DOAN and SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

[2010] AATA 717

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 717

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No                  2009/5576

GENERAL ADMINISTRATIVE DIVISION		)
Re		LE DOAN

Applicant

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

Respondent

DECISION

Tribunal Professor T Sourdin, Member

Date21 September 2010

PlaceSydney

Decision The decision under review is varied. The preclusion period for the purposes of obtaining Centrelink benefits was appropriately calculated in the original decision made by the Respondent to extend from 13 June 2005 to 28 March 2010.

................[SGD].............................

Professor T Sourdin
  Member

SOCIAL SECURITY – compensation lump sum - preclusion period – whether special circumstances – financial hardship – grounds for exercise of discretion – decision under review affirmed.

Social Security Act (1991) – ss 17, 1170, 1184K

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

Director-General of Social Services v Hales (1983) 47 ALR 281

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

Re Colaiacolo and Secretary, Department of Social Security (AAT 2109, 24 April 1985)

Re Groth and Secretary, Department of Social Security (1995) 37 ALD 797

Re Green and Secretary, Department of Social Security (1990) 21 ALD 772

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

Re Ivovic & Director-General of Social Services (1981) 3 ALN No 61

Re Krzywak and Secretary, Department of Social Security (1988) 15 ALD 690

Re Secretary, Department of Family and Community Services and Jonauskas (2001) 65  ALD 533

Secretary, Department of Social Security v Ellis (1997) 46 ALD 1

Secretary, Department of Social Security and Hill (1995) 2(1) SSR 9

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

REASONS FOR DECISION

21 September 2010            Professor T Sourdin, Member

Introduction

1.      This is an application by Ms Le Doan (“the Applicant”) for review of a decision of the Social Security Appeals Tribunal (“SSAT”) in respect of the decision regarding the decision to impose a preclusion period preventing payment of Social Security benefits.  An authorised review officer (“ARO”) made an original decision on 28 January 2009 that as a result of an award being made in respect of a compensation claim made by Ms Doan that she would be precluded or unable to claim Centrelink benefits from 13 June 2005 to 28 March 2010. The sum of $30,251.94 was also recovered from compensation award amount and was regarded as a debt by Centrelink.   

2.      The SSAT partially affirmed this decision on 5 November 2009. However, the SSAT decided that the amount of compensation awarded to the Applicant should be regarded as a lower amount and that therefore the preclusion period should be recalculated. An application to review the decision was lodged with the Administrative Appeals Tribunal (“the Tribunal”) on 25 November 2009 by the Applicant.

3.      The hearing of the application for review began in Sydney on 28 July 2010 and resumed and concluded on 5 August 2010. Unfortunately the original hearing commenced almost an hour late due to the unavailability of a hearing room. Additional written submissions were lodged on 20 August 2010. The Applicant was self-represented and a Vietnamese interpreter assisted her. Laura Combes of Centrelink represented the Respondent.

4.      The Applicant provided oral evidence.  The following written material was also placed in evidence before the Tribunal:

Exhibit	Description	Date
R1 T Docs	Documents lodged pursuant to section 37 of the Administrative Appeals Tribunals Act 1975 (pages 1 – 179)	–30 December 2009
A1	Bundle of bills	Various dates -
A2 A3 A4 A5	Written notes regarding $25,000.00 List of Children’s names and dates of birth Medical Certificate Dr Law Copies of Affidavits and chronology used in relation to past claim	3 March 2009 x2 , one dated 8 August 2009 29 July 2010 27 May 2010 28 August 2006
R2	Letter from Centrelink to Applicant	30 December 2009
R3 R4 R5	Respondent SFIC List of Authorities Written Submissions together with letter dated 28 January 2009	24 June 2010 24  June 2010 5 August 2010

5.The issues before the Tribunal are:

(a)Whether the preclusion period calculations are correct and that the preclusion period for the Applicant is from 13 June 2005 to 28 March 2010;

(b)Whether there are any circumstances in which all or any part of the compensation awarded to the Applicant should be disregarded for the purposes of determining the preclusion period that operates preventing payment of social security benefits or for the purposes of calculating the Centrelink debt.

legislation

6.      The relevant legislation is the Social Security Act 1991 (“the Act”) and in particular sections 17, 1170, and 1184K.

