Dinas and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs

[2011] AATA 270

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2011] AATA 270

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2010/4864

GENERAL ADMINISTRATIVE DIVISION		)
Re		DIMITRA DINAS

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Ms Regina Perton, Member

Date21 April 2011

PlaceMelbourne

Decision The Tribunal sets aside the decision under review and substitutes a decision that as from 18 February 2011, the compensation affected payment is to be treated as not having been made on the basis of special circumstances.

..................[signed]......................

Member

SOCIAL SECURITY ‑ lump sum compensation – preclusion period – special circumstances – decision set aside.

Social Security Act 1991 ss 17, 1170, 1184K

Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25
Ryde v Secretary, Department of Family and Community Services [2005] FCA 866

REASONS FOR DECISION

21 April 2011 Ms Regina Perton, Member

1.      Dimitra Dinas, who is 42 years old, sustained serious injuries in a workplace accident on 21 April 2000.  She received a lump sum compensation award of $350,000 on 16 July 2007.  After a $40,000 deduction for legal costs, she received $310,000.

2.      On 22 July 2010, Ms Dinas lodged a claim for disability support pension (DSP) with Centrelink, which delivers services for the Department of Families, Housing, Community Services and Indigenous Affairs (the Department).  Centrelink rejected Ms Dinas’s claim as she was subject to a compensation preclusion period until 1 February 2012, as a result of receiving the lump sum compensation.

3.      Ms Dinas sought review of the decision by an authorised review officer (ARO) of Centrelink and the Social Security Appeals Tribunal (SSAT).  The decision to refuse the application was affirmed on the basis of the preclusion period.  On 9 November 2010, Ms Dinas lodged an application for review with the Tribunal.

4.      The issue before the Tribunal is whether there are special circumstances that warrant shortening the preclusion period.

MS DINAS’S HEALTH AND PERSONAL CIRCUMSTANCES

5.      There is no dispute that Ms Dinas suffers from a number of medical problems which are likely to impact upon her for the rest of her life.  Some of these were the subject of the compensation payment, others not.  Ms Dinas’s doctor, Dr I Alekozoglou, in a note written in January 2011, stated that Ms Dinas suffers from depression, severe hearing loss, chronic pain in the neck, back, shoulder, lower limbs and knees.

6.      Ms Dinas suffered the loss of hearing after the workplace accident but it was not part of the compensation award.  She has lost her hearing in one ear entirely and her hearing in the other ear is diminished.  Hearing aids do not assist her.

7.      At the time Ms Dinas received the lump sum compensation, she believed she would be able to work part-time.  Prior to her accident, she worked long hours in the hospitality industry.  She had been singled out by management as having management potential.  Ms Dinas has tried to obtain work by submitting hundreds of job applications and has sought assistance through Centrelink’s employment network.  However, now that she has been out of the workforce for more than a decade and is unable to undertake telephone based work, she finds that she is not even accepted for voluntary work.  Her lack of experience, coupled with the nature of her disabilities, appears to have been an insurmountable barrier to gaining paid or unpaid work but she continues to try.

8.      Ms Dinas sought assistance from Centrelink in finding work.  She was referred to a specialist agency assisting persons with disabilities to find work but they have not been able to help.  Ms Dinas has only recently become aware of the existence of carer allowance for which her parents may well have been eligible over the years since the accident.  She was frustrated that Centrelink did not tell her of the availability of that payment which would have allowed her parents to help her to a greater degree.

9.      Ms Suzanna Bogdanoska, a Commonwealth public servant who has known Ms Dinas for 35 years, provided a written reference.  She described the changes in Ms Dinas since the accident.  She stated that little had been done over the years to assist Ms Dinas with rehabilitation or to find work.  Ms Bogdanoska stated that her friend’s lack of experience and hearing loss had proven insurmountable.

