BOURKE and SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

[2010] AATA 321

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 321

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2010/0007

GENERAL ADMINISTRATIVE DIVISION		)
Re		LISA BOURKE

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Professor RM Creyke, Senior Member

Date4 May 2010

PlaceBatemans Bay, NSW

Decision The decision under review is affirmed. This means the decision of the Social Security Appeals Tribunal stands.

...................[sgd]...............

Professor RM Creyke, Presiding Member

CATCHWORDS

SOCIAL SECURITY – Applicant received two lump sum compensation payments for work injury, attracting a compensation preclusion period for her Disability Support Pension – warned of preclusion period – applicant did not contact financial information services officer as suggested – acquired significant assets with compensation monies – substance abuse –circumstances did not justify ‘special circumstances’ waiver – decision under review affirmed.

Social Security Act 1991 (Cth) ss 17, 1169, 1170, 1171, 1184K

Re Angelakos and Secretary, Department of Employment and Workplace Relations [2007] FCA 25

Re Beadle and Director-General of Social Security (1984) 6 ALD 1

Beadle v Director-General of Social Security (1985) 7 ALD 670

Re Colaiacolo and Secretary, Department of Social Security [1985] AATA 91

Dranichnikov v Centrelink [2003] FCAFC 133

Re Groth and Secretary, Department of Social Security (1995) 40 ALD 541

Re Krzywak and Director-General of Social Services (1988) 15 ALD 690

Re Ivovic and Director-General of Social Services (1981) 3 ALN N95

Re Zaccardi and Secretary, Department of Social Security (1995) 40 ALD 760

5 May 2010  REASONS FOR DECISION

Professor RM Creyke, Senior Member

1.      Ms Lisa Bourke was injured at work on 17 December 1999.  On 4 February 2000, she lodged a workers’ compensation claim in relation to the injury.  Ms Bourke had been in receipt of disability support pension until November 2008.

2.      On 18 December 2006 Centrelink was notified that Ms Bourke had a workers’ compensation claim in progress.  From 11 February 2000 to 24 October 2008, Ms Bourke received periodic compensation payments totalling $33,190.80.

3.      On 30 January 2008, Ms Bourke received a lump sum of $44,000 for pain and suffering.  On 27 February 2008 Centrelink was advised that the lump sum payment had been made to Ms Bourke.

4.      On 28 February 2008, Centrelink advised Ms Bourke that there was no Centrelink charge in relation to the payment made and no compensation preclusion period would apply.  However Ms Bourke was advised in that letter that if she received a subsequent compensation payment Centrelink would total all her payments and could impose a compensation preclusion period.

5.      On 3 October 2008, Ms Bourke’s compensation claim was settled for $180,000 and this amount was paid to Ms Bourke’s solicitors on 24 November 2008.

6.      On 18 November 2008, Centrelink reassessed the effect of the multiple payments to Ms Bourke and imposed a compensation preclusion period to commence on 25 October 2008 and end on 22 July 2011.  Centrelink also calculated the Centrelink charge amount to be $10,645.33.

7.      On 18 November 2008, Ms Bourke’s disability support pension was cancelled and she was told she would not be eligible for another pension until 22 July 2011.  On 20 November 2008, Centrelink advised Ms Bourke’s representative that an amount would be deducted from Ms Bourke’s compensation payment due to her receipt of arrears of periodic compensation. At the hearing, Ms Bourke acknowledged that at the time of the settlement of her compensation claim, her solicitor had advised her there might be a compensation preclusion period.

8.      On 20 November 2008, Centrelink notified Ms Bourke that a compensation preclusion period had been imposed and advised her to contact the Centrelink Financial Information Services Officer or the Compensation Recovery Team who would explain the impact of the preclusion period.  At the hearing, Ms Bourke admitted that she did not follow up this suggestion. 

9.      On 26 November 2008, Ms Bourke asked for a review of the decision to impose the compensation preclusion period as she did not believe the period was correctly calculated.  However, Centrelink affirmed the decision and also advised her how the period had been calculated. 

