Booth and Secretary, Department of Employment and Workplace Relations

[2006] AATA 655

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 655

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2006/360

GENERAL ADMINISTRATIVE DIVISION		)
Re		Mr Howard Booth

Applicant

And

Secretary, Department of Employment

and Workplace Relations

Respondent

DECISION

Tribunal Ms N. Isenberg, Member

Date26 July 2006

PlaceSydney

Decision The decision under review is set aside and the Tribunal decides that the preclusion period is further reduced so as to end as at the date of this decision, namely 26 July 2006.

[SGD] Ms N Isenberg
  Member

CATCHWORDS

SOCIAL SECURITY – lump sum workers’ compensation payment – preclusion period – whether special circumstances exist to justify the exercise of the discretion to disregard all or part of the compensation payment being made – the decision under review is set aside.

LEGISLATION

Social Security Act 1991 – sections 1170 and 1184K

CASE LAW

Haidar v Secretary of Social Security (1998) 52 ALD 255

REASONS FOR DECISION

26 July 2006 Ms N Isenberg, Member

DECISION UNDER REVIEW

1. The decision under review is the decision by the Social Security Appeals Tribunal (“the SSAT”) not to disregard some or all of the compensation settlement so as to further reduce the length of a preclusion period from 2 September 2004 to 20 February 2008.

BACKGROUND

1. In September 2004 Mr Booth settled a workers’ compensation claim for $270,000 inclusive of costs.  In October 2004, he received a net amount of $187,458.82 after legal and other costs were deducted.  As a result of the compensation payment and using a statutory formula that takes into consideration the amount of the lump sum compensation payment, Centrelink imposed a preclusion period, that is, a period during which Mr Booth was not entitled to receive Centrelink benefits.

2. When Mr Booth applied for Newstart Allowance in August 2005 his application was rejected because of the preclusion period. 

3. Following representations to Centrelink about his financial situation a reduced preclusion period was imposed: from 2 September 2004 to 20 February 2008. 

4. Further representations were made but the preclusion period was not reduced further.  The SSAT also concluded that there was no basis to further reduce the preclusion period.

5. Mr Booth now appeals to this Tribunal for a review of the original decision.

ISSUE BEFORE THE TRIBUNAL

1. The central issue in this matter is whether there are any “special circumstances” in Mr Booth’s case to reduce the length of the preclusion period as per section 1184K of the Social Security Act 1991 (“the Act”).

LEGISLATION

1. By strict application of the formula in subsections 1170(3), 1170(4) and 1170(5) of the Act, the preclusion period is from 2 September 2004 to 27 August 2008. Centrelink has already agreed to reduce that period from 2 September 2004 to 20 February 2008.

2. The Act provides relief from the strict application of the formula, by giving the Secretary a discretion to disregard the whole or part of the compensation payment in “special circumstances”: Section 1184K(1) of the Act provides as follows:

   “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.”

DISCUSSION AND FINDINGS

1. It was Centrelink’s position that, there are no special circumstances in Mr Booth’s case such that the discretion to disregard more of the compensation payments should be exercised.  Expenses associated with Mr Booth’s mother’s illness as well as repairs to his rented home in Wagga as a result of a break-in and vandalism have already been taken into account.   The Respondent contended that to further reduce the preclusion period would frustrate the object of the legislation in the absence of any circumstances in which it would be reasonable to do so. 

Are Mr Booth’s circumstances special?

1. Mr Booth had provided a number of different versions of how he spent the settlement money and consequently now finds himself destitute.  In essence though, those versions are the same, and it is only precisely how the money was spent that differs.

2. Although Mr Booth had already provided some information about his financial circumstances, at my request he provided another financial statement, received by the Tribunal on 30 June 2006.

3. Mr Booth’s evidence to the SSAT and before me was broadly consistent.  Some features of what has occurred to him since he received the settlement monies have lead me to the view that his circumstances are special and that the discretion should be exercised further.

4. Mr Booth made some decisions about spending the money which were not unreasonable: he paid back his debts (about $30,000) and made contribution to his son’s welfare (in total about $10,000) to make up for his inability to provide for him during the lean years when his work ability was affected by his injury. 