17(3) Subject to subsection (4), 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 judgment being entered in respect of the settlement or otherwise; 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 of 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 judgment being entered in respect of the settlement or otherwise; 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, or both.

…

1170(1)  Subject to subsection (2), if a person receives both periodic compensation payments and a lump sum compensation payment, the lump sum preclusion period is the period that:

(a)begins on the day following the last day of the periodic payments period or, where there is more than one periodic payments period, the day following the last day of the last periodic payments period; and

(b)ends at the end of the number of weeks worked out under subsections (4) and (5).

1170(2)  If a person chooses to receive part of an entitlement to periodic compensation payments in the form of a lump sum, the 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 at the end of the number of weeks worked out under subsections (4) and (5).

1170(3)  If neither of subsections (1) and (2) applies, the lump sum preclusion period is the period that:

(a)begins on the day on which the loss of earnings or loss of capacity to earn began; and

(b)ends at the end of the number of weeks worked out under subsections (4) and (5).

1170(4)  The number of weeks in the lump sum preclusion period in relation to a person is the number worked out using the formula:

Compensation part of lump sum

Income cut-out amount

1170(5)  If the number worked out under subsection (4) is not a whole number, the number is to be rounded down to the nearest whole number.

…

1184K(1)  For the purposes of this Part, the Secretary may treat the whole or part of a compensation payment as:

(a)not having been made;  or

(b)not liable to be made;

if the Secretary thinks it is appropriate to do so in the special circumstances of the case.

background

7.      On 13 June 2005 Ms Doan sustained significant injuries as a result of a motor vehicle accident. She was a passenger in the motor vehicle and suffered injuries to her sternum, neck, back and left shoulder. She went to hospital but returned to work for a short time “despite the obvious severity of her injuries” (Claims Assessment and Resolution Service Reasons for Decision at T 13 at p 89).

8.      Ms Doan received Centrelink benefits when she was unable to work as a result of her injuries. She was still unable to work as of the date of the AAT hearing.  Ms Doan's motor vehicle accident claim was assessed by a CARS assessor on 7 January 2009 and she was awarded the sum of $285,500.17 (T12).  The sum of $30,251.94 was recovered from the compensation award amount and was regarded as a debt by Centrelink in respect of payments made by Centrelink from 2005 to 2009.  

9.      When Ms Doan accepted the assessment in respect of her motor vehicle accident compensation, she acknowledged that she understood that various deductions from the final assessment amount would be made, including reimbursements to Medicare and "Department of Social Security", disbursements, out-of-pocket expenses and legal fees (T12).

10.     Ms Doan was advised by Centrelink on 28 January 2009 that she would be subject to a preclusion period and would be unable to obtain income from Centrelink until after 28 March 2010. She contacted Centrelink by telephone on 28 January 2009 and was also advised verbally about the preclusion period. She also attended a Centrelink office on 3 February 2009 to lodge an application for review of the Centrelink's decision regarding the preclusion period. 

11.     On 6 April 2009, Ms Doan purchased a house in Canley Heights.  At the hearing, Ms Doan gave evidence that it is a four-bedroom house. The purchase price was $395,000 (T22). The entire proceeds that Ms Doan received in respect of compensation for her motor vehicle accident were used to purchase the house and Ms Doan did not retain any funds to support herself. She now lives in that house on her own.

12.     Ms Doan is aged 51.  She was born and educated in Vietnam until Year 7 or 8 of High School and came to Australia in 1998. When she came to Australia with her five children she was sponsored by her then husband. After her arrival, she went to TAFE in Australia and attended three courses to learn literacy and English classes and has attended some vocational training in Parramatta. She initially looked after her five children at home and then started working in Australia in a paid position in a factory in 2004. In the factory she was rotated in a number of different positions as a worker. She worked there until she was injured in the motor vehicle accident referred to above.

13.     Ms Doan was divorced from her husband in 2000. She indicated that she had marriage problems because her ex husband was a gambler. She lived in rented accommodation in Bankstown until she purchased the house in Canley Heights with the proceeds of her compensation pay out in April 2009.

14.     The applicant had a de facto type of relationship following the break up of her marriage in 2003 and 2004.  After her accident her de facto partner moved in and helped with cooking and other duties. Because of her illness she had an argument with him and she ended the relationship.

