Dimos and Department of Family and Community Services

DECISION AND REASONS FOR DECISION [2000] AATA 440

ADMINISTRATIVE APPEALS TRIBUNAL )

) No V2000/257

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

DECISION

Tribunal Mr B.G. Gibbs, AM, Senior Member

Date5 June 2000
PlaceMelbourne

Decision      The Tribunal affirms the decision under review.
  (Sgd.)    B.G. GIBBS
  Senior Member
CATCHWORDS
SOCIAL SECURITY – Carer Payment – entitlement – preclusion period – whether special circumstances sufficient to disregard some or all or part of compensation payment – decision affirmed.
Words and Phrases
Social Security Act 1991, ss. 17(1), 17(2), 17(3), 1165(6), 1165(8), 1184(1)
Secretary, Department of Social Security and Winterbotham (1990) AAT Decision No. 6499 : 12 November 1990.

REASONS FOR DECISION

5 June 2000 Mr B.G. Gibbs, AM, Senior Member
Introduction

This is an application by Mr John Dimos for review of the decision of the Social Security appeals Tribunal ("SSAT") dated 1 February 2000, to affirm the decision of a delegate of the respondent in these proceedings, to reject a claim for Carer Payment on the grounds that a preclusion period applies from 24 October 1998 to 22 February 2000.
Representation
At the hearing by this Tribunal Mr Dimos was self-represented but accompanied by his wife Theodora and a friend, Ms Braniff. Ms P. D'Cunha, a Departmental Advocate, appeared for the respondent.
Material
The Tribunal had before it documents ("the T documents") lodged by the respondent pursuant to section 37 of the Administrative Appeals Tribunal Act 1975. Other material, to some of which it may be necessary to refer, was also received by the Tribunal during the hearing.
Witnesses
Mr Dimos and his wife gave evidence during the hearing. No other witnesses were called.
Background
Mr Dimos was injured at work on 15 August 1994.
He received weekly compensation payments until 16 May 1997.
On 20 June 1997 Mr Dimos claimed Disability Support Pension, which was granted from that date.
Mr Dimos commenced receiving weekly compensation payments from 27 March 1998.
Mr Dimos' Disability Support Pension was cancelled from 25 June 1998, and payments made for the period 2 April 1998 to 15 June 1998 were recovered from GIO Workers' Compensation (Victoria) Limited.
Mr Dimos ceased receiving weekly compensation on 23 October 1998.
Mr Dimos received a lump sum compensation settlement of $144,000 in respect of his injury, on 15 November 1998.
The effect of the lump sum settlement is that Mr Dimos was precluded from payment of pension, benefit or allowance for the period from 24 October 1998 until 22 February 2002.
Mr Dimos was advised of the preclusion period in a letter dated 28 October 1998.
Mrs Dimos reapplied for Disability Support Pension, which was granted at the maximum rate from 29 October 1998. Mrs Dimos is currently in receipt of the Disability Support Pension.
On 10 June 1999 Mr Dimos lodged a claim for Carer Payment, which was rejected on the same day due to the compensation preclusion period.
Mr Dimos appealed to the SSAT against the decision on 14 July 1999.
The SSAT heard the appeal on 31 August 1999 and on the same day affirmed the decision to impose a preclusion period.
On 7 October 1999 Mr Dimos applied to this Tribunal for review of the decision of the SSAT.
The application for review was heard by this Tribunal on 3 December 1999 (Senior Member Handley) and a decision was handed down on 13 December 1999, affirming the decision of the SSAT to impose a preclusion period from 24 October 1998 to 22 February 2002.
A new claim for Carer Payment and Carer Allowance was lodged on 23 December 1999.
The new claim for Carer Payment was rejected due to the imposition of the preclusion period, and Carer Allowance was granted on 23 December 1999.
Mr Dimos appealed the decision to reject Carer Payment on 13 January 2000. The appeal was heard by the SSAT on 1 February 2000 and, as indicated, the decision to impose a preclusion period from 24 October 1999 to 22 February 2002, was affirmed.
It is that decision which is the subject of these proceedings.
Issue
The issue for determination by this Tribunal is whether Mr Dimos' circumstances are sufficiently special to disregard all or part of the compensation payment.
Relevant Legislation
The legislation relevant to this matter is to be found in the Social Security Act 1991 ("the Act"), as follows:
"17(1) In this Act, unless the contrary intention appears:
"compensation affected payment" means:
(aa)     an age pension; or
(a)       a disability support pension; or
(b)       a parenting payment; or
