Dalby; Secretary, Department of Employment and Workplace Relations

[2005] AATA 613

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 613

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2004/1638

GENERAL ADMINISTRATION  DIVISION		)
Re		SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS

Applicant

And BRUCE DALBY

Respondent

DECISION

Tribunal Senior Member, Mrs Josephine Kelly

Date29 June 2005

PlaceSydney

Decision The reviewable decision of the Social Security Appeals Tribunal on 11 November 2004 is set aside. Substituted for it is the decision that there are no special circumstances that warrant the exercise of the discretion in s 1184K of the Act or that make it desirable to waive recovery of the debt under section 1237AAD.

[sgd] Senior Member, Mrs Josephine Kelly

CATCHWORDS

SOCIAL SECURITY – disability support pension – preclusion period – review of preclusion period five years after period ended – special circumstances for discretion – special circumstances to waive recovery of any debt – unforeseen expenditure – future needs – impact of the Goods and Services Tax – decision set aside.

LEGISLATION

Social Security Act 1991 sections 1184K and 1237AAD



CASELAW

Security, Department of Family and Community Services v Allan (2001) 66 ALD 147

Naim Haidar v Secretary, Department of Social Security (1988) 52 ALD 255

Beadle v Director General of Social Security (1985) 60 ALR 225
Secretary, Department of Social Security v Hulls (1991) 22 ALD 570
Kertland v Secretary, Department of Family and Community Services (1999) 95 FCR 64
Drew and Secretary, Department of Social Security 18 September 1996 AAT No. 11293

REASONS FOR DECISION

29 June 2005   Senior Member, Mrs Josephine Kelly

Background

1.      Mr Bruce Dalby, the respondent in these proceedings, suffered severe spinal injuries on 5 February 1988.  As a result he became a C6 quadriplegic.  From about that date until he received a lump sum compensation settlement in March 1999, he

was receiving social security benefits. The lump sum compensation settlement was $500,000.  The following reflects the payments taken out and a refund:

Settlement:  $500,000

Deductions:     medical and legal costs    ($179,869.62)

Centrelink compensation       affected payments):                ($69,353.000)

Received:     $250,751.38

Plus HIC refund   $50,000

Total received:  $300,000 approximately

2.      An administrative error made by Centrelink meant that the amount recovered from Mr Dalby ($69,353) was approximately $6,000 less than it should have been. However, a decision has been made to waive that sum. 

3.      The preclusion period under the legislation was 605 weeks, from 5 February 1988 to 9 September 1999.  The lengthy delay between the date of injury and the settlement resulted in the preclusion period ending approximately five months after the settlement monies were received by Mr Dalby. Mr Dalby’s Disability Support Pension (“DSP”) was cancelled from the date of payment prior to 24 March 1999 (T5) but was resumed after 9 September 1999. 

4.      On 22 April 2004, five years after Mr Dalby’s settlement, he wrote to Centrelink requesting that the $63,353 (sic) that had been recovered by Centrelink from his settlement be repaid to him (T8).  He wrote:

“As this compensation was for spinal injuries suffered leaving me a C/6 Quadriplegic I am respectfully asking for you to look into this matter as I feel the reimbursements to Centrelink were unjustified.

I Believe there was an exclusion period set on all compensation pay outs of 10 years hence the reimbursement of $63,353.00. However this minimal payout was not going to last that long, being severely disabled is a costly business. Wheelchairs alone cost in excess of $3000.00 for the manual type and $10,000.00 for the electric type other unforseen costs quickly erode any funds.

It would be greatly appreciated if you could look into reimbursing me the $63,353.00 or any part of it.”

5.      On 11 August 2004 Centrelink rejected that request (T12). That decision was affirmed by the ARO on 15 September 2004 (T15).  On 11 November 2004 the SSAT decided that Mr Dalby’s circumstances were special and warranted repayment of the funds (T2).  The Secretary, Dept of Employment and Workplace Relations (“the Secretary”) seeks a review of that decision in these proceedings. 

