Chambers; Secretary, Department of Families, Housing, Community Services and Indigenous Affairs and
[2008] AATA 1115
•15 December 2008
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2008] AATA 1115
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2008/3125
GENERAL ADMINISTRATIVE DIVISION )
Re SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS Applicant
And
STEPHEN CHAMBERS
Respondent
DECISION
Tribunal Ms A F Cunningham (Senior Member) Date15 December 2008
PlaceHobart
Decision The Tribunal sets aside the decision of the Social Security Appeals Tribunal and affirms the terms of the decision of the Centrelink delegate made on 11 December 2007 imposing a lump sum preclusion period from 13 June 2007 to 18 January 2011.
(Sgd) A F Cunningham
Senior Member
CATCHWORDS
SOCIAL SECURITY - disability support pension - lump sum compensation payment - compensation preclusion period - special circumstances - claim that children living in applicant's sole care rejected - no evidence of special circumstances - decision under review set aside
Social Security Act 1991, ss. 17(1), 17(2), 17(3), 1169, 1170(1), 1170(4), 1170(5), 1184K, Division 3 Part 3.14
Beadle and Director-General of Social Security (1984) 6 ALD 1
Beadle v Director-General of Social Security (1985) 60 ALR 225
Dranichnikov v Centrelink [2003] FCAFC 133
Groth and Secretary, Department of Social Security (1995) 37 ALD 797
REASONS FOR DECISION
15 December 2008 Ms A F Cunningham (Senior Member) 1. Mr Chambers made a claim for Disability Support Pension which was rejected by Centrelink on the basis that he was subject to a compensation preclusion period. Mr Chambers had received a lump sum compensation payment following an accident at work on 17 June 2004. The preclusion period imposed by Centrelink was from 13 June 2007 until 18 January 2011. Mr Chambers sought a review of Centrelink's decision which was affirmed by an Authorised Review Officer on 23 April 2008.
2. Mr Chambers successfully appealed to the Social Security Appeals Tribunal (SSAT) which determined that the compensation preclusion period ended on 12 May 2008, effectively reducing the period by some 32 months. The significance of this date was that the SSAT accepted Mr Chambers' evidence that he had taken on the sole care of his two children from 12 May 2008. In the SSAT's view this fact constituted "special circumstances" within the meaning of section 1184K of the Social Security Act 1991 (the Act) and justified treating part of the compensation payment as not having been made.
3. The Secretary seeks a review of the decision of the SSAT. An Interlocutory Application seeking a stay of the SSAT's decision was made by the Secretary. By its decision of 1 August 2008 the Tribunal refused the application for a stay.
4. A fresh application for a stay was subsequently made on the basis of Mr Chambers' changed circumstances and the availability of new evidence which was not presented at the earlier hearing.
5. Mr Chambers had been represented by Mr Young at the earlier hearing of the Application for a stay. Mr Young appeared at the subsequent hearing and sought leave to withdraw as he was without instructions. Mr Young informed the Tribunal that his last communication with his client had been some six weeks ago and he understood that Mr Chambers had left the state.
6. The Tribunal subsequently determined to grant a stay of the SSAT's decision and oral reasons were given on 6 November 2008. At the hearing of the appeal the Tribunal ordered that a stay of the SSAT's decision be continued pending a determination of the application for review.
7. The hearing of the appeal was convened in Devonport on 26 November 2008. Correspondence was forwarded to Mr Chambers by Mr Sparkes on behalf of Centrelink to the Victorian address recorded by Centrelink (presumably as advised by Mr Chambers), informing him of the date, place and time of the hearing. Subsequently further correspondence was forwarded to Mr Chambers at the address recorded by Centrelink as his Gunns Plains Tasmanian address. Mr Chambers made no attempt to contact either the AAT Registry, Centrelink, Centrelink' solicitor or his own solicitor in relation to the hearing of the appeal which he would have been aware was imminent. He would also have been aware of the Tribunal's decision to stay the decision of the SSAT from 6 November 2008 until 26 November 2008 as payment of his disability support pension would have ceased.
