Curry; Department of Family and Community Services - [2002] AATA 672

DECISION AND REASONS FOR DECISION [2002] AATA 672

ADMINISTRATIVE APPEALS TRIBUNAL )

) No Q2002/287

GENERAL ADMINISTRATIVE DIVISION       )
           Re      SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
  Applicant
           And    DEBRA CURRY
  Respondent

DECISION

Tribunal Ms J Cowdroy

Date9 August 2002
PlaceBrisbane

Decision The Tribunal sets aside the decision under review and in substitution of that decision determines that the compensation preclusion period extends from 21 September 1998 to 2 March 2009.

................(Sgd).........................
Ms J Cowdroy
Member

CATCHWORDS
SOCIAL SECURITY – preclusion period – whether special circumstances exist to warrant a reduction in the preclusion period

Social Security Act 1991

Beadle v Director-General of Social Security (1983) 6 ALD 1
Re Hajar and Secretary, Department of Social Security (1988) 16 ALD 717

REASONS FOR DECISION

9 August 2002 Ms J Cowdroy

Background to the Appeal

This is an appeal against a decision of the Social Security Appeals Tribunal dated 27 November 2001. That decision set aside a decision of Centrelink that a compensation lump sum preclusion period be imposed from 21 September 1998 to 2 March 2009 and substituted its decision that the preclusion period ends on 4 March 2002.
Mr N Foster appeared for the applicant and the respondent appeared in person. The T-documents were admitted into evidence and marked E1 pursuant to s 37 of the Administrative Appeals Tribunal Act 1975. Also tendered was a report of Dr L Siegel dated 23 May 2002 which was admitted into evidence and marked E2. The matter was decided on the basis of the exhibits, the respondent's evidence and the written and oral submissions of both parties.
At issue is whether special circumstances exist which warrant disregarding any part of the compensation preclusion period.

Applicant's Case

As a result of a back injury in 1994, the respondent pursued an action for damages, which settled on 21 September 1998. Ms Curry received a lump sum of $450,000 inclusive of costs. The Secretary decided to impose a preclusion period for the period 21 September 1998 to 2 March 2009 and conveyed this decision to the respondent in a letter dated 27 October 1998.
On 11 January 1999, Ms Curry sought a review of this decision, followed by another request for review on 1 February 1999 on the basis that she had $113,000 and $100,000 respectively left of her settlement monies. By letter dated 25 March 1999, the respondent was advised that the compensation preclusion period would not be altered.
Ms Curry claimed disability support pension, and, following its rejection on 10 March 2001, she again requested review of her preclusion period. On 20 July 2001 the applicant declined to alter the preclusion period. In October of 2001, the respondent was awarded a further $24,000 in compensation, of which she received a net amount of $18,000. The Social Security Appeals Tribunal's decision to vary the preclusion period was made on the basis that Ms Curry's circumstances were "special circumstances", including "her history of psychiatric disorders, her lack of funds and her very limited capacity to work".
It was pointed out, however, that the respondent retains over half the settlement monies in the form of assets. The exercise of the discretion to find special circumstances should not occur when a person has realisable assets, which could be utilised to provide income support until the end of the preclusion period. As the respondent retains significant assets, it is not appropriate that she receive income support.
Further mitigating against the exercise of the discretion is the fact that Ms Curry was aware of the possibility of a preclusion period before she received the settlement monies and that she had been advised on 25 March 1999, when she still had over $100,000 in the bank, that the preclusion period would stand. The respondent had embarked on a period of rapid expenditure, notwithstanding that she had knowledge that the preclusion period had years to run.
Whilst the respondent indicated that she had been advised by a Centrelink officer to spend all her money, at which time she would become eligible for income support, this is improbable, given that the respondent had already been advised in writing that the preclusion period would not be altered.

