunal found that DSS both delayed in replying to the applicant and “failed to provide the applicant sufficient information regarding the position with regard to the invalid pension (as the DSP was then titled) prior to settlement”.   In considering the adverse effect of these circumstances upon the applicant, and whether they justified a finding of special circumstances, the Tribunal summarised the authorities on “special circumstances” as follows:

“17.A conclusive definition of “special circumstances” is not provided for by the Act. The leading authority on the interpretation of ’special circumstances’ is Re Beadle and Director-General of Social Security (1984) 6 ALD 1. The Tribunal in that case stated (at 3):

‘An expression such as “special circumstances” is by its very nature incapable of precise or exhaustive definition.  The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional.  Whether circumstances answer any of these descriptions must depend upon the context in which they occur.  For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases.  This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special.’

On appeal (Beadle v Director-General of Social Security (1985) 60 ALR 225 at 230) the Full Court of the Federal Court of Australia said:

‘While we would place less emphasis on one dictionary definition of “special”, we are in broad agreement with the approach of the Tribunal and are in agreement with its conclusion.’

18.Hill J, in Trimboli v Secretary, Department of Social Security (1989) 86 ALR 64 at 73 said:

‘It is neither appropriate nor proper here to attempt a definition of what circumstances will be “special”.  The occasions when circumstances are special will vary with the facts of each particular case.’

19.The Tribunal in Re Krzywak and Secretary, Department of Social Security (1988) 15 ALD 690 at 699 pointed to a number of factors which it believed to be ‘relevant to the exercise of the discretion in this matter’. These factors were:

“financial hardship, legislative changes, incorrect legal advice, ill health.”

Whilst not an exhaustive list, these factors have been found by the Tribunal to be ‘useful guidelines for the exercise of the discretion”.  (Re Secretary, Department of Social Security and Bolton (1989) 18 ALD 464).  Other factors which the Tribunal has found to be relevant to the question of special circumstances include incorrect departmental advice (Re Secretary, Department of Social Security and VXY, Decision No 8559; 3 March 1993) and the standard of the applicant’s housing (Re Mourtitzikoglou and Secretary, Department of Social Security (1991) 23 ALD 249.  It has also been the view of the Tribunal in the past that the relevant circumstances of the applicant be viewed overall.”

Whilst not finding ill health, financial hardship or incorrect legal advice contributing components to warrant a finding of special circumstances, the Tribunal in Re Parezanovic (supra) did find both the delay in replying to the applicant and the department’s failure “to provide to the applicant sufficient information” (as set out above) sufficient to justify special circumstances (see para 38, p11).  The Tribunal concluded:

“In consideration of the evidence before it, the Tribunal concludes that [it] is appropriate here to exercise the discretion and find special circumstances.  It is the Tribunal’s opinion that the insufficient advice provided to the applicant by the DSS and the delay in giving the correct advice adversely affected the applicant’s financial situation and the Tribunal thereby waives recovery of the remainder of the $24,200.53 paid to the applicant and his wife between 6 November 1989 and 15 August 1991.”

It needs to be pointed out that, unlike Mr Parezanovic, Mr Bell does not receive an income nor does he own an unencumbered home (refer to para 30, pp8-9).

Mr Perdon referred to the matter of Re Akesson & Secretary, Department of Social Security (AAT No. 12682, 5 March 1998, unreported), which followed the precedent in Re Secretary, Department of Social Security and VYS (1996) 40 ALD 745 where it was stated:

“... the Tribunal pointed to the undesirability of denying special circumstances to applicants who, while not in immediate financial hardship, were likely to be reduced to long-term financial difficulties if special circumstances were not found.  The Tribunal considered it was ‘inappropriate for a system of Social Security to require people to take a ‘one-way ticket to poverty’ to qualify for social security payments’.  In the circumstances before this Tribunal, I find that, unlike in the circumstances of VYS. the applicant is not only experiencing immediate financial hardship but faces grave long term financial, medical and psychiatric difficulties.”

