Dean and Secretary, Department of Employment and Workplace Relations

[2006] AATA 932

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 932

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No   N2005/1427

GENERAL ADMINISTRATIVE DIVISION		)
Re		CHARLES DEAN

Applicant

And SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Robin Hunt

Date31 October 2006  

PlaceNewcastle  

Decision The Tribunal sets aside the decision under review and substitutes a decision that the length of the preclusion period should be reduced so that it ends on the date of this decision, that is, 31 October 2006.

[SGD]

Robin Hunt
  Senior Member

CATCHWORDS

Compensation payment – lump sum – compensation award received by way of settlement - preclusion period - special circumstances – discretion - preclusion period reduced

Beadle v Director-General of Social Security (1985) 60 ALR 225.

Re Beadle and Director of General of Social Security (1984) 6 ALD 1

Groth v Department of Social Security (1995) 40 ALD 541 at 545

Secretary, Department of Social Security v Thompson (1994) 36 ALD 563

Magallanes and Secretary, Department of Social Security (1995) AATA 10044

Re Beus and Secretary, Department of Social Security (1992) 68 SSR 981

Secretary, Department of Social Security v Hulls & Others (1991) 22 ALD 570

Secretary, Department of Family and Community Services v Allan [2001] FCA 1160

Lintern and Secretary, Department of Social Security (1993) 72 SSR 1041

Re Milan Lukic v Secretary, Department of Social Security No. S91/12 AAT No. 6944

Hajar and Secretary, Department of Social Security (1988) 16 ALD 716

Re Secretary, Department of Social Security and Haining (1992) 67 SSR 960

Re Smith and Secretary, Department of Family and Community Services (2001) 3(9) SSR 133

Drage and Secretary, Department of Family and Community Services [2003] AATA 1233

Lazarov and Secretary, Department of Family and Community Services [2004] AATA 743

Nikolov and Secretary, Department of Social Security N91/216 AATA No 7452

Avenessian and Secretary, Department of Family and Community Services [2004] AATA 840

Re Secretary, Department of Social Security and Vys (1995) 40 ALD 745

Henderson v Secretary, Department of Family and Community Services [2004] AATA 541

Re Secretary, Department of Social Security and Bolton (1989) 18 ALD 464

Black and Secretary, Department of Social Security (1994) AAT 9786

Secretary, Department of Family and Community Services and Orlando [2000] AATA 632

Re Fuller and Secretary, Department of Family and Community Services (2004) 84 ALD 152; [2004] AATA 615

QX05/10 and Secretary, Department of Employment and Workplace Relations [2006] AATA 178

Re Secretary, Department of Family and Community Services and Danielson-Jensen [2004] AATA 1319

Kirkbright v Secretary, Department of Family and Community Services (200) 106 FCR 281

Re Bus and Secretary, Department of Employment and Workplace Relations [2006] AATA 155

Re Secretary, Department of Family and Community Services and Bullock (2001) 67 ALD 528

Re Frelek and Secretary, Family and Community Services (2005) 86 ALD 772

re Woods and Secretary, Department of Family and Community Services (2002) 68 ALD 241

legislation

Social Security Act 1991 (Cth) s1184K

REASONS FOR DECISION

Summary

1.           Mr Charles Dean suffered an injury in a work accident on 22 June 2000 and sustained injuries to his neck and back. His personal injury claim in the district court was settled on 7 February 2003 for $375,000. Centrelink calculated a lump sum preclusion period from 8 February 2003 to 23 January 2009 in consequence. An authorised review officer decided that there were no special circumstances in Mr Dean’s case that warranted shortening the preclusion period.  Mr Dean sought a reduction of the applicable period in the Social Security Appeals Tribunal (SSAT).  The SSAT decided that it was not appropriate to exercise the discretion to reduce the period.  On Mr Dean’s further application for review, the Administrative Appeals Tribunal has decided that his is a case of special circumstances that warrant a reduction in the preclusion period. This means his application for review has been successful.

ISSUE

2. The only issue before me is whether there are special circumstances for the purposes of s.1184K of the Social Security Act 1991 (the Act) that would allow the whole or part of the lump sum compensation payment to be disregarded so as to reduce or eliminate the preclusion period. In relation to the discretion that allows the tribunal to shorten the preclusion period, s.1184K(1) of the Act provides:

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.

consideration

3.           While the preclusion period is in place Mr Dean cannot receive a pension despite his being unemployed since his accident. This is because he has received compensation to cover his loss of earnings during the preclusion period. Mr Dean does not dispute Centrelink’s calculation of the preclusion period to the estimated date in 2009 but has asked for consideration of his special circumstances. The SSAT found that these were not so exceptional to warrant exercise of the discretion in Mr Dean’s favour.

