Coppard and Secretary, Department of Family and Community Service S
[2003] AATA 640
•7 July 2003
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2003] AATA 640
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2002/1234
GENERAL ADMINISTRATIVE DIVISION ) Re PAUL COPPARD Applicant
And
SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION
Tribunal Mr S. Webb Date7 July 2003
PlaceSydney
Decision The Tribunal affirms the decision under review.
……………………………………
Mr S. Webb, Member
CATCHWORDS
SOCIAL SECURITY - compensation recovery – lump sum compensation preclusion period – recovery of compensation affected payments – debt to the Commonwealth - whether special circumstances exist – whether the duration of the preclusion period should be reduced – decision affirmed
LEGISLATION
Social Security Act 1991 sections 17, 1165 (repealed), 1166 (repealed), 1169, 1170, 1178, 1179, 1184F, 1184K, 1225 (repealed)
CASE LAW
Re Ivovic and Director-General of Social Security (1981) 3 ALN N95
Re Beadle and Secretary, Department of Social Security (1984) 6 ALD 1
Beadle v Director-General of Social Security (1985) 7 ALD 670
Secretary, Department of Family & Community Services v Allan (2001) 116 FCR 1
REASONS FOR DECISION
7 July 2003 Mr S. Webb 1. This application by Mr Paul Coppard (“the Applicant”) is for review of a decision of the Social Security Appeals Tribunal (“the SSAT”) dated 17 July 2002 to affirm the decision of an authorised review officer (“ARO”) on 22 April 2002 to recover a charge of $9,082.55.
2. A hearing before the Tribunal was held in Sydney on 9 May 2003 at which the Applicant was represented by Mr Michael Rollinson of counsel and the Secretary, Department of Family and Community Services (“the Respondent”) was represented by Ms Cheryl Collis of Centrelink’s Advocacy and Administrative Law Team.
3. The Applicant gave oral evidence at the hearing and the following exhibits were taken into evidence:
EXHIBIT DESCRIPTION
T1-T32Documents prepared pursuant to section 37 of the Administrative Appeals Tribunal Act1975.
A1Applicant’s bundle of documents.
A2Letter from Mr Paul Coppard dated 4 March 2003 with one attachment.
A3Submission by Mr Michael Rollinson dated 2 May 2003
R1Respondent’s Statement of Facts and Contentions dated 14 March 2003.
R2Centrelink computer screen dump dated 21 March 2003.
R3Centrelink computer screen dump dated 8 May 2003.
BACKGROUND
4. The following information is provided by way of background and is not in contention between the parties.
5. The Tribunal finds:
(a)The Applicant suffers from Chronic Fatigue Syndrome (“CFS”) which he contracted on or about 28 February 1995 following an overdose of Hepatitis B vaccinations.
(b)The Applicant brought a compensation claim against his employer in consequence of which he was awarded periodic compensation payments. He subsequently commenced a civil action on medical negligence grounds and was awarded $230,000 on 17 May 2001 (Exhibit A2 and T5). This amount included components for economic loss and is, therefore, compensation for the purposes of section 17 of the Social Security Act 1991 (“the Act”).
(c)On 7 February 2001 Centrelink informed the Applicant that Centrelink may recover a compensation charge and a lump sum preclusion period may be imposed in the event of a lump sum compensation payment (Exhibit T3).
(d)On 16 May 2001 Centrelink provided the Applicant’s solicitor with an estimate of the compensation charge (Exhibit T6).
(e)On 4 July 2001 the Applicant was informed that a lump sum preclusion period would apply from 28 February 1995 to 25 January 1999 and a compensation charge of $9,082.55 would be recovered from United Medical Protection (Exhibit T8) in consequence of the Applicant’s receipt of that amount in Sickness Benefit and Disability Support Pension (“DSP”) during the lump sum preclusion period.
(f)The Applicant sought a review of this decision and was informed on 10 August 2001 that the review had affirmed the initial decision (Exhibit T11).
(g)The Applicant pursued his appeal rights and the matter was heard by the SSAT on 20 November 2001. The SSAT decided to set aside the decision on a legal technicality)., and an amount of $9,082.55 was refunded to the Applicant (Exhibit T30).
