Blight and Department of Family and Community Services - [2001] AATA 911

DECISION AND REASONS FOR DECISION [2001] AATA 911

ADMINISTRATIVE APPEALS TRIBUNAL        Nº V2001/521
GENERAL ADMINISTRATIVE DIVISION
  Re:         GARRY PETER BLIGHT
  Applicant
  And:       SECRETARY TO THE
  DEPARTMENT OF FAMILY AND
  COMMUNITY SERVICES
  Respondent

DECISION

Tribunal:       M.J. Carstairs, Member
Date:             2 November 2001
Place:            Melbourne

Decision:The decision under review is affirmed.

(sgd) M.J. Carstairs
Member
SOCIAL SECURITY – disability support pension – lump sum compensation payment – whether preclusion period should be imposed – whether special circumstances
Social Security Act 1991 s17, 1665(8), 1184(1)
Re Morgan and Secretary Department of Family and Community Services [2001] AATA 734
Re Beadle and Director-General of Social Services (1984) 6 ALD 1
Groth v Secretary, Department of Social Security (1996) 40 ALD 541

REASONS FOR DECISION

2 November 2001 M.J. Carstairs, Member

This is an application by Gary Blight (the applicant) for review of a decision of the Social Security Appeals Tribunal (the SSAT) made on 23 March 2001. The SSAT affirmed a decision of a Centrelink delegate of the Secretary to the Department of Family and Community Services (the respondent) to impose a preclusion period on payment of social security payments to the applicant from 8 April 1999 to 7 August 2002.
The Tribunal had before it the documents lodged under s37 of the Administrative Appeals Tribunal Act1975. These documents, which were numbered T1–T46, were marked as Exhibit 1. The applicant gave oral evidence at the hearing, as did his cousin Anthony Hodgkinson, who assisted him at the hearing. Mr Terry Baker, an advocate with Centrelink, represented the respondent.
BACKGROUND
The applicant received disability support pension in 1994 when he injured his back at work, on 15 August 1994. He continued to be paid disability support pension until his compensation case was settled on 30 March 1999. He also received periodical payments of compensation from the date of the injury until the settlement.
The matter was settled with the applicant accepting a settlement sum of $160,000. The respondent then made a decision, to impose a preclusion period of 191 weeks starting on the day that periodic payments ceased (8 April 1999) and ending on 4 December 2002 (T4). The respondent advised the applicant of the preclusion period by letter dated 19 April 2001. That letter also advised the applicant that he had to repay $432.40 in social security payments. A later letter, dated 31 May 1999, advised that the sum to be repaid was in fact $39,461.00.
The applicant sought review of the decision about the imposition of the preclusion period. On 17 August 1999 the decision was affirmed. The decision remained unchanged after reconsideration in November 2000. However on 1 March 2001, an authorised review officer varied the length of the preclusion period, taking into account unforseen expenses, which the applicant incurred in removing asbestos from his house in 1998. The effect of the decision was to reduce the preclusion period by 17 weeks, ending the period on 7 August 2002, rather than 4 December 2002 as previously calculated.
The applicant sought further review by the SSAT, which affirmed the decision. He then sought review by this Tribunal on 11 May 2001.
EVIDENCE
The applicant told the Tribunal that he had settled his compensation case in 1999 despite his solicitor saying that it might be worthwhile taking the matter to court. He said that the case had been going on for years and he did not want to continue with the litigation. He preferred to settle and simply signed when the papers were forwarded to him. He said his solicitor did not advise him at the time that he would be subject to a preclusion period. When he received the settlement moneys he immediately went to the bank and collected bank cheques, which he had organised in advance. He said he knew for some three or four weeks that the settlement moneys were coming to him. The cheques were to cover the payment for his house at 69 Lawler Street, Yarram. He told the Tribunal that the house had been bought on his behalf by a relative in either 1997 or 1998. He had ordered a new car from Mitsubishi when he had agreed to the case being settled.
The applicant gave evidence to the Tribunal that he had a serious drug problem until the mid-1990s. He said that in the past he had a drug habit costing him more than $250 a day and ran up considerable amounts of debt with drug dealers. In the late 1980s he was seriously injured in a drug related assault. In that assault he was bashed, sustained head injuries, and had one leg broken and nearly severed with an axe. He told the Tribunal that about 1995, his cousin, Anthony Hodgkinson, had found him destitute and living in appalling conditions and with a worsening drug habit. Mr Hodgkinson had since assisted him to get his life back together. Mr Hodgkinson had taken the applicant to live at his home until the house at Yarram was purchased in 1998.
That house was purchased with assistance from family members. The applicant said that he had considerable financial help from one family member by the name of Loretta, who otherwise did not wish to be named. He said that Loretta also gave him money when menacing demands were made on him in 1997 to pay $10,000 for debts arising from his earlier drug habit. When he received the settlement money in 1999 he paid back the $10,000 to her.