5. Mr Booth gave evidence in relation to a number of factors which I took into account in deciding to exercise the discretion in section 1184K :

• The actual sum upon which Centrelink was obliged to base its calculations was in fact about $100,000 more than Mr Booth actually received.  While it is not entirely clear, this amount seems to have been deducted by his solicitors from the settlement monies for their costs and disbursements.  It is unknown if this amount was agreed by Mr Booth in a costs agreement, but the amount, nearly a third of the settlement monies appears high.

• Mr Booth received a large sum of money – over $170,000, for which he was most likely ill-prepared as to its management.  There was no evidence that he received any financial advice in relation to the monies.

• He made some questionable business decisions – he bought equipment in anticipation of going into a business with a partner, but nothing seems to have come to fruition as far as that is concerned, and the equipment has negligible re-sale value.

• His mother, to whom he is obviously devoted, became suddenly ill.  It was thought that she would die.  He financed a trip for her to see her daughter and grandchildren overseas and he needed to accompany her as she was frail.  She became more ill later and now requires high level and ongoing institutional care.  That has been financed to a degree by renting out the mother’s home, but there remains a shortfall which he and one sister meet.  His mother is basically unable to communicate.

• One of the most unpleasant features of what has happened to Mr Booth since the settlement is that his overseas sister appears to have taken advantage of his new-found financial situation.  He lent her an amount of about $25,000.  He doubts that he will see the money returned and speaks to her only in relation to their mother’s welfare.  Furthermore the sister purported to have been paying all the mother’s household bills whereas Mr Booth later had to pay for them all himself.  The sister also, apparently induced her mother to give her a Power of Attorney and an investment property was sold and the sister retains the proceeds.  The planned sale of the mother’s house was fortuitously halted.  Two hearings were required before the Guardianship Tribunal in relation to the mother’s assets and to set aside the Power of Attorney.  The solicitors fees were in the vicinity of $8,000. 

• In addition his personal situation has created enormous stress on Mr Booth.  He feels he has “lost” both his mother and a sister.

• His other sister, with whom he had previously been staying in Sydney is “highly strung” and their relationship is under strain because of the family situation.

• Further, while his mother is incapacitated in Sydney, he feels the need to be with her.  This makes him “guilty” about being away from Wagga where his son lives.  Mr Booth rents a home in Wagga, but must “doss down” with friends while in Sydney.  This, too, upsets him, that he has to rely on the goodwill of others.

• In relation to the property he rents he had taken in others to assist paying the rent.  However, during his absences the place has been trashed, with a resulting cost of several thousand dollars. Because of his absences in Sydney he has had to expend about $1,000 to secure the premises.

• He was obliged to seek legal advice in relation to his father’s will as his step–mother “refused to show him the will”.  Suffice to say, he received nothing from his father’s apparently substantial estate, following advice from his solicitors, at a cost of $3,000, that he had poor prospects.

• Mr Booth had a serious health scare about 12 months ago, with an unidentified infection that lasted for months.  He thought he might be gravely ill, but inexplicably the condition gradually improved.  He has however required psychiatric care because of depression.

1. “Special circumstances” for the purposes of section 1184K do not have to be statistically “extreme” or “unique”, it is sufficient if there is something that takes the matter out of the usual ordinary case, (see Haidar v Secretary Department of Social Security (1998) 52 ALD 255 at 264).

2. From Mr Booth’s evidence the only rash expenditure I could identify is that of the holiday to Bali ($10,000) and about $10,000 on the poker machines.

3. Mr Booth now finds himself destitute.  He provided supporting documents to this effect from St Vincent de Paul Society dated 22 June 2006 and the Salvation Army Streetlevel Mission dated 16 June 2006, as well as letters from family and friends.

4. The Authorised Review Officer and SSAT took into account the ‘loan’ to the overseas sister, some money to his son ($4,000) and $10,000 spent on poker machines.

5. The details Mr Booth provided to me of the unfortunate occurrences since the settlement which have left him destitute, exceed the information previously considered in the reduction of the preclusion period.

DECISION

1. The decision under review is set aside and the Tribunal decides that the preclusion period is further reduced so as to end as at the date of this decision, namely 26 July 2006.

I certify that the 21 preceding paragraphs are a true copy of the reasons for the decision herein of Ms N Isenberg, Member

Signed:  Associate

Date of Hearing  26 June 2006
Date of Decision  26 July 2006
Representative for the Applicant               Mr H Booth, Self-Represented
Advocate for the Respondent                    Mr A Zhang,
  Centrelink Legal Services Branch