4.           Mr and Mrs Dean both gave oral evidence as well as furnishing written statements. These set out that they bought a house from part of the proceeds of the lump sum compensation. On 23 June 2003, the settlement of Mr and Mrs Dean’s new house purchase took place. They had not previously owned a home and bought what their counsel described as a modest house. The house price was $261,000. They borrowed $81,389.20 by way of mortgage and paid $153,710 from the compensation monies towards the price. Fees associated with this purchase included $744 in solicitor’s fees and disbursements and $5,487.90 stamp duty. They also invested $100,000 of the award in an investment fund, thinking it would provide them with some income.

5.           Mrs Dean gave oral evidence to the effect that they had tried to use their money wisely but found they could not keep up with the mortgage and other expenses so had to cash in the investment. They initially had expected to have more income because they thought Mrs Dean would continue to work and that Mr Dean would be able to work part time. The reality was that Mrs Dean became unwell and could not work and Mr Dean also found no work opportunities despite making many job applications. Mr Dean’s further evidence was that he is dyslexic and has trouble reading. He tries to read to his children but has difficulty with some of the words in their books. It follows that he can only perform manual work, however, once he admits he has a back injury no one will employ him in this capacity. He undertook security guard training but no one has employed him in this way as such jobs usually involve being a bouncer. Mr Dean furnished a long list of organisations to which he had applied for work. While Mr Dean’s expectations may have been unrealistic given that he cannot read well and has a back injury, I accept that he did attempt to find some way of earning despite his difficulties.

6.           On 16 September 2003, Mr Dean purchased a Ford Falcon car for $22,500. The couple also owned a Lancer which was worth around $2,000. Mrs Dean gave evidence that they traded in the Ford Falcon for a smaller car, a Kia. Documents before me show the Kia has a resale value now of $15,000. Mrs Dean said they downgraded their vehicles as they were having financial difficulties and decided they could manage with just one smaller car.

7.           The Deans gave oral evidence to the effect that they have attempted to manage the resources they have had carefully. There is no evidence that they previously tended to get into debt. The evidence of Mr and Mrs Dean was that they had always managed their debts and level of debt carefully. Mr Dean gave evidence that their practice was to put money away for emergencies. Nevertheless, after the accident award they soon ran into trouble.

8.           In August 2004, Mr and Mrs Dean cashed in the investment fund ($100,000 initial contribution) which was returning $70 per month (at that time) and received $98,000. Most of this money was expended on paying out the mortgage. The remainder was expended on paying out unspecified bills. On 9 May 2003, Mr Dean also received a payment from CbusAdministration superannuation fund of $51,895.86 including $50,000 by way of insurance benefit for total and permanent disablement. Mr and Mrs Dean did not give details of how this money was expended.  However, the couple are now in very straightened financial circumstances and there is nothing before me to suggest an extravagant pattern of spending.

9.           Mr Dean gave evidence that he relied on his wife to manage their affairs. This ties in with Mrs Dean’s evidence and other records before me. It was Mrs Dean, for instance, who rang Centrelink to discuss the effect of the compensation payment on the family entitlements. It was she who told the tribunal that she was aware of the preclusion period whereas Mr Dean’s evidence was vague and contradictory. Mr Dean also gave evidence to the effect that he had the impression that he would be able to appeal against the preclusion period more easily.

10.          Mrs Dean ran into financial difficulties soon after the family moved into their new home. Mr Dean’s mother suffered a stroke and his father passed away. Mrs Dean sacrificed her attention to other matters to help and visit her mother-in-law as much as possible. It was during this period that she ran up a credit card debt of a little over $3,000. She told the tribunal that she was normally careful not to incur debts but she was spending money less carefully than usual because of the pressures on her to look after her husband’s family.