Respondent's Case

Upon receiving the lump sum payment, Ms Curry purchased a house in Shell Harbour, Sydney for $180,000 and a vehicle for $36,000. She moved into the house in December of 1998. She spent no more than $5,000 on furniture. She paid off her daughter's car, which cost $18,000. She spent a lot "on silly things" and within six months after receiving the money, she was receiving treatment for agoraphobia. Her psychologist advised that shopping would be therapeutic. She subsequently became a compulsive shopper, purchasing items such as socks, underwear, and toilet paper in vast quantities. She received treatment from psychiatrist, Dr Siegel and his wife, who is a psychologist.
Her expenses included attendance at a pain management program at Royal North Shore Hospital in Sydney. She travelled to Sydney once monthly and stayed overnight. The respondent takes a number of prescribed medications, including Endone. In March 2002, the respondent moved from Sydney to Queensland. The decision to move was prompted by the fact that her daughter resides in this State and she had met a man from Queensland named Rodney Jenkins, with whom she set up home. She placed a deposit on the house in Queensland and then placed her New South Wales on the market.
There is a mortgage for $60,000 in joint names with Rodney Jenkins. The house cost $215,000 and the house in Sydney fetched $245,000. Not long after she began living with Mr Jenkins, they separated. She continues to reside in the jointly owned property and Mr Jenkins is paying the mortgage, rates, electricity and the phone bills. There are no expenses for which she is liable. She has a Health Care card to offset the cost of her prescriptions, which she estimates cost her about $50 per month.
The car that was purchased new for $35,000, now has "no value" as it is dented. However, upon questioning, she acknowledged that the vehicle is insured for $22,000. The proceeds of the sale of the Sydney property, less the amount spent on the Queensland home, yielded $18,000 which was utilised in paying off credit card debts and to meet living expenses. She did have some money put aside for an operation, of a cosmetic nature, but that will not now proceed.
In respect to living expenses, the respondent visits her daughter a couple of days per week, where some meals are provided for her. She spends very little on food, commenting that she has a small appetite. She conceded that probably her circumstances were no more special than anyone else who had received a compensation payment. She believed that she was not mentally equipped to handle a large amount of money. Following the back injury, she had developed phobias, suffered from depression, and separated from her husband, which left her feeling vulnerable. If she sees items on "special", she feels compelled to buy them.
Since moving to Queensland, the respondent has spoken to Dr Siegel on three or four occasions by phone. She has not sought any other form of psychiatric treatment or counselling for her problems.
In cross-examination, the respondent admitted that she "probably" was told that there was going to be a preclusion period before she received the compensation money. She recalled receiving a letter from Centrelink to that effect.
Even though Centrelink advised her that it would not reduce the preclusion in March of 1999, she was not greatly concerned as she "kept thinking everything will work out". This comment was made in the context of a belief held by the respondent that she would reconcile with her husband. She admitted that in January 1999, she had $113,000 left, which she knew she must make last for ten years. When she claimed for disability support pension in early 2001, she was told by a Centrelink financial planner that if she spent all her money, she would then be eligible for income support from Centrelink.
On 23 March 2000, the financial information support record states that the respondent had said she had no money. The respondent denied that this was said, as she has never been in the situation where she had no money. If she had to sell her house, she would invest the proceeds. At present, the respondent has a "couple of hundred dollars" in the bank. She will not seek income support from Mr Jenkins.

Consideration:

