Campbell and Secretary, Department of Education, Employment and Workplace Relations
[2010] AATA 981
•08 December 2010
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2010] AATA 981
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2010/0858
GENERAL ADMINISTRATIVE DIVISION ) Re Lance Campbell Applicant
And
Secretary, Department of Education, Employment, and Workplace Relations
Respondent
DECISION
Tribunal M D Allen, Senior Member Date8 December 2010
PlaceSydney
Decision The decision under review is SET ASIDE and this matter remitted to the Respondent with the Direction that the preclusion period currently applying to the Applicant is to cease on 15 May 2011.
...................[sgd].....................
M D Allen, Senior Member
CATCHWORDS
SOCIAL SECURITY: Preclusion period. Dissipation of assets explained by cognitive impairment following cerebral infarcts. Preclusion period abridged.
LEGISLATION
Social Security Act 1991, Ss 1184K(1)
CASES
Secretary Department of Social Security v Ellis (1996-7) 24 AAR 535
Dranichnikov v Centrelink (2004) 75 ALD 134
REASONS FOR DECISION
8 December 2010 M D Allen, Senior Member 1. By application made 2 March 2010 the Applicant sought review of a decision by the Social Security Appeals Tribunal (“SSAT”) dated 2 September 2009 affirming a decision to reject the Applicant’s claim for Newstart Allowance due to a compensation preclusion period applying from 24 March 2005 to 15 May 2013.
2. Subsequent to the decision of the SSAT the Respondent has determined that the Applicant qualifies for Disability Support Pension (“DSP”), but as stated in a letter to the Applicant dated 11 February 2010, DSP is not payable to him during the compensation preclusion period.
3. On 1 June 2005 the Applicant settled an action for damages occasioned by an industrial accident for the sum of $700,000.00 inclusive of costs.
4. Prior to the settlement the Applicant had been paid workers compensation, the last of these payments being on 23 March 2005. Of the settlement sum the Applicant received $354,016.83.
5. By letter dated 13 July 2006 Centrelink wrote to the Applicant stating inter alia:
“We have been advised that you are entitled to a lump sum compensation payment of $700,000.00. In case you need to apply for Centrelink payments in the future, we have calculated that the preclusion period start date is 24 March 2005 and the end date is 15 May 2013. You may however choose to test your eligibility for other benefits such as a Health Care Card...”
6. That letter also contained the following statement:
“We also provide a financial service for our customers. The Financial Information Service (FIS) provides information that will assist both current and future customers improve their standard of living by using their own money to the best advantage. The FIS service can be contacted at your nearest Centrelink office.”
Unfortunately the Applicant did not avail himself of this service and then made a series of decisions that has led to the dissipation of the monies received following his award of common law damages.
7. In these proceedings the Applicant did not dispute the imposition of a preclusion period following the settlement of his claim for common law damages, nor did he dispute the calculation of the preclusion period.
8. The Applicant’s claim to be paid DSP is premised on a submission that special circumstances exist in his case such as to invoke the operation of subsection 1184K(1) of the Social Security Act 1991. That subsection states:
“(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.”
9. The term “special circumstances” has been extensively considered in case law. In Secretary, Department of Social Security v Ellis (1996-7) 24 AAR 535 at 539. Carr J said:
“In Beadle v Director-General of Social Security (1985) 7 ALD 670, a Full Court of this court had to consider whether the Administrative Appeals Tribunal had erred in its interpretation of s102(1)(a) of the Act which provided for an extension of time in which to claim a family allowance ‘…in special circumstances…’. At 673-674 the Full Court said:
‘Presumably in this context special circumstances must include events which would render the six months unfair or inappropriate… 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. The matter is one for the Director-General bearing in mind the purpose for which the power is given. The phrase ‘special circumstances’, although lacking precision, is sufficiently understood in our view not to require judicial gloss.’
In Groth v Secretary, Department of Social Security (1995) 40 ALD 541at 545, Kiefel J, after referring to Beadle said:
‘…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. That was, I consider, the only inquiry to be undertaken in this 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. The inquiry I have referred to would involve considering what would be the effect, if the provision in question or the principle of liability it creates is applied.’
In Dranichnikov v Centrelink (2004) 75 ALD 134, Hill J (with whom Kiefel and Hely JJ agreed), said at paragraph 148:
“…other cases which have considered analogous words such as ‘special reasons’ has tended to conclude, albeit in different context, 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: Jess v Scott (1986) 12 FCR 187; 70 ALR 185 and the cases in various contexts in the decision which Lockhart, Shepherd and Burchett JJ discussed”.