8. The Tribunal was satisfied that all reasonable attempts had been made to notify Mr Chambers of the hearing and proceeded to hear the appeal in his absence.
Issues:
9. Mr Chambers has not disputed having received a lump sum compensation payment on 25 July 2007 in the sum of $275,000.00 in settlement of a common law claim for damages. This is despite Mr Chambers having ticked the "no" box in his original claim for Newstart Allowance dated 26 March 2007 in response to the question:
"Have you claimed, or are you entitled to claim compensation or damages from an accident, illness or injury".
10. There is verification of the payment in the T Documents, which were tendered in evidence. (T8 Deed of Release, T9 Letter from Victorian Workcover Authority, T10 Letter from Arnold, Thomas & Becker Lawyers, T11 Advice of Compensation Payment, T13 Settlement Statement from Arnold, Thomas & Becker, Lawyers)
11. The settlement statement from Mr Chambers' awyers, Arnold, Thomas & Becker (at T13) indicates that from the settlement monies received in the sum of $275,000.00, costs in the order of $33,000.00 were deducted and the balance sum of $242,000.00 was forwarded to Mr Chambers. Despite this, Mr Chambers failed to declare receipt of the monies in his application for payment of Newstart completed on 1 August 2007 (T28), which included a section asking whether he had been paid compensation or claimed compensation in the period Thursday 19 July 2007 to Wednesday 1 August 2007, in response to which Mr Chambers ticked the "no" box.
12. On the basis of the documentation contained in the T Documents the Tribunal is satisfied that Mr Chambers was paid lump sum compensation of $275,000.00 in settlement of his claim.
13. The issue for the Tribunal to determine is whether "special circumstances" exist that make it appropriate to treat the whole or a part of the compensation payment as not having been made.
14. It was conceded by the Secretary that Mr Chambers otherwise meets the qualification requirements for a disability support pension (DSP).
The Legislation:
15. Payment of a DSP is made pursuant to the provisions of the Social Security Act 1991 (the Act). Chapter 3 contains the general provisions relating to payability and rates. Division 3 of Part 3.14 contains the provisions that relate to receipt of lump sum compensation payments.
16. Section 1169 provides that "compensation affected payments" are not payable during a lump sum preclusion period.
17. A compensation affected payment includes DSP under section 17(1) of the Compensation Recovery Definitions Provisions.
18. Section 17(2) states that "compensation" means:
"(2) Subject to subsection (2B), for the purposes of this Act, compensation means:
(a) a payment of damages; or
(b) a payment under a scheme of insurance or compensation under a Commonwealth, State or Territory law, including a payment under a contract entered into under such a scheme; or
(c) a payment (with or without admission of liability) in settlement of a claim for damages or a claim under such an insurance scheme; or
(d) any other compensation or damages payment;
(whether the payment is in the form of a lump sum or in the form of a series of periodic payments and whether it is made within or outside Australia) that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury".
19. The terms of the Deed of Release (T8) show that the settlement sum included both pecuniary loss as well as pain and suffering damages. The Tribunal is accordingly satisfied that the settlement monies paid to Mr Chambers meet the definition of compensation under the Act and that payment of DSP is subject to a preclusion period.
20. The duration of the compensation preclusion period is determined in accordance with the provisions of section 1170. Sub-section 1170(4) states that the number of weeks in the lump sum preclusion period is calculated on the basis of the following formula:
Compensation part of lump sum income cut-out amount
21. The compensation part of a lump sum compensation payment is calculated pursuant to section 17(3)(ab)(iii) as 50% of the settlement amount. In this case, $137,500.00.
22. The Tribunal was informed that the income cut-out amount referred to in section 1170(4) was $727.63, a figure which is accepted by the Tribunal.