(h)On 8 March 2002 Centrelink sent the Applicant a recovery notice in respect of the compensation charge pursuant to section 1178 of the Act (Exhibit T13). The Applicant sought a reconsideration of the decision to recover the compensation charge.
(i)On 21 March 2002 the Applicant was informed by Centrelink that the decision to recover the compensation charge was affirmed and the charge was recoverable under previous section 1166(4C) of the Act, which was in force at the time of compensation award (Exhibit T14). The Applicant sought a review of the decision.
(j)An ARO affirmed the decision to recover the charge on 22 April 2002 in response to a request by the Applicant for its reconsideration (Exhibit T20). The Applicant sought review of the decision by the SSAT without satisfaction, giving rise to the current application before this Tribunal.
ISSUES BEFORE THE TRIBUNAL
6. The only issues before the Tribunal are:
(a)whether ‘special circumstances’ exist in the Applicant’s case; and if so
(b)whether the correct and preferable decision would be to treat the lump sum compensation payment, in whole or in part, as not having been made.
LEGISLATION
7. The relevant legislation in this matter is the Social Security Act 1991 in particular sections 1169, 1170 and 1184K.
EVIDENCE OF MR COPPARD
8. Mr Coppard told the Tribunal he ceased work on medical grounds in 1997 and claimed DSP. He gave evidence that his common law damages claim was settled on 17 May 2001 for $230,000 inclusive of costs, of which he received $125,000. He stated that only $5,000 of this amount remains, the balance having been spent on items listed at Exhibit A1 and other expenses, including vehicle repairs, house renovations and living costs.
9. Mr Coppard informed the Tribunal his symptoms had improved, but that this was a gradual, on going process. He said his condition had improved despite being unable to afford and, in consequence, take the medications and vitamin treatments prescribed by his treating doctor (Exhibit A2). He told the Tribunal he has not been assessed by his treating doctor for more than twelve months but “keeps in touch”. It was his evidence that he takes “alternative medications” that have been approved of by his treating doctor and are cheaper, namely “Usana Mega-Antioxidant, Usana Multi-mineral and Usana Cal/Mag Plus”.. Mr Coppard informed the Tribunal that his wife and children are all in good health.
10. Mr Coppard gave evidence that he lives with his wife and three dependent children in a house that they own without encumbrance. He said the family sold an investment property and used the proceeds, $112,000, to pay out a mortgage on the primary residence. He informed the Tribunal that the family has lived in this house for 12 or 13 years and has been progressively renovating it during that time. He told the Tribunal that before his injury he conducted much of the renovation work himself, only occasionally engaging the services of contractors, but since the injury he has not been able to undertake such work and has had to rely upon contractors. In his evidence in chief, Mr Coppard told the Tribunal the renovation works were essential and not discretionary, listing porous roof tiles, rusted guttering, damaged built-in wardrobes and damaged bathroom tiles as examples.
11. Mr Coppard informed the Tribunal that his three children have all attended a private Christian school since commencing school. He said his eldest son is now attending TAFE, studying computing. He gave evidence that he had not been able to pay the school fees in the period after his injury and prior to settlement of his compensation claim, in consequence of which it was necessary to pay $11,000 in arrears from the settlement monies. He told the Tribunal he purchased a computer for his son to assist with his studies.
12. Mr Coppard told the Tribunal he and his wife are members of a church and pay 10percent of their income in the form of a tithe to that church. He stated that he has paid the tithe for a period of 25 years. Mr Coppard informed the Tribunal that 10percent of the compensation settlement monies, an amount of $12,500, was paid as a tithe to the church and that 10percent of their fortnightly income, an amount of $150 per fortnight, is expended in this way.
13. Mr Coppard told the Tribunal his wife is employed on a regular part-time basis by the YWCA, earning between $275 and $570 per fortnight depending on her hours of work. It was his evidence that his wife also studies on a part-time basis and does most of the housework. Mr Coppard stated that he has been employed during school holiday periods in the position of projectionist at a local cinema. He informed the Tribunal that he was able to cope with this work as it was not heavy or too demanding and that he had earned between $160 and $400 per fortnight. He opined, however, that he would not be able to sustain such employment over a longer period because of his condition. It was his evidence that he could do some housework, such as washing and cleaning, but not chores such as vacuuming.