11.          Mrs Dean gave evidence that she was paying $30 per month to the bank to keep the credit card in order. This was not reducing the debt so she approached the bank to try to reach another arrangement. The bank offered an arrangement which required her to repay the debt at the rate of $90 per month. Mrs Dean was already in difficulty and did not think this expectation was fair. She gave evidence to the effect she could not make the larger payment out of her income at that time. Mrs Dean then sought the advice of a financial planner. The advice she followed resulted in financial disaster. Mrs Dean gave evidence that she relied on advice that she should apply for bankruptcy as this would clear the debt to the bank and the ownership of the house would not be affected.

12.          Mrs Dean is now bankrupt and the trustee is claiming fees of $9,000, which Mrs Dean cannot pay. In other words, Mr and Mrs Dean are much worse off and have a larger debt than ever. The trustee is threatening to sell their house unless the fees are paid.

13.          Other adverse circumstances have arisen since the compensation payment as well. It was not known at the time of settlement of the personal injury claim that Mr Dean’s wife, Ainslee, would be incapacitated by illness to the point that she is unable to do even part-time work now and probably in the future. Mrs Dean, since the settlement, has to cope with several medical conditions including irritable bowel syndrome, which causes her to lose control of her bowels at times and to have diarrhoea and vomiting. She also has fybromyalgia, depression and anxiety/panic disorder. These severe medical conditions gravely impact upon her ability to cope with everyday living and assist her husband with his difficulties. She has been suicidal at times. Her illnesses also necessitate payment for medications that were unanticipated.

14.          It was not clear at the time of the settlement that the psychological consequences to Mr Dean of the injury would be so extensive. Mr Brian Drury, Senior Rehabilitation Consultant of CRS Australia certifies that as at 25 May 2006 Mr Dean’s increased pain levels and depressive state results in cognitive deficits that would make him a danger in the workplace. Mr Drury reports that Mr Dean cannot undertake any work at present and will not be able to until his depression is brought under more effective control.

15.          Mr and Mrs Dean did not foresee at the time of settlement that Mr Dean would be unable to do or to obtain suitable part-time work. They gave evidence that they accepted the settlement in expectation that this would be possible. Mr Dean has applied for many jobs. Even apart from his current state, his evidence was that since receiving the settlement, when he has looked for work, if he discloses that he has a back injury, he does not get the job. Mr Dean also has dyslexia.

16.          Mrs and Mrs Dean tried to handle their money responsibly. When they realised they could not repay the debt to the bank and some other small debts, Mrs Dean first approached the bank and then took advice from a financial counsellor as to benefits of going bankrupt. The advice either was negligent and misguided or Mrs Dean misunderstood the consequences of bankruptcy. Their home is now under threat and they have an even larger debt to the trustee in bankruptcy. Mrs Dean is still investigating whether she has any legal recourse flowing from this advice.

17.          Mrs Dean gave evidence that an error by Centrelink in recording financial details led the trustee in bankruptcy to charge higher fees because the trustee in bankruptcy thought the income level of Mr and Mrs Dean was higher than it in fact was. While this error has since been corrected, the trustee still requires payment of $9,000 in fees.

18.          Worry caused by the fees on bankruptcy and the threat of the trustee in bankruptcy to force a sale of the family home has placed great strain on whole family. The stress of the bankruptcy on Mrs Dean, who is the "money manager" in the family, and guilt as to the possibility of losing the family home, has made Mrs Dean feel suicidal. Her medical conditions, (outlined above) have worsened greatly over the last several years, to the point that they are now severely debilitating.

19.          The current situation is that both Mr and Mrs Dean are under intense psychological pressure and unable to cope well with family life. This is attested to by the psychiatric report of Dr Leonard Lambeth of 22 March 2006. In this report Dr Lambeth diagnoses Mr Dean as suffering from major depression that is chronic and severe, and states that she feels worthless, negative about the future and about her family’s financial situation. Mr Dean has needed to see the mental health team, has had suicidal thoughts and has difficulty coping with the children and his wife's illnesses. This view is also supported by Dr Oxley, although it is not a recent phenomena. There is evidence that Mr Dean had psychological adjustment problems and depression in 2002. His condition, however, now seems to have worsened.

20.               The children are being affected by the intense psychological pressure on their parents – one child has been diagnosed by Dr Suri as having anxiety disorder and depression. She was in counselling and is now in a special group at school for children “dealing with change” and sometimes does not come home if her parents have been arguing.

21.          Mrs Dean told the tribunal there is inadequate money to be able to afford for the children to go to netball and difficulty in affording some school excursions, even though the family has liquidated some assets, for example, buying a smaller, cheaper car.

