DLKP and Secretary, Department of Social Services (Social services second review)

[2020] AATA 3682

DLKP and Secretary, Department of Social Services (Social services second review) [2020] AATA 3682 (18 September 2020)

Division:GENERAL DIVISION

File Number:          2019/5370

Re:DLKP  

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

DECISION

Tribunal:Member K. Parker

Date:18 September 2020

Place:Melbourne

The Tribunal sets aside the decision under review and remits this matter for reconsideration in accordance with a direction that under s 1184K(1) of the Social Security Act 1991 (Cth) (SS Act), 75 per cent of $315,000 (of the workers’ compensation lump sum payment to the Applicant on 16 September 2017 in the amount of $336,088), will be treated as not having been made to the Applicant for the purpose of calculating the “lump sum preclusion period” under s 1170 of the SS Act.

.....................[sgd]..............................................

Member K. Parker

Catchwords

SOCIAL SECURITY ENTITLEMENTS – application of “lump sum preclusion period” – substantial portion of workers’ compensation lump sum stolen – whether discretion enlivened under s 1184K of the Social Security Act 1999 (Cth) – whether “special circumstances” existed – applicant suffers from serious mental health conditions – applicant does not have access to any other income or assets – applicant’s prospects of obtaining employment are remote – whether appropriate to treat whole or part of lump sum payment as not having been made – consideration of different factors that contributed to funds being stolen – decision set aside and remitted for reconsideration in accordance with direction to treat 75 per cent of the stolen portion of compensation lump sum payment as not having been made for the purpose of calculating preclusion period

Legislation

Social Security Act 1991 (Cth)

Secondary Materials

Social Security Guide - FOR DECISION

Member K. Parker

18 September 2020

1. The Applicant, DLKP,[1] seeks review of a decision by the Social Services and Child Support Division of the Tribunal (AAT1) made on 5 July 2019 (Decision Under Review). This decision affirmed a decision made by an authorised review officer (ARO) of the then Department of Human Services (Department) on 10 September 2018 to reject the Applicant’s claim for Newstart Allowance (NSA) under the Social Security Act 1991 (Cth) (SS Act). The Applicant applied for NSA on 24 August 2018.[2]

   [1] The Tribunal, of its volition, considered it appropriate in this case to make orders under s 35 of the Administrative Appeals Tribunal Act 1975 (Cth) to apply a pseudonym in the place of the Applicant’s name and to omit details in these Reasons for Decision which would reveal the identity of the Applicant.

   [2] While nothing turns on the following matters, NSA stopped being paid under the SS Act on 20 March 2020 and has been replaced by JobSeeker Payments. The Applicant has several physical and mental health conditions and has also applied to receive the disability support pension (DSP). The Applicant’s DSP application was rejected, and the rejection decision is currently under review as a process separate to the present application before this Tribunal.

2. The Applicant’s claim for NSA was rejected due to the application of a “lump sum preclusion period” operating from 16 September 2017 to 1 January 2021 under s 1169(1) of the SS Act. This section applied to the Applicant because he received a lump sum workers’ compensation payment of $336,088 on 1 September 2017 (Lump Sum).

3. The relevant legislative provision which arose for consideration in this application was s 1184K of the SS Act as set out below:

   Secretary may disregard some payments

   (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.

   …

4. The hearing took place on 15 September 2020. The Applicant gave oral evidence at the hearing. He was represented by the priest of an orthodox church, Father X, who is the personal benefactor and litigation guardian of the Applicant. The Applicant called his social worker and his treating clinical psychologist to give evidence at the hearing. Their evidence was uncontested. They were impressive witnesses and the Tribunal regards their evidence as credible. The Tribunal has carefully considered the voluminous documentary evidence and submissions lodged by both parties in this matter.

5. By the end of the hearing, the Secretary’s representative appropriately made some concessions which are referred to below. The issues that remain for determination are:

   (a)whether the Tribunal is satisfied that discretion under s 1184K of the SS Act is enlivened (i.e. whether “special circumstances” exist in this case); and

   (b)if so, whether the Tribunal “thinks it is appropriate” to treat the whole or part of the Lump Sum payment as not having been made to the Applicant in the “special circumstances” of this case.

6. When the Applicant received the Lump Sum in the form of a cheque, he banked it in January 2018 and subsequently withdrew those funds in cash as soon as he was able.[3] The Applicant gave evidence that after he withdraw these funds from the bank, he kept $315,000 of the Lump Sum in cash and stored it in a plastic storage box in the walk-in robe of his bedroom in his former house.

   [3] As corroborated by the Applicant’s bank statements produced to the Tribunal recording the relevant deposit and subsequent withdrawals.

7. At this time, the Applicant was greatly impacted (and still is) by the breakdown of his relationship with his ex-partner of 19 years (who I will refer to as Ex-Partner) which, according to his treating clinical psychologist, has caused an exacerbation of a pre-existing medical condition of severe depression and anxiety. Ex-Partner is the mother of the Applicant’s only child. The Applicant has been unable to see his child following the breakdown of the family unit and the protracted family law proceedings which ensued.

8. Sadly, in mid-2018, the Applicant attempted to take his own life. He was rescued and subsequently hospitalised in a psychiatric facility, during which time the Applicant’s house was burgled. The occurrence of the burglary was corroborated by police records provided to the Tribunal, which also indicated there had been a spate of other burglaries nearby to the Applicant’s former house. The Applicant informed the Tribunal that the $315,000 in cash hidden in the storage box was among the items stolen during the burglary. News to the Applicant of the burglary resulted in an extension of his hospitalisation in the psychiatric facility, as corroborated by relevant medical records produced to the Tribunal.