14. It was Mr Coppard’s evidence that he was fully aware that a compensation charge in the amount of $9,082.55 applied in his case. Mr Coppard informed the Tribunal he appealed the decision to recover the charge from his insurer and was successful, the charge being repaid to him in consequence of an SSAT decision in his favour. He agreed that, thereafter, he was aware and had been informed Centrelink would seek to recover the charge from him personally. When asked why no provision had been made from the compensation settlement monies to cover the compensation charge, Mr Coppard stated he was not able to answer because his wife was in charge of the family finances.
15. Mr Coppard agreed that he retained in the bank an amount of approximately $19,000 in November 2002, but now has only approximately $5,000 remaining. When questioned about the expenditure of these funds, Mr Coppard told the Tribunal no provision had been made to cover the possible repayment of the compensation charge. He gave evidence that he had used the money to purchase new cabinets, including a television/entertainment cabinet and a bookcase, at a cost of $2,200 and a new television set to replace an old one which was faulty at a cost of $900. He told the Tribunal he had spent “over $1,000” repairing the family Starwagon while on holiday and purchasing four new tyres. Mr Coppard explained that the family holiday comprised one week in a cabin on a lake near Foster, which cost approximately $400 plus food and petrol. He said the family had been taking annual holidays in this location for many years and in previous years had taken longer and more frequent holidays, but he could no longer afford to do this since his injury.
SUBMISSIONS AND FINDINGS
16. The Tribunal carefully considered all the evidence, the submissions of the parties, relevant legislation and caselaw in reaching the correct and preferable decision in this matter.
17. The Tribunal finds the Applicant to be a witness of truth who gave his evidence openly and without guile to the best of his recollection.
18. It is not in dispute between the parties and the Tribunal finds that the Applicant received $230,000 in a lump sum compensation payment in consequence of which a lump sum preclusion period applies. The Tribunal finds and the parties agree that the lump sum preclusion period was correctly calculated to commence on 28 February 1995 and cease on 25 January 1999. The parties agree and the Tribunal finds that the Applicant received an amount of $9,082.55 in compensation affected payments during the lump sum preclusion period.
19. Mr Rollinson, for the Applicant, conceded that the facts set out in the Respondent’s Statement of Facts and Contentions (Exhibit R1) are not in issue. The Applicant’s circumstances are within the terms of current section 1169 and previous section 1165 of the Act, whereby no compensation affected payment was payable to the Applicant during the (new) lump sum preclusion period. In the circumstances, the amount that is recoverable by the Commonwealth from the Applicant is to be worked out pursuant to section 1179 of the Act.
“1179 The section 1178 recoverable amount
The recoverable amount under this section is equal to the smaller of the following amounts:
(a) the compensation part of the lump sum compensation payment;
(b) the sum of the payments of the compensation affected payment made to the person in relation to a day or days in the lump sum preclusion period.
20. The Applicant was sent a recovery notice (Exhibit T13) on 8 March 2002 pursuant to section 1178 of the Act, which relevantly provides:
“1178 Repayment of amount where both lump sum and payments of compensation affected payment have been received
1178(1) If:
(a) a person receives a lump sum compensation payment; and
(b)the person receives payments of a compensation affected payment in relation to a day or days in the lump sum preclusion period;
the Secretary may, by written notice to the person, determine that the person is liable to pay to the Commonwealth the amount specified in the notice.
…”
21. Previous section 1166, which was in force at the date of the original decision in this matter, had the same effect in the Applicant’s circumstances as current sections 1178 and 1179, and relevantly provides:
“1166 Person may have to repay amount where both lump sum and payments of compensation affected payment have been received
1166 (1) If:
(a) a person receives a lump sum compensation payment; and
(b)the person receives payments of a compensation affected payment for the lump sum preclusion period;
the Secretary may, by written notice to the person, determine that the person is liable to pay to the Commonwealth the amount specified in the notice.
1166 (2)Subject to subsection (5), the amount specified in the notice is the recoverable amount and is worked out under sections 5(3), (4), (4A) and (4C).