The applicant said that he had started to receive disability support pension in 1994, but succeeded in getting employment with a company dealing in rotary milking systems some months later. He said that he advised the respondent by telephone that he had commenced work and was told that he should see how he went with the employment. He suffered a workplace injury not long after starting work. He was heavily dependent on drugs at that time, and consequently, was supporting an expensive habit. He said as he "straightened out" he was aware that money still was coming in from Centrelink. He did not advise Centrelink when he moved from a previous residence at Wren Street, Hampton Park, to live with his cousin Mr Hodgkinson. The other residents of the house at Wren Street did not forward mail to him.
He said that he did not advise his solicitors until 2000 that he had continued receiving payments of disability support pension while getting ongoing payments of compensation. He said that the first letter that he had received from Centrelink in April 1999 indicated that he was required to pay back only an amount of $432 in social security payments. About that time Centrelink officers interviewed him in regard to his receipt of the disability support pension. He said that he had started to pay back the sum claimed by Centrelink, first paying an amount of $10,000. The documents showed this payment was made on 25 June 1998. He said that he was pressured to pay by Centrelink, though what he wanted to do was to work out a repayment schedule in instalments. He said that when he paid the $10,000 they said that the recovery of moneys would go no further, until the issue of a preclusion period was looked at. At that time he still had money left from the settlement and would have had $15,000 left at the end of the preclusion period, had his preferred course of repayment been adopted. He said that he tried to negotiate this. However his solicitor recommended that he pay out the debt. He said that he gave the remaining $25,000 to his solicitor to pay the debt. The documents showed that the second payment of $25,000 was made on 29 November 1999. He said that if he had not been pressured to pay out the debt he would not need to be asking the Tribunal to look at the preclusion period, as he would have had money left.
The applicant said that as his financial position worsened he increased the bank overdraft (secured on the house at Yarram) from $2000 to $10,000. He said he has had to resort to food vouchers at times. He has unpaid bills including a veterinary bill for his dog, outstanding rates for 2001, and a gas bill. He gave evidence that an earlier debt for three years arrears of rates (approximately $1800) had been paid by family members on his behalf.
On questioning from the Tribunal the applicant said that he could not take in a boarder to live with him at Yarram as he is a loner and does not trust people. He said that he could not sell his car as he would lose money in doing so and he was likely to end up with expensive problems if he purchased a cheaper car. He said that he needed the car to attend medical appointments, but said that in the main, these appointments were within one and a half kilometres of his home. He had not taken up his doctor's suggestions about seeing physiotherapists in Sale or Melbourne. He said that the compensation authority would pay for any taxi travel incurred to attend medical appointments. The applicant said that he has never had stability in his life, and the house and the car represent that for him.
Anthony Hodgkinson gave evidence that when he discovered the circumstances in which the applicant was living, in Wren Street, in 1995, he was appalled. He said that the applicant was destitute and living in conditions that were not fit for an animal. He estimated that the applicant weighed less than 9 stone when he rescued him and took him to live at his own home. He said that the applicant has been drug free since about 1995 or 1996 and alcohol free for over 18 months. In his view the house at Lawler represents security for the applicant and a safety zone, as he is still fearful of his past catching up with him. He said that he is really proud of what the applicant has done to reform his life.
Mr Hodgkinson said that he and his mother support the applicant to the extent that they can. His mother is on a pension and able to help little. He gives the applicant about $400-$500 per fortnight to keep going and to pay off the overdraft. He does not expect that the applicant will ever be in a position to repay him. However he said that he and his mother could not continue to support the applicant. Mr Hodgkinson said that he could not have the applicant live with him again now.
CONSIDERATION OF ISSUES
Section 17(2) of the Social Security Act 1991 (the Act) provides that "compensation" for the purposes of the Act includes a payment in settlement of a claim for damages, if there is some component referable to lost earnings or lost earning capacity. The Act then provides (s17(3)) that where a claim is settled, 50 per cent of the total settlement is deemed to be in respect of lost earnings or lost earning capacity ("compensation part of a lump sum compensation payment"). The Tribunal is satisfied that the applicant's settlement sum included a component for lost earnings or lost capacity to earn. Therefore, the formula in s1665(8) of the Act must be applied to work out a preclusion period, during which the applicant cannot be paid a compensation affected payment. Disability support pension is a "compensation affected payment" (s17(1)(a) of the Act).
The formula for working out the preclusion period is in s1665(8), which provides:
1165.(8) If a compensation lump sum is received on or after 20 March 1997, the number of weeks in the preclusion period is the number worked out under the following formula:
Compensation part of lump sum
Income cut-out amount