23. In accordance with the formula referred to in section 1170(4), the duration of Mr Chambers' preclusion period is calculated at 188 weeks which is rounded down from 188.97 weeks in accordance with the provisions in section 1170(5).
24. As the preclusion period was to commence on the day after the periodic payments ceased in accordance with section 1170(1), the preclusion period commenced on 12 June 2007 and ceases on 18 January 2011 after a period of 188 weeks.
25. This period can be reduced pursuant to the provisions of section 1184K of the Act which states as follows:
"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".
Discussion:
26. The term "special circumstances" has been considered on numerous occasions and most relevantly as follows: Beadle and Director-General of Social Security (1984) 6 ALD 1 at page 3:
"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 qualify of unusualness that permits them to be described as special ..."
27. The term was further considered by the Full Court on appeal which held that:
"... special circumstances in this context must include events which would render the (strict application of the rule in question) unfair or inappropriate".
Beadle v Director- General of Social Security (1985) 60 ALR 225 at 228.
28. The Full Federal Court stated in Dranichnikov and Centrelink [2003] FCAFC 133 at page 20:
"Other cases which have considered analogous words such as "special reasons" has 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: Jess v Scott (1986) 12 FCR 187 ...".
29. As noted in paragraph 2 above the special circumstances as found by the SSAT were based a finding that Mr Chambers' two children were in his sole care as from 12 May 2008.
30. It was submitted on behalf of the Secretary that the legal costs of $33,000.00 deducted from Mr Chambers' compensation settlement amount would not constitute special circumstances in this case. This argument was not advanced by the respondent and the Tribunal agrees that the legal costs were not so significant or unusual such as to constitute special circumstances as the term is commonly understood.
31. Two issues arise from the contention that special circumstances arose when Mr Chambers' two children came into his sole care. Firstly, whether the event in fact occurred and secondly, if it did, would it constitute special circumstances within the meaning of the Act as found by the SSAT.
32. Mr Sparkes submitted that on the basis of the evidence produced at the hearing, the Tribunal could not be satisfied that Mr Chambers' two children were ever in his sole care but that they lived with both parents during the relevant time. It could not be argued, Mr Sparkes contended, that this occurrence was in any way unusual or uncommon such as to constitute special circumstances and the Tribunal agrees.
33. The evidence submitted at the hearing included Centrelink records which are largely compiled on the basis of receipt of information, both verbal and documentary, including claim forms completed by the applicant for benefits.
34. The documentary evidence reveals that Mr Chambers was removed from property that he owns at 568 Preston Road by the police on 4 June 2008, following a domestic dispute and again on 14 August 2008 when he was taken into custody. On 8 September 2008 he advised Centrelink of his address as Apex Caravan Park. On 18 August 2008 Centrelink cancelled Mr Chambers' Family Tax Benefit (FTB) on the basis that the children were not in his sole care. The children's mother, Ms Jeffrey, was paid arrears of FTB. Centrelink records show Ms Jeffrey as residing at 568 Preston Road from 12 February 2008 and being in receipt of FTB as the children's sole carer from 1 September 2008.
35. At paragraph 31 of the SSAT's decision it is stated that the Tribunal accepted Mr Chamber's evidence that he had the care of his two children since 12 May 2008 and that this had added to his financial hardship. The SSAT considered that by not exercising the discretion to waive part of the preclusion period, the children would be at risk in that there would be inadequate funds to meet their and their father's basic needs. The SSAT did not consider that Mr Chambers could care for himself and his two children from the FTB alone which Mr Chambers received.
36. The oral evidence that Mr Chambers gave to the SSAT was not given to this Tribunal because Mr Chambers failed to appear at the hearing. There was no confirmatory documentary evidence that Mr Chambers' two children were in his sole care from 12 May 2008, apart from the fact that he was in receipt of the FT B. It is clear however, that the children are not currently in Mr Chambers' sole care. Nor were they in his sole care on 4 June 2008, which was only five days following the SSAT decision, and when he was removed from 568 Preston Road following a domestic dispute with Ms Jeffrey, the children's mother. The children remained in Ms Jeffrey's care after Mr Chambers' eviction. On 14 August 2008 Mr Chambers was again removed from 568 Preston Road and the children remained at the property with Ms Jeffrey.