22.          The marriage relationship of Mr and Mrs Dean is under intense strain, with frequent arguments where, prior to the injury, they were very happy together. The couple attended at Centacare but cannot afford marital counselling.

23.          Mr Dean's mother had a stroke at an early age, which was unexpected, and required considerable effort on the part of the family and has taken a toll in terms of stress, as has the death in December 2005 of Mr Dean’s father, who was described in evidence by Mr Dean as his “best mate”.

24.          The psychological condition of Mr Dean has deteriorated and will require treatment if he is to improve. In terms of medical treatment for his major depression, Dr Lambeth says he will need medication indefinitely, at $70 a month and should have monthly psychiatric visits for at least one year, at $170.00 per visit, then every three months after that; behavioural therapy for his depression, likely to require at least 15 sessions at $170.00 per session. At present, Mr and Mrs Dean do not have the money for such treatment, expect for anti-depressant medication.

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Special circumstances

25.          The Act does not define “special circumstances”. There are numerous AAT and Federal Court cases which have involved consideration of “special circumstances”. A leading case is Beadlev Director-General of Social Security (1985) 60 ALR 225. Here, the Federal Court (at 230) was in broad agreement with the position adopted by the Tribunal in Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 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 the context which 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”

26.          In Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545, Keifel J, after referring to the Federal Court’s decision in Beadle, observed that special circumstances:

“...would require something to distinguish Mr Groth’s 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...”.

27.               In Magallanes and Secretary, Department of Social Security (1995) AATA 10044 at [63], the tribunal found that it has been recognised that a person’s circumstances must be looked at in there entirety in order to determine whether they may be described as unusual, uncommon or exceptional. This view was also expressed in Re Beus and Secretary, Department of Social Security (1992) 68 SSR 981 where the tribunal found it inappropriate to exercise the discretion in section 1184 of the Act.

28.              The purpose of the legislative scheme is to ensure that a person who receives compensation for an injury does not “double-dip” and receive benefits from the public purse in respect of the same period of time. This view was noted in the matter of Secretary, Department of Social Security v Hulls & Others (1991) 22 ALD 570. Heerey J in Secretary, Department of Family and Community Services v Allan [2001] FCA 1160 noted that:

The basic policy, understandbly enough, is that there should not be “double dipping”. 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.

29.              I acknowledge that Also see Lintern and Secretary, Department of Social Security (1993) 72 SSR 1041 and Re Milan Lukic v Secretary, Department of Social Security No. S91/12 AAT No. 6944. I have considered a number of factors discussed below in deciding whether the discretion should be exercised in favour of Mr Dean due to his particular circumstances.

Financial matters

30.              In this case, Mr and Mrs Dean holds his house unecumbered. It is arguably inequitable for Mr Dean to claim financial hardship when owning such a valuable asset: Hajar and Secretary, Department of Social Security (1988) 16 ALD 716; see also Re Secretary, Department of Social Security and Haining (1992) 67 SSR 960; Re Beus and Secretary, Department of Social Security (1992) 68 SSR 981 and Re Smith and Secretary, Department of Family and Community Services (2001) 3(9) SSR 133; Drage and Secretary, Department of Family and Community Services [2003] AATA 1233; Lazarov and Secretary, Department of Family and Community Services [2004] AATA 743. As the SSAT noted home ownership puts Mr Dean in a better position than many recipients of social security. See Nikolov and Secretary, Department of Social Security N91/216 AATA No 7425. Mr Dean was notified by Centrelink of the likely operation of the preclusion period but I do not attach as much importance to this circumstance as the respondent urged. While reckless spending is relevant to consideration of special circumstances, I do not accept that Mr and Mrs Dean ignored advice and were irresponsible in the way they used up their compensation. The fact that Mr and Mrs Dean were aware of a preclusion period, unlike the applicants in cases like Nikolov (supra and Avenassian and Secretary, Department of Family and Community Services [2004] AATA 840 at [17] and ReSecretary, Department of Social Security and VYS (1995) 10 ALD 745, does not mean that they cannot be found to come within special circumstances. While there is no evidence that Mr Dean was required to pay out the mortgage to avoid dire consequences such as a forced sale of his house by the mortgagor, see Henderson v Secretary, Department of Family and Community Services [2004] AATA 541 and Nikolov, Mr and Mrs Dean have clearly been experiencing great financial problems and could not afford the mortgage repayments. Their paying out the mortgage I take as evidence of their attempts to show financial responsibility and good management of their limited resources rather than a cause of criticism.