15.     Ms Doan has 5  children who are named, aged and located as follows:

Le Thi Thien Kim – daughter born 1979 – living in Melbourne.

Le Thi Thanh Thuy – daughter born 1980 – a hairdresser living in Sydney.

Le Thi Hong Ngoc – daughter born 1982- living in Melbourne.

Le Quang Phuc – son born 1984 – a real estate agent who lived in Sydney but who moved out and now lives in Melbourne.

Le Thi Ngoc Diem – daughter born 1987. She is qualified as a beautician and lives in Sydney.

16.      The Applicant also has a younger sister, grandmother, and uncles and aunts, who all live in Sydney.  They have loaned her some money to help with expenses from time to time. Her children reside in either Melbourne or Sydney – Kim, Ngoc and Phuc all live in Melbourne. Thuy and Diem live in Sydney. The Applicant has irregular contact with the children who reside in Melbourne. She sees her daughter Diem on a more regular basis as Diem has been expecting a baby .Thuy visits Ms Doan on a weekly basis and brings her food. She has 3 grandchildren who live in Melbourne aged 10, 8 and 3 – their parent is Kim. They visit Sydney sometimes to visit her. She has never travelled to visit them in Melbourne.

17.     Ms Doan has not worked since her accident. She did not receive Centrelink payments after her disability support payment was cancelled on 28 January 2009 until shortly after the AAT ordered that the SSAT decision be stayed. Ms Doan was receiving a disability support pension payments at the time of the AAT hearing. The preclusion period had previously been due to expire on 28 March 2010.

18.     Ms Doan is in poor health. She suffers from major depression and a pain disorder (A4). The Doctor has prescribed Cataprex, Sandomyge, Deptran and a Seretide inhaler.

evidence of the applicant 

19.     As noted previously, shortly after her motor vehicle claim was finalised, the Applicant purchased a house. The cheque was received by Ms Doan and within a month or so the house was purchased. She said “it was not my decision – it was my children’s. They said we should buy a house and they would help me. Thuy said she could borrow money from the bank to help. She was working. The other children could help and would look after me.”

20.     Prior to purchasing the house Ms Doan had been renting and living in an old house in Bankstown.

21.     The house that was purchased is on land that is approximately 580 sq metres in size. The house has 4 bedrooms and is about 60 years old. The house cost $395,000. As noted previously, Ms Doan paid the whole of her monetary settlement amount towards the house and did not retain any funds to ‘live on’ although she had previously been notified that she would not be eligible to receive any Centrelink payments until March 2010.

22.     The house was purchased jointly in the names of the Applicant and her daughter, Thuy. Thuy did not contribute any money towards the purchase. The Applicant said that she bought a four bedroom house rather than a unit or a more modest house on the advice of her children who said that they would help her and look after her and also they thought that they could have wedding parties at the house. Three children moved into the house following the purchase – Diem, Phuc and Thuy. The children moved out in 2010 but the Applicant was not able at the hearing to recall when that took place. The Applicant now lives alone in the four bedroom house.

23.     The mortgage on the home at the time of purchase was about $206,000. At present the mortgage is about $205,000. The mortgage has been paid by Ms Doan and not by her children. She said that although the children did not help to pay the mortgage when they lived in the house they would give some money to her – about $280 per week. The children did not pay any bills while they lived with their mother. They do not give any money to her now. Although the mortgage is also in the name of Thuy (the Applicant’s daughter) Thuy does not pay, and has not paid, anything towards the mortgage. Ms Doan considers that each of the five children own 10% of the house. It seemed clear that none of the children have paid any money towards the purchase of the house or the mortgage although Thuy has assisted with the paperwork.

24.     Ms Doan has considered either selling the house or renting it out. She said “With the rent I think I could pay the interest.” however, “maybe the children will come back to me.” She has not considered taking in boarders and “has too many things in her head.” Ms Doan thinks that the price of the house has gone up but it will depend on the buyer. She estimates that the value of the house is now more than $400,000.00.

25.     Ms Doan has two cars that she cannot drive. She is planning to sell them to a mechanic. She thinks she will only get a few hundred dollars for each car.