…
1166 (4C) If:
(a) the person is a member of a couple; and
(b)the person receives a lump sum compensation payment on or after 20 March 1997;
the recoverable amount is equal to the smaller of the following amounts:
(c)the compensation part of the lump sum compensation payment;
(d)the sum of the payments of the compensation affected payment made to the person for the new lump sum preclusion period.
…”
22. This being the case, the amount specified in the recovery notice, $9,082.55, is recoverable and is a debt to the Commonwealth for which the Applicant is liable pursuant to section 1184F or the equivalent previous section 1225 of the Act. The Tribunal so finds.
23. The sole issue to be determined by the Tribunal, therefore, is whether there are special circumstances that would warrant exercise of the discretion provided in section 1184K of the Act. Section 1184K provides:
“1184K Secretary may disregard some payments
1184K(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.
…”
24. The Tribunal is mindful of the authorities in relation to interpretation of the term ‘special circumstances’.. In relation of a similar provision under the Social Security Act 1947, the Tribunal said in Re Ivovic and Director-General of Social Services (1981) 3 ALN N95 at N97:
“The reference to special circumstances ‘by reason of which’ a person liable ‘should be released’ requires, in our view, that there must exist in the circumstances of the case, a factor or factors which justify the making of an exception in whole or in part to the principle of liability which the Act otherwise establishes.”
Toohey J in Re Beadle and Secretary, Department of Social Security (1984) 6 ALD 1 said 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 context that 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 quality of unusualness that permits them to be described as special.”
25. This passage was approved of by the Federal Court in Beadle v Director-General of Social Security (1985) 7 ALD 670 and is often quoted in such cases. Heerey J said in Secretary, Department of Family & Community Services v Allan (2001) 116 FCR 1 at paragraph 17:
“It is not sensible to lay down precise limits or precise rules as to what may constitute special circumstances: Beadle v Director General of Social Security (1985)7 ALD 670; at 673; 60 ALR 225 at 228. Ill health, financial circumstances and the unfairness of a strict application of the Act are some matters which may in an individual case, constitute special circumstances: Kirkbright v Secretary, Department of Family and Community Services (2000) 106 FCR 281; at 284-7; 65 ALD 211; 32 AAR 120; see also Kertland v Secretary, Department of Family and Community Services (1999) 95 FCR 64 at 71; 57 ALD 600; at 607.”
26. In the present case, Mr Rollinson submitted that the average fortnightly household expenditure incurred by the Applicant and his family exceeds their combined average fortnightly income. He contended that this imbalance was the result of Centrelink’s recovery of the debt by deduction, with the effect that the Applicant cannot afford to purchase medication that has been approved of, in lieu of prescribed medications, by his treating doctor. In Mr Rollinson’s submission these circumstances constitute special circumstances, whereby the discretion not to recover the debt should be exercised.
27. Ms Collis, for the Respondent, submitted that the Applicant’s financial circumstances were not exceptional or unusual and could not be considered to represent financial hardship to the extent that it would be appropriate to exercise the discretion under section 1184K. In Ms Collis’ submission the Applicant has significant discretionary expenditure within the family’s fortnightly budget as estimated (Exhibit A3, Annexure B) to enable him to repay the debt by fortnightly deduction without undue difficulty. She noted that the Applicant's own evidence was that he retained an amount of approximately $5,000 in a building society account. This, Ms Collis contended, was approximately equivalent to the balance of the debt remaining, which stood at $5,799.45 on 8 May 2003 (Exhibit R3), and could be used to substantially reduce the debt. In Ms Collis’ submission, the Applicant had expended his compensation lump sum in a frivolous and extravagant manner, expending large amounts on renovations that were not essential and on “lifestyle” items, including:
· musical instruments for his children ($2,500);
· a broadcast quality video camera and related equipment ($9,000);
· a motor cycle ($12,500);
· a family holiday in New Zealand ($12,000); and
· church tithe ($12,500).
28. In Ms Collis’ submission, the musical instruments, the video camera and the motor cycle could be sold and the proceeds used to repay the Applicant’s debt to the Commonwealth. Ms Collis contended that the on going payment of $150 per fortnight in tithes to the church was a matter of discretion, which indicated the Applicant’s capacity to both afford to repay his debt and purchase approved treatments for his medical condition. In these circumstances, Ms Collis submitted it would not be reasonable or appropriate to reduce the Applicant’s debt thereby releasing him from his liability under the Act at the expense of the taxpayer.