MS DINAS’S FINANCIAL CIRCUMSTANCES

10.     Out of the proceeds of the compensation settlement, Ms Dinas reimbursed her parents for renovations to their home that they undertook to make it more accessible and safe for her.  She paid $40,000 of her parents’ mortgage because they had taken care of her both physically and financially.  She also reimbursed her brother $15,000 for bills he had paid when she did not have the money or the will to do it herself due to her severe depression and chronic anxiety.  She also bought items such as a closed caption television due to her hearing difficulties.  She also purchased an expensive hearing aid but unfortunately it does not assist her.

11.     Ms Dinas stated that in early 2008 she came to the realisation that she had to take control of her life and provide some future financial security for herself.  She had dissipated some of the compensation through gambling whilst in her depressed state.  She saw a financial advisor who had suggested that she initially place $200,000 in a term deposit and then buy a home.  The property market was rising quickly and she realised that if she did not buy something soon she would never be able to do so.  As she had no income she was unable to get a bank loan.  She eventually found a unit for $220,000 which her parents urged her to buy.  She and her mother took out a Commonwealth Bank loan of $35,000.  The compensation settlement made up the balance of the purchase price.  As her parents are age pensioners, they are not in a position to help her to any greater degree.

12.     Ms Dinas’s property was tenanted when purchased and the same tenant still occupies the premises.  After payment of the minimum mortgage repayments, body corporate fees, buildings and landlord insurance, Ms Dinas receives around $35 per week.

13.     Ms Dinas told the Tribunal that she is unable to obtain a loan or credit card to provide additional income until her preclusion period ends.  Her parents’ income is limited and it is not feasible to take out a loan on their home.  In any case, she does not consider it appropriate to further burden her parents.

14.     The Tribunal received a statement dated 16 February 2011 from Brignells, Public Accountants and Tax Agents.  It was pointed out that Ms Dinas’s taxable income had been below the tax free threshold for the financial years ending 30 June 2009 and 30 June 2010.  They stated that her only source of income was the rent from her one bedroom unit.  They stated that it has been Ms Dinas’s intention to move in and make the property her primary residence but that she has insufficient income to make that possible.

ARE THERE SPECIAL CIRCUMSTANCES?

15. Section 17(1) of the Social Security Act 1991 (the Act) provides that compensation affected payment includes disability support pension. Section 17(2) provides:

Subject to subsection (2B), 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 and whether it is made within or outside Australia) that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury.

16. Under s 17(3) of the Act, 50 per cent of a lump sum settlement payment is held to be the compensation part of the payment. Section 1170 of the Act sets out the method of calculating a compensation preclusion period, which commences on the day following the last day of periodic payments (s 1170(1)(a)). Section 1170(1)(b) provides that the length of the preclusion period is calculated by dividing the compensation part of the lump sum payment by the income cut-out amount (s 1170(4) and (5)).  Income cut-out amount is defined in s 17(1), according to a formula set out in s 17(8).

17. The documentary evidence does not show that the settlement award was for reasons other than compensation for loss of earnings or loss of earning capacity. The Tribunal finds that the compensation received by Ms Dinas falls within the definition of compensation in s 17(2) of the Act. The calculations have not been challenged by Ms Dinas. The preclusion period currently ends on 1 February 2012.

18. Section 1184K(1) of the Act gives the decision-maker discretion to treat the whole or part of a compensation payment as not having been made or not liable to be made, if the decision-maker thinks it is appropriate to do so in the special circumstances of the case. 

19.     The meaning of the term special circumstances in the context of social security law has been discussed in several Federal Court cases and a multitude of Tribunal cases.  In Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25, Besanko J considered the term in the context of s 1237AAD of the Act. Besanko J refers extensively to Ryde v Secretary, Department of Family and Community Services [2005] FCA 866, where Branson J held that the use of the term special circumstances in the legislation demonstrated an intention to proscribe waiver in ordinary cases.  Branson J went on to state that the hardship or unfairness should be sufficient to justify departure from the general rule in the particular case.

20.     In Angelakos, Besanko J states, at [33]:

I also note that the authorities have emphasised time and again the importance of maintaining flexibility in determining what constitutes special circumstances … It was not the intention of Parliament to confine the exercise of the discretion to an exceptional case … there must be something that distinguishes the case from the ordinary or usual case.