10.     On 20 January 2009, Centrelink again contacted Ms Bourke to ensure she was aware of the impact of the compensation preclusion period and to offer her an appointment with the Centrelink Financial Information Services Officer. The information was repeated in a follow-up letter that day.  The offer was not acted upon.

11.     On 9 October 2009, Ms Bourke contacted the original decision maker asking for a review of the compensation preclusion period saying she was in financial hardship.  The decision to impose the compensation preclusion period was affirmed on 20 October 2009 on the ground that there were no special circumstances to justify varying the period.

12.     On 21 October 2009, Ms Bourke lodged an application for disability support pension, which was rejected on 22 October 2009.  That decision was upheld on review by an Authorised Review Officer on 6 November 2009.  Ms Bourke then appealed to the Social Security Appeals Tribunal which affirmed the decision on 10 December 2009.  Ms Bourke then appealed to the Tribunal on 4 January 2010.

Legislation

13.       The relevant legislation is the Social Security Act 1991 (Cth) (Act). Section 1171 of the Act provides that if a person receives two or more lump sum payments in relation to the same event which gave rise to the compensation payments, and at least one of which is for lost earnings or lost capacity to earn, then compensation affected payments, including disability support pension,[1] are not payable to the person during a lump sum preclusion period.[2]  What is ‘compensation’ and the ‘compensation part’ of the lump sum is defined in section 17(1) of the Act. The Act also defines what is the ‘period payments period’[3] and ‘receives compensation’.[4]  The calculation of the compensation preclusion period is set out in section 1170 of the Act.

[1] Social Security Act 1991 (Cth) s 17(1).

[2] Id s 1169.

[3] Id s 17(1).

[4] Id s 17(5).

14.     The ‘income cut-out amount’ is defined in section 17(1) of the Act as an ‘amount worked out using the formula in subsection (8), as in force at the time when the compensation was received.’

15.     Whether all or part of the compensation preclusion period can be disregarded depends on whether there are ‘special circumstances’.  Section 1184K(1) of the Act provides:

Secretary may disregard some payments

1184K(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.

Issues

16.     The issues are:

·Whether Ms Bourke is subject to a compensation preclusion period?

·If so, whether the preclusion period has correctly been calculated? and

·Whether there are any special circumstances that warrant disregarding all or part of the lump sum compensation payment?

Evidence and consideration

17.     Ms Bourke impressed the Tribunal as a witness of truth who attempted carefully to recall her expenditure over the previous 18 months.  She also conceded that she had not always been wise about her expenditure.  In particular she noted that monies she has expended for the benefit of her husband, in the hopes that the relationship could be salvaged, appear to have been payments made in vain. For example, Ms Bourke said that the money she lent her husband to assist him to purchase a car and to pay off an existing car loan is not likely to be recoverable.

18.     Although Ms Bourke conceded at the hearing that her solicitor had advised her at settlement that she could face a preclusion period, she said when she received a letter dated 28 February 2008 from Centrelink via her solicitors following receipt of her initial payment of $44,000, which said no compensation preclusion period would be imposed, she had assumed that this was the final notification.

19.     She also conceded that when she was notified that a compensation preclusion period had been imposed, and that she could seek advice about the implications from the Centrelink financial advice service, she had done nothing.  In part she said this was because she thought Centrelink would make an appointment for her to see them.  She accepted with hindsight that this was not sensible.

20.     Ms Bourke gave evidence to the Tribunal on how she had expended the sums she had received which had resulted in her being in financial hardship.

21.     Ms Bourke agreed that she had received $44,000 for pain and suffering, and $180,000 for the settlement of her claim.  In total this amounts to $224,000.  Ms Bourke was required to pay back an amount of $793.35 from the settlement amount. That means she received $223,206.65.  The ‘compensation part’ of that lump sum is $111,603.32, being 50 per cent of that amount.  That amount was correctly calculated.

22.     The compensation preclusion period is calculated by dividing the compensation part by the figure for the ‘income cut-out amount’.  That amount in November 2008 was $778.88.  When $111,603.32 is divided by $778.88, the result, rounded down, gives a figure of 143 weeks.  That figure was correctly calculated. 