It is not in dispute that the respondent injured her back in 1994 and she was awarded a lump sum compensation payment of $450,000. Part of that payment encompassed a component for economic loss. The respondent does not contend that the preclusion period is incorrectly calculated. She does however, seek to have the preclusion period reduced.
It is common ground that the respondent received approximately $320,000. She also received another net amount of $18,000 in October 2001.
The monies she received were utilised to purchase a home in New South Wales and a new vehicle, as well as meeting the costs of a vehicle for her daughter. Considerable amounts were expended on various items in shopping sprees, said to have been recommended as a form of therapy for the treatment of agoraphobia.
The New South Wales property has been sold and the respondent moved to Queensland in March of this year and has purchased another property with a partner, from whom she is estranged. The respondent also purchased an investment property. Both the New South Wales house and the investment property have since been sold. The respondent purchased another house in Queensland in March this year with a partner, from whom she is currently separated. The respondent resides in that property.
The applicant contends that the Social Security Appeals Tribunal erred in deciding that special circumstances existed within the meaning of s 1184 of the Social Security Act 1991.
That section provides the decision maker with a discretion to decrease the length of the preclusion period if the following is met:
"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."
The term "special circumstances" has been considered by the Tribunal and other forums on numerous occasions. In Beadle v Director-General of SocialSecurity (1983) 6 ALD 1, Toohey J stated that the expression "special circumstances" is incapable of precise or exhaustive definition. Further he stated:
"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".
In deciding whether the respondent's circumstances are "unusual", the Tribunal makes the comment that many preclusion matters that come before it relating to the situation where a recipient of a lump sum of compensation has spent all their money and the preclusion period is still running. That fact, of its own, does not make the matter "special".
In the present matter, the Tribunal was struck with the rapidity with which the respondent spent two lump sums, particularly when the first was in the order of $322,000.00. Whilst the evidence reveals that some of the funds were expended on the purchase of homes, including an investment property, funds were also expended on the purchase of a vehicle for the respondent's daughter. Clearly, such expenditure was not in keeping with its designated use, which was to ensure that the respondent had a means of supporting herself throughout the preclusion period.
Further, whilst I accept that there was a period when Ms Curry was not coping well emotionally and consequently acted in a rash manner, it is difficult to accept that by the time she received the second lump sum payment, she was not in a position, if she so chose, to exercise some control over her spending. Her decision to expend the entire $18,000 received in October 2001, is inexplicable, given that she was aware that the applicant had made it clear that it was not receptive to reducing the preclusion period. Faced with that knowledge, rather than keep the $18,000 to provide some measure of financial security, she chose to pay off her credit card debts, in the full knowledge that this would leave her with no funds with which to live.
The Tribunal did not accept the respondent's evidence that she has been unable to control her spending from the time she received the first lump sum payment. Her evidence was that she continued to spend her money without regard to the consequences and one can only conclude that she held a belief that when the funds ran out she would receive income support from the respondent. I find it difficult to accept that she was advised by a financial adviser at Centrelink to spend all her funds. However, even if this had occurred, there is ample evidence that it had been made clear to her by the time she received the second lump sum payment that she was not likely to receive income support during a preclusion period.
The Tribunal notes that, in making the decision to reduce the preclusion period, the SSAT was influenced considerably by the fact that the respondent required $4,000 for the cost of a planned back operation. The evidence before this Tribunal from the respondent in this regard was that no back operation was planned at this stage, although it was possible that she may undergo surgery in that joint in the future. The money which was planned to have been put aside for surgery related to surgery of a cosmetic nature.
The Tribunal's reasoning also reveal that considerable emphasis was placed on Dr Seigel's opinion that if Ms Curry was compelled to sell her home, she would suffer a major exacerbation of symptoms. Be that as it may, within weeks of the decision of the SSAT, the respondent had placed a deposit on another home in Queensland and placed her New South Wales on the market. Consequently, whilst considerations as to the sale of a home may have been valid then, they certainly have no validity now.
In Re Hajar and Secretary, Department of Social Security (1988) 16 ALD 717, the Tribunal considered that it was inequitable to claim financial hardship when the claimant owns a valuable asset and this Tribunal concurs with those sentiments.
All things considered, I do not consider it would be an inappropriate expectation for the respondent to sell the home in which she currently resides and live off the proceeds. In so finding, I consider that the respondent's circumstances are no different to many recipients of lump sum compensation payments, who chose to spend it unwisely. By the very nature of the jurisdiction, given that it is a means of compensating those who injury themselves and cannot work, recipients of lump sums have ongoing health problems, mostly of a physical nature, but frequently associated with psychiatric and emotional problems. The fact that the respondent has suffered from a compulsive shopping phobia does not convert her circumstances to those which are special, unusual or uncommon.
Consequently, the totality of the evidence leads me to conclude that there are no special circumstances that would warrant treating part of the compensation payments as not having been made. Accordingly, the Tribunal sets aside the decision under review and in substitution decides that the preclusion period runs from 21 September 1998 to 2 March 2009.
I certify that the 34 preceding paragraphs are a true copy of the reasons for the decision herein of Ms J Cowdroy, Member
Signed:         Sarah Oliver
  Associate
Date of Hearing  9 July 2002
Date of Decision  9 August 2002
Solicitor for the Applicant         Mr N Foster, Departmental Advocate
The Respondent Appeared in Person