31.              I have not overlooked that, apart from the compensation monies Mr Dean has received two further lump sums of approximately $49,000 and $52,000 (total $101,000) and there is little evidence as to how these sums have been expended. I further note the respondent’s evidence that Mrs Dean is presently in receipt of parenting payments and a family tax benefit totaling $773.14 per fortnight (see Attachment 4) and that the family members are each in receipt of health care cards. Mrs Dean told the tribunal that a friend has promised to pay the trustee in bankruptcy in instalments. This means she still has a debt but will not be under the same pressure regarding it as previously. I note she also wishes to repay some of her debt to her grandmother who paid out her credit card and other small debts.

Family’s Health

32.              Doctor Y A E Ghabrial (orthopaedic surgeon) in his report of 22 October 2001 assessed  Mr Dean’s back impairment at 30%, loss of efficient use of right lower limb 15%, loss of efficient use of left lower limb 15% and neck at 25%. The neck was said to have been stabalised with future complications unlikely. Whilst Dr Ghabrial could not exclude future surgical intervention on the spine, Mr Dean was stated to be handling his conditions and no surgery had been booked at that stage.

33.              Alison Elvish (occupational therapist) in her report of 5 July 2002 noted, (consistently with the reports of Dr Spittaler (neurosurgeon), Dr Ghabrial (orthopaedic surgeon), Dr Furey (occupational physician) and Dr Pacey (rehabilitation specialist) which were provided to her), that whilst Mr Dean was not fit for his pre-injury labouring occupation that he could be retrained into alternate employment which did not require heavy manual handling, twisting, bending or repetitive duties. Ms Elvish stated that she observed that Mr Dean was able to mobilise with a walking stick, but that as his home (he was renting at that time) did not have stairs she could not observe him using them, although Mr Dean indicated he is able to do so with the assistance of a rail. In considering Mr Dean’s future needs, including equipment, Ms Elvish only made reference to replacement walking sticks, not a wheelchair (T6).

34.              Ms Elvish in her report of 31 May 2006 considers the suitability of Mr Dean’s current house for his future needs. Whilst Mr Dean’s current house is a single storey house with an open plan living area, the report makes it clear that Mr Dean’s home is yet to be modified for wheelchair access. There are two steps to the front and rear verandah, as well as a further step from the front verandah to the front door (which is yet to be widened), ramps are yet to be installed and grab rails are yet to be affixed. The block is not even, although described as fairly level. The report fails to identify whether the height of benches and windows are appropriate for someone in a wheelchair (As the sink is 90cm in height and there are overhead cupboards in the kitchen which Mr Dean cannot presently reach this may not be the case).

35.               Reference is made to the suitability of the residence “if” a walking aid, including a walking stick, is needed in the future. No indication is given of whether Mr Dean is at all likely to require any walking aid, let alone a wheelchair. However, it is noted that Mr Dean is presently able to squat and assist in gardening.

36.              On 6 March 2006 Dr Harris prescribed Lexapro for Mr Dean’s depression.

37.              Dr Lambeth (psychiatrist) in his report of 22 March 2006 notes that Mr Dean stated that when he applies for jobs that he is told that they will not hire him “because of his previous back injury and the problem with insurance premiums”. Dr Lambeth diagnoses Mr Dean with major depression and opines that the likely causes are firstly Mr Dean’s back and neck injury (including continuing pain and inability to adapt) and secondly his inability to work and support his family. Other factors include his father’s death in December 2005, his mother’s stroke in 2005 and his financial situation.

38.              Dr Oxley in his letter of 28 March 2006 stated that Mr Dean’s rehabilitation for his back injury has been slow and complicated by a period of drug dependency secondary to a regime of pain relief. His history of back pain had to that time prevented his employment. Mr Dean also presented as depressed due to his father’s recent death.

39.              Brian Drury of CRS Australia in his letter of 25 May 2006 states that Mr Dean is unfit for work at this time, given his increased pain levels and depression, which affect his cognitive functioning. Mr Dean has been referred to Centacare and re-referral to CRS following counselling is recommended.