The respondent submitted that the income cut out amount in the formula is to be taken as that figure applying at the time of the settlement, though this is not specifically provided for in the Act. Effective from 20 September 2001, an amendment to the Act (Family and Community Services Legislation (Simplification and Other Measures) Act Nº 71 of 2001) provides that the income cut out amount is the amount in force when the compensation was received. In Re Morgan and Secretary Department of Family and Community Services [2001] AATA 734, the Tribunal decided that though the legislation prior to the amendment does not specifically so state, the relevant date should be the time of settlement. The Tribunal agrees with that approach. At the date of the applicant's settlement in April 1999, the income cut out amount provided for in the Act was $416.80.

The "compensation part of the lump sum compensation is defined in s17(3) of the Act, as 50 per cent of the settlement amount. Applying the formula in s1165(8) to the settlement in the applicant's case, the Tribunal is satisfied that the resultant period is 174 weeks, starting on 8 April 1999, when periodic payments of compensation ceased, and ending on 7 August 2002.
The central issue for the applicant in this case was the question of special circumstances. The issue of the recovery of the debt of disability support pension (for which the respondent accepted was satisfied by the payment of $35,000) was not before the Tribunal. Special circumstances are provided for in s1184 of the Act, which states:
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.
The term "special circumstances" was discussed by the Tribunal in Re Beadle and Director-General of Social Services (1984) 6 ALD 1. That case is authority for the proposition that special circumstances must be unusual, uncommon or exceptional and are taken to be circumstances where the imposition of the statutory charge would result in unfairness. It has been accepted that s1184 allows the decision-maker the fullest opportunity to consider the particular circumstances of each case and the factors which alone or together might be considered to take the case out of the ordinary. It has been held that there must be something to distinguish the case from others to make it stand out or the usual or ordinary case (Groth v Secretary, Department of Social Security (1996) 40 ALD 541 at 545.).
In the applicant's case, the matters raised by him include his past drug use and the need now to have stability in his life, the pressure brought to bear on him to pay the debt to the Commonwealth in a lump sum instead of paying it off over a period, inadequate legal advice, his lack of knowledge that a period of non-payment would be imposed and his current financial circumstances.
Looking at these issues in turn, the applicant said that the house at Yarram represented the first security that he had had in what has clearly been a difficult and troubled life. He said that he continues to be worried for his safety and feels safer there because of its remoteness to Melbourne. The respondent submitted, however, that despite the applicant's history, the focus should be on his present position. On the respondent's submission, the applicant has a present capacity to relieve his financial difficulties through the sale of assets, or by renting out a room in his home.
The applicant submitted that part of the special circumstances of his case was that he was pressured to pay back the debt to the Commonwealth; and that this repayment put in peril his ability to spread the remaining money over the time when he could receive social security payments again.
The applicant said that he should not have been pressured to repay. Two different sections of Centrelink were taking different approaches. He said that while the debt recovery section of Centrelink was demanding payment, the compensation recovery section commented adversely on his actions in repaying the debt. The applicant's evidence on this point was supported by a Centrelink document which stated that special circumstances did not apply as the applicant was
sufficiently informed of his preclusion period from the start. He knew he had to serve it yet he still went ahead and repaid his Centrelink debt with the rest of his compo payment (T14 )

