Bus and Secretary, Department of Employment and Workplace Relations
[2006] AATA 155
•24 February 2006
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2006] AATA 155
ADMINISTRATIVE APPEALS TRIBUNAL )
) No V2005/998
GENERAL ADMINISTRATIVE DIVISION ) Re WENDY BUS Applicant
And
SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS
Respondent
DECISION
Tribunal Mr John Handley, Senior Member Date24 February 2006
PlaceMelbourne
Decision The decision under review is set aside and in substitution IT IS DECIDED that the period of preclusion should end upon delivery of this decision. The compensation payment otherwise referrable to the period between the date of this decision and 1 December 2008 should be treated as not having been made. ..............................................
Senior Member
SOCIAL SECURITY‑ preclusion period of nine years imposed following damages settlement of $400,000 – applicant subsequently separated, divorced and lost home in property settlement – maintenance not paid for dependent children – monies invested extinguished at October 2005 – preclusion period to end 1 December 2008 – applicant without income and dependant on allowances from her welfare dependent children – circumstances special – preclusion period to end on delivery of decision – decision set aside
Social Security Act 1991 (Cth) s 17 (1) and (3) and s 1170 and s 1184
Secretary to the Department of Family and Community Services v Allan (2001) 66 ALD 147
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Secretary, Department of Family and Community Services v Chamberlain [2002] FCA 67
Department of Social Security v Smith (1991) 13 AAR 454
Kirkbright v Secretary, Department of Family and Community Services (2001) 32 AAR 120
REASONS FOR DECISION
24 February 2006 Mr John Handley, Senior Member 1. This application concerns the review of a decision to impose a nine year preclusion period upon the applicant who settled common law proceedings, in an amount of damages, following severe injuries in her former workplace.
2. The circumstances giving rise to that decision may be briefly summarised as follows.
3. Mrs Bus was a nurse at the St John of God Hospital in Ballarat. She suffered severe back injuries in 1994 when assisting to lift a patient from a seated position. She has subsequently been totally incapacitated and has had spinal surgery on four occasions involving a fusion at two levels. She has also had a spinal stimulator inserted. Weekly compensation was paid under the Victorian workcover system until 16 November 1999 when a claim for damages that had been issued by her was settled in the sum of $400,000. The respondent imposed a preclusion period from 16 November 1999 until 1 December 2008.
4. By this application, Mrs Bus alleges that her circumstances are special and the period of preclusion should be reduced. That can be achieved if, by this review, it is decided that the whole or part of her compensation payment should be treated as either not having been made or not liable to be made (refer s 1184K of the Social Security Act 1991 (“the Act”)).
5. For the purposes of this application there was no dispute between the parties that the monies received by Mrs Bus were “compensation” and the disability support pension (“DSP”) for which she has applied is a “compensation affected payment”. Additionally there is no dispute between the parties that the period of preclusion was properly calculated and that only the “compensation part of a lump sum compensation payment” was considered (refer s 17(1) and (3) and s 1170 of the Act).
6. Mrs Bus was represented in her common law proceedings by a firm prominent in Victoria in personal injuries litigation. She said that she was advised by her solicitors not to settle in the sum of $400,000, because it was likely that she would achieve a greater sum from a jury verdict. In fact she recalled that her solicitors asked her to sign what appears to have been an indemnity by reason of her rejecting the advice not to accept the sum of $400,000. She recalled that she was pressured by her husband to settle in that sum, he being a person described by her as being abusive and threatening. Additionally she said that she was overwhelmed by painkilling medication she was then consuming, some of which also included morphine. Mrs Bus acknowledged that she was advised by her solicitors that she would be exposed to a period of preclusion but said that she thought that it would only apply during the time that she lived with her partner.
7. Approximately two years after the date of settlement, Mrs Bus and her husband separated. Family Court proceedings were issued including proceedings to settle the distribution of property. In the interim, Mrs Bus had engaged a share broking firm and invested $300,000 from the settlement funds into a share portfolio which apparently was designed to provide her with regularity of income. The balance of the compensation funds was expended upon legal costs, household items, medical and dental costs for her children and extinguishing other debts.
