Craig Austin and Secretary, Department of Social Services
[2014] AATA 516
•29 July 2014
[2014] AATA 516
Division GENERAL ADMINISTRATIVE DIVISION File Number
2014/1658
Re
Craig Austin
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Mr R G Kenny, Senior Member
Date 29 July 2014
Place Brisbane The Tribunal affirms the decision under review.
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Mr R G Kenny, Senior Member
CATCHWORDS
SOCIAL SECURITY – Pensions, benefits and allowances – Settlement of compensation claim – Lump-sum compensation payment includes component referable to lost earnings and capacity to earn – Imposition of preclusion period – Use of Guide to Social Security Law - Special circumstances not established for part of settlement to be treated as not having been received – Preclusion period not shortened – Decision under review affirmed
LEGISLATION
Social Security Act 1991 (Cth) ss 1170, 1184K
CASES
Angelakos v Secretary, Department of Employment and Workplace Relations (2007) 100 ALD 9
Brodley and Secretary, Department of Social Security [1991] AATA 669
Director-General of Social Services v Hales (1983) 47 ALR 281
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Lazarov and Secretary, Department of Family and Community Services [2004] AATA 743
Re Hajar and Secretary, Department of Social Security (1988) 16 ALD 716
Secretary, Department of Family and Community Services v Allan (2001) 66 ALD 147
Secretary, Department of Social Security v Smith (1991) 23 ALD 277
Winterbotham and Secretary, Department of Social Security [1990] AATA 808
SECONDARY MATERIALS
Guide to Social Security Law, Australian Government
REASONS FOR DECISION
Mr R G Kenny, Senior Member
29 July 2014
BACKGROUND
Craig Austin (“the applicant”) was injured in a motor vehicle accident on
10 December 2007. In settlement of the compensation claim associated with his injuries, he was awarded two lump sum payments which totalled $265,750. On 27 March 2012, Centrelink determined that, as a result of his lump sum payments, the applicant would be subject to a preclusion period from 22 March 2012 until 22 April 2015. The effect of the Centrelink decision was that the applicant was precluded from receiving forms of income support payments, including Newstart Allowance, under the Social Security Act 1991 (Cth) (“the Act”) during the preclusion period. On 6 January 2014, the applicant applied for Newstart Allowance. His claim was rejected on the same day and that decision was affirmed by an authorised review officer on 21 January 2014 and, in turn, by the
Social Security Appeals Tribunal (“SSAT”) on 3 March 2014.
ISSUES AND LEGISLATION
The applicant did not dispute the imposition of the preclusion period or its duration. I am satisfied that this has been correctly calculated in accordance with s 1170 of the Act.
The applicant was concerned that there were special circumstances applying to his situation which required that some part of his settlement monies be disregarded so that the preclusion period would be shortened. That is the issue for determination. The relevant provision of the Act reads:
Section 1184K Secretary may disregard some payments
(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.
EVIDENCE
The applicant
The applicant’s work history includes the driving of interstate transport vehicles, and the compensation paid to him related to injuries he received when a truck he was driving was involved in an accident in which he sustained injuries to his neck, shoulders, legs, pelvis, right arm, wrist and right hip.
The applicant conceded that he had received notification from Centrelink in March 2012 and in April 2012 in which he was advised of the imposition of the preclusion period and of the consequences to him associated with that period. Despite that, he purchased a house in April 2012 for $147,000. It is not subject to a mortgage. He also bought a Holden utility vehicle in that year for $25,000. Days after the house purchase, it was partly consumed by fire. The house was insured and the insurance company obtained two quotations for repairs to be carried out. These were in the amounts of $65,000 and $30,000, respectively.
The insurance company selected the lower of the two quotations and forwarded $30,000 to the applicant. He engaged a builder other than the one who provided the lower quote. This was because, he said, at the time when that builder came to the house to give the quotation, he told the applicant that he did not want the job and would provide a lower quote to ensure that he would not be selected by the insurance company to carry out the repairs. The sum of $30,000 paid by the insurance company was not sufficient for the repairs to be completed and he outlaid an additional $70,000 of his own funds to complete the work. The remainder of his compensation monies has been spent on general living costs and also the costs associated with renting premises while his house was under repair.
The applicant now has no cash in hand and has a debt of approximately $300 to his bank. He is in arrears in relation to periodic payments for services such as electricity and will be unable to meet upcoming expenditure on rates. He lives alone and has a daughter for whom he has been paying child support but is currently in arrears. He said his daughter will be 18 years of age in November this year.