6.      At the time of the SSAT hearing Mr Dalby said that he had $44,000 remaining from his settlement. During the hearing before me he said he had $40,000 remaining. 

Issues:

7.      There are two issues:

· Whether there are special circumstances in the Respondent’s case that warrant the exercise of the discretion in section 1184K of the Social Security Act 1991 (“the Act”) to disregard all or part of his lump sum compensation payment; and

· Whether there are special circumstances that make it desirable to waive recovery of any debt under section 1237AAD of the Act.

The Legislation

8.      Relevant provisions of the Social Security Act 1991 are set out below.

Section 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.

Section 1237AAD

The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:

(a)       the debt did not result wholly or partly from the debtor or another person knowingly:

making a false statement or false representation; or

(ii)       failing or omitting to comply with a provision of this Act or the 1947 Act; and

(b)       there are special circumstances (other than financial hardship alone) that make it desirable to waive; and

(c)       it is more appropriate to waive than to write off the debt or part of the debt.

The Evidence

9. Both Mr and Mrs Dalby gave oral evidence during the hearing. Other evidence included documents provided to the Tribunal pursuant to s 37 of the Administrative Appeals Tribunal Act 1975, known as “the T documents” and data on a modified vehicle (R1). I also had the benefit of statements of facts and contentions from both Ms Collis who appeared for the Secretary and Ms Anagnos who represented Mr Dalby.

10.     The following matters were relied upon by Ms Anagnos as constituting special circumstances. 

a)Mr Dalby’s unexpected and unforeseen expenses;

b)Mrs Dalby’s ill- health, stemming from her caring responsibilities;

c)Mr Dalby’s severe disability and the costs associated with it;

d)Mr and Mrs Dalby’s future expenses; and

e)The impact of the introduction of the Goods and Services tax on Mr Dalby’s ability to meet future expenses.

The Law

11.     The authorities establish that the term “special circumstances” is intended to allow the decision-maker the fullest opportunity to consider the particular circumstances of each case (Kertland v Secretary, Department of Family and Community Services (1999) 95 FCR 64). In that case it was said: The statutory regime is

“…designed to prevent a person from being entitled to receive social security benefits in respect of a period during which the person receives, or is entitled to receive, personal injury compensation for loss of earnings of earning capacity.” (at 64)

12.     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: Beadle v Director General of Social Security (1985) 60 ALR 225 and Secretary, Department of Social Security v Hulls (1991) 22 ALD 570.

13.     The effect of Hill J’s decision in the case of Haidar v Secretary, Department of Social Security (1988) 52 ALD 255 was contentious. In its Statement of Facts and Contentions, the Secretary argued that that case is authority for the proposition that events that occur after the expiration of a compensation preclusion period should not be considered in the decision to exercise the discretion in section 1184K of the Act, in this case that would be after September 1999. Ms Anagnos disagreed.

14.     His Honour said that:

“… events after the expiration of the ordained preclusion period could only have relevance as factors to be considered in the exercise of discretion if those facts in some way related to the events occurring during the preclusion period.” (52 ALD 255 at 264).

15.     Ms Anagnos argued that his Honour’s remarks merely circumscribes the type of events occurring after the end of the preclusion period that may be relevant.  It in no way states that no events occurring after the end of the preclusion period can be considered in the exercise of the discretion in section 1184K. Elsewhere, Hill J expressly includes the consideration of a person’s current economic position as a result of how they have utilised their compensation payout, as a matter that is a relevant consideration in the exercise of this discretion (at 263).

16.     I accept that events occurring after the preclusion period has expired may be relevant but only if they “relate” in some way to events occurring during the preclusions period.

17.     Some other remarks his Honour made are helpful to the task I am undertaking.  At page 263-264 he said:

Without putting too fine a point upon it, the purpose of the basic thrust of the legislation was to avoid a claimant being entitled both to social security benefits and benefits in the nature of income through lump sum payments.