10. According to the Applicant’s evidence, at the time he received his payment of damages he was working as a casual cleaner at a coal mine. He was also, with his sister, undertaking cleaning of holiday units on weekends. For various circumstances he lost these employments.
11. At the same time he purchased his brother’s house at Rutherford in the Hunter Valley for the sum of $295,000.00. He paid an additional $5,000.00 for furniture.
12. Cross examined the Applicant said that he bought his brother’s house as “he was going to lose it”. I infer from this statement a mortgagee was about to foreclose on the property. How the purchase price of $295,000.00 was agreed upon was not explained but when the Applicant sold that house he realised $339,000.00.
13. Following his losing the cleaning jobs the Applicant decided to purchase a lawn mowing franchise. To enable this purchase and to obtain equipment the Applicant entered into a mortgage over his house property at Rutherford in the sum of $100,000.00.
14. Unfortunately the Applicant did not carry out any due diligence when purchasing his mowing franchise. He found out when he went to alleged customers that they had not been serviced for some six months and had therefore started to employ other persons. Out of a list of 60 alleged customers the Applicant only retained 20. Later his business was adversely affected by the drought, in that customers did not require their lawns to be regularly moved.
15. In 2001 the Applicant suffered a “stroke”. In his report of 13 May 2010 neurologist Dr Chris Levi stated:
“Mr Campbell has the condition CADISIL – Cerebral Autosomal Dominant Arteriopathy with Subcortical Infarction and Leukoariosis. This is an inherited genetic stroke syndrome.
Lance has inherited the gene from (sic) this condition from his mother, who died of the condition. The condition presents with recurrent stroke events, recurrent episodes of migraine, depression and cognitive impairment.
Lance has had one major stroke event that has left him with some residual right sided weakness. He has had two other less severe stroke events. He has also had an event that rendered him unconscious (a so called encephalopathic event).
In addition to CADISIL he has hypertension, he is overweight and has sleep apnoea, which is currently under investigation. The combination of these various conditions, particularly the residual stroke effects and the sleep apnoea do make it very difficult for him to work in full time employment. He has tiredness, lethargy, day time sleepiness and residual right sided weakness and clumsiness, particularly affecting his hand.
There is no treatment presently for CADISIL. The natural history is that it is a progressive condition and it is likely that he will develop further problems with increasing disability in the future.”
16. In a later report dated 28 October 2010, Dr Levi reported that the Applicant’s CADASIL can result in the accumulation of stroke related brain damage and associated cognitive impairment and depression.
17. The Applicant was also hospitalised for two weeks in 2006 following an insect bite. He stated that he was in a coma for four days and on life support.
18. The ultimate result of his illnesses and the downturn in his lawn mowing business was that he walked away from the business and had to sell his Rutherford house in order to repay the bank. He also lost equipment used in the lawn mowing business when the owner of the storage facility where the equipment was stored sold it to recover unpaid storage fees.
19. Following the sale of the Rutherford house, the Applicant bought a single bedroom house in Cessnock, NSW. He also bought a utility vehicle and began a business as a courier driver. This business ended when he hit a kangaroo and the vehicle became a write off.
20. In 2008 the Applicant suffered a further stroke and was found unconscious by his sister.
21. The Applicant is divorced. He has at times had the custody and care of his daughter, who apparently does not have a good relationship with her mother. Unfortunately, when living with the Applicant at Cessnock, she was bullied at her high school and so had to return to her mother’s custody.
22. Because the money he had remaining after the sale of the Rutherford house and the purchase of the Cessnock house was running out the Applicant had to borrow from his niece. He also fell behind in repayments to the bank on the loan obtained in order to purchase the Cessnock house.
23. Exhibit A3 is a letter from the St George Bank to the Applicant and evidences that a request by him to that bank for financial assistance because of difficulties experienced was refused. I therefore accept the Applicant’s evidence that he sold his Cessnock house to prevent the bank from foreclosing.
24. Exhibit R2 evidences that following the sale of his Cessnock house the Applicant received the sum of $38,683.58.
25. Following the sale of his Cessnock house the Applicant purchased a caravan for the sum of $7,000.00 and a motor vehicle for $11,000.00. He also paid to his niece the sum of $25,000.00.
26. The Applicant gave evidence that the payment to the niece was to repay monies he had borrowed from her or to repay monies she had expended on his account. Cross examined the Applicant was unable to produce any documentation evidencing the actual amounts expended by his niece on his behalf.
