Cashion and Secretary, Department of Family and Community Services - [2002] AATA 425

DECISION AND REASONS FOR DECISION [2002] AATA 425

ADMINISTRATIVE APPEALS TRIBUNAL )

) No T2001/123

GENERAL ADMINISTRATIVE DIVISION       )
           Re      BRETT MATTHEW CASHION
  Applicant
           And    SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
  Respondent

DECISION

Tribunal Associate Professor B W Davis A M (Part-time Member)

Date31 May 2002
PlaceHobart

Decision (a) Tribunal finds there are special circumstances which warrant application of s1184 of the Social Security Act 1991, to treat the whole or part of the compensation payment received by the applicant, Brett Matthew Cashion, as not having been made. (b) The preclusion period to be used for purposes of calculation pursuant to s1165 of the Act is 20 April 1994 to 24 February 1998 less 26 weeks for which Mr Cashion has already received a refund payment (ie 175 weeks overall). (c) The Tribunal directs that any monies accruing to Mr Cashion as a result of recalculation with zero preclusion period be paid into the applicant's representative trust account and used solely for lumbar surgery should that prove feasible. (d) If it does not prove feasible for surgery to occur within a stated period, say two years, the full amount in the trust fund is to revert to the respondent.

[Sgd B W Davis]
Part-Time Member
CATCHWORDS
Social Security - disability pension - benefits - compensation payment - lump sum preclusion period - discretion to treat whole or part as not received - special circumstances.
Legislation
Social Security Act 1991 – s1184
Authorities
Re Ivovic and Director-General of Social Security (1981) 3 ALN 95
Director-General of Social Security v Beadle (1985) 60 ALR 225
Re VYS and Secretary, Department of Social Security (1995) 40 ALD 745
Secretary, Department of Social Security v Anderson (1997) 49 ALD 189
Re SRL and Secretary, Department of Social Security (1997) N97/686 AAT 12288 (14 October 1997)
Re Minos and Secretary, Department of Family and Community Services (2000) AATA 1104 (8 December 2000)
Secretary, Department of Family and Community Services v Bullock (2001) W2001/1016 (12 December 2001)

REASONS FOR DECISION

May 2002 Associate Professor B W Davis A M (Part-time Member)

