Brdaric and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs

[2008] AATA 1065

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 1065

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2008/2922

GENERAL ADMINISTRATIVE DIVISION		)
Re		BRANISLAV BRDARIC

Applicant

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

Respondent

DECISION

Tribunal Rear Admiral A R Horton AO, Member

Date28 November 2008 

PlaceSydney

Decision The decision under review is affirmed. 

...................[Sgd]....................

Rear Admiral A R Horton AO
  Member 

CATCHWORDS

SOCIAL SECURITY – compensation lump sum preclusion period – applicant suffered stroke - preclusion period reduced by authorised review officer – disability support pension paid from end of preclusion period – applicant seeks further reduction of preclusion period to date of stroke – disability support pension would only be payable from date of claim – consideration of special circumstances –  no further reduction of preclusion period – decision under review affirmed

Social Security Act 1991 – ss 17, 1169, 1170, 1184K

Social Security (Administration) Act 1999 – ss 11, 16

Beadle (and ors) v Director-General of Social Security (1985) 60 ALR 225

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

Secretary, Department of Social Security v Hales (1998) 82 FCR 154

Ryde v Secretary, Department of Family and Community Services [2005] FCA 866

Dranichnikov v Centrelink [2003] FCAFC 133

Angelakos v Secretary, Department of Employment and Workplace Relations (2007) 100 ALD 9

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

REASONS FOR DECISION

28 November 2008 Rear Admiral A R Horton AO, Member   

1. Resulting from a workplace accident in 1997, Mr Branislav Brdaric (“the Applicant”) received a compensation settlement in August 2001. Pursuant to section 1169 of the Social Security Act 1991 (“the Act”), Centrelink applied a compensation preclusion period commencing on 21 October 1998 and ending on 3 February 2015. Mr Brdaric was informed accordingly by letter of 24 August 2001.

2.      On 25 September 2007, Mr Brdaric lodged a claim for Disability Support Pension (“DSP”) following a stroke in late August.  Because of the preclusion period, this claim was rejected, but on review, an Authorised Review Officer (“ARO”) decided that due to special circumstances, the preclusion period ended on 9 January 2008.  Mr Brdaric was then paid DSP from 10 January 2008. 

3.       Seeking to have the DSP paid from the date of the stroke, (which would entail the preclusion period being further reduced) Mr Brdaric sought review of this decision by the Social Security Appeals Tribunal (“SSAT”).   On 27 May 2008, the SSAT affirmed the decision of the ARO that the preclusion period ended on 9 January 2008.  On 1 July 2008, Mr Brdaric sought review of this decision by the Administrative Appeals Tribunal .

4. At a hearing on 10 November 2008, Mr Brdaric was self represented. Ms Raewyn Harlock represented the Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs (“the Respondent”). The documents (T docs) provided pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 were taken into evidence as was the Respondent’s Statement of Facts and Contentions dated 28 October 2008 (Exhibit R1). Whilst Mr Brdaric variously stated that he had documentary evidence, no such evidence was made available to the Tribunal.

ISSUES

5.        The issues in this matter are:

·     whether special circumstances exist whereby part or all of the compensation preclusion period ending 9 January 2008 can be waived, such that the DSP payments can be effected from an earlier date, and if so; 

·      whether DSP can be paid for any period prior to the lodging of the claim on 25 September 2007.

LEGISLATION

6. Under subsection 17(1) of the Act, DSP is defined as a “compensation affected payment”. Under subsection 17(2)(b), compensation is relevantly defined as “a payment under a scheme of insurance or compensation under a Commonwealth, State or Territory law....(whether the payment is in the form of a lump sum or in the form of a series of periodic payments ...) that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury”.

7. Section 1169 of the Act states that a compensation affected payment is not payable to a person during a lump sum preclusion period. The rules for calculating a lump sum preclusion period are defined in section 1170. There is no dispute in this matter as to the calculations made in respect of the original preclusion period, i.e. to 3 February 2015.

8.        Section 1184K provides for some or all of the compensation payment to be disregarded if it is appropriate to do so in the light of special circumstances.     Subsection 1184K(1) relevantly states:

(1)       For the purpose 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.