8. The property proceedings were resolved upon the basis that in consideration of her husband not making any claim upon her for a payment from the monies invested she agreed to transfer to him her interest in the former matrimonial home, including her liability over a mortgage which was registered in favour of his mother. Additionally it was agreed that her husband would not be liable for maintenance of the children but would be responsible for the payment of school fees and private health insurance.
9. Mrs Bus thereafter purchased a home for herself and her children in the sum of $170,000. A mortgage to the ANZ Bank was also obtained in the sum of $49,000. It was intended that the income upon the interest generated from the share portfolio would meet mortgage repayments.
10. Mrs Bus described her former husband as being emotionally violent and abusive to her and physically violent to the children. It would appear that one of the children, Joshua, currently aged 19 years, has frequently exhibited violent behaviour. He has not threatened Mrs Bus but has threatened his sister with a knife. He has also damaged household property with a hammer and other instruments. The property has required replacement. He has also caused extensive damage to motor vehicles which have been purchased and repaired by Mrs Bus out of her invested funds.
11. Following the purchase of the home, the balance in the share portfolio was reduced to $144,000 at November 2003. Thereafter the invested funds rapidly diminished as shares were sold to raise monies to meet other costs. At October 2004 the balance of the investment was $85,000 and at October 2005 the balance was nil. In fact between July 2005 and October 2005 the remaining $50,000 was expended.
12. Mrs Bus presently lives in a home which has a market value of $190,000. The mortgage was discharged at or about October 2004 but thereafter she took out two loans of $20,000 and $10,000 to meet expenses. These loans have subsequently been repaid.
13. Subsequent to the elimination of the share portfolio and the income from it, Mrs Bus has been dependent on monies payable as benefits from Centrelink to her children. Joshua presently receives youth allowance. It is paid into her bank account and administered by her for his benefit. She withdraws $100.00 per fortnight for her benefit. Additionally, her eldest daughter Laura receives a carers’ pension in the sum of $700.00 per fortnight. That sum is paid to Laura as the carer of Mrs Bus. Some of those monies are also used by Mrs Bus to meet her day to day expenses.
14. As a home owner, Mrs Bus is required to meet costs and expenses from time to time associated with rates, electricity, gas, water and telephone. She also owns a motor car to which she incurs costs. Additionally she also has insurance costs over the home, its contents and a motor car. Mrs Bus said that she has considered selling her home which she estimates presently has a value of $190,000 and purchasing a unit elsewhere in the sum of $160,000. It is her belief that the difference between the sale price and the cost of purchase would give her immediate access to funds but she acknowledged at the hearing that she had not been advised nor had she factored the costs of stamp duty upon the purchase nor the charges of the selling agent upon the sale of her current home.
15. Whilst it is likely that there would be some funds remaining, it was learnt by these proceedings that Mrs Bus unfortunately is unable to manage monies and it would be likely that any monies, being the net proceeds of the sale of her home, would rapidly dissipate.
16. The only other access to income would be by Mrs Bus obtaining employment. It was learnt at the hearing that she applied to Highlands Support Services Inc. in Ballarat in November 2005 to be placed in employment. Apparently that agency has a reputation for placing disabled persons in employment. To date no such placement has been achieved. Mrs Bus indicated that she could work as a call centre operator, if such work became available, subject to being able to sit and stand having regard to the extent of her back injury. Additionally, Mrs Bus has obtained a degree in psychology for which she studied subsequent to the commencement of her incapacity. Whilst it was suggested to her that she might obtain employment by reason of that degree, there was no evidence of employment becoming immediately available (perhaps more so when Mrs Bus does not have any clinical or practical work experience as a psychologist). It is inconceivable that Mrs Bus could ever return to nursing or hospital administration, for which she also has experience.
17. The case on behalf of the respondent was of Mrs Bus being a person who was reckless in the expenditure of her settlement funds and who had made regrettable and poor choices in the manner in which those funds were expended. It was also submitted in a Statement of Facts and Contentions prior to the hearing that the expenditure of funds had not been “reasonable”.
conclusion and reasons for decision
18. In Secretary to the Department of Family and Community Services v Allan (2001) 66 ALD 147, Heerey J commented upon s 1184 of the Act offering the opportunity to ameliorate “what would otherwise be harsh and (an) unfair application of a rigid formula” if circumstances of a recipient can be found to be “special”. Additionally, His Honour commented that “With a very large compensation sum the preclusion period might be very long. The longer the period, the greater the potential for unforeseen circumstances to create hardship”. In my view those comments are applicable to the present application.