37. Even if the Tribunal was to accept that the children were in Mr Chambers' care for a short period from 12 May 2008, which it does not, the period is so short that it could not possibly constitute special circumstances to justify waiving part of the preclusion period.
38. The documentary evidence produced by Centrelink contains conflicting statements as to the occupation of 568 Preston Road, such that the Tribunal is unable to be satisfied on the balance of probabilities that there was any period when Mr Chambers' two children were in his sole care.
39. The remaining question is whether there are any other circumstances that could constitute "special circumstances" within the meaning of section 1184K of the Act such as to justify a waiver of any part of the preclusion period.
40. There is a suggestion that Mr Chambers was unaware of the preclusion period. The Tribunal rejects the suggestion. Evidence was given by the solicitor who acted on behalf of Mr Chambers in the settlement of his compensation claim, Lisa Treeby. It was Ms Treeby's evidence that although Mr Chambers had not advised her that he was in receipt of a Centrelink payment, she had advised him with respect to the preclusion period.
41. There were several occasions when Mr Chambers failed to disclose receipt of his compensation payment to Centrelink, presumably because he was aware that it would effect his pension entitlements. There is evidence that Mr Chambers was being paid Newstart Allowance at the same time that he was receiving periodic workers compensation payments in the sum of $1,100.00 gross per fortnight.
42. It was submitted on behalf of the Secretary that the result of the SSAT's decision was to place Mr Chambers in a better financial position than he would otherwise have been had he used the compensation payment for its intended purpose. And as stated by Deputy President Forgie in Groth and Secretary, Department of Social Security (1995) 37ALD 797 referring to the provisions of the Act:
"... the provisions are intended to ensure that the person is not paid from two sources in respect of the same period of time".
43. Mr Chambers' claim for DSP was made on 14 November 2007. On his Income and Assets Form in support of his application he listed the value of his household contents as $10,000.00 and his Westpac bank account balance at $200.00. He also owned a property at 568 Preston Road, North Motton in Tasmania which he had purchased on 4 October 2007 for $173,000.00 and a motor vehicle purchased in August 2007, which had a value of around $9,000.00.
44. The Westpac bank statements tended in evidence show that the sum of $242,000.00 was deposited on 25 July 2007 and $200,000.00 was transferred on 21 August 2007, leaving a balance of $19,808.64 in the Westpac account. Sizeable withdrawals were made from the account over subsequent weeks with a balance of $55.56 being recorded on 28 September 2007. In effect over a nine week period Mr Chambers had spent most, if not all, his compensation monies.
45. Mr Sparkes submitted that Mr Chambers currently has access to resources which could be realised to provide for his future needs. His property at 568 Preston Road is presently on the market for $175,000.00. The house is obviously not required for Mr Chambers' living arrangements as he no longer resides at the property. Mr Sparkes pointed out that the sale proceeds would well and truly cover the balance of the preclusion period.
46. In conclusion the Tribunal finds that there are no circumstances in this case that constitute special circumstances as this phrase is now understood that warrant a waiver of any part of the preclusion period. The Tribunal accordingly sets aside the decision of the SSAT and affirms the terms of the decision of the Centrelink delegate made on 11 December 2007 imposing a lump sum preclusion period from 13 June 2007 to 18 January 2011.
I certify that the 46 preceding paragraphs are a true copy of the reasons for the decision herein of Ms A F Cunningham (Senior Member)
Signed: .............................
R Hunt (Administrative Assistant)Date/s of Hearing 26 November 2008
Date of Decision 15 December 2008
Solicitor for the Applicant Mr B Sparkes, Centrelink Legal Services
Solicitor for the Respondent No appearance by the respondent on his own behalf
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