The applicant seeks review of a decision made by a delegate of Centrelink on 14 December 2000 and subsequently affirmed by the Social Security Appeals Tribunal (SSAT) on 27 July 2001 not to treat the whole part of a lump sum compensation payment received by the applicant as not having been made.
The Issue
The issue to be determined is whether there are "special circumstances" for the purposes of s1184 of the Social Security Act 1991 ("the Act") which would justify treating the whole or part of the compensation payment received by the applicant as not having been made.
Background
The applicant suffered a back injury in 1992 and received periodic compensation payments from 1992 to 19 April 1994. He received job search allowance from April 1994 and then disability support pension (DSP) from June 1994, the latter payment being current.
The applicant settled his compensation claim in December 2000 for the amount of $215,000 plus the retention of previously paid amounts.
The social security law provides that where a person receives compensation, which is wholly or in part in respect of lost earnings or lost capacity to earn, then a person is precluded from receiving social security payments during the lump sum preclusion period. The preclusion period commences on the day loss of earnings occurs or on a day following the cessation of periodic compensation payments, whichever is later. Fifty percent of the lump sum is disregarded, but the remaining fifty percent is divided by the income cut off amount, (being the amount of income which would produce a nil rate of pension under the income test) to establish the length of the preclusion period.
In the case of Mr Brett Matthew Cashion the Department of Family and Community Services (DFCS) decided that a lump sum preclusion period applied from 20 April 1994 to 24 February 1998. As this period was all in the past, a compensation charge of $31,244.20 representing social security payments calculated as being made to the applicant between April 1994 and February 1998 was recovered by DFCS at settlement. It is noted that the respondent's calculations failed to take account of one of the periods during the overall preclusion period, and that the correct amount of the compensation charge is approximately $3,500 greater than that recovered.
The applicant sought review of the compensation charge on the basis that he required spinal surgery which would cost approximately $28,000 if performed in the private health system.
An authorised officer of DFCS decided this constituted "special circumstances" under the social security law, which justified the Department disregarding $28,000 of the applicant's compensation settlement. This decision reduced the preclusion period to end of August 1997 rather than the original February 1998, a reduction of 126 weeks from the 201 weeks initially applicable. This made Mr Cashion due for a refund of $4,591 for the disability support pension paid to him for the 26 week period up to 19 February 1998.
The SSAT affirmed this decision on 19 July 2001, Mr Cashion then lodged an application for review by this Tribunal on 14 August 2001.
Counsel for the applicant contends that despite receiving income support payments, the applicant is not in a position to fund essential surgical procedures, he is also medically unfit for work and has a number of ongoing serious medical and psychological problems. The applicant claims special reasons exist which warrant application of s1184 of the Act, to treat whole or part of the compensation payment received as not having been made.
The respondent argues that the applicant has been fairly treated, with favourable calculation of the preclusion period and payment of social security while awaiting compensation settlement. The applicant and his solicitors were both advised of a preclusion period as early as 1994. While the cost of private health surgery may have been considerable, that factor should have figured in the compensation settlement and not be sought as an extra now, given that the need for surgery was identified as early as 1996.
Evidence
At the AAT Tribunal hearing conducted on 10 April 2002, the applicant was represented by Mr Brian Sparkes and the respondent by Mr David Perdon.
Mr Brett Matthew Cashion was sworn and gave evidence about his disabilities, financial circumstances and lifestyle. He attended primary schools in Tasmania and Victoria and later attended Canterbury Flat Technical College for two and half years. He aspired to become an apprentice jockey, but was too heavy, so undertook a number of other employment situations, including work in a panel beating shop, warehouse, caravan manufacturing plant and flour mill. His country upbringing proved useful when he became a plant operator and he eventually owned his own earth-moving business in Tasmania, before being forced into voluntary bankruptcy because of collapse of a major forestry company in 1991. There was no work available in Tasmania, so he sought employment in a gold mine in Western Australia, a flour mill in Bendigo, before going to Queensland where he worked in the warehouse of Kinney Shoes, until he sustained a major back injury in 1992.
Under questioning he stated that initially he thought the injury was only pulled muscles and tried to resume work on light duties. When the injury was diagnosed as more serious, he was placed on worker's compensation payments in Queensland, but as there was a time limit on these, was forced to bring a common law suit for compensation. Although he had ceased worked in 1994, he did not realise the compensation action would involve an extensive time frame, ultimately involving a payment of around $240,000 received in 2001.
Queried as to how he had used the money, he stated that he ended up receiving $152,000 after all expenses had been met. He had paid off a personal loan, purchased a chiropractic mattress and initially banked the remainder, as he was living in public housing. His aim was to purchase a basic home and undergo a CRS rehabilitation training program, so as to create a future, but he became ill and could not continue the program.
Social Security had advised him to invest in bricks and mortar i.e. to use the compensation money to secure a solid asset. This seemed good advice, but had not appreciated the ongoing costs involved in owning a home and this was to cause him much trouble later. He had outlaid $150,000 on a house, having to borrow $25,000 from the Commonwealth Bank for an intended back operation. His only other assets were an old car worth about $2,000 (a 1983 Holden utility) and he had less than $1,000 in the bank.
Mr Cashion testified that the only house he could afford was at Tea Tree, a considerable distance from Hobart and lacking public transport. It was a two story three bedroom house, but he could really only use one floor. It had been necessary to alter the bathroom, given the nature of his disability. He lived alone, a long-term relationship had failed, but he had periodic limited access to his daughter of 18 months.