19. Mrs Bus did incur approximately $20,000 in legal costs upon the settlement of her claim for damages but costs of themselves in legal proceedings are not a “special circumstance”. If there is any complaint by her as to the quantum, she has rights elsewhere. The injuries per se are not of themselves a “special circumstance” because she has been compensated for them.
20. However, the injuries have had a catastrophic effect upon her. The physical injuries have resulted in multiple spinal fusions, a laminectomy and the insertion of a spinal stimulator. She is in constant pain and is currently consuming slow release morphine medication in addition to traditional painkilling drugs. She has limited mobility. Additionally she has also developed significant emotional injuries which, I think, have not been properly considered by the respondent or in the two previous appearances before the Social Security Appeals Tribunal (“SSAT”). In recent years, she has been treated for a neck injury, has been diagnosed with arthritis in her spine and arthritis in her hands, (apparently by reason of the use of walking sticks). The spinal injuries are not a “special circumstance” because compensation has been recovered for them. However, the neck injury, the arthritic process and the depression and other emotional consequences are beyond the scope of the damages settlement and are therefore relevant in considering the applicant’s circumstances.
21. Mrs Bus has been under the care of Ms Peta Price, a clinical psychologist in Ballarat, for many years. She has been diagnosed with depression and anxiety. She has on occasions been suicidal. She has exhibited obsessive and irrational behavior.
22. Some of those behavioral features have been responsible for the manner in which her settlement funds have been expended. Unlike some other Tribunal decisions which were discussed at the conclusion of the hearing of this review involving persons who have expended funds on gambling, alcohol or drugs, Mrs Bus has on occasions purchased enormous quantities of food and clothing (when she had monies) to create “stock piles” for the occasion which appeared to her to be inevitable and imminent of having no monies at all. A list of her expenditure within the six month period between October 2004 and March 2005 revealed that she expended $9,000 on food and groceries and $5,000 on clothing. Whilst the list also recorded other usual or anticipated costs of home maintenance, insurances and costs of a similar nature, it also included costs of purchase of a second hand car as a result of Joshua extensively damaging a motor car and the purchase of a dining table and chairs which were replacements for items which he had destroyed during an episode of rage where he smashed equivalent items in the home.
23. Nonetheless, Mrs Bus has not had the benefit of any financial planning or advice or supervision which has been recognized by Ms Price in her report of 23 January 2006 which concluded in the following terms:
Mrs Bus denied excessive spending, but said that she had tried to use her finances to ward against future possible financial shortfalls by stocking up with food and clothing. These occasions have occurred at times of high distress and are likely to have been related to increased depression and associated catastrophic thinking. Depression often compromises decision-making processes and ability to consider the full implications of the decisions made at the time because of catastrophic thinking and, in Mrs Bus’s case, a tendency to obsess about worst possible outcomes. This is likely to have impacted on financial decisions made.
24. A record of her expenditure also reveals payment of monies for medical costs of her children which were not recoverable by private health insurance, involving many thousands of dollars and the payment of monies upon a holiday for herself and Laura which, when the circumstances of both of them are examined and considered post-settlement in 1999, could not surely be thought as being excessive or reckless.
25. The concept of “special circumstances” has been the subject of numerous decisions in this Tribunal, the Federal Court and elsewhere. More often than not the Tribunal decision of Re Beadle and Director-General of Social Security (1984) 6 ALD 1 is considered and recited. Despite that decision of 22 years ago it continues to remain no less relevant in its statement that the concept is not one of “rigid or narrow interpretation but commands inquiry into, and an appreciation of, a person’s circumstances”. At page three the Tribunal decided:
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.