EVIDENCE

9.        Born in Croatia in 1969, Mr Brdaric arrived in Australia with his parents the following year.  He completed schooling to School Certificate level, then undertook  pre-apprenticeship training as a pastry chef for 6 months.  He then decided that demolition work (and later, formwork, steel fixing and factory work) was more satisfying, albeit he retained an interest in pastry making.   From 1992 to 1994, Mr Brdaric lived with his parents in Serbia; they remained in that country when he returned to Australia.

10. In 1997, Mr Brdaric was seriously injured in a demolition work accident, initially receiving periodic compensation payments, followed by Centrelink payments, before receiving a settlement by judgment of $716,553 on 1 August 2001. Using the formula prescribed in section 1170 of the Act, Centrelink then calculated a lump sum preclusion period ending on 3 February 2015. In evidence, Mr Brdaric did not dispute the calculation of the above preclusion period (which as earlier referred to was subsequently amended to end on 9 January 2008), although he stated that he was in no position to verify or otherwise the calculations. However, he very strongly voiced his view that the compensation payment (which he recalled as being in the order of about $515,000 nett, that is as received by him), failed to take account of his strong work ethics and the taxes he had paid in the years prior to the accident. This is, of course, outside the purview of this Tribunal.

11.      The 1997 accident resulted in Mr Brdaric having a serious back injury, which he stated remains the present situation.  On his return to work, he was given mundane tasks such as cleaning the lunch room, and where he sought to do more, he had to take time off.  Following receipt of the compensation payment, Mr Brdaric travelled to Serbia in November 2001 to see his mother (his father then being deceased) and to have a holiday.  About a month later, he returned to Australia in order to prepare to move on a more permanent basis to Serbia.  He sold his “special” (drag) car, and returned to Serbia in February 2002.  He took with him two bicycles and his effects, including valuable model cars, in 14 metal containers at a freight cost of some $22,000.   

12.      Mr Brdaric married in Serbia.   He remained in that country until returning to Australia in late 2005, being divorced by that time.  Whilst in Serbia, he lived with his wife in his mother’s home at various times for a total of 6 to 12 months, and for the remaining time, in rented accommodation in Novi Sad.  In the former situation he paid no rent, but contributed to living costs.  At Novi Sad, he paid rent, which seemingly was in the order of $200 - $300 per week.  In March 2005, his mother’s home burnt down, and his evidence is that he lost most of his possessions, including one bicycle, between 2 and 3 thousand euros in cash – which he had withdrawn from his bank as he felt that the bank had a problem - and his paper records.

13.      By the time of his return to Australia in late 2005, Mr Brdaric had spent the compensation payment, that is about $515,000.   He obtained residence in a boarding house at Belmore at $90 per week, and worked casually for one or two days per week, being inhibited from full-time work by recurring back problems.  His evidence is that he earned sufficiently to enable him to live frugally, but that he was reasonably comfortable in that situation.  Circumstance changed dramatically in August 2007, when he suffered a stroke and could no longer work (as evidenced in various medical reports in the T documents), a situation that pertains to the present. 
He has pensioner concession in respect of medication, and he takes some 5 tablets daily.

14.      In the resultant period after the stroke until the DSP was granted from 10 January 2008, Mr Brdaric borrowed some $6,500 from friends and acquaintances in order to pay rent and meet his living expenses.  That debt now stands at about $5,500 and Mr Brdaric stated that he is being pressured by some to repay his debts.  No detail is before me as to the persons to whom Mr Brdaric is indebted.  In early 2008, Mr Brdaric moved into public housing accommodation, this leading to a reduced rental charge (approximately $60 per week).  I note that Mr Brdaric has an advanced payment (loan), that is being paid back through his normal DSP payments. 

Compensation Payment Expenditure    

15.      In seeking review of the original decision in November 2007, which denied  eligibility for DSP because of the extant preclusion period, Mr Brdaric completed a Statement of Expenditure and Circumstances (T24 of 28 November 2007), which specifically addressed compensation settlement payment expenditure.  I accept that much of the details are, at best, an approximation as best remembered by Mr Brdaric, and this became evident in cross examination. Nonetheless, review of that expenditure, whereby all settlement monies were expended in a four year period is  relevant when considering whether there are special circumstances which might lead to a further reduction in the preclusion period pursuant to section 1184K(1). 