The applicant has listed his house for sale with a local agent who has advised him it is valued at between $220,000 and $240,000. Apart from his house and furniture, his only asset is the utility vehicle which he has advertised for sale with a price of $15,000.
The only interest in the vehicle was from the owner of a used car dealership who offered him $5,000. He rejected this offer because he feels the offer was unrealistically low and was confident that the dealer would sell if for a much higher price. He said that the vehicle had been damaged previously and was listed on a “written-off vehicle register” maintained by the Queensland Department of Transport and Main Roads. As such, he understood that he was able to sell it privately without advising the purchaser of that listing but that a dealer was obliged to advise a purchaser. He said that this would make it difficult for a dealer to sell the vehicle at an inflated price. At the time of claiming Newstart Allowance, a Customer Declaration Form was completed. Therein, he listed that vehicle and a second vehicle which he values at $4,500. He said that the engine in that vehicle “blew up” and he sold it for $1,000 after the SSAT hearing in March 2014.
The applicant has health concerns. He has diabetes mellitus and needs medication in the form of insulin injections on a daily basis. His supply of this medication is almost depleted and he cannot afford to replenish it. He has developed a painful back condition which manifests itself in severe sciatic pain in his leg and foot. He said that was not associated with the injuries for which he received his compensation payments. He has received spinal injections for this but these have not relieved his pain. He is hopeful that he will overcome his sciatic pain to the extent that he will be able to return to employment as a driver.[1]
Other evidence
[1] After the hearing, the applicant provided two documents. On 5 July 2014 he advised that, on 3 July 2014, he had a further injection which failed to relieve his pain. On 23 July 2014 he provided a report, dated 17 July 2014, fromIn evidence was a letter to the applicant from a sales consultant with a real estate agency located near where the applicant lives. The consultant estimated the value of the house to be $220,000 to $240,000 with the option of a marginally higher listing price.
Dr Michael McLean, the applicant’s general practitioner since April 2014, completed a medical certificate on 21 May 2014 in which he advised that the applicant was unfit for work because of “low back pain/radiculopathy”.
SUBMISSIONS
The circumstances which the applicant relied upon to show that his case was special, such that s 1184K of the Act would apply, were his financial position and his health concerns. He submitted that his financial situation was such that the preclusion period should be shortened to enable him to access income support payments, clear his debts, pay his bills and purchase medication. He submitted that, having bought his car for $25,000, he would be losing $20,000 if he sold it for $5,000 and would be disadvantaged without his own means of transport. He submitted that he was a victim of circumstance in having a vehicle accident and a house damaged by fire.
For the respondent, Mr McQuinlan submitted that there were no special circumstances to justify making any adjustment to the preclusion period. He submitted that, based on the evidence concerning the value of the house, it was appropriate that the applicant sell it and that, by so doing, he would be in much the same position financially as he was when he received his compensation payment. He submitted that the current value of the house approximated the amount of compensation which he was paid. In particular, he submitted that the applicant purchased the house with full knowledge of the significance of the preclusion period. He submitted that it was not the intent of the Act to allow such an asset to be retained so that he could receive Centrelink benefits. He also submitted that the applicant should investigate further the selling of his car and noted that, even if it sold for $5,000, those monies would assist him with his immediate financial concerns.
Mr McQuinlan submitted that the decision under review ought be affirmed.
CONSIDERATION
The purpose of the provisions relating to preclusion periods has been described as operating as a:
fair balance of the interests of the recipient of the payment with the competing interests of others in the community whose needs must be met as far as possible from a finite budget allocation for social security measures.[2]
[2] Secretary, Department of Social Security v Smith (1991) 23 ALD 277 at 281-282.
Similarly, they have been described as a safeguard against “double dipping” in that:
People should not receive social security payments for loss of earnings where they have received compensation for that same loss of earnings from another source.[3]
[3] Secretary, Department of Family and Community Services v Allan (2001) 66 ALD 147 at 148.
Those considerations must be kept in mind when determining, for the purposes of applying s 1184K(1) of the Act, whether or not special circumstances exist in a given case. The issue of special circumstances arises in various parts of the Act. In the context of other aspects of the Act, it was observed that what is required is:
something to distinguish [the] case from others, to take it out of the usual or ordinary 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.[4]
[4] Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545.
That observation is equally applicable to s 1184K(1) of the Act. Accordingly, there must be something about the applicant’s situation which makes it unfair, unusual or uncommon such that it distinguishes it from the ordinary or usual case.[5] I am satisfied that the applicant’s circumstances do not meet that description.