9. A property settlement reached with Ex-Partner left the Applicant with no remaining interest in the family home, as corroborated by family court records produced to the Tribunal. The Applicant described that he has no assets to fall back on. He reported that he was in debt presently, to the order of $100,000. There was evidence lodged with the Tribunal showing debts owed to his family law solicitors of approximately $47,000 and the remaining debt due to money owed on his credit card accounts. During the last few months, the Applicant has been living with his mother, who is in her 70’s. He receives food donations from members of the community and as organised through Father X, the church he belongs to. The Applicant informed the Tribunal that he has no other savings available to him, nor does he have any remaining assets other than the clothes on his back.  

10. These matters were not challenged by the Secretary. By the end of the hearing, having heard oral evidence directly from the Applicant and his social worker and treating clinical psychologist for the first time, the Secretary concedes it is open to the Tribunal to find that the Applicant had kept $315,000 in cash at his premises at the time of the burglary and that he had an arguable case that “special circumstances” exist. The Secretary contends that if the Tribunal is so satisfied, the preclusion period should be reduced such that it ends on 15 April 2020. The Tribunal questioned whether there was any significance attached to this specific date. The Secretary’s representative stated that there was not.

11. The Tribunal finds, on the balance of probabilities, that:

    (a)the Applicant had kept $315,000 in cash from the Lump Sum stored in this home at the time of the burglary;

    (b)those funds (i.e. $315,000) in their entirety were stolen during the burglary (among other items);

    (c)the Applicant is financially destitute and relies on the charity of others to survive;

    (d)the Applicant has serious psychological and physical medical conditions which impair his ability to function and to make rational decisions, even when guided by others; and

    (e)the Applicant’s prospects for employment are not positive due to his conditions, so his ability to improve his financial position through paid employment is remote.

12. Accordingly, the Tribunal is satisfied that “special circumstances” exist in this case which enliven the Tribunal’s discretion under s 1184K(1) of the SS Act.

13. The Tribunal is satisfied on the evidence that two factors have contributed to the loss of $315,000 of the Lump Sum.  The first factor is the act of burglary by a third party which the Tribunal is satisfied was beyond the Applicant’s control. The second factor is the decision and action of the Applicant to withdraw $315,000 of the Lump Sum in cash and to store that in his house without any security measures in place to keep such a large amount of cash safe.

14. There are mitigating circumstances in respect of the Applicant’s serious mental health conditions which provide some context for storing such a large sum of cash in his house as he did. The Tribunal is satisfied on the evidence that the Applicant has a history of not acting in a rational manner as a result of his severe psychological conditions. His treating clinical psychologist gave evidence at the hearing that he considered there to be signs of obsessive-compulsive tendencies in the Applicant’s presentation including hoarding, which may have impacted his decision-making process, and this could explain why he had kept the cash at his house. The clinical psychologist also corroborated that a key issue for the Applicant was his distrust of banking institutions and other people, especially after having felt let down by Ex-Partner.

15. The Secretary contends as follows:[4]

    Should the Tribunal find that $315K was stolen, despite the impact of the Applicant’s mental health condition, the Commonwealth should not be held accountable to fully compensate the Applicant for the consequences of his decision to hide such a large quantity of cash on his premises.

    [4] Refer paragraph [87] of the Secretary’s Statement of Facts, Issues and Contentions dated 26 June 2020.

16. The Applicant’s decision and action of storing $315,000 of the Lump Sum in cash, unsecured, in his house, displays an irrational degree of risk tolerance. The Tribunal finds that one of the reasons (but not the only reason) for the Applicant doing so, was the impairment caused to his decision-making processes by his serious mental health conditions of severe depression and anxiety and possibly also, according to the Applicant’s clinical psychologist, his obsessive-compulsive tendencies. However, based on the Applicant’s evidence at the hearing, the Tribunal finds there were other equally important reasons for his decision and action to keep the cash at his house, namely:

    (a)his religious beliefs to the effect that the world as we know it may come to an end; and

    (b)his other long-standing personal beliefs including his general reticence to place trust in banks to hold those funds securely on his behalf.

17. For these reasons, the Tribunal considers that the Applicant is at least partially responsible for the unfortunate situation he now finds himself in and partially accepts the Secretary’s contention as set out in paragraph [15] above.

18. Upon balancing the matters referred to in the above paragraphs, the Tribunal considers that the degree to which the Applicant, due to his own personal beliefs (unrelated to his mental health conditions), contributed to the loss of the funds was in the order of 25 per cent. The Tribunal reaches this conclusion after applying a 75 per cent “discount” for the likely impacts of his mental health conditions of depression and anxiety (and possibly also his obsessive-compulsive tendencies) on his decision-making processes, and also the contribution to this loss by the occurrence of the burglary undertaken by a third party, which was beyond the Applicant’s control. Accordingly, the Tribunal thinks it is appropriate to treat 75 per cent of $315,000 (of the Lump Sum) payment as not having been made to the Applicant for the purpose of calculating the “lump sum preclusion period”. This means the remaining 25 per cent of $315,000 (of the Lump Sum) will be counted for the purpose of calculating the “lump sum preclusion period”.

    DECISION

19. Accordingly, the Tribunal sets aside the decision under review and remits this matter for reconsideration in accordance with a direction that under s 1184K(1) of the SS Act, 75 per cent of $315,000 (of the workers’ compensation lump sum payment to the Applicant on 16 September 2017 in the amount of $336,088), will be treated as not having been made to the Applicant for the purpose of calculating the “lump sum preclusion period” under s 1170 of the SS Act.

I certify that the preceding 19 (nineteen) paragraphs are a true copy of the reasons for the decision herein of Member K. Parker

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Associate

Dated: 18 September 2020

Date of hearing:	14 September 2020
Advocate for the Applicant:	Father X
Advocate for the Respondent:	Mr Tim Noonan, Services Australia