26. A more contemporary interpretation of the words “special circumstances” can be found in Groth v Secretary, Department of Social Security (1995) 40 ALD 541 (“Groth”) where Kiefel J decided that circumstances, if “special”, would be outside the usual or ordinary case (refer paragraph 12). Her Honour expanded her analysis and decided:
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.
27. In Secretary, Department of Family and Community Services v Chamberlain [2002] FCA 67 Kiefel J again considered the concept of “special circumstances”. She followed her analysis in Groth by also introducing the factor of “inappropriateness” into the other descriptors of events that might constitute “special circumstances” (that is unfair, unintended or unjust) (refer paragraph 20).
28. In the present case, Mrs Bus did agree to settle in the sum of $400,000 but it could not have been, on the evidence, an informed or willing compromise. On her own evidence she accepted that sum by rejecting the advice of her legal representatives, succumbing to the pressures of her husband and being confused and disorientated by reason of the medication that she was then consuming. She acknowledged that she knew that there could be a period of preclusion but thought that it would apply only whilst she was partnered. She and her husband and children then lived in a home in Ballarat.
29. Within two years of settlement, Mrs Bus and her husband separated, she entered into Family Court proceedings and the net result was that in exchange for her husband assuming responsibility for a mortgage to his mother, he acquired the former matrimonial home. As a consequence of that outcome, Mrs Bus was obliged to obtain a home of her own to house herself and the children. The proceeds of sale were obtained from monies she had invested in a share portfolio and from a mortgage. The funds then in the portfolio were then substantially depleted. She was then facing another seven years of the preclusion period. She assumed a number of costs on behalf of her children which were unforeseen in the nature of medical and dental treatment and was required also to replace household items and furniture and a motor car as a result of damage caused by her son. Despite being free of the abusive relationship of her former husband, she was then exposed to the abuse and violence of one of her sons. Eventually the mortgage over the home was paid out by her which had the effect of further depleting the funds invested. For reasons which remain unclear, she then took out two other loans which have again subsequently been repaid in full and which have had the effect of again depleting monies invested.
30. There was no criticism by the respondent of the decision to purchase a home. Any criticism of that decision would have been inappropriate. Mrs Bus lost her interest in the former matrimonial home when the Family Court proceedings were concluded. Purchase of a home, per se, might not be thought as a special circumstance, but it is, surely, when one does not have a place to live and is responsible for the care of children. That purchase substantially eroded the monies invested. It was a purchase which was not foreseen when the preclusion period was calculated. The failure to recognise the depletion of the invested funds, for that purchase, in her special circumstances would be an injustice.
31. It would appear by reason of the emotional and behavioural traits which have been exhibited on many occasions to her psychologist, Mrs Bus has engaged in a period of irrational spending of monies which have ultimately depleted the entirety of the funds invested. She has subsequently become dependent upon monies otherwise paid to her children as youth allowance and as a carer payment. A period of two years and ten months remains under the present preclusion period. Laura will be leaving the Ballarat district later this year when she marries and will no longer qualify for carer payment. Mrs Bus will be therefore denied access to those funds. She has considered selling her home and purchasing another home elsewhere at a lesser cost but that is (for reasons given earlier) unlikely to give her financial security before the expiration of the current preclusion period.
32. The interpretation made to date by the SSAT and by the respondent of the spending habits of Mrs Bus have been harsh and have not taken into account her circumstances which I think are special because those circumstances have involved “something unfair, unintended or unjust . . . [and] out of the ordinary” (refer Groth).
33. Had Mrs Bus not divorced she would not have been required to purchase another home. Had her children not suffered illness and had a need for surgery she would not have incurred those costs. Had she not been consuming excessive quantities of painkilling medication, including morphine and had she not been in pain, and had proper financial advice and management of her funds, her spending of funds might have been more rational or informed.
34. It may be thought that divorce, illness of family members and responsibility for medical costs are not circumstances which are “special”, but subsequent to the settlement, Mrs Bus was exposed to and endured a separation and divorce from her husband (and his financial support), the loss of her home and the need to acquire another. She has been required to replace items of property destroyed by Joshua, including a motor car. She is not a person who has wasted monies, either by choice or addiction on drugs or alcohol or gambling. She is, in my view, a person who in context has had and continues to have circumstances which are “special”. Put another way, her circumstances are “special” because she has been exposed to events which were unintended, out of the ordinary and unfair.