1. The Tribunal finds that the applicant’s financial situation is moving to a point of financial “insecurity”, particularly after the tax liabilities are paid and the fit-out of the boat is completed (see paragraph 9 above). The respondent has calculated that even on his worst case scenario, in mid-February, Mr Bell had $7,591 (21 fortnights DSP after all the above expenses, except present living expenses).  Mr Perdon referred the Tribunal to the decision of then Deputy President Thompson in Re Doyle & Secretary, Department of Social Security (1986) 10 ALN 193 where he refers to the assets test provisions and states:

   “(7)The Department has provided guidelines for its staff to enable them to determine whether persons who meet the requirements of paras (a), (b) and (c) of s6AD(1) would suffer financial hardship if s6AD did not apply to them.  It accepts that a single person may suffer such hardship even though he has readily available money up to $6000;  and that a married couple may do so even though they have readily available money up to $10,000.  In a news release issued in May 1985 on the occasion of changes being made to the assets test, the Minister for Social Security referred to those guidelines, indicating that they reflected his views on the matter.

   (8)It is, I think, clear that parliament, when it enacted the assets test provisions and included s6AD, intended that persons who had money readily available with which they might support themselves should use some of it for that purpose and should not receive benefits under the Act until the amount of the money readily available had been reduced to the point at which it would cause severe financial hardship to require them to use any more of it for that purpose.”

Further, Mr Perdon pointed out that s.14A defines the liquid assets test as allowing a "maximum reserve", stated as follows:

(a)if the person is not a member of a couple and does not have a dependent            child—$2,500; or

(b)in any other case—$5,000.”

The guidelines to the Act in relation to hardship state that if the total value of these realisable assets, combined with other readily available assets is below $6,000 (single) or $10,000 (married), the customer would not be expected to realise before the hardship provisions can be applied. In relation to Special Benefits, the guidelines state If a claim is assessed under the long term available funds test and the claimant has no exceptional or unforeseen expenses, then:

·       special benefit (SpB) is not paid if available funds are more than $5000; this limit applies regardless of marital status or number of dependants; and

·       no preclusion period applies.  If available funds are more than $5000 the SpB claim should be rejected;

·       ...

1. Mr Bell’s assets are within these parameters and even though he has the option of postponing the fitout of his boat by continuing to reside with his parents if he wished, it cannot be argued that, like Mr Parezanovic for instance, he owns an unencumbered asset in the form of a home.  The boat is hardly a viable asset given that it is situated in a paddock at Hastings and requires refitting to make it habitable. Mr Perdon pointed out, in circumstances where the decision under review is affirmed and the financial situation changes (i.e. payment of taxation and completion of boat fit-out), it is open to Mr Bell to re-apply for the DSP at any time. The respondent also argued that as Mr Bell had received notification in writing of the preclusion period on 4 August 1997 he had sufficient time to re-arrange his finances and perhaps could have done a better job to stretch out his finances to encompass the preclusion period.  The Tribunal is, however, disinclined to accept these arguments in the circumstances.

2. Finally, turning to the third issue, the Tribunal notes the somewhat contradictory arguments put by the respondent. The evidence is that Mr Bell both attended the Department in person (Aitkenville Regional Office) and on more than one occasion sought to confirm the advice since via the Teleservice Centres (refer to paras 17, 18, 19 of the SSAT decision - T2).  Further, it was only when lodging his claim for the DSP on 18 July 1997, subsequent to his having attended the Aitkenville Regional Office in February of that year that he was asked to complete a “Compensation and Damages Module C” form “just in case” it was necessary. Mr Bell told the SSAT that “the Centrelink officer was not able to advise Mr Bell whether the payment would have any effect on his claim” (T2, p7).

3. In discussing the evidence, the SSAT said:

   “The Tribunal was impressed by Mr Bell’s candour and his recollection of the events that transpired during the period in question.  Mr Bell presented as a forthright person who was genuinely cautious (perhaps even over cautious) about making sure that he received correct advice from the Department before making any decisions.  On the balance of probabilities the Tribunal was satisfied that Mr Bell’s version of events occurred and that his enquiries were specific enough, particularly in relation to the possibility that he may accept a lump sum payment based on the advice he received, for Centrelink to owe him a significant duty of care to at least qualify the advice provided as being subject to the need for further investigation into the insurance policy or research of the relevant legislation.”