23.     As Ms Bourke received periodic compensation payments until 24 October 2008, Ms Bourke’s compensation preclusion period commences on 25 October 2008[5] and continues until 22 July 2011.  That number of weeks has been correctly calculated.

[5] Id s 1170(1).

24.     Ms Bourke has received some board from her son Daniel at $100.00 a week while he was living with her.  He is no longer doing so.   His girlfriend had also been paying board of $50.00 a week for some 8 weeks.  Ms Bourke has also had some casual work for about 4 to 5 weeks in Mogo when she was working 10 to 15 hours a week.  She has been to the job agency over 20 times seeking work and had an interview the day after the hearing.  She had also been shortlisted for a job with the Bateman's Bay hospital but had ultimately not been successful.  However, she is hopeful in time that she will obtain employment.

Special circumstances

25.     The final issue is whether there are any special circumstances which justify the Secretary disregarding all or part of the compensation payment.[6]  For there to be 'special circumstances', the circumstances must be unusual, uncommon or exceptional.[7]  They do not have to be unique but they do need to have 'a particular quality of unusualness that permits them to be described as special'.[8] In  Dranichnikov v Centrelink[9] the Full Court of the Federal Court said of the similar expression, ‘special reasons’:

Other cases which have considered analogous words such as ‘special reasons’ have tended to conclude, albeit in different contexts, that what is required will be circumstances which distinguish the case in consideration from the usual case. There will be a requirement that the circumstances are such that takes the case out of the ordinary.[10]

[6] Id s 1184K(1).

[7] Re Beadle and Director-General of Social Security (1984) 6 ALD 1, 3. See also Re Groth and Secretary, Department of Social Security (1995) 40 ALD 541; Re Ivovic and Director-General of Social Services (1981) 3 ALN N95; Re Angelakos and Secretary, Department of Employment and Workplace Relations [2007] FCA 25.

[8] Re Beadle and Director-General of Social Security (1984) 6 ALD 1, 3. The finding was upheld generally on appeal by the Federal Court in Beadle v Director-General of Social Security (1985) 7 ALD 670 although Toohey J said he would place 'less emphasis on one dictionary definition of "special"' (at 675).

[9] Dranichnikov v Centrelink [2003] FCAFC 133.

[10] Id at [66].

26.     In the frequently cited reasons in Re Beadle and Director-General of Social  Security[11] the Tribunal said:

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.[12]

[11] Re Beadle and Director-General of Social Security (1984) 6 ALD 1.

[12] Id at [12].

27.     Specific factors which are commonly relied on to decide whether the circumstances are ‘special’ are financial hardship, limited assets, how the lump sum was spent, and ill health.[13]  Other relevant factors taken into account under the Social Security Guide at 4.13.4.20, 'Factors to Consider When Determining Special Circumstance Provisions’, are: emotional state, addictions and decision-making capacity, and incorrect or insufficient legal advice.

Financial hardship

[13] P Sutherland Annotations to the Social Security Act 1991 (2nd ed.) (The Federation Press, 2005) 510.

28.     Financial hardship on its own is insufficient to qualify as special circumstances.  The cases also indicate that financial hardship must go beyond 'straitened' circumstances and be able to be classed as exceptional.[14] As the Tribunal noted in Re Colaiacolo and Secretary, Department of Social Security:[15] 

It is surely correct, on the basis of the evidence, that the applicant and those members of his family still dependent on the combined incomes are by no means well off financially. However, I cannot escape the conclusion that straitened as the financial circumstances are, they are not exceptional. Even if they were, the Tribunal has previously ruled that the financial position of an applicant would not ordinarily constitute a 'special circumstance'.

[14] Re Krzywak and Director-General of Social Services (1988) 15 ALD 690, 700; Re Zaccardi and Secretary, Department of Social Security (1995) 40 ALD 760.

[15] Re Colaiacolo and Secretary, Department of Social Security [1985] AATA 91, para 20.