However, the legislature was conscious of the possible harshness of a rule structured in an arbitrary way.  Section 1184, therefore, provided the means whereby the secretary or, in the event ultimately of an appeal to the Administrative Appeals Tribunal, that tribunal, could alleviate the harshness of the statutory provision in an appropriate case but only where there were special circumstances”

18. Section 1184 was in the same terms as the present s 1184K.

Mr Dalby’s unforeseen expenditure

19.     Ms Anagnos relied on what she categorised as unforeseen expenditure by Mr Dalby as being a special circumstance or contributing to special circumstances.  There were two aspects of this argument.  One was actual expenditure incurred and the other was a notional loss of income. 

20.     During the preclusion period in early 1998, Mr Dalby met his present wife.  She was in Australia on a holiday visa with her son Luke.  Mrs Dalby has no family members in Australia. They married in July 1998 and for about six months lived with Mr Dalby’s mother. From the time of their marriage until 15 July 1999 Mr Dalby was supporting Mrs Dalby and Luke, relying on his disability support pension (“DSP”) at the single rate.  He said he sold his possessions including two old cars, a television and other items to buy food. 

21.     In December 1998 they moved into a NSW Department of Housing house at Mona Vale where they still live.  I accept that neither Mr nor Mrs Dalby brought any assets to their marriage.  They set up a home from scratch.  Annexure B in Exhibit R2 sets out the expenditure incurred in doing that plus some additional items including two motor vehicles.  The total expenditure in that document is $74,126.50.  On the evidence, I find that about $60,000 was incurred during the preclusion period for setting up the house and was financed by the settlement monies received in April 1999. The list was prepared by Mr Dalby. In evidence he said that he had prepared it from memory. It might seem that some items were perhaps excessive and unwise, given the limited income and financial resources available to the family and the fact that they are living in a Department of Housing home on a weekly tenancy. Mr Dalby said that he assumed that they would be able to stay as long as they pay the rent.  Given that the family has lived in the home for about six and half years that assumption seems justified. They will not have the benefit of some of the expenditure if they move, however given the time they have been there and that it seems likely that they will remain, that matter is not significant.

22.     I am not confident that the costs listed are accurate as it was made from Mr Dalby’s memory.  For example a cot and accessories is listed as costing $2,000.  In her evidence Mrs Dalby said it cost $400.  A sum of $1,600 for “accessories” to a cot seems unlikely.

23.     It is relevant to consider how much of the $74,126.50 set out in to Exhibit R2, Annexure B, was spent to meet Mr Dalby’s needs.  The sum of $16,900 was spent on two motor vehicles. I conclude this has been during the period 1998 to date rather than during the period of setting up the home.  Of that $16,900, modifications to suit Mr Dalby cost $1,900.  A commode chair costing $1,100 was purchased and some part of the $5,000 for paving was to widen some pathways for Mr Dalby’s manual wheelchair. Excluding the purchase price of the car, approximately $6,000 was spent to meet Mr Dalby’s needs. 

24.     Between July 1998 and 15 July 1999 Mrs Dalby and Luke held bridging visas.  From that point Mrs Dalby was granted a temporary spouse visa.  Although entitled to work she could not because she was caring for Mr Dalby, Luke and a new born daughter, Neysa.   Mrs Dalby was precluded from receiving income support payment from Centrelink until January 2001 because Mr Dalby had signed an “Assurance of Support” contract.  They did receive Family Tax Benefit for the children and Mrs Dalby was paid a Carer Allowance of approximately $75 per fortnight.  Mr Dalby continued to receive DSP at the higher single rate until January 2001 when Mrs Dalby began to receive a carer payment of $320 per fortnight and the DSP was reduced to the partnered rate.  Now, both Mr and Mrs Dalby work part-time. Mr Dalby earns $120 gross per week and Mrs Dalby $170 gross per week.

25.     Ms Anagnos argued that because of Mrs Dalby’s migration status until 2001 the family received a lower income than an ordinary family whose source of income was social security benefits and therefore Mr Dalby was using his settlement monies for their living expenses, which was not what those monies were meant for. 