27. Cross examined, the Applicant conceded that when he sold his Cessnock property he knew the sum of $38,000.000 obtained would have to support him during the preclusion period.
28. Currently the Applicant’s expenses are $150.00 per week for a one bedroom unit at Hawks Nest plus $100.00 per month for the hire of a machine to treat his sleep apnoea. In addition he has living expenses which were not canvassed by the Applicant in his evidence.
29. I note from the decision of the SSAT that the Applicant had a child support debt in the sum of $22,000.00 and that the Child Support Agency had garnisheed a tax refund in the sum of some $15,000.00. No evidence was given by the Applicant as to the current status of any child support debt.
30. As I see it the Applicant has made a series of decisions which in hindsight have provides to be disastrous to his own interests.
31. The purchase of the lawn mowing franchise was a costly mistake, following that his attempts to work as a courier driver were thwarted by the vehicle being written off following his striking a kangaroo. He has also had a further motor vehicle accident and has a debt of $900.00 to the NSW Ambulance Service.
32. I am concerned as to the Applicant’s ability to understand his circumstances. In a report to Centrelink dated 11 June 2008, Dr Munas stated:
“He has suffered his fourth stroke and now has problems with his memory and higher level planning.”
Under the heading “Current Symptoms” Dr Munas wrote:
“Patient unable to recall some recent events. Cognitive impairment. Higher level planning problems. Not safe to drive. Not well oriented to place”.
33. Having seen and heard the Applicant give evidence I can only say that his appearance before me was consistent with Dr Munas’ description.
34. Further, I note that in a Job Capacity Assessment Report dated 16 June 2008 an Accredited Rehabilitation Counsellor reported:
“Due to cognitive impairment client is unable to budget or run a business and is in financial strife”.
35. I do not regard the Applicant as a person who has set out to dissipate his award of damages and then seek to throw himself upon the Social Security system.
36. When he originally received his damages he had employment and in those circumstances it was not imprudent for him to purchase a dwelling house. That house may have been purchased at a premium but I note that when sold a profit was made.
37. The Applicant next purchased a lawn mowing business. This failed due to several circumstances but in 2001 the Applicant suffered his first stroke and between 2001 and 2008 suffered four strokes leading to cognitive impairment. In these circumstances if monies have been expended without proper regard to the preclusion period and its effect then that is understandable.
38. As I see it the situation of this Applicant is materially affected by his cognitive impairment which occurred after the imposition of the preclusion period. It seems clear that prior to his strokes the Applicant was able to engage in some forms of employment, for example lawn mowing or cleaning.
39. Currently the Applicant is in straightened financial circumstances. That he gave $25,000.00 to his niece for prior expenditure incurred on his behalf, which expenditure is nowhere documented, is of concern but may be explained by his cognitive defects. Even so some allowance must be made for this voluntary dissipation of assets.
40. The Applicant also has an unrealised asset in his motor vehicle which he purchased for $11,000.00. He has been told not to drive because of his sleep apnoea. That he still does so is bordering on criminal behaviour and he should sell his motor vehicle immediately. This will then realise funds for his maintenance.
41. Having regard to what the previously cited cases discuss as establishing special circumstances, I find that the Applicant has established special circumstances, namely the change in his position from a person who could engage in employment to one who has been found, even by Centrelink, to be unable to engage in employment due predominantly to his cognitive impairment. I also accept that his cognitive impairment has led to non-optimal choices in the way in which he has arranged his financial affairs.
42. Notwithstanding the above findings, I note that the Applicant has gifted some $25,000.00 to his niece and he has assets, namely a caravan and a motor vehicle.
43. I find that special circumstances exist sufficient to reduce the preclusion period applicable to the Applicant, but allowance must be made for a dissipation of assets. I also note that currently he is in receipt of DSP following a stay order imposed by this Tribunal.
44. The decision under review is SET ASIDE and this matter remitted to the Respondent with the Direction that the preclusion period is to cease on 15 May 2011. I consider that this date achieves a balance between the Applicant’s special circumstances and the policy which led to the imposition of the preclusion period.
I certify that the 44 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member M D Allen.
Signed: ....................[sgd]..................
K. Lynch, AssociateDate of Hearing 29 November 2010
Date of Decision 08 December 2010
Representative for the Applicant Mr L Campbell (self)
Representative for the Respondent Centrelink Legal Services
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