Conlon; Secretary, Department of Family and Community Services an D
[2003] AATA 1322
•22 December 2003
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2003] AATA 1322
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2003/1150
GENERAL ADMINISTRATIVE DIVISION ) Re Secretary, Department of Family and Community Services Applicant
And
Gabrielle Conlon
Respondent
DECISION
Tribunal M.A. Griffin Date22 December 2003
PlaceSydney
Decision The decision under review is set aside and in substitution therefore the Tribunal decides that such part of the compensation received by Mrs Gabrielle Conlon be disregarded so that the preclusion period ends on 22 December 2003.
[Sgd] M.A. Griffin
Member
CATCHWORDS
SOCIAL SECURITY - compensation payment - preclusion period - special circumstances - decision set aside
Social Security Act 1991 s 1184K(1)
Dranichnikov v Centrelink [2003] FCAFC 133
Kertland v Secretary, Department of Family and Community Services (1999) 95 FCR 64
Groth v Secretary, Department of Social Security (1996) 40 ALD 541
Director-General of Social Services v Hales (1983) 47 ALR 281
REASONS FOR DECISION
22 December 2003 M.A. Griffin, Member 1. This is an application by the Secretary, Department of Family and Community Services (“the Department”) for review of a decision of the Social Security Appeals Tribunal (“SSAT”) dated 6 June 2003 which set aside a decision of an authorised review officer (“ARO”) of Centrelink and substituted a new decision that such part of the compensation received by Mrs Gabrielle Conlon be disregarded as results in the preclusion period ending on 6 June 2003 (T2). On 30 December 2002 the ARO decided to impose a compensation preclusion period from 17 October 2001 to 22 June 2004.
2. At the hearing of this matter on 30 October 2003, the Department was represented by Ms Cheryl Collis, a Centrelink advocate. Mrs Conlon was represented by Ms Dianne Anagnos, a solicitor from the Welfare Rights Centre. The Tribunal had before it the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975, as well as exhibits marked A1 and A2 for the Department and R1-R3 for the Mrs Conlon, the Respondent.
BACKGROUND
3. On 29 April 1999, Mrs Conlon suffered injury in a motor vehicle accident driving home from work. She claimed compensation and on 16 October 2001 the matter was settled for a lump sum amount of $166,398.27. There was an economic loss component in the settlement sum. On 25 October 2001, Centrelink calculated that Mrs Conlon was precluded from receiving social security payments from 17 October 2001 until 22 June 2004 according to a statutory formula applied to the compensation part of any lump sum payment.
4. On 22 October 2002, Mrs Conlon visited her Centrelink office and asked for a review of the preclusion period. On 12 December 2002, a delegate of the Department decided there were no special circumstances to allow for reduction or avoidance of the preclusion period (T12). On 30 December 2002, an ARO affirmed the delegate’s decision (T14). On 7 May 2003, the SSAT found that Mrs Conlon’s dire financial circumstances fall within the definition of ‘special’ under section 1184K. The SSAT decided that the preclusion period should be shortened and that Mrs Conlon is eligible to be paid social security (T2, p.10). The SSAT decided the preclusion period should end on the date of its decision, being 6 June 2003.
ISSUE
5. The parties agreed at the outset that the issue for determination is:
· whether there are special circumstances that make it appropriate to disregard some or all of the compensation payment made to Mrs Conlon pursuant to section 1184K of the Social Security Act1991 (“the Act”).
EVIDENCE
6. Mrs Conlon is a fifty-eight year old married woman. She and her husband have been estranged for many years. She has four adult children and lives with one of her sons in Housing Commission accommodation. Until her accident in 1999, Mrs Conlon had worked for ten years as a machine operator for Berri, the fruit juice manufacturer. Prior to that employment, she worked for 14 years as a waitress. In the 1999 car accident she suffered injuries to her left shoulder, lower back and left leg. She had an operation on her shoulder and has restricted use of her left arm. She said she can’t use it properly and demonstrated difficulty raising her left arm above the horizontal. Mrs Conlon said she has restricted movement in her back and neck and has difficulty doing simple things, such as vacuuming her house.