40.              Mr Dean’s reference to his ill health does not of itself constitute special circumstances as has been noted in cases such as Re Secretary, Department of Social Security and Bolton (1989) 18 ALD 464 and Black and Secretary, Department of Social Security (1994) AAT 9786.  Mr Dean’s ill health or his incapacity to work does not amount to special circumstances without further adverse circumstances. I further note that his compensation was designed to cover at least some of the health problems experienced by Mr Dean. Mr Dean has been compensated for his back and neck injury (including the future pain and suffering it would cause) and his future inability to work because of that injury.

41.              Likewise, many of his medical expenses cannot constitute special circumstances since such expenses should have been taken into account in the settlement of Mr Dean’s compensation claim. Moreover, the entire family is in possession of healthcare cards which provide financial assistance with prescription medicine and doctor’s attendances.

the house

42.              Mrs Dean gave evidence that Mr Dean would possibly require the aid of a wheelchair. While there is no compelling evidence that Mr Dean’s health makes it essential he remain in his present house as in cases such as Secretary, Department of Family and Community Services and Orlando [2000] AATA 632, I accept Mrs Dean’s evidence that she and her husband were influenced when they bought the house by Mr Dean’s present restricted mobility and possible deterioration in the future. Not all features of the house are designed for a person in a wheelchair or with difficulty walking but the wide shower entry and wider than usual doors are important to them. I do not find reason to doubt Mrs Dean’s truthfulness about how important she considers the design of the house is for managing her husband’s reduced mobility. She put some emphasis on this in her oral evidence and was otherwise truthful. She was open, for example, about matters such as her knowledge of the extent of the preclusion period.

43.              The purchase of a modest 3 bedroom hardiplank and tile home from the personal injury settlement has given the Dean family some stability in the knowledge that the home is specially adapted for a person with a disability. This includes having a wide shower area which is much easier for Mrs Dean to lift her husband out of if he falls in the bath area, which ahs occurred twice since they moved into the house and once previously in their former rented accommodation. The assessment of the home undertaken by Ms Elvish, occupational therapist, dated 19 June 2006 indicates a number of ways in which the home is well adapted for the current and future possible needs of Mr Dean.

44.              Mr and Mrs Dean are very fearful of losing their matrimonial home and this financial pressure is impacting upon their ability to manage an extremely difficult situation. Losing the home would be psychologically devastating to both of them.

45.              The social links at the home with neighbours and the children of neighbours are considerable, particularly the links between the children and their friends in the street, on the evidence of Mr Dean. Subsequently, moving would be traumatic and place an additional heavy burden of hopelessness on the family.

46.              If forced to sell their home the Dean’s could never again afford to buy another one. They would lose money in terms of real estate commission, likely to be in the vicinity of $8,000. They would also have to spend money on the payment of stamp duty on any new property. I accept that it is highly unlikely that Mr and Mrs Dean could ever afford to buy into the market again.

47.              If Mr and Mrs Dean did not own their own home, they would have to pay rent. This would be a drain on them and their children and they would probably be eligible for rent assistance in the long term, which would be a drain on the public purse.

other factors that should also be taken into account

48.              The preclusion period is the same regardless of the amount of the legal costs in the matter. In this case, the matter went to court and only settled some time after commencement of the hearing. The legal costs were $65,000. This is a high figure and probably more than if the matter had settled at an earlier time, yet the preclusion period is the same as if it had settled prior to the hearing. The formula applied by the Department of Family and Community Services does not take into account the amount of money that is effectively “lost” to an applicant in legal fees. In Re Fuller and Secretary, Department of Family and Community Services (2004) 84 ALD 152; [2004] AATA 615 at 15 this was a factor taken into account as constituting special circumstances. Re Fuller was cited with approval in QX05/10 and Secretary, Department of Employment and Workplace Relations [2006] AATA 178 at 30 – 32. Loss of monies in legal costs was also a factor taken into consideration in Re Secretary, Department of Family and Community Services and Danielson-Jensen [2004] AATA 1319 at 27.

the law as it applies to this factual situation

49.              I have adopted some of counsel’s submissions for Mr Dean in summing up the law as to his situation. In Beadle, the leading case in this area, it was stated that circumstances ought to have “a particular quality of unusualness” in order to constitute “special circumstances” for the purposes of the section, be “unusual, uncommon or exceptional”. Groth developed the tests to be applied as including situations which were “unfair, unintended or unjust”. In a similar vein, Mansfield J in Kirkbright v Secretary, Department of Family and Community Services (200) 106 FCR 281 described s. 1184K as a “release valve for such unfairness or injustice in certain circumstances” (as cited in Re Bus and Secretary, Department of Employment and Workplace Relations [2006] AATA 155 at 37. In Re Bus it was held that, at 34:

… Her circumstances are “special” because she has been exposed to events which were unintended, out of the ordinary and unfair.