(c)       a social security benefit; or
(e)       a disability support wife pension; or
(f)        a carer payment; or
(g)       a special needs disability support pension; or
(h)       a special needs disability support wife pension; or
(i)        mature age allowance; or
(j)        mature age partner allowance; or
Compensation
17(2) For the purposes of this Act, compensation means:
(a)       a payment of damages; or
(b)a payment under a scheme of insurance or compensation under a Commonwealth, State or Territory law, including a payment under a contract entered into under such a scheme; or
(c)a payment (with or without admission of liability) in settlement of a claim for damages or a claim under such an insurance scheme; or
(d)any other compensation or damages payment;
(whether the payment is in the form of a lump sum or in the form of a series of periodic payments) that:
(e)       made wholly or partly in respect of lost earnings or lost capacity to earn; and
(f)        made either within or outside Australia.
Compensation part of a lump sum
17(3) For the purposes of this Act, the compensation part of a lump sum compensation payment is:
(a)       50% of the payment if the following circumstances apply:
(i)the payment is made (either with or without admission of liability) in settlement of a claim that is, in whole or in part, related to a disease, injury or condition; and
(ii)the claim was settled, either by consent judgement being entered in respect of the settlement or otherwise, on or after 9 February 1988; or
(ab)     50% of the payment if the following circumstances apply:
(i)the payment represents that part of a person's entitlement to periodic compensation payments that the person has chosen to receive in the form or a lump sum; and
(ii)the entitlement to periodic compensation payments arose from the settlement (either with or without admission of liability) of a claim that is, in whole or in part, related to a disease, injury or condition; and
(iii)the claim was settled, either by consent judgement being entered in respect of the settlement or otherwise, on or after 9 February 1988; or
(b)if those circumstances do not apply – so much of the payment as is, in the Secretary's opinion, in respect of lost earnings or lost capacity to earn.
New lump sum preclusion period
1165(6) If a person chooses to receive part of an entitlement to periodic compensation payments in the form of a lump sum, the new lump sum preclusion period is the period that:
(a)begins on the first day on which the person's periodic compensation payment is a reduced payment because of that choice; and
(b)ends after the number of weeks worked out under subsections (8) and (9).
1165(8) If a compensation lump sum is received on or after 20 March 1997, the number of weeks in the preclusion period is the number worked out under the following formula:
Compensation part of lump sum
Income cut-out amount
1184(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."
As correctly observed by Ms D'Cunha, the Federal Court and several decisions of this Tribunal have addressed the meaning of "special circumstances" in the context of social security legislation, the consensus of opinion being that to be "special", the circumstances must be unusual, uncommon or exceptional. Straitened financial circumstances are not of themselves sufficient to constitute special circumstances. Nor is the fact that a person's health is such that he may be medically qualified to receive Disability Support Pension, of itself sufficient to constitute special circumstances within the meaning of section 1184(1) of the Act.
Evidence
This Tribunal in its decision dated 13 December 1999 found that the lump sum settlement of $144,000 fell within the definition of compensation payment pursuant to section 17(2) of the Act.
Mr Dimos is presently in receipt of Carer Allowance at the rate of $76.40 per fortnight and Mrs Dimos receives the maximum rate of Disability Support Pension for a married person, which is $385.80 per fortnight. This amount is inclusive of rent assistance. Thus the total payment received by Mr and Mrs Dimos is presently $462.20 per fortnight.
At the time of the lump sum settlement Mr Dimos was 60 years of age and is now 62.
Mr and Mrs Dimos were living in rented accommodation and Mr Dimos wished to have his own home in which he and his wife (who suffers psychiatric problems), could live for the remainder of their lives.