16.      Significant expenditures, as detailed on Mr Brdaric’s statement, and that were questioned by the Respondent, include such items as clothing ($100,000), car ($22,000), gifts ($18,000) and various holiday expenses, including travel (totalling $122,000).  Mr Brdaric described himself as a person who bought nice things such as clothing, and did not care about the costs.  He saw that as a means of restoring “self esteem” following the work accident.  He never stayed “in less than 5 star accommodation”;  in the four year period he holidayed in Australia prior to moving to Serbia in November 2001, and then in Paris and Thailand (twice).   He spent lavishly on gifts for his wife and family.  He placed his settlement monies predominantly in an Australian bank – no records have been provided to the Tribunal – as well as a French bank in Serbia. 

17.      When asked how he expected to live after returning from Serbia in 2005, Mr Brdaric stated that he expected his wages from work in the demolition and formwork industries would be adequate for his lifestyle, that he would have no recourse for outside help, such as from social security, for the duration of the preclusion period.  Unfortunately, the stroke changed the situation. 

CONSIDERATION

18.       The above describes Mr Brdaric’s situation and addresses the reasons given by him as to his expenditure of the compensation settlement monies.  As indicated earlier, Mr Brdaric sees that the compensation payment as determined, and as received by him, was inadequate given his work ethic, his years as a tax payer, and the ongoing back problems resulting from the accident.  In that context, he further sees that the effect of the stroke on his ability to work could not be foreseen, and accordingly, the date of his eligibility for the DSP should be based on that event.  He questioned the reason for the ARO varying the preclusion period to end on 9 January 2008, when he considered it would have been more appropriate to have the period end on the date of the stroke, when he was no longer able to work.

19.      The Respondent submitted that even if a decision is taken to end the preclusion period earlier than that presently before the Tribunal, the earliest date of DSP eligibility would be 25 September 2007, the date of lodgement of the claim, rather than the date of the stroke. That said, the Respondent submitted that no further reduction in the preclusion period was warranted;  the original preclusion period of some 16 years has been reduced by 7 years or almost half, a significant concession.  Further, the Respondent opined that Mr Brdaric had recklessly expended in just a few years his settlement monies, that he had “lived it up”, and had failed to consider the long term implications.

20.      Ms Harlock said that there is no suggestion that Mr Brdaric did not understand that he would not be eligible for any compensation affected payment until the end of the preclusion period, nor that he had not understood the date at which the preclusion period would expire.   As to his outstanding debts, Mr Brdaric has already shown a capacity to reduce the debt, and he needs to reassure those concerned of his intentions to repay his debts.   In summary, the Respondent  submitted that the circumstances are such that further amelioration under the provisions of section 1184K(1) in respect of special circumstances is not appropriate.

21.      The term “special circumstances” is not defined in legislation, but the term has been considered by both this Tribunal and the Federal Court. The interpretation put forward by the Tribunal, with Toohey J presiding, in Re Beadle and Director General of Social Security (1984) 6 ALD 1, has been widely followed, and states that:

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.

22.      That Tribunal went on to say that ”the existence of “special circumstances” is to be determined from all the circumstances...” which in the context of the matter, before that Tribunal, related to an application for a handicapped child’s allowance. That "all the circumstances" should be considered in this matter is supported by the words of the Full Federal Court in dismissing an appeal against the above decision (Beadle (and ors) v Director-General of Social Security (1985) 60 ALR 225), wherein it was stated at 228 in respect of whether special circumstances were evident in the delay in making a claim:

More difficult would be questions of ignorance, illiteracy, isolation, illness and the like. It would depend upon the circumstances of the particular case whether these constituted special circumstances. We do not think it is possible to lay down precise limits or precise rules.