Mr Cashion was then queried about his medical condition and prospects. He stated he was faced with the prospect of spinal fusion, with only limited prospects of success. If it failed, he would probably end up in a wheelchair. In any event, more than one operation might be involved and spinal fusions could only be contemplated at intervals of five to ten years. A surgeon, Mr Hunn, had advised him that if a compensation payment was involved, he could not have an operation on the public health system, but would have to pay for private hospital treatment. The estimated cost had changed over time, but was around $25,000.
He had approached the Commonwealth Bank for a further loan but this had been refused. Centrelink had suggested the possibility he could sell the house in order to finance an operation, but he was reluctant to do so, as he would end up in public housing, which would involve public subsidy anyway.
Mr Cashion testified that he was under very heavy medication. He received at least 100 milligrams of morphine twice a day and earlier 320 milligrams of morphine a day which was very close to an overdose. There were numerous other drugs prescribed as well and his body had become so used to this punishment that when he attempted suicide, it merely put him to sleep for three or four days. He had become an emotional wreck because of the pain and circumstances and sometimes could not make any logical decisions. He had been seeing a psychiatrist (Dr Reginald Parton) every six to eight weeks, since 1996, and had some 15-odd admissions to the psychiatric ward.
Counsel for the respondent then questioned Mr Cashion as to why he had purchased a home so remote from Hobart, when he really needed capital to pay for his back operation. Mr Cashion stated that he suffered from agoraphobia and needed to be alone, given his medication and depression. He admitted he knew there was the possibility of having to pay some money back to Centrelink, but was uncertain what this might entail, moreover he was hoping and expecting his name would be placed on the waiting list for an operation in the public health system. He thought he was on the list, but his ability to focus on matters was now restricted. He had hoped the Tea Tree property could be share-farmed, but his irritability and demeanour had precluded this. He was conscious of receiving payments of various amounts from Centrelink, but found it hard to recall the details. His current costs were higher than the pension he was receiving, he was paying off the mortgage on the Tea Tree house at $100 per fortnight, but his cash was running out.
He was queried about medication and a reported case of overdose. Mr Cashion said that he had taken morphine, plus diazepan and Melleril, but later phoned the Crisis Intervention Centre and they had sent an ambulance. He recognised that the amount of medication was harming his internal organs and now saw it as a matter of urgency to have the proposed back surgery.
The witness then withdrew and counsel for the applicant and respondent made their final submissions.
Counsel for the applicant argued that Mr Cashion's case warranted recognition as "special circumstances" within s1184 of the Social Security Act 1991 ("the Act"). The phrase "special circumstances" had been judicially considered on many occasions by the AAT and the Federal Court. Such "circumstances" could only be regarded as special if they were unusual, uncommon or exceptional and must depend upon the context in which they occurred. It was clear Mr Cashion had attempted to act rationally and not squander his compensation payment, but his medical and psychological circumstances were such that his plans had not succeeded and he was now in extremely difficult circumstances, in part arising from Social Security's well-intended advice to buy a house. This safe haven should not be taken from him; a system of social security should not require individuals to take a one-way ticket to poverty, merely to satisfy liability. The applicant was not in a position to fund a private operation, so that without some windfall gain the operation would not proceed. He is unfit to work, has extremely serious medical conditions and the overall picture is clearly one of "special circumstances" envisaged by s1184 of the Act.
Counsel for the respondent noted that although he felt personal sympathy for Mr Cashion's predicament, the reality was that the applicant had been generously treated by the Department. Not only had the preclusion payment period been reduced and an initial error in calculation been omitted, but Mr Cashion was continuing to receive a pension throughout. The applicant had gained a substantial asset (namely his house) through his compensation payment, moreover he had failed to seek a further loan from the Commonwealth Bank of less than $25,000, treating the latter application as an "all-or-nothing" event. It is clear Mr Cashion regarded the proposed back surgery as the way to end all his problems, but circumstances were more complex than this and a major quandary remained as to whether he was on the public health waiting list or not and why. If the Tribunal further reduced the compensation recovery amount, it would be saying that Mr Cashion's circumstances were so special and unique that they warranted disregarding virtually the entire amount of approximately $220,000, the applicant had received, while leaving him in possession of a significant asset in the form of his house.
If the Tribunal did decide the entire amount of compensation received by the applicant should be disregarded under the "special circumstances" clause, then the respondent submitted the Tribunal should direct the amount remitted not to the applicant, but to the applicant's representative trust account, to ensure the operation goes ahead. It was a complex situation in which either the applicant might decide not to have the operation or the psychological situation could be such that surgeons might refuse to do the operation.
Analysis
The Tribunal is required to stand in the shoes of the decision-maker, giving due weight to statutory provisions and guiding principles, but also giving appropriate consideration to all available evidence and contextual factors.
The relevant legislation is s1184 of the Act, which states as follows:
"1184.   Secretary may disregard some payment.
11.84(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 appropriate to do so in the special circumstances of the case."
Other parts of s1184 deal with circumstance of the person's partner receiving compensation or prospective review of a disability support pension.
There are numerous cases within the AAT and Federal Court as to what constitutes "special circumstances" in triggering application of s1184. See for example:
Re Ivovic and Director-General of Social Security (1981) 3 ALN 95
Re Beadle and Director-General of the Social Security (1985) 60 ALR 225
Re VYS and Secretary, Department of Social Security (1995) 40 ALD 745
Re Secretary, Department of Social Security and Anderson (1997) 49 ALD 189
Re SRL and Secretary, Department of Social Security (1997) N97/686 (AAT Decision No. 12288, 14 October 1997)
Re Minos and Secretary, Department of Family and Community Services (2000) AATA 1104, 8 December 2000.
Re Secretary, Department of Family and Community Services and Bullock (2001) W2001/1016, 12 December 2001.