Mr Dimos therefore took the compensation settlement in order to enable him to purchase a home. The settlement, however, was not sufficient to purchase a house. He therefore agreed to purchase a property owned by his wife's mother, demolish the house and build two units, one for himself and his wife, the other for his daughter Dina and her fiance.
The unit built for Mr and Mrs Dimos cost $120,000 and the one for their daughter, which is considerably more substantial and which she and her fiance financed, cost $240,000 to build.
During the hearing Mr Dimos tendered a statement by Dr Louis Loizou of the Templestowe District Medical Centre. The statement dated 29 January 2000 is as follows:
"To whom it may concern
Re: Theodora Dimos
This is to certify that Theodora has severe psychological disturbance with suicidal tendency. Her condition is labile & she requires constant supervision by her husband who is essentially her carer. I receive many distress calls from her husband & I consider Theodora a difficult management problem."
Mr Dimos informed the Tribunal that he had owned a factory which his wife operated. However, because of her illness she made wrong decisions and she and her husband lost their house and all of their money. This occurred twelve years ago.
Mr Dimos said that because of his wife's psychiatric condition he has to be with her all of the time.
Based on "roadside" valuations carried out by the Australian Valuation Office on 31 October 1999, the value of the unit occupied by Mr and Mrs Dimos is in the order of $235,000 and the value of their daughter's unit is in the order of $265,000.
Ms D'Cunha tendered and the Tribunal received two Register Search Statements provided by the Lands Title Office, Victoria, on 2 May 2000. Examination of the documents reveal that ownership of the two properties is vested in Mr and Mrs Dimos and their three daughters on a share basis. Each property comprises four equal (undivided) shares. Mr and Mrs Dimos are Joint Proprietors of both properties, holding one share in each of the properties. Each of the children is a Sole Proprietor of both properties, holding one share each in each of the properties. Mr and Mrs Dimos and their three children are tenants-in-common of both properties. This means that each shareholder can dispose of their share as they so wish.
Mr Dimos stated that prior to moving out of his mother-in-law's house he and his wife had lived there for about ten years. Except for the first couple of months they paid no rent. However, they did pay all of the household expenses including the rates and gave his mother-in-law money to supplement her pension.
Mr Dimos explained that he and his wife moved from the house because it had become dilapidated and the garden was too big for him to manage. Mr Dimos further stated that the other incentive for moving was because with the lump sum settlement they could build a new house for themselves for a small amount of money.
Mr Dimos acknowledged that about a week after he received the lump sum settlement he was informed that he would not receive the pension.
Mr Dimos also stated that even though he knew he would not get a pension, he would still go ahead tomorrow and buy a house. When asked how he would propose to live, Mr Dimos responded by saying he would try and find work, but this was extremely difficult because of his wife's illness. He did not believe that his decision to build a unit was a mistake.
Mr Dimos said that the unit in which he and his wife live was completed about one week ago and that up to that time one of his daughter's lived with them. Sometimes the daughter made a financial contribution to the cost of living. Mr Dimos pointed out, however, that it is not the Greek custom for children to have to pay their own way.
Findings
From the material before me I find that Mr Dimos' circumstances are not sufficiently special to merit disregarding the whole or part of the compensation payment pursuant to section 1184(1) of the Act.
As observed by Ms D'Cunha, in Secretary, Department of Social Security and Winterbotham (1990) AAT Decision No. 6499 : 12 November 1990, the Tribunal considered whether Mr Winterbotham's circumstances were sufficiently unusual to warrant the compensation payment, either in whole or part as not having been made. Mr Winterbotham spent a portion of his settlement payment on purchasing real estate. He purchased land and built a house for his family. The Tribunal compared Mr Winterbotham's position to that of another compensation recipient who invested his compensation settlement on investments. The Tribunal stated that:
"Neither recipient should expect the taxpayer to support him while he holds on to assets he could well realize to support himself."