[5] Angelakos v Secretary, Department of Employment and Workplace Relations (2007) 100 ALD 9 at 18.
The breadth of discretion in s 1184K(1) of the Act is such as to accommodate health problems. The applicant experiences problems with low back pain and sciatica which would seem to be unrelated to the accident which led to his compensation payment.
He has undergone injection procedures with Dr McLean but these have not relieved his pain. He has insulin dependent diabetes and has almost depleted his current supply of this medication. Also, he has been unable to make payments of periodic expenditure on service items such as electricity.
Special circumstances may be found in financial hardship where that goes beyond straitened circumstances and are truly exceptional.[6] While I accept that the applicant is experiencing financial difficulty, I am satisfied that this does not reach that level because of his assets in the form of a car and his house. He has attempted to sell his car. That may prove difficult because it is listed on a written-off vehicle register. However, he has been offered $5,000 for it from a dealer and the realisation of that sum would enable him to provide for himself for at least part of the remaining preclusion period. He has listed his house for sale. In the event that the sale occurs, he would realise an amount of money at least equal to his compensation lump sum.
[6] Director-General of Social Services v Hales (1983) 47 ALR 281 at 321.
I accept the applicant’s evidence that he has not wasted his settlement monies. It may have been prudent of him to purchase the house. But he did so at a time when he was well aware of the need to provide for his needs for the three years before the preclusion period ended. He was unfortunate in that the house was damaged by fire shortly after its purchase. However, it was insured. I am unable to accept his version of the reason, apparently given to him by the builder who did not want the work, and that the builder lodged a low quote to ensure that he did not get the work. Such an approach does not accord with common sense. No convincing explanation was given as to why the applicant did not approach that builder or the insurance company about the builder honouring his quotation. In the result, he outlaid a significantly larger amount than either of the quoted sums.
As submitted by Mr McQuinlan, there is authority that a person in the applicant’s position be required to sell an asset rather than permitting him access to income support payments. That reflects the purpose of the Act as noted above.[7] In Re Hajar and Secretary, Department of Social Security,[8] the Tribunal said:
It is inequitable for the applicant to claim financial hardship when he owns such a valuable asset and does nothing to realise on it, particularly, when the lack of encumbrances has been brought about by diversion of some of the compensation moneys that led to the present application.
[7] See paragraphs 13 and 14 (above).
[8] (1988) 16 ALD 716 at 720. See also Lazarov and Secretary, Department of Family and Community Services [2004] AATA 743.
I am satisfied that such is particularly so when, as in this case, the house is unencumbered by a mortgage.[9] I agree with the following comment by the Tribunal in Winterbotham and Secretary, Department of Social Security,[10] when the Tribunal said:
As to the submission that the respondent should not be forced to sell his house, the Tribunal would compare his position with that of another recipient of a compensation award who chooses to expend his compensation moneys on investments. Should there be any difference between one who invests his money in stocks and shares and one who invests in real estate? Neither should expect the tax-payer to support him while he holds on to assets he could well realise and use to support himself. This is not to say that the Tribunal seeks to force the respondent to sell his house; or even recommends that course of action. It is not the Tribunal's role to do that. At the same time, the Tribunal cannot ignore the view that the selling of the house is one way by which the applicant could resolve his present difficulties. It is an evident cause of action, although not by any means the only one
[9] See Brodley and Secretary, Department of Social Security [1991] AATA 669 at [17].
[10] [1990] AATA 808 at [25].
The applicant’s house, in effect, represents his compensation in a different form. In that, he is in a better financial position than many other recipients of social security payments. He has health concerns relating to his back and diabetes mellitus. The realisation of his assets will enable him to continue with his medication regimen for his back and diabetic condition.
I am satisfied that there are no circumstances, either individually or in conjunction with each other, that are special such as to meet the requirements of s 1184K(1) of the Act.
DECISION
The Tribunal affirms the decision under review.
I certify that the preceding 24 (twenty-four) paragraphs are a true copy of the reasons for the decision herein of Mr R G Kenny, Senior Member ..............................Sgd..........................................
Associate
Dated 29 July 2014
Date of hearing 18 June 2014 Date final submissions received 14 July 2014 Applicant In person Advocate for the Respondent Mr Rick McQuinlan, Department of Human Services
Dr Michael McLean which, in so far as relevant, advised that the applicant was awaiting treatment through the public hospital system.
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