7. Mrs Conlon said she received full wages from Berri for six months after the accident and then $495.00 a fortnight in workers compensation payments until the lump sum settlement. She said a doctor told her to go back to work for half a day for three to four days a week before the settlement. She said a rehabilitation lady tried to help her but eighteen months after the accident she was told there was no job suitable for her at Berri. Mrs Conlon said her employment restriction was a matter put before the court appointed arbitrator in the compensation claim legal proceedings. There was a substantial past and future economic loss component in the lump sum settlement of her compensation claim.
8. Mrs Conlon said she received approximately $107,000.00 of the total lump sum after expenses. She said she spent almost the entire sum within a year. Mrs Conlon said she received a letter from Centrelink advising her of the preclusion period. She said she didn’t think anything of it really. She said she thought she would be able to go back to work and that she never really thought about how she would get through the preclusion period. She said she contacted Woolworths about a job, where her son was working, in their warehouse but nothing came of it. She said it was stupidity on her part because she never thought she would be out of work and had never had a sum of money like this to deal with before.
9. Mrs Conlon’s written submissions describe her expenditure of the compensations payment as follows (Exhibit R1):
·car $20,000.00
·repairs to car $ 2,000.00
·holiday to Ireland $12,000.00
·furniture $15,000.00
·cars for children $ 7,300.00
·gifts to two daughters $10,000.00
·repayment of loan to son $14,000.00
·repayment of loan to friend $ 3,000.00
·repayment of loan to friend $ 5,000.00
10. Mrs Conlon said she actually bought the car on hire purchase a few months after the 1999 accident for $18,500.00 and spent $10,000.00 of the lump sum on it, leaving some three thousand dollars owing which she has not paid. The car has since been damaged in another accident and Mrs Conlon has no money now to repair the car or pay the debt owing. The finance company has instituted proceedings to recover the debt owing on the car. Mrs Conlon expects the car will soon be repossessed.
11. Mrs Conlon has fallen behind in her rental payments to the Housing Commission. Her written submissions include an eviction notice from the Housing Commission. However, Mrs Conlon said her son, who lives with her, had paid $350 of the $460 arrears in rent the previous week and she hoped to come to an arrangement with the Housing Commission to allow her to stay.
12. I went through the expenditure figures at paragraph 9 above with Mrs Conlon. There was some variation. The figures she gave me in total amounted to $87,000.00 approximately. She said the other $20,000.00 had been spent on general day to day living.
13. I asked Mrs Conlon about the trip to Ireland. She said she took her husband, from whom she has been estranged for some 18 years, on a six-week trip to Ireland, including a stay in London, to visit his family. She said she paid his costs as well as her own. She said she did this because her husband’s mother has Alzheimer’s disease and that despite their estrangement she and her husband are still good friends. Mrs Conlon said the marriage broke-up many years ago because of his alcoholism. She said he has no money. She said they had a very good time on the trip and entertained her husband’s family and friends. Indeed, Mrs Conlon said no expenses were spared. She said she spent between $12,000.00 and $15,000.00 on the trip.
14. I asked Mrs Conlon if she had made any other applications for employment besides the phone call to the Woolworth’s warehouse. She said words to the effect of ’I asked a few friends but my age and the accident is a big problem and nobody seems to want to give me a job’. She said the rehabilitation counsellor told her she was not suitable for ‘office work’ at Berri due to her level of education.
15. Mrs Conlon said she has no money. She said her son who lives with her receives Newstart allowance; the household income is about $310 per fortnight and their rent is $132.00 per week. Mrs Conlon owes about $7000.00 for her car and produced an overdue notice in the amount of $155.86 for gas and electricity. Mrs Conlon said she was aware of her limited future employment opportunities about one year before being advised of the preclusion period. Mrs Conlon said her two daughters are married with their own families and that her daughters’ husbands were employed and on reasonable incomes. She was asked why she spent thousands of dollars on gifts to her daughters during the preclusion period. She said she knew it was silly but she wanted to help her daughters.
16. Mrs Conlon was asked about providing for herself with the compensation money rather than spending a substantial amount of it on gifts to family members. She said words to the effect of “I didn’t think it would go that quick. I thought I was like a millionaire”.