4. The respondent conceded that the advice system regarding lump sum compensation payments was bad “in that officers had approximately four minutes to deal with customers” in what is a “very hard and complex” legislative area.  Nevertheless, Mr Bell relied on this advice and in the respondent’s summary of facts and contentions it is recorded that “the [applicant] may have received incorrect departmental advice.  It would be fair to say that the compensation preclusion provisions are complex and without a full copy of the policy and release, proper advice could not be given ...”.

5. As discussed at the hearing, the applicant has lodged a complaint with the Office of the Commonwealth Ombudsman regarding the actions of the departmental officers concerned.  Mr Bell considers that these officers should be reprimanded. The Tribunal does not accept the respondent’s submission or rather, “excuse”, of the limited time available to officers for giving advice in this complex area.  It agrees with Mr Bell that such officers should be appropriately trained to effectively advise or, in such areas of complexity, to appropriately refer enquiries to “specialised” officers.  Such officers should be in a position to competently advise enquirers as to their entitlement status once a lump sum compensation payment is accepted.  As far as the decision under review is concerned, this Tribunal finds that it was reasonable for Mr Bell to have sought advice from the Department before organising his lump sum compensation payment through Norwich Union Insurance.  It also finds that Mr Bell prudently sought such advice from the department on more than one occasion.  Further, the Tribunal finds that in the circumstances, Mr Bell acted reasonably in accepting the lump sum compensation payment on the understanding that he had been correctly advised by the department, and that his DSP would not be affected.

6. .  The Tribunal finds that, similar to the circumstances of Re Parezanovic (supra), Mr Bell was incorrectly advised by the Department as to the effect of this lump sum compensation payment on his DSP entitlement, and as such was unaware that he would be subjected to a preclusion period.  Unlike in the factual situation of Re Napolitano (supra), where the Tribunal found that

   “the incorrect advice given to the applicant by the officer of the respondent’s Department played no part in causing the applicant to lose his invalid pension in September 1991.”

Mr Bell relied on this advice in arriving at his decision to accept the lump sum compensation settlement from Norwich Union Insurance.  As a consequence, the Tribunal finds that, due in part to his having been incorrectly advised by the Department as to the effect that a lump sum compensation settlement would have on his DSP entitlement, Mr Bell is suffering financial hardship.

1. Given the number of enquiries Mr Bell did make to the Department regarding his entitlements if he accepted a lump sum compensation payment, it could be argued that he did so because he doubted the veracity of the information and advice given.  He told the SSAT that “his philosophy, developed as a builder, was to ‘measure twice and cut once’.” (T2, p7)  If he did have such doubts then it could be suggested that he could have taken the initiative to make enquiries with Norwich Union Insurance or seek legal advice and, therefore, accept some responsibility for the preclusion period that arose.  The experience in other matters is that such enquiries may not have been enlightening (see Re VXY supra, para 53) where incorrect legal advice from solicitors is discussed.  See also Secretary, Department of Social Security & VYS (1996) 40 ALD 745 where Senior Member Dwyer deals with the issues of incorrect legal advice at paragraphs 30-39. Senior Member Dwyer states that

   “The Act allows the Secretary and this Tribunal to seek to achieve a ‘broad measure of justice for the individual case’.” (para 49)

2. It would appear from the experience of Mr Bell that, notwithstanding the concerns previously documented by this Tribunal regarding advice given to clients seeking information about their entitlements to DSP pursuant to ss.17(1), 17(2), 17(2A), and 17(3) of the Act, the matter is far from resolved within the Department or otherwise. In seeking to achieve “a broad measure of justice” for Mr Bell in these circumstances, in exercising its discretion to waive part of the lump sum compensation settlement preclusion period, the Tribunal sets aside the decision under review. The Tribunal determines that payment of the Disability Support Pension is subject to a preclusion period from 13 June 1997 until 30 June 1998.

   I certify that this and thesixteen (16) preceding pages are a true copy of the decision and reasons for decision herein of Ms L.S. Rodopoulos, Member

   Signed:         .....................................................................................
     Personal Assistant/Associate

   Date of Hearing  30 March 1998
   Date of Decision  24 April 1998
   Applicant  Self-represented

   Respondent  Mr D. Perdon, Centrelink