29.     Ms Bourke gave evidence that the lump sums she received were expended as follows:

ITEMS

EXPENDITURES

Legal fees to solicitor

$53.832.94

Centrelink charge

$10,654.33

Car for herself

$19,900.00

Car for husband

$9,000.00

Finalisation of payment for husband’s utility vehicle (ute)

$12,000

Orthopaedic bed

$1,895.00

Treadmill

$1,500.00

Weights (for husband)

$1,900.00

Sleep apnoea machine (for husband)

$2,500.00

Non-elective surgery for husband for his pituitary condition

$9,000.00

Accommodation while husband in hospital (for herself)

$450.00

Health fund premiums for herself & family from July 2009 to July 2010

$1,900.00

Refrigerator

$2,020.00

Spectacles for herself and one child

$1,200.00

Orthopaedic shoes

$300.00

Laptop computer

$1,500.00

New television

$700.00

Car repairs and 4 new tyres

$1,674.00

Dentist fees for 2 children

$800.00

Tallboy drawers x 2

$1,390.00

Mower repairs

$109.80

Back massager

$318.95

Household bills

$8,772.83

20 weeks’ support for her unemployed son

$3,000.00

Sub-total:  $146,317.85

REGULAR OUTGOING EXPENSES

Rent (until Dec. 2009)

$116.00 pw x 61 weeks = $7,076.00

Rent (since Jan. 2010)

$56.00  pw x 16 weeks = $896.00

Water & Sewerage rates (until Dec. 2009)

$25 pw x 61 weeks

= $1,525.00

Water & Sewerage rates (Jan – Feb 2010)

$16.00 pw x 8 weeks

= $128.00

Water & Sewerage rates (March 2010 – hearing date)

$6.00 pw x 8 weeks

= $48.00

Home contents insurance (until Dec 2009)

(Insurance now discontinued)

$20.00 pw x 61 weeks

= $1,220.00

Electricity (until Dec 2009)

$29.20 pw x 61 weeks

= $1,781.20

Electricity (since Jan 2010)

$8.83 pw x 16 weeks

= $141.28

Gas (until Dec 2009 only)

$33.33 pw x 61 weeks

= $2,033.13

Telephone (until Dec 2009)

$20.83 pw x 61 weeks

= $1,270.63

Prepaid mobile phone (since Jan 2010)

$2.00 pw x 16 weeks

= $32.00

Car registration (12 months to end Mar 2010)

= $700.00

Car insurance (12 months, until end Dec 2009)

= $737.00

Petrol (until Feb 2010)

(No longer able to afford)

= $40.00 pw x 69 weeks = $2,760.00

Food & Groceries

$250.00 pw x 77 weeks

= $19,250.00

Medical expenses (until Dec 2009, Doctor now bulk bills)

$75.00 pw x 61 weeks

= $4,575.00

Chemist expenses (until Dec 2009)

$25.00 pw x 61 weeks

= $1,525.00

Clothing (until Dec 2009)

$20.00 pw x 61 weeks

= $1,220.00

Cannabis use (until 27 October 2009; for herself and husband)

Use resumed in April 2010

$225.00 pw x 51 weeks

= $11,475.00

$225.00 x 3 weeks

= $675.00

Sub-total:  $59,068.24

Total:   $146,317.85

+ $59,068.24

= 205,386.09 

30.     Ms Bourke can account for some $205,386.09 of the $223,206 she received as a result of the two compensation settlement amounts.  That means she should still have a balance of some $17,000 to $18,000.  In addition, Ms Bourke has received some income from board paid by her son Daniel and his girlfriend.  Daniel obtained work in August 2009 and paid board until January 2010.  She herself has also had some part-time casual work in Mogo for January to February 2010 and has been diligently seeking work via an employment agency since she has been at Batemans Bay.  For a while prior to November 2007, she had a job at Queanbeyan Hospital but when she was asked to mop floors and do other cleaning these activities exacerbated her back condition and she quit.

31.     At the same time, the Tribunal accepts Ms Bourke's evidence that since she has been living at Bateman’s Bay she has had to seek financial assistance from the St Vincent De Paul Society and the Salvation Army, that she cannot afford petrol at present, that her daughter while she was living with her between December and March 2010 had on occasions to buy food for them both, and that Ms Bourke has not been able to fill her prescriptions for her medication. 