50.              In this case, the confluence of events and the gravity of the situation are extremely unusual, uncommon and exceptional. There were a number of very significant matters which could not have been anticipated at the time of the personal injury settlement, particularly in terms of the future. The health situations of both Mr and Mrs Dean are extreme, for different reasons and have brought them both to despair and hopelessness, which is badly affecting their children's welfare.

51.              It is clear that it is not only financial circumstances that may be considered pursuant to the section, but also other circumstances. In the matter of ReSecretary, Department of Family and Community Services and Bullock (2001) 67 ALD 528 Senior Member Handley, after citing Re Beadle and Groth, re-stated the principles applicable to the exercise of the discretion in these matters. At paragraphs 26-27 of his decision he said:

[at 27] there is nothing in the above analysis which confines special circumstances to the flavour as was submitted by Mr Ells. Additionally there is nothing in the above analysis which confines special circumstances to be circumstances of a financial nature only. Indeed, special circumstances must be ascertained in the context of the applicable legislation: refer Re Tasmanian Ferry Services Ltd and Department of Transport and Communications (1992) 29 ALD 395. Consideration of what constitutes special circumstances involves application of a broad discretion without binding, rules or rigidity: refer Minister for Community Services and Health v Thoo (1988) 78 ALR 307. Special circumstances should be found if it will avoid injustice: refer Springfield Nominees Pty Ltd v Bridgeland Securities Ltd (1992) 38 FCR 217; 110 ALR 685.

[at 28] It was submitted that review of preclusion periods involve persons who are impecunious or who have depleted much of the compensation moneys (which gave rise to the imposition of the preclusion period). This is so but it does not follow that special circumstances can only be demonstrated by persons who present with immediate financial insecurity. I would suggest that the unusual, uncommon or exceptional circumstances that some people do experience extend beyond purely financial factors, for example illness, poor legal advice or a myriad of domestic or cultural circumstances. These may all contribute to or precipitate financial insecurity or instability. But the discretion to determine whether special circumstances exist is not enlivened only when an applicant presents with financial insecurity.

52.              In that case, the applicant acquired a severe and debilitating illness, haemochromatosis, which may require further surgery. That was held to amount to "special circumstances". The senior member stated at paragraph 30:

lIIness per se is not a 'special circumstance', but the consequences may be, for illness may not only involve the cost of treatment. It can, as demonstrated in the present case, have far reaching consequences and often dislocating consequences.

53.              Similarly, in Re Frelek and Secretary, Family and Community Services (2005) 86 ALD 772, Frelek was young 30 year old man at time of injury, experienced severe injuries (paralysis), depression and financial difficulty because he had bought a house. There was constant pressure of him, his wife and three children, one of whom was in counselling, his mental health deteriorated, surgery not covered by Medicare at a cost of $34,000, and Mrs Frelek developed cervical cancer. It was agreed that the preclusion period should be shortened so that it finished at the time of hearing (27 April 2005 instead of Dec 2007).

54.              Special circumstances were found in Frelek’s case as a result of a number of factors: the majority of the money was spent on the house and land that the applicant now owned; constant pressure on the family for last five years; the father's injury meant that a machine and surgery were needed, likely to cost $34,000, not available through medicare; Mr Frelek had mood disorder or depression, which:

together with despair and hopelessness are contributing factors to their present circumstances: re Woods and Secretary, Department of Family and Community Services (2002) 68 ALD 241.

55.              Other factors were compelling medical evidence that the physical and mental health of the applicant had deteriorated; financial stress on the Mr Frelek and his family was now more than straitened circumstances. There was also the physical, social, and emotional health to consider, not only of Mr Frelek, but also of his wife and three children, one of whom is now adolescent and has required counselling; Mrs Frelek has experienced cervical cancer; the monies have not been dissipated. It was held that special circumstances were established.