Special circumstances require a factor or factors which justify making an exception in whole or in part to the principle of liability which the Act establishes. In Re Ivovic the Court said:
"`Special circumstances' … the use of the word special is, we think, intended to allow the decision-maker the fullest opportunity to consider the particular circumstances of each case. Whilst we agree that hardship is a relevant consideration in the discretion … we reject the submission that we should ignore the circumstances out of which the alleged hardship is said to have arisen."
But in Beadle the Full Federal Court upheld the finding of the Tribunal in Re Beadle and Director-General of Social Security (1984) 6ALD at p.3 that:
"An expression such as "special circumstances" is by its very nature incapable of precise or exhaustive definition. The qualifying objective looks to the 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 in the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. That it is not to say that the circumstances must be unique but they must have a qualify of unusualness that permits them to be described as special".
The above excerpt has been referred to on many occasions in a range of cases before the Tribunal and in the Federal Court, involving a variety of factors such as financial hardship, illness, injury, debts, negligent advice, management of settlement monies and many other situations. Those circumstances further illustrate the requirement that the Tribunal should take a range of factors and the full context into account. As the Tribunal in Re Beadle concluded (at p4):
"… But it is not helpful to focus too closely on each particular circumstance of the applicant and ask whether it is special. The question is whether, when the relevant circumstances of the applicant are looked at in their entirety, they may fairly be described as unusual, uncommon or exceptional so as to warrant payment of the allowance earlier than the date from which it would ordinarily be paid."
While Beadle was not concerned with a preclusion period specifically, the comment remains relevant and has been adopted in many subsequent cases.
In so far as Mr Brett Matthew Cashion is concerned, it is clear from evidence provided to the Tribunal that the Department of Family and Community Services has dealt with his case with considerable compassion, but has now reached the point where counsel for the respondent correctly notes that if the Tribunal further reduced the compensation recovery amount, this would leave him in possession of a substantial asset (a house) while to some extent avoiding liability which the Act requires to be met.
Having considered the matter in which the applicant gave evidence to the Tribunal, it must be said he appeared a truthful witness, quite articulate at times, but readily admitted that his medical and psychological circumstances were such that he found it difficult to make logical and informed decisions consistently.