23.      Such a view was subsequently endorsed by the Full Federal Court in Dranichnikov v Centrelink [2003] FCAFC 133; (2003) 75 ALD 134 at [66] – [67].
Kiefel J in Groth v Secretary, Department of Social Security (1995) 40 ALD 541 observed that:

... although imprecise [it] is sufficiently understood not to require judicial gloss: Beadle’s case [(1985) 60 ALR 225, 7 ALD 670] (at ALR 229; ALD 674), and for present purposes it is sufficient to observe that it would require something to distinguish Mr Groth’s case from others, to take it out of the usual or ordinary case... It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.

24.      More recently, Besanko J concluded in Angelakos v Secretary, Department of Employment and Workplace Relations (2007) 100 ALD 9 that there must be something that distinguishes the case from the ordinary or usual cases, stating:

I also note that the authorities have emphasised time and again the importance of maintaining flexibility in determining what constitutes special circumstances. The danger is that the test will be overstated if the word “exceptional” is emphasised. It was not the intention of parliament to confine the exercise of the discretion to an exceptional case. There is less risk of overstatement if the words “unusual” or “uncommon” are emphasised. Those words indicate, correctly in my view, the fact that there must be something that distinguishes the case from the ordinary or usual case. It may not be easy to postulate the ordinary or usual case other than in quite general terms and, in doing so, close attention must be given to the particular statutory context.

25.      Besanko J also referred to the view of French J in Secretary, Department of Social Security v Hales (1998) 82 FCR 154 that financial hardship was not necessary in order to make a finding of special circumstances. Ryde v Secretary, Department of Family and Community Services [2005] FCA 866 must also be taken into account in that Branson J observed (at [25]) that “The Full Court in Beadle did not endorse the view expressed by the Tribunal in Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 3 that circumstances are special only if they are ‘unusual, uncommon or exceptional’.” Her Honour considered that the “hardship or unfairness” referred to by French J in Re Hales must be sufficient to justify departure from the general rule in a particular case.

26.      Following Besanko J in Angelakos, it is necessary to distinguish the situation of Mr Brdaric from the ordinary or usual case. It is appropriate to do that in the context of persons in receipt of social security payments, or having to meet with the privations or limitations that may be imposed upon them in that situation. Here I find that the circumstances of Mr Brdaric are not such as to be considered unusual or out of the ordinary in the above context.

27.      There is no doubt from his evidence that Mr Brdaric had no intention of resorting to social security payments once he had exhausted his settlement monies.  The stroke in August 2007 unfortunately changed all that.  So too, it lead to health problems requiring medical consultations and medication.  Nonetheless, virtually by his own admission, he spent his settlement monies “recklessly”, consuming about $515,000 in four years, much being in respect of luxury items and holidays.  He clearly paid no real regard to the prospect of financial difficulties in the remaining 10 years of preclusion after his return from Serbia in 2005. 

28.      The decision of the ARO to reduce the preclusion period by 7 years, showed a generous understanding of the situation that Mr Brdaric had in effect brought upon himself.  The varied preclusion period ended on the date of the ARO decision, that is 9 January 2008.   To further vary the preclusion period would, in my view, place Mr Brdaric in a situation whereby he receives a benefit not normally available to others in a similar situation.  Given that he incurred a debt of $6,500 when unable to work after his stroke and that he has been able to reduce that debt to some $5,500, his financial situation is not, in my view, markedly different to others in receipt of social security payments.  As to his health, his inability to work and his need for medication and treatment, places him in a similar situation to many in receipt of the DSP.  That is, his circumstances are not unusual or uncommon. 

29.      In summary, I do not consider that there are any special circumstances in evidence, and it is therefore not appropriate to further treat any part of his compensation payment as not having been made.

DECISION

30.       I therefore affirm the decision of the Social Security Appeals Tribunal of 27 May 2008 to reject the claim by Mr Brdaric to amend the date of eligibility for the Disability Support Pension by further varying the compensation preclusion period.

I certify that the 30 preceding paragraphs are a true copy of the reasons for the decision herein of Rear Admiral A R Horton AO, Member

Signed:         ................[Sgd]...........................
  Ms Radhika Prasad, Associate

Date of Hearing  10 November 2008
Date of Decision        28 November 2008
Appearance for the Applicant        Self-Represented
Appearance for the Respondent    Ms Raewyn Harlock, Centrelink legal
  services