Such correspondence is at the very least unhelpful.

However taking all the circumstances into account, the Tribunal is not persuaded that this issue is sufficient to exercise the discretion favourably under s1184 of the Act. In evidence before the Tribunal was a letter from the solicitor Bill Kee and Associates dated 10 August 1999:
We refer to our attendance at the offices of Centrelink in Sale on 27 July 1999 to represent your interest in relation to an interview of the Prosecutions Department of Centrelink.
It is our suggestion that you make an arrangement to make a further lump sum payment to Centrelink at your discretion to evidence your true intentions in this matter. We note that you will have to pay the money to the Commonwealth Government in any event at some future date and we believe it is of assistance to any possible criminal charges if you now make payment off the debt"
Computer records of conversations between Centrelink officers and the applicant (T35), during 1999, show that there was ample time for the applicant to weigh up the benefits of paying off the debt at a discounted amount. The second and larger repayment of $25,000 was not made until 29 November 1999. During the period between when he sought review of the decision to impose the preclusion period (May 1999), and when he paid the remainder of the debt in November 1999, he consulted his solicitor. The applicant submitted that he was pressured by demands for payment within a fortnight. However, the Tribunal is satisfied that on the evidence of the timing of the repayments he did not respond to this pressure. He took time to consider what action he should take and did so on advice from his solicitor.
On the applicant's evidence he is running up increasing credit card debt. He relies on substantial family support to live from week to week. The respondent submitted however that the most telling aspect in his circumstances is that he retains significant assets and can make choices to liquidate them. The applicant said in his evidence that he needed his car to travel. However, the travel that may be needed relates to physiotherapy that he has not elected to have; and for which there appears to be entitlement to reimbursement from the insurer. The Tribunal does not accept that the applicant could not sell his car to relieve his hardship.
The applicant also submitted that he was not sufficiently advised by his solicitor that he would be subject to a preclusion period. It is clear that the applicant did not fully inform his solicitor of his potential debt to the Commonwealth. On his own evidence this was what most compromised his ability to spread his settlement money over the period when he would not receive social security payments.
The Tribunal accepts that the applicant is disabled by his back condition. The applicant contacted the Tribunal after the hearing to say that a further scan of his back shows that he has a protrusion that may cripple him in the future. It is clear that the applicant has limited ability to work. This does not put him in a different position to other cases where persons injured in the workplace are subject to preclusion periods. This circumstance, either on its own or in combination with the other factors presented here, is not sufficient to warrant an exercise of the discretion beyond that exercised by the authorised review officer in a decision dated 1 March 2001.
For these reasons the Tribunal decides that the settlement must be taken into account using the formula under the Act. A preclusion period is imposed between 8 April 1999 and August 2002. There are no special circumstances to warrant disregarding the compensation further.
DECISION
The decision under review is affirmed.
I certify that the thirty-one [31] preceding paragraphs are a true copy of the reasons for the decision herein of
M.J. Carstairs, Member
(sgd)       Catherine Thomas
              Clerk
Date of Hearing:  24 September 2001
Date of Decision:  2 November 2001
Solicitor for the Applicant:           Nil — self-represented
Solicitor for the Respondent:       Nil — Mr T. Baker, Advocate with Centrelink