32.     So although the Tribunal has no reason to doubt Ms Bourke when she says she currently has no money, there remains a discrepancy in the figures which should be in her favour.  In those circumstances, Ms Bourke is not in the level of straightened financial circumstances which would justify exercising the 'special circumstances' discretion on this ground alone.

Limited assets

33.     Ms Bourke pays reduced rent for the house in which she is living in Batemans Bay, and she has a car which cost $19,990, has undergone repairs, and has had new tyres.  Her house is furnished, and she has a new refrigerator, television and computer, a treadmill, and an orthopaedic bed.  In terms of her assets, she is, therefore, not in an unusual or uncommon position.  Ms Bourke does not have a credit card and at present has no other debts.

How lump sum was spent

34.     The figures indicate that Ms Bourke should have some $17,000 to $18,000 left from the compensation settlement monies she received.  That figure would have been augmented had her husband accepted the obligation to repay the $9,000 Ms Bourke lent him towards the cost of a car and the $12,000 she also lent him to pay off the loan on his utility.  That money was to be repaid when he sold his utility.  However, Ms Bourke said his intention now is to sell the utility and the car and to use the money to pay for a new automatic car for himself and that he has no intention of repaying her.

35.     Other financial outlays are that Ms Bourke has on occasion lent $50 to her daughter for petrol, which was not always repaid.  She also lent $2,900 to her son Daniel when he purchased a quad bike in the middle of 2009.  While he was in employment he had been repaying her at $80.00 a week, but this amount ceases when he is no longer working.  The Tribunal is also concerned that the letter from the Mental Health Worker in the NSW Greater Southern Area Health Service dated 14 April 2010 suggests Ms Bourke may again be relying on cannabis since it is not clear how she can afford to pay for the substance.  On a more positive note, the Tribunal is aware that Ms Bourke has an appointment in May 2010 with the Drug and Alcohol Service for assistance with her cannabis use.

36.     Ms Bourke accepts that not all her expenditure has been wise and she should have taken financial advice to ensure she could continue to live on the over $223,000 she received so that she could survive until July 2011. In these circumstances, Ms Bourke was aware that she needed to husband some of the remaining monies in order to live.  Expenditure of an amount of $19,900 on a car is surprising in those circumstances. 

37.     In summary, given Ms Bourke's assets and how she spent the lump sum compensation monies, her financial circumstances are not so unusual or uncommon as to amount to 'special circumstances'.

Poor health

38.     Despite an operation to repair a torn rotator cuff in her right shoulder, and further surgery in September 2008 on her spine to insert a Wallis device, Ms Bourke continues to suffer chronic pain and has limited mobility, strength, and ability to lift, stand and sit for any length of time due to her back injury.  She has four different conditions in her back: a disc herniation at L4/5, scoliosis of the back, Bertolotti’s syndrome and Scheuermann’s disease.

39.     As a consequence of her long-term cannabis use which she took to relieve her loneliness, her depression and for pain relief, she has been left with poor memory and concentration problems and it has been accepted that these conditions and her substance abuse affected her judgment during the period after she received her settlements monies.  She is at risk of depression at present because she cannot afford to take her anti-depressant medication. Ms Bourke has prescriptions for Temazepam and Valium for assistance with sleeping, and Tramal and Endone for pain relief. 

40.     She has not been able to continue taking these medications, since she has not been able to afford to pay for the prescriptions.

41.     However, on its own, her ill health is only one factor in the several factors which are considered when special circumstances are being considered and are not sufficient of themselves to justify waiving all or part of the compensation preclusion period.

Emotional state, addictions and decision-making capacity

42.     Some time in late 2007 according to her evidence, Ms Bourke commenced smoking 'huge amounts of marijuana'.  She said she found that 'smoking alleviated both [her] pain, loneliness and depression'.  At that time, Ms Bourke was also having high doses of narcotic strength painkillers' and these 'deadened not only my pain but also my ability to remember, concentrate, understand and communicate and my general awareness of what was happening in my day to day life'.  This continued until August 2009 when her painkillers were reduced and she said she became aware of the 'devastating effect that smoking had on [my] mind, personality and ability to function an everyday normal life'.  When Ms Bourke moved to Batemans Bay she did seek assistance from the NSW Greater Southern Area Health Service for her addiction but the request was not actioned.  She has made a subsequent request, however, and is to see a counsellor in May 2010.