21.     Mr Noonan, who represented the respondent, referred to a number of previous decisions where the Tribunal considered whether there should be a requirement for a person to sell all assets acquired out of the proceeds of the compensation settlement before a shortening of the preclusion period was warranted.  The cases referred primarily to properties or vehicles purchased with the compensation lump sum.  The outcomes of those decisions varied as to whether the preclusion period should be shortened, despite the person having acquired assets which he or she did not have prior to the compensation settlement.  The Tribunal does not propose to undertake a written analysis of each case presented because special circumstances need to be considered in the context of the facts of each case.

22.     Ms Dinas agreed that she did not have a property of her own when she received the compensation lump sum.  She pointed out that if she sold the property, she would be unlikely to be able to purchase a property again.  Once she has an income, she wishes to move to the property and have some independence.  The unit, of which the Tribunal saw photographs, is rather basic and around 30 to 40 years old.  It suffered damage during the recent heavy rain events and there are quite a number of repairs to be done.  It is not clear whether the insurance company will meet the cost of repairs.  It also requires some updating were it to be let at a more competitive rental.  Ms Dinas suggested that if she lives in her own property it would save Centrelink a considerable amount as she would not require rental assistance.

23.     The Tribunal accepts that Ms Dinas’s circumstances of being in poor health with ongoing disabilities and having to manage financially on her compensation payout without being eligible for social security payments do not put her in a situation that differs from others in similar circumstances.  Her choice to purchase a property, rather than live on the moneys awarded would not normally warrant a finding of special circumstances from this Tribunal.

24.     However, there are a number of factors in this matter that point towards a finding of special circumstances for the balance of the preclusion period.  Were Ms Dinas to sell the property, she would be unlikely to ever again be able to purchase another.  She is unable to move into the ground floor property because she would have no income at all were she to do so.  She currently receives a small amount once the mortgage repayments and other commitments are met.  The Tribunal notes that it was a financial adviser who suggested she purchase rather than keep the money in a term deposit in a bank.  The Tribunal accepts that Ms Dinas’s medium to long term welfare and financial circumstances would be damaged if she were forced to sell her property to meet her living costs for the next year.

25.     Ms Dinas’s severe hearing loss was not compensated despite its occurrence coinciding with her workplace injury.  Her parents may well have been able to assist her financially to a greater degree had they and she been aware of the existence of carer allowance.  Despite ongoing contact with Centrelink and the employment agency that is contracted to help disabled persons find employment, she was not informed of the availability of that payment until she discovered it relatively recently.  Ms Dinas is single with elderly parents who are not well-off and appear to be unable to wholly support her to the end of the preclusion period.  Despite trying very hard, Ms Dinas is unable to get work.  She would be prepared to work voluntarily to get experience but no one is prepared to take her on.

26.     Taking into account the factors described above, the Tribunal is satisfied that this case is out of the ordinary and that there is hardship or unfairness that is sufficient to justify departure from the general rule in the particular case.  Therefore, the Tribunal finds that it is appropriate in this case to exercise its discretion under s 1184K(1) of the Act, to disregard part of the compensation received in calculating the preclusion period. That is, in effect, to shorten the preclusion period.

27.     The Tribunal notes that there is now less than a year until the end of the preclusion period.  The Tribunal is of the view that the preclusion period should cease from the date of its hearing.

DECISION

28.     The Tribunal sets aside the decision under review and substitutes a decision that as from 18 February 2011, the compensation affected payment is to be treated as not having been made on the basis of special circumstances.

I certify that the twenty-eight [28] preceding paragraphs are a true copy of the reasons for the decision of:

Regina Perton, Member

Signed:………………[signed]……………………………………

Associate  Grace Horzitski

Date of hearing:  18 February 2011
Date of decision:  21 April 2011

Advocate for applicant:                Self represented

Advocate for respondent:            Mr T Noonan, Advocacy Branch Centrelink