26.     In 1999 when Mr Dalby received his settlement monies, he paid a $3,000 Grace Brother’s bill he had and a $15,000 debt owed by Mrs Dalby in Scotland.   Luke’s biological father who lived in Scotland caused difficulties for Mrs Dalby when she applied for her spouse visa and a solicitor was paid $3,000 to address that.  A further expense was a visit by Mrs Dalby’s mother at the time Neysa was born for which Mr Dalby paid approximately $3,000. Mrs Dalby also returned to Scotland with Luke and Neysa at about the end of 2000.  That cost $9,000 to $10,000.  Mrs Dalby gave evidence that Mr Dalby paid for another visit by her mother and visits by two of her friends at different times, each of whom was accompanied by a child.  On the evidence, the total expenditure for those trips would have been about $10,000.  Mrs Dalby also said that her mother had come to Australia on other occasions but had paid for herself.  Mr Dalby had said she could not afford to do so because she was on a pension.

27.     Mr Dalby lost $10,000 in an ill-fated attempt to set up a printing business. 

28.     The above expenditure totals approximately $130,000.  Taking into account the $40,000 which is left from the settlement monies, there has been other expenditure of $130,000 which was said to have been spent on “day-to-day living” which is not otherwise accounted for.

Mrs Dalby’s role as carer

29.     Another aspect of Ms Anagnos’s argument was that Mrs Dalby could have become a permanent resident in her role as carer which would have given her access to carer payment in the first two years of her living in Australia.  The argument was that the family would have received $9,669.35 during that period from July 1999 until January 2001.  Ms Agnanos argued that this was a notional entitlement which is a relevant consideration. 

30.     In short, the income support the family missed out on because of Mrs Dalby’s migration status during the period July 1998 and January 2001 “should be given a great deal of weight in this case”.   

Mrs Dalby’s ill-health

31.     I find that Mrs Dalby has suffered shoulder and lower back pain which has been caused or exacerbated by lifting Mr Dalby who weighs 100 kgs. She lifts him from his wheel chair to the car and to and from chairs and his bed.  Mr Dalby receives 24.5 hours of assistance from carers.  While he said that was the limit, Mrs Dalby said it was her choice and that more care could be provided.  She has had chiropractic and physio treatment for this condition although she does not at present, but she does exercises in a gym which costs her $13. A letter (Annexure F to Exhibit R2) from a chiropractor gives the opinion that she would need ongoing treatment while undertaking that lifting.   Another factor contributing to Mrs Dalby’s back pain has been lifting the electric wheel chair that Mr Dalby has had for the last year or so into the car.  It is much heavier than his manual wheel chair which was 15 kg.  The electric wheel chair is about 30 kgs and the battery which is lifted separately 15 kg.   

Future needs

32.     Connected to Mrs Dalby’s back and shoulder pain was an argument that the family needs a car which Mr Dalby can get into without being lifted.  Such a vehicle would also make Mr Dalby independent.  Exhibit R1 reflected the cost of one new and several second-hand wheelchair accessible vehicles. The prices ranged from $100,000 to $7,500, although Ms Anagnos specified a figure of $70,000, as did Mr Dalby in his evidence.  The family cannot afford to spend $70,000 at present.

33.     The evidence was somewhat confusing. I understood that Mr Dalby was talking about purchasing a vehicle that he could enter sitting in a wheel chair and then move that wheel chair into the driving position so that he did not have to change seats.  I understood Mr Dalby to say that recent legislation permitted the driving of a motor vehicle from a wheel chair. He that ability would allow him to take Luke to events which Mrs Dalby did not enjoy. Exhibit R1 did not show such a vehicle and Mr Dalby seemed to change his position.  The $70,000 figure relied upon by Ms Anagnos was for a new Mercedez-Benz 7 seater plus wheelchair vehicle with a ramp. Searches of legislation did not reveal any provisions such as I understood Mr Dalby referred to.  It was also not clear on the evidence how Mr Dalby would move from the wheelchair to the driver’s seat once he was inside a wheel chair accessible vehicle and whether or not he would require assistance to do so. 