35. Additionally, if the circumstances of Mrs Bus are presently considered, it would be apparent that as a 52 year old woman in country Victoria with gross disabilities, she would have little opportunity of obtaining regular employment thereby providing her with a regular income. She has sought employment by a recruiting agency that specialises in placing disabled persons, but without success. She does have a psychology degree but without clinical or practical experiences. Her qualifications as a nurse and in hospital administration are unlikely to be exploited.
36. The compensation part of a lump sum compensation payment is a statutory assumption that 50 per cent of the sum settled represents a payment for economic loss. But s 1184 of the Act was inserted “to ameliorate the harshness of the arbitrary provisions” and if “special circumstances” are found to exist it would be “appropriate to treat the compensation payment such that there will either be no period when double payment is assumed to have been made or there will be a shorter period” (refer Chamberlain at paragraph 26).
37. Mansfield J in Kirkbright v Secretary, Department of Family and Community Services (2001) 32 AAR 120 (“Kirkbright”) described s 1184 of the Act as a “release valve for such unfairness or injustice in certain circumstances”. His Honour heard an appeal against findings made by the Administrative Appeals Tribunal and decided that the Tribunal had not properly considered whether the applicant had been exposed to an injustice or unfairness when considering whether his circumstances were “special”. It was decided that there had been a strict application of the Act without consideration of the ameliorative effect of s 1184. Mansfield J referred to a decision of von Doussa J in Department of Social Security v Smith (1991) 13 AAR 454 (“Smith”) where in consideration of the legislation applicable before the 1991 Act (the 1947 Act) His Honour examined similar provisions and decided that whilst recognizing that a balance must be struck between the interests of a beneficiary and a limited social security budget
. . . the legislature must have recognized that from time to time a case may arise where the degree of unfairness to a recipient to a payment by way of compensation would bring about an unreasonable or unjust result which was outside that which could be justified by the practical expediency of the arbitrary nature of the provisions of s 152 and 153. Section 156 was enacted as part of the scheme under Part XVII before the “50 per cent ruling” was introduced by the Social Security (Amendment) Act 1988. But this is no reason to construe s 156 as having no operation in respect of a case where the 50 per cent rule produces a clearly unjust result. Before the 1988 amendment there were other provisions in Part XVII the strict application which could operate in an arbitrary way. By its terms the discretion given by s 156 may be exercised where the Secretary (or a body standing in the place of the Secretary on appeal) “considers it appropriate to do so in the special circumstances of the case”. These are wide words intended as the Tribunal in Ivovic pointed out, “to allow the decision-maker the fullest opportunity to consider the particular circumstances of each case”.
38. All things considered I am of the view that there has been a failure to date to recognize s 1184 as a “release valve” (as described by Mansfield J). Additionally there has been a failure to comprehend, particularly in recent times, that Mrs Bus is a person without income and who is dependent upon allowances being made to her by her children who are both welfare recipients. There has been, I regret, a view that she is a person who has been irresponsible or reckless in the expenditure of funds, without a proper focus on her circumstances. Additionally, I can see no reference, since October 2005 to an acknowledgement that she no longer has monies or income and the catastrophe of that situation.
39. An examination of her circumstances, and the events giving rise to them, in my view, commands a finding that her circumstances, at least at the present time, are “special”.
40. I am satisfied that from the date of delivery of this decision, the preclusion period should end. To adopt the language of s 1184 I am satisfied that it should be found that the compensation payment which would otherwise be referrable to the period of time between the date of this decision and 1 December 2008 should be treated as not having been made, because it would be appropriate to do so in the “special circumstances” of this case.
41. It follows therefore that the decision under review should be set aside and a decision in substitution for it as above should be made.
I certify that the 41 preceding paragraphs are a true copy of the reasons for the decision herein of –
Mr John Handley, Senior MemberSigned: .....................................................................................
Personal AssistantDate of Hearing 17 February 2006
Date of Decision 24 February 2006
Solicitor for the Applicant Self Represented
Departmental Advocate Ailsa Bramley
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