As Ms D'Cunha pointed out, the Tribunal did not recommend that Mr Winterbotham sell his home. At the same time, the Tribunal stated that it could not ignore the view that the selling of the house was one way by which Mr Winterbotham could resolve his difficulties.

As Ms D'Cunha also stated, the matter presently before the Tribunal is similar to Re Winterbotham, in that Mr Dimos has built a residence for himself using his compensation settlement. However, as was observed by Ms D'Cunha, Mrs Winterbotham was only receiving payment of additional family payment for her dependent children. In the case of Mr Dimos, he has no dependants and as recorded earlier he is presently in receipt of Carer Allowance at the rate of $76.40 per fortnight and Mrs Dimos is receiving Disability Support Pension at the rate of $385.80 per fortnight, being the maximum rate payable to a person who is a member of a couple.
It should be recorded that Mr Dimos submitted that his wife's medical condition should be taken into account when determining special circumstances. However, as pointed out by Ms D'Cunha, Mrs Dimos' medical conditions are pre-existing and have no relevance in respect of either Mr Dimos' compensation settlement or his preclusion period.
During the hearing Ms D'Cunha made the following submissions:
"The fact that Mrs Dimos is currently being paid the disability support pension is a recognition of her existing medical condition and therefore the respondent submits that Mr Dimos' medical condition does not constitute special circumstances. On the other hand, Mr Dimos did not avail the facilities available to him to get appropriate financial advice. As can be seen in the T documents, Mr Dimos was invited by the Financial Information Service officer in May of 1998 to approach him with regard to any compensation settlement that could possibly occur in the future.
Mr Dimos chose not to avail of the facilities. In fact the respondent submits that Mr Dimos had other options available to him to invest his settlement payment, which he chose not to consider. Unlike Mr Winterbotham, Mr Dimos did not seek financial advice. Instead he decided on a course of action in spite of being aware of the consequences of his actions. As stated in their evidence, Mrs Dimos stated that her daughter was living with them until the present time. Her daughter who was working full-time, but yet Mr and Mrs Dimos chose not to get any contributions from their daughter, and provided her with board and lodging free with a home to …
At the same time, Mr and Mrs Dimos were approaching the Commonwealth with the argument of special circumstances and saying – in his application, Mr Dimos said he was destitute. With regard to the building of the property, Mr Dimos was advised two days after receiving the settlement that he would have a preclusion period extending to 22 February 2002. That letter as well can be found in the To documents. Mr Dimos again chose to ignore advice given to him. He appealed a decision to impose a preclusion payment and the decision was reviewed by an authorised review officer.
This was in March 1999. Again Mr Dimos was advised that he had a preclusion period, no payments would be made. But he still persisted with his decision to build a house. Mr Dimos appealed and attended a Social Security Appeals Tribunal hearing on 31 August '99. At that stage, he had not commenced construction of the houses. It has been contended on behalf of Mr Dimos that at the date of the Social Security Appeals Tribunal hearing on 31 August '99 that the building contract had not been signed, but the demolition of the old house had been completed and the architects and engineering drawings and legal work had been done.
From the evidence provided at the Social Security Appeals Tribunal, Mr Dimos stated to that Tribunal that were he to be given the decision of receiving a settlement at that date, he would still go ahead and buy the house. In fact that is the very evidence that Mr Dimos has presented today at this hearing. Mr Dimos has been recklessly indifferent to the consequences of his decision and it appears that Mr Dimos was determined to build up his assets at the expense of the Commonwealth.
As per the valuation notice provided, the two units are valued at $235,000 and $265,000 each. The titles notice shows that Mr and Mrs Dimos have interests in both of these properties, and the interests are in the form of being tenants in common which allows them to take decisions regarding their interests in the properties."
I agree with the submissions thus made and find accordingly.
As was further observed by Ms D'Cunha, Mr Dimos is in possession of valuable assets being two units, one of which he appears to believe he owns. As stated, the value of that unit is $235,000.
As was also correctly observed by Ms D'Cunha, the settlement payment was a payment intended to secure Mr Dimos' future in light of his loss of earnings. However, he chose to expend the money for a different purpose.
Ms D'Cunha further submitted as follows:
"Further, the Department submits that not all of the settlement moneys were used to assess his preclusion period. Only half of it was. So it is only $72,000 that was used to assess the preclusion period. Further, the Department submits that the legislation in the Social Security Act has been specifically constructed to ensure that people who receive money for economic loss are responsible for maintaining themselves from their settlement funds.
Mr Dimos has stated quite emphatically that it was his great wish to have a house to live in. The Department does not negate that wish. It is the Department's contention that Mr Dimos could very well have had that wish after the year 2002. In fact if Mr Dimos had taken financial advice, the offer of which was extended to them, he could very well have waited out the preclusion period and then got his wish of having the house to live in. Therefore putting all the facts of this matter together with the evidence and the case law, it is the Department's submission that it would not be unjust, unreasonable or inappropriate for the Secretary to maintain the preclusion period, particularly given that Mrs Dimos is on the maximum rate of the disability support pension and Mr Dimos is in receipt of carer allowance.
Further, Mr Dimos and Mrs Dimos have stated that they have moved into their new unit, which means that they would not need to pay any rent any longer. This therefore leaves them with a payment of $389.60 a fortnight. That is taking away the rent assistance, which is not a figure that the Department contends would leave them destitute, given that they do not have any dependants and now they do not have any rent to pay. Therefore the respondent submits that the decision of the Social Security Appeals Tribunal be affirmed."

I agree with the further submission, and find accordingly.
Decision

In the circumstances the decision of the Tribunal will be that the decision under review is affirmed.
I certify that the 52 preceding paragraphs are a true copy of the reasons for the decision herein of Mr B.G. Gibbs, AM, Senior Member
Signed: .....................................................................................
  Personal Assistant
Date/s of Hearing  3/5/2000
Date of Decision  5/6/2000
Counsel for the Applicant        Self-represented
Counsel for the Respondent    Ms P. D'Cunha
Solicitor for the Respondent    Centrelink Admin Law Team

[2000] AATA 440

5 June 2000

Key Legal Topics

Areas of Law

Social Security Law

Legal Concepts

Social Security Act 1991

Compensation Payment

Preclusion Period

Special Circumstances