17. Mrs Conlon is not presently on any medication but has a skin condition for which she has been referred by her GP to a skin specialist. At the moment she cannot afford the cost of seeing the specialist.
CONSIDERATION OF THE ISSUES
18. The relevant section of the Act is section 1184K (1) which provides:
“1184K Secretary may disregard some payments
1184(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.”
19. Ms Anagnos submitted that the term ’special circumstances’ is intended to allow the decision maker the fullest opportunity to consider the particular circumstances of each case and referred to the decision of the Federal Court in Kertland v Secretary, Department of Family and Community Services (1999) 95 FCR 64. She submitted that the discretion to disregard the whole or part of a compensation payment can be exercised where application of the usual rules would lead to a result that is unfair or inappropriate. She submitted that in this case, factors such as ill health, financial circumstances and social factors should be regarded as special circumstances.
20. In respect of ill health, Ms Anagnos referred to the recent skin rash and the restricted movement arising from the car accident. In respect of financial hardship Ms Anagnos referred to Mrs Conlon’s absence of savings or substantial assets, her debts and lack of income. In respect of social factors, Ms Anagnos referred to Ms Conlon’s social conditioning as her motivation for spending money on her family and to her lack of experience, or of advice received, in dealing with a large sum of money.
21. The Department, in their Statement of Facts and Contentions (Exhibit A1), refer to the Federal Court decision in Groth v Department of Social Security (1996) 40 ALD 541 and submit that: “in considering whether a person’s circumstances are “special” the decision maker should look at the effect upon the claimant if the waiver provisions were not applied. If the consequences are unintended by the legislation, or the effect on the person concerned was different from that which would be felt by others, the circumstances may be considered to be “special”". The Department submits “that issue must be considered in the context of the Social Security legislation bearing in mind, as the Federal Court said in Director-General of Social Services v Hales (1983) 47 ALR 281 at p321 :
“The legislation provides for the payment of a variety of benefits to different classes of people who will usually have one thing in common; they will be impecunious and in straitened circumstances””
22. The Department further submits “the intention of the legislation imposing a preclusion period upon the recipient of a lump sum compensation payment is to prevent a person obtaining the benefit of income support payments in relation to a period of incapacity (or reduced capacity) for work when they have received a lump sum settlement to compensate them for that same incapacity”.
23. The Department submits that Mrs Conlon’s expenditure of her lump sum payment was reckless and foolish and that waiver of the preclusion period would amount to double dipping. The Department submits that Mrs Conlon has normal debts and she has friends and family she can call on for assistance. The Department contends that the Mrs Conlon’s circumstances do not warrant the exercise of the discretion.
24. In reaching its decision, the Tribunal takes into account the written material, the oral evidence and the submissions made at the hearing.
25. The issue is whether or not there are special circumstances in this case, which make it appropriate to regard the whole or part of the compensation payment as not having been made. In Dranichnikov v Centrelink [2003] FCAFC 133 (19 June 2003) at paragraph 65, Hill J in considering the term ’special circumstances’ said:
“65. … The origin of the test apparently adopted by the Secretary appears to be the decision of the first instance Judge in Beadle v Directory-General of Social Security (1985) 60 ALR 225.. That was a decision under previous legislation, the history of which is referred to by French J in Secretary of Department of Social Security v Hales (1998) 82 FCR 154.. The Full Court in Beadle comprising Bowen CJ, Fisher and Lockhart JJ, however, was of the view that it was not possible to lay down precise rules as to what constituted special circumstances under the then s 102(1)(a) of the Social Security Act 1947 (Cth). Their Honours point out that the question whether there were special circumstances was one for the decision maker (in that case the Director-General) bearing in mind the purpose for which the power was given. The reference to the first instance decision from which the words “unusual, uncommon or exceptional” come was not actually affirmed by the Full Court.
66.. To some extent the question whether there were special circumstances must depend on how it came about that the error occurred. Again that is not a matter to which the decision maker apparently averted. 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 and the cases in various contexts in the decision which Lockhart, Shepherd and Burchett JJ discuss”.