34.     Evidence was sought to be adduced about other expenses related to Mr Dalby’s disability that cannot be met at the moment.  Ms Anagnos provided a list from the New South Wales Department of Health’s Program of Appliance’s for Disabled People (PADP) in Exhibit R2 Annexure “G”.  She asked Mr Dalby about the items and whether he needed them and if so whether or not PADP would provide them or he would have to pay.  This evidence was of little assistance. I find that Mr Dalby has not been precluded from meeting his assistance needs by lack of funds but when some items in the list were brought to his attention, he thought about it and thought that some might be helpful. He had not made inquiries of PADP whether the devices would be provided.  For example, when asked about adaptive devices needed for personal care and domestic tasks he said a cutting board with a knife would be useful and when questioned said that it would probably be provided by PADP.  Similarly, he mentioned a new bed table but when questioned said that that also would be provided by PADP. 

35.     He did say that portable ramps were not provided and would cost $1,100 and that portable shower hoses would be useful if he went away, but not for day to day use, however, he and his family do not go away.  He said that a pedal machine to exercise his arms would perhaps be useful now that he does not push his manual wheelchair and that a personal alarm system was not supplied by PADP. 

36.     He expressly stated that he does not have to pay for the cost of a wheelchair which is supplied by PADP, but does have to pay the cost of tyres and inner tubes.  The front set costs $80 and the back $50 per set.  He is using the second set in nine months.   This evidence is quite different from what he stated in his original request for a refund and in his evidence before the SSAT.

37.     Another aspect of the evidence relied upon was that Mrs Dalby needs respite from caring for Mr Dalby.  On the evidence, the only break she has had was a three week visit to Scotland at the end of 2000.  Mr Dalby has carers who come in for 24 ½ hours per week and given Mrs Dalby’s evidence, such care may be available for a longer period. 

The Impact of the Goods and Services Tax

38.     The final matter relied on as going to special circumstances is the impact of the Goods and Services Tax (“GST”) which was introduced in July 2000. The calculation of a person’s compensation period changed after the GST’s introduction so that the divisor increased from $412.70 in early 1999 to $543.63 in July 2000. The effect was that the preclusion period would have been much shorter if his settlement had occurred after that alteration and hence the Centrelink charge he had to pay would have been less and he would have had more money available to him.  Also, purchases after that date including a clothes dryer ($350), washing machine ($1,200) and car ($10,000) in Annexure B to Exhibit R2 were affected, as is all other GST affected expenditure from the date of its introduction.  Mr Dalby’s settlement did not take GST into account. 

39.     Ms Anagnos relied on Heerey J’s decision in Security, Department of Family and Community Services v Allan (2001) 66 ALD 147 as authority for the principle that a factor that applies to all or a substantial part of the community, such as the GST, need not necessarily be excluded when considering whether the range of circumstances affecting an individual can be said to be “special” (at 150-151). Hence GST is a relevant matter in this case. The Secretary accepted that impact of the GST and the change in the calculation at that time can be considered in the context of the circumstances of the individual.

40.     In Allan the settlement for $250,000 was on 1 March 1998.  Mr Allan had spent the monies by 8 November 1999 when he applied for a disability support pension.   The preclusion period was determined to be from 28 February 1998 until 6 February 2004 which was reduced by this Tribunal to 1 July 2003.  Two matters were considered to constitute special circumstances.  The first matter was that Mr Allan had become addicted to heroin as a result of his work injury and second was the effect of GST on his cost of living after its introduction in 2000.  The GST applied during the preclusion period from July 2000 until 6 February 2004.

41.     The facts in this case are quite different.  Mr Dalby’s preclusion period ended in September 1999 and the repayment was made at the time he received the settlement monies in April 1999.  During the preclusion period GST did not apply to his expenditure. I certainly accept that where expenditure is affected by GST during a preclusion period, that is a relevant consideration, as in Allan.  But that is not the case here.  In that circumstance, I do not consider that the introduction of the GST is a matter which in this case is of significance in considering whether there are relevantly special circumstances. That conclusion is supported by Hill J’s decision in Haidar. 

42.     A matter of concern to me is the expenditure of settlement monies received on “day-to-day living”, which is not included in any of the figures given earlier in this decision.  The parties agreed the amount was approximately $130,000. 