43.     Ms Bourke was notified in November 2008 by Centrelink that a compensation preclusion period would be imposed and her disability support pension was cancelled.  From that time she has been aware that the money she received would be her sole income until July 2011 unless she was able to be employed.  The Tribunal takes into account the effect on her mental functioning and decision-making ability of her cannabis use during this period, but finds that the significance of the information about her financial circumstances, aided by the cessation of her disability support pension, means she should have been aware of and taken some action to protect her financial position on receipt of the sums she received.

Incorrect or insufficient legal advice

44.     Although Centrelink advised Ms Bourke on 28 February 2008 that she would not have a compensation preclusion period imposed, at that time only her $44,000 compensation sum had been awarded.  That letter did warn her that if she received a further lump sum payment for the same incident she would be subject to a compensation preclusion period.

45.     Ms Bourke has conceded that her solicitor also advised her of the potential for a compensation preclusion period to be imposed following her receipt of a lump sum compensation payout. Indeed, her solicitor contacted Centrelink in September 2008 seeking information about a compensation preclusion period once the settlement monies, anticipated for December 2008, had been received.  He was advised, in a section of the form completed by Centrelink that, based on the predicted settlement figures, there would be a compensation preclusion period which would commence on 13 September 1999 and end on 17 March 2002. 

46.     It is not clear whether the solicitor’s warning to Ms Bourke was provided before or after receipt of this information from Centrelink.  If before, the advice from her solicitor that Ms Bourke could be subject to a compensation preclusion period would be consistent.  If afterwards, since the dates for the compensation preclusion period in the form were already past, it would not have been surprising that her solicitor assumed that she would not be precluded from continuing to receive disability support pension from December 2008 onwards.  The Centrelink advice on the form was clearly incorrect. Ms Bourke also gave evidence that following settlement her solicitor did not return her calls so she was unable to seek his advice. In those circumstances, it is less surprising that Ms Bourke did not consider she would be subject to a compensation preclusion period once her settlement monies had been received.

47.     However, from November 2008, Ms Bourke received the correct advice from Centrelink that she would be subject to a compensation preclusion period and was informed of the actual dates of the compensation preclusion period.  In addition her disability support pension ceased in November 2008.  She was put on notice by that advice and by the withdrawal of her income support.  Despite these developments she did not respond to an offer of financial advice from Centrelink made in November 2008 and repeated in January 2009.  In those circumstances, even allowing for the impact on her decision-making ability of her cannabis use at the time, Ms Bourke would have known that she was not going to receive income support and needed to husband her monies.  Her failure to take steps to seek advice about how to do so is, therefore, not excusable.

Conclusion

48.     On balance, although Ms Bourke's health is at risk, she has a capacity for work and because she is actively seeking work, is likely to be successful in time.  She has adequate assets.  She is in difficult financial circumstances until she obtains employment but that is in part because she has not expended the lump sums she received as wisely as she should and did not take financial advice about how best to manage.  Even allowing for some poor Centrelink advice, the failure of her solicitor to be accessible, and the impact on her decision-making ability of her substance abuse, her circumstances overall, taking account of all the factors, are not so unusual or exceptional as to justify waiving some or all of the compensation preclusion period. As a consequence, the Tribunal affirms the decision of the Social Security Appeals Tribunal to uphold the period of compensation preclusion which is in force until 22 July 2011.

I certify that the 48 preceding paragraphs are a true copy of the reasons for the decision herein of Professor RM Creyke, Senior Member.

Signed:         ..........................[sgd]..............................
  C. Kocak, Associate

Date/s of Hearing  20 April 2010
Date of Decision  4 May 2010 
Solicitor for the Applicant          Self-represented
Solicitor for the Respondent     Centrelink Legal Advocacy Branch