26. The legislative objective of the Act can be found in the “Guide to Social Security Law” as published by the Department on its website ( where under the subheading of “Rationale for the lump sum preclusion period” it is stated that “lump sum compensation payments are treated on the basis that people who cannot work because of a compensable injury should NOT receive income support for the same period from both the social security system AND compensation payments”.
27. In Groth (supra) at 545, Keifel J in consideration of the phrase ’special circumstances’ said, “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”.
28. With these case law and policy considerations in mind, the Tribunal has had regard to the factors, which Mrs Conlon submits amount to special circumstances and to the history of Mrs Conlon’s use of her lump sum settlement. The injuries sustained in the accident have left Mrs Conlon with restricted use of her left arm and limitations in the range of physical activity she can undertake. She has a skin rash at the moment but there is no evidence before the Tribunal that this rash is of a seriously debilitating nature. It appears her treating doctor considered her fit to return to light duties at work for half a day three or four days per week some years ago. There is no evidence to indicate that she could not do such work at present.. Mrs Conlon said she wanted and expected to return to work and that was one reason why she did not pay any real attention to the preclusion period. However, other than one telephone call to Woolworths, she has not made any real attempt to return to paid employment. I find that Mrs Conlon’s health is not of itself a special circumstance.
29. As to the social factors, I have considered the submission that Mrs Conlon’s social conditioning caused her to put her family first in expending her settlement monies on them and that her social background was such that she was unable to deal with such a large amount of money. There have been several cases in which the Tribunal has considered the manner in which lump sum settlements have been expended. The reasonableness of the person’s expenditure has been a significant consideration in the determination of special circumstances. Mrs Conlon managed to expend the entire sum of $107,000.00 in less than one year. While aware of the preclusion period she did not make any financial provision to tide her over that preclusion period. She said she expected to return to work but has not made any real attempt to do so. She spent many thousands of dollars on gifts to her children and on a trip to Ireland with her estranged husband to visit his mother. The Tribunal is satisfied this pattern of expenditure was extravagant. The Tribunal does not accept that social conditioning or lack of advice can excuse or ameliorate the unreasonableness of this dissipation of the lump sum. I find that social factors affecting Mrs Conlon’s expenditure do not amount to special circumstances.
30. This leaves consideration of Mrs Conlon’s claimed financial hardship. On the evidence presented I am satisfied that Mrs Conlon is destitute. She has substantial debts, no real assets and no income. She is clearly not suited to clerical work and although she has not explored alternative types of employment, which may fall within the term ’light duties’; realistically, she has very limited employment opportunity. She has been in arrears with her rent to the Housing Commission and recently faced eviction. Her accommodation situation remains precarious and subject to her son continuing to pay her rent. Her other son has a drug problem and is not able to assist her. Mrs Conlon has two married daughters who have been the beneficiaries of substantial gifts from her lump sum settlement. However her daughters are married and have their own families to look after. Her daughters and her friends have assisted her in the past and apparently continue to do so but this assistance remains tenuous and uncertain. Mrs Conlon has worked all her life and raised four children without any apparent assistance from or reliance upon the social security system. While her expenditure of the compensation funds was profligate, it is clear that Mrs Conlon is in extreme financial hardship. The Tribunal finds that her straitened financial circumstances are so out of the ordinary as to amount to special circumstances. Mrs Conlon has managed to get by, with the assistance of others till today. In the circumstances the Tribunal considers the correct and appropriate decision is to disregard such part of the compensation received by Mrs Conlon so that the preclusion period ends on 22 December 2003.
DECISION
31. The decision under review is set aside and in substitution therefore the Tribunal decides that such part of the compensation received by Mrs Gabrielle Conlon be disregarded so that the preclusion period ends on 22 December 2003.
I certify that the 31 preceding paragraphs are a true copy of the reasons for the decision herein of M.A. Griffin
Signed: A. Krilis
AssociateDate/s of Hearing 30 October 2003
Date of Decision 22 December 2003
Advocate for the Applicant Ms Cheryl Collis
Solicitor for the Respondent Ms Dianne Anagnos
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