56.              In this case, which has a number of similarities to Frelek, Mr Dean’s wife handles the finances of the family and probably plays a central role in the emotional well-being of the family. Her illness has been a devastating blow to the family: her evidence was that on some days she cannot control her bowels, and also vomits. Mr Dean lives with almost constant back and neck pain, and very restricted mobility. Even driving in a car for long periods is difficult for him. Although he hoped to get part-time work, he cannot do so, which is very upsetting for him. In Avenessian ill health and inability to engage in paid employment were factors considered to be relevant to shortening the preclusion period. As in Frelek, the Dean family own a modest home, made of hardiplank and tile. That did not exclude him from consideration in Frelek and it is submitted that it ought not to exclude his case from being evaluated in light of all the circumstances.

57.              In VYS at 75 - 756, negligent advice was a factor taken into account in the exercise of the discretion under the Act. It ought also to be taken into account in this case. But for that advice, Mrs Dean would not have gone bankrupt, causing great stress and increased financial pressure on the family, guilt and fear of losing the family home.

58.              The approach taken in Bullock and Frelek was also the approach taken in QX05/10 by the Full Tribunal, constituted by Snr Member P McDermott and Member G Maynard. In QX05/10 the Applicant contracted HIV. It was held that ill health resulting in incapacity to engage in paid employment is relevant to a finding of special circumstances. Mental health, depression and anxiety were also held to amount to special circumstances in the case. Although the Applicant still had funds, it was said ( at paragraph 60) that:

we appreciate that the Applicant has funds but we consider that it is undesirable that a person who is not in immediate financial hardship should be reduced to long term financial difficulties if special circumstances are not found". If she had not purchased a home, she probably would have had to apply for rent assistance. She could not work again.

59.              Reducing the preclusion period from 2010 to the date of decision, March 2006, the tribunal said (at paragraph 60) that:

The Tribunal appreciates that she still has funds, but considers that it is undesirable that a person who is not in immediate financial hardship should be reduced to long term financial difficulties if special circumstances are not found.

60.              ln this case, the significance of the home for Mr and Mrs Dean and their children was not taken into account and I agree with the submission that the family need not be forced to exhaust all resources by selling the home, with the attendant social, psychological and financial consequences for the entire family.

61.              lt is possible that the medical condition of Mr Dean may deteriorate further, making a properly adapted home even more important than it is today. Professor Ghabriel, Director, Department of Orthopaedic Surgery at Royal Newcastle Hospital found in his report of 22 October 2001 (T5) that Mr Dean has suffered a C5/6 disc injury with subsequent degenerative changes, right L5/S1 disc prolapse with compression of the right S1 nerve root, producing 30% permanent impairment of the back, 15% loss of efficient use of each leg above the knee, taking into account loss below the knee and 25% permanent impairment of the neck. He indicated that a future disc excision and fusion may be required.

62.              In Re Frelek, Bullock and other cases, the level of assets held has not been a factor elevated in importance over other factors. In Vys, the level of assets held was much higher than in this case, yet the discretion was favourably exercised because it was said that the discretion should be exercised so as to give "a broad measure of justice for the individual case". The applicant owned two houses unencumbered, a 23 ft cabin cruiser and had $45,000 in savings. It was said that the social security system should not require a person to take "a one way ticket to poverty" before being able to qualify for social security payments. In that case the Social Security Appeals Tribunal had reduced the preclusion period by 12 months and the tribunal reduced it by a further year.

63.              My overall impression in the present case is that the financial problems, the ill-advised bankruptcy, the further cost and stress of the bankruptcy, unexpected ill health, the effect on the children and all the circumstances of this case justify the cessation of the preclusion. The situation in which the family finds itself is not entirely of their making even though there was no fault on the part of Centrelink. Mr and Mrs Dean are deserving of relief.

decision

64.              The Tribunal sets aside the decision under review and substitutes a decision that the length of the preclusion period should be reduced so that it ends on the date of this decision, that is, 30 October 2006.

I certify that the 64 preceding paragraphs are a true copy of the reasons for the decision herein of Ms R. Hunt

Signed:         .....................................................................................
  Rhonda Pietrini        Associate

Date/s of Hearing  31 August 2006 & 10 October 2006
Date of Decision  30 October 2006
Counsel for the Applicant         Mandy Tibbey
Solicitor for the Applicant          Jerome McClintock
Counsel for the Respondent     Brendan Kelly
Solicitor for the Respondent     Andrew Crockett