43.     From sometime before or about July 1998 until he received settlement monies in April 1999 Mr Dalby was paying the expenses of Mrs Dalby and Luke from his DSP at the single rate, by selling possessions, and obtaining some food coupons and electricity vouchers from the Salvation Army.  From April 1999 until July 1999 he was reliant on the settlement monies alone. From July 1999 until January 2001 he received FTB and Mrs Dalby received a carer’s allowance.  Mr Dalby was again paid his DSP at the single rate from the end of the preclusion period in September 1999.   That was reduced to the lower partnered rate in January 2001 when Mrs Dalby began receiving the carer’s payment. 

44.     There was therefore a period from July 1998 until January 2001, that is about 2 ½ years, when the family was not receiving maximum benefits under the Social Security legislation.  The family has been receiving the maximum benefits for 4 ½ years.  It is not unreasonable to expect that once maximum social security benefits were being received, the family would have tailored its expenditure to its income and in any event would have had far less need to use the settlement monies for day to day living.  Other families have to live within the constraints of social security benefits.

45.     During the 6 year period since receipt of the settlement monies there has been an annual expenditure on “day to day living” in excess of the social security benefits received of approximately $21,666 per annum or $416 per week. Before the SSAT Mr Dalby said that in the previous 12 months, his settlement monies had been reduced from $75,000 to $44,000, $10,000 of which was the loss for the failed printing business.  Therefore there was an expenditure of $21,000 or $404 per week on other things during that 12 month period. Those figures can be contrasted with the spending pattern since the SSAT decision. Four thousand dollars has been spent over the 7 month period between that hearing and the hearing in this Tribunal, that is approximately $145 per week. I am not satisfied that in fact the $130,000 has been spent on “day-to-day” living, or if it has it seems excessive in the circumstances.    What is striking in this case is that the evidence discloses relatively little expenditure out of the settlement monies to meet Mr Dalby’s needs arising from his quadraplegia.

Consideration

46. In all the circumstances set out above, I do not consider that there are special circumstances that warrant the exercise of the discretion in section 1184K of the Act to disregard all or part of Mr Dalby’s lump sum compensation payment. In my opinion, Mr Dalby was not treated unfairly or disadvantaged by the calculation of the preclusion period and the consequential repayment. There has been relatively little expenditure from the settlement monies for Mr Dalby’s needs arising from his disability. It is now said that a particular type of vehicle needs to be purchased. It would have been prudent for Mr and Mrs Dalby to have considered Mr Dalby’s future needs when spending the settlement monies. Also, although a new Mercedes-Benz vehicle might be desirable, from the evidence I conclude that there are less expensive alternative vehicles which Mr Dalby can afford to purchase. In the past the evidence shows that he has purchased second hand vehicles.

47.     There has been considerable expenditure by the family which while understandable has been a matter of determining priorities.  Some examples are paying for Mr Dalby’s mother and friends to come to Australia and for her and the children to visit Scotland, and for various improvements to their home.  Another significant circumstance is the $130,000 said to have been spent on “day to day living”.   While part of that amount was obviously spent during the 2 ½ year period from July 1998 to January 2001 when no, and then relatively low social security payments were received by the family, it is now 4 1/2 years since the family has been receiving maximum benefits and expenditure has continued well in excess of those benefits for “day to day living”.  

48.     For the above reasons I also find that there are not special circumstances that make it desirable to waive recovery of any debt under section 1237AAD of the Act.

Decision

49. The reviewable decision is set aside and substituted for it is the decision that there are no special circumstances that warrant the exercise of the discretion in s 1184K of the Act or that make it desirable to waive recovery of the debt pursuant to s 1237AAD.

I certify that the 49 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member, Mrs Josephine Kelly

Signed: Miss Sacha Keady

Associate

Date/s of Hearing  20 June 2005
Date of Decision  29 June 2005
Advocate for the Applicant       Centrelink Legal Services Branch
Solicitor for the Respondent     Welfare Rights Centre