Despite this, Mr Cashion does not appear to have acted in an extravagant, frivolous or bizarre fashion when compensation monies were received. Rather he carefully considered his options, banked the majority of the capital until required, then acting upon departmental advice, purchased a modest home which assured him of privacy and provided a tangible asset. It is clear that he has been struggling ever since to meet his financial commitments and despite severe medical problems, trying to secure some independence and fashion limited prospects for the future.
Mr Cashion appears to have been extremely unfortunate in sustaining a major back injury at a relatively early age. His current physical and mental condition is traumatic, both in terms of prognosis for treatment of his injury, but also from the massive medication which has caused psychological problems so severe that suicide has been attempted. Whether his hope that surgery will relieve some of his problems is correct or not, the reality is this is the goal he clings to. It is equally understandable that he is reluctant to part with the one real asset he has in life, namely his house.
While it is clearly the intent of the Act to prevent "double-dipping" in terms of welfare payments, s1184 of the Act does grant discretion to forego some liability if truly special circumstances prevail. Having weighed all the evidence before the Tribunal in the case of Mr Cashion, it is clear his circumstances are so dire, that it can be regarded as outside the norm and thus unusual and exceptional. Put bluntly, unless some remedial action is attempted, his prospects are few and could have a tragic outcome.
One issue which has not been totally clarified to the Tribunal's satisfaction is whether Mr Cashion does or does not have any prospect of public hospital surgery for his back injury. Given that waiting lists are now substantial in such medical areas, this may not be a satisfactory solution anyway. There are equivalent queries about the feasibility and timing of private surgery, but evidence suggests this may be possible if $25,000 can be found. But to force him to sell his house to gain such capital would be a severe penalty on an individual who appears to have virtually no other assets or friends in the world.
There are a number of supplementary factors which the Tribunal must take into account. Mr Cashion is receiving ongoing welfare payments, but these are not overly generous given his circumstances and necessitate payment of approximately $100 per fortnight to meet mortgage requirements. The applicant's initial compensation claim included a component for his medical operation, but he ultimately received less than expected and wisely or otherwise gave higher priority to purchasing a home than the operation. Given that the probability of success with the latter is around 60 per cent at best, it is perhaps understandable he might have hesitation about surgery, but now finds it a matter of some urgency. As for the prospect of forcing him to dispose of his house to generate the sum essential for private surgery, there must be some hesitation, given his psychological situation, where even small stresses may generate dangerous outcomes.
The Tribunal notes Secretary, Department of Social Security and Anderson (1997) 49 ALD 189, involving a situation where suicidal tendencies were discussed in respect of a preclusion payment. While seeking to avoid any situation where a threat of suicide might be perceived as putting pressure on an agency or Tribunal, consideration had to given to cases where distress and a sense of hopelessness were involved. The Tribunal noted that:
"The most moving and overwhelming consideration in our decision … is that which we have found as fact, of Mr Anderson seriously and genuinely being suicidal. It would be wrong, indeed it would be abhorrent for us to waive consideration of this potential as being something within his own responsibility and for which he and those around him, should bear the consequences. He should be entitled, as should everyone else who has received social security payments before or during compensation proceedings to a restoration, so far as might reasonably be possible, of either his pre-injury circumstances or a lifestyle without ongoing litigation, its consequences and the concern of debt recovery procedures".
Mr Cashion's case is different to that in Anderson, nonetheless there is clear medical evidence of Mr Cashion's psychiatric maladies and suicidal tendencies, thus consideration must be given to prospective implications of ongoing illness and penury. The Tribunal considers, taking all evidence into account, that Mr Cashion's situation does constitute "special circumstances" of a somewhat parlous kind and warrant the exercise of discretion to forego the preclusion payment liability accruing to Mr Cashion are safeguarded and used solely for the back surgery he needs. If this cannot be achieved within say a two year timeframe (i.e. if Mr Cashion does not seek the operation or it cannot be performed), then the same amount should revert to the respondent.
Decision
(a)The decision under review is set aside and in substitution therefor the Tribunal finds there are special circumstances which warrant application of s1184 of the Social Security Act 1991, to treat the whole or part of the compensation payment received by the applicant, Brett Matthew Cashion, as not having been made.

(b)The preclusion period to be used for purposes of calculation pursuant to s1165 of the Act is 20 April 1994 to 24 February 1998 less 26 weeks for which Mr Cashion has already received a refund payment (ie 175 weeks overall).
(c)The Tribunal directs that any monies accruing to Mr Cashion as a result of recalculation with zero preclusion period be paid into the applicant's representative trust account and use solely for lumbar surgery should that prove feasible.
(d)If it does not prove feasible for surgery to occur within a stated period, say two years, the full amount in the trust fund is to revert to the respondent.
I certify that the 44 preceding paragraphs are a true copy of the reasons for the decision herein of Associate Professor B W Davis A M (Part-time Member)
Signed: K L Miller .....................................................................................
  Personal Assistant
Date/s of Hearing  10 April 2002
Date of Decision  31 May 2002
Counsel for the Applicant        Mr B Sparkes
Solicitor for the Applicant         Hobart Community Legal Services
Counsel for the Respondent    Mr D Perdon
Solicitor for the Respondent    Law Services, Centrelink