29. The Tribunal finds the Applicant has significant tradeable assets, which include his unencumbered house, broadcast-quality video equipment, a Yamaha motorcycle, a new television and a recent model Mitsubishi Starwagon. Many people who rely upon social security payments for their income do not possess such assets and are in impecunious circumstances. The same cannot be said of the Applicant. The Tribunal accepts that his financial circumstances are made difficult by his incapacity but is satisfied that some of his assets are not essential and could reasonably be liquidated without having an unduly harsh effect upon his family.
30. The Applicant submitted that he purchased the video camera having completed a video production course with the intention of developing a video production business. When questioned on this claim by the Tribunal, he acknowledged that he was not actively pursuing this plan and the video camera was used for family and occasional church purposes. The Tribunal accepts that the Applicant intended to use the video equipment professionally and that such a plan is reasonable in his circumstances. The fact is the Applicant is not actively pursuing his original notion and the video equipment is not being used professionally, whereby there is no reason to consider its sale unreasonable. The Tribunal so finds.
31. The Applicant gave evidence that he purchased the motorcycle to alleviate marital difficulties between he and his wife arising in consequence of his medical condition. He told the Tribunal that he and his wife shared an interest in motorcycle riding before the birth of their children and intended to use the motorcycle to share time together and resolve their marital difficulties. When questioned on this point, the Applicant told the Tribunal he and his wife have resolved their marital difficulties and use the motorcycle only on occasional weekends. The Tribunal accepts that the motorcycle has performed a useful role in the context of the Applicant’s marriage. The Applicant’s own evidence was that his marital difficulties have been resolved and the motorcycle is used only occasionally. The Tribunal is satisfied there is nothing to suggest any adverse consequences or significant effects would follow, were the vehicle to be sold by the Applicant and the proceeds used to repay his debt to the Commonwealth. The Tribunal so finds.
32. Considering Mr Rollinson’s submission that the Applicant’s fortnightly family income does not exceed his family’s fortnightly expenditure, the Tribunal is not persuaded this situation constitutes ‘special circumstances’ for present purposes. There can be no doubt that the fortnightly payment of $150 in the form of a tithe to the Applicant’s church is discretionary expenditure.
33. The evidence is that the Applicant’s CFS symptoms are improving gradually and his capacity for employment is increasing. The Applicant agreed that the improvement in his condition was occurring despite his failure to take the vitamin supplements and anti-oxidants that had been approved by his doctor and without the need for him to consult his doctor during the past twelve month period. The Tribunal so finds. The Tribunal is satisfied the Applicant’s health circumstances are not special when considered in the context of others who qualify for and receive DSP.
34. The Tribunal is left in no doubt that the Applicant’s health, financial and family circumstances do not constitute special circumstances whereby it would be appropriate to enliven the discretion provided by section 1184K of the Act. The Applicant’s financial circumstances cannot be characterised as more straitened than the financial circumstances of most families who rely upon social security payments for their income. The fact is the Applicant and his wife have some capacity to generate income and are doing so. They have assets that could reasonably be sold without any detrimental effect of significance upon the Applicant’s health or family. They have a cash reserve of approximately $5,000 that could reasonably be used to substantially reduce the debt. That the Applicant and his wife expend 10 percent of their income in tithes to their church provides some measure of their financial capacity to repay the debt to the Commonwealth.
35. Taking all these factors into account and considering the totality of the Applicant’s circumstances, the Tribunal is satisfied that no special circumstances exist to warrant reducing the Applicant’s debt to the Commonwealth, in consequence of which the SSAT decision must stand.
DECISION
36. The Tribunal affirms the decision under review.
I certify that the 36 preceding paragraphs are a true copy of the reasons for the decision herein of Mr S. Webb, Member
Signed: A. Krilis
AssociateDate/s of Hearing 9 May 2003
Date of Decision 7 July 2003
Counsel for the Applicant Mr Michael Rollinson
Advocate for the Respondent Ms Cheryl Collis
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