26.     Ms Doan said initially in evidence that she had children but no contact with them, no money, no husband and limited health. She said:

at the moment I am living by myself with no electricity. I am paying the mortgage and have to borrow for food, medicine .... Thuy visits every now and then, perhaps once a week, but contact is limited as we have arguments. She sometimes brings me food.

27.     After questioning it became clear that Ms Doan had regular contact with most of her children although it is possible that culturally she regarded this as “no contact.”

28.Ms Doan said:

At present, the Centrelink benefit is just enough to pay the mortgage. I have no money. I am asking you to consider helping....I am just asking Centrelink to pay back some of the money that they took before. That will help me move on. I need money to pay debts and the bills.....I am asking for money to pay my debts and for the cost of living... The benefit is just enough to pay the mortgage. I will try to borrow money from my son. That will help with food and medication.

29.     On her evidence, it is clear that, even with a full Centrelink benefit and even with financial assistance from a child, she is not able to pay electricity and other bills as her mortgage payments in respect of her four bedroom house consume all her benefits.

30.     In terms of her debts, Ms Doan indicated that she had some bills, her mortgage and three loans that she had to pay back. She said that her uncles had loaned her money and that Doang Than Phat (one uncle) had loaned $10,000 to the Applicant on 3 March 2009 and Doan Thi Le (another uncle) loaned two amounts to her of $5,000 on 8 August 2009 and $10,000 on 3 March 2009.

31.     It was also clear, and the Applicant agreed that at the time of spending the lump sum, the Applicant understood that she would not be entitled to a Centrelink benefit until March 2010.

submissions

32.     The Applicant submitted that special circumstances existed which included her financial hardship and the circumstances surrounding the expenditure of her lump sum payment and that these should operate to shorten the preclusion period. Her argument was basically that the preclusion period should not operate and she should be paid back money to assist her in her current situation. Ms Doan’s English was poor and an interpreter assisted her at the Hearing. In addition, at the Hearing on 5 August 2010, Ms Doan was granted leave to file additional written submissions. She filed an additional letter with the Tribunal on 20 August 2010.

33. In written submissions, the Respondent contended that the original preclusion period was correctly calculated pursuant to sections 17 and 1170 of the Act. In respect of special circumstances the Respondent submitted that Ms Doan made no effort to preserve the compensation amount in order to support herself until the end of the preclusion period, did not act prudently with her monies, and that her spending priorities were inappropriate. In relation to the Applicant’s expenditure on a house, the Respondent has stated that “[the Applicant] used the compensation money to buy a house, and had spent all her compensation money less than a month after receiving it.”

34. Whilst the Respondent conceded that the Act gives relief to the strict application of the compensation preclusion period by giving the Secretary a discretion to disregard the compensation payment in whole or part in ‘special circumstances’ in accordance with section 1184K of the Act, the Respondent did not consider that the discretion should be exercised in this matter. The authorities of Beadle v Director-General of Social Security (1985) 60 ALR 225, Re Beadle and Director-General of Social Security (1984) 6 ALD 1, Krzywak and Secretary, Department of Social Security (1988) 15 ALD 690 and Re Green and Secretary, Department of Social Security (1990) 21 ALD 772, suggest that the discretion may be exercised after consideration of a range of matters that may include a reference to the circumstances in which the hardship arose.

Consideration of Issues

35.     The Tribunal first turns to consider the issue of whether the calculation of the preclusion period was correct. Although at the Hearing the Applicant appeared to believe that the preclusion period calculations were correct and was concerned with the special circumstances that she considered should apply in her situation, the Tribunal must still consider the calculation issue as this was raised by the Respondent which submitted that the approach taken by the SSAT in calculating the preclusion period was incorrect.

36. The Tribunal finds that the Applicant’s payment falls within the definition of compensation in accordance with subsection 17(2) of the Act, which defines compensation as a payment of damages or a payment under a scheme of insurance or a payment in settlement of a claim for damages as it was made following a CARS assessment.

37. The preclusion period in relation to this amount was calculated in accordance with section 1170 of the Act. In this regard, the Tribunal is not satisfied that the approach of the SSAT was correct. The correct amount to be used for the calculation is the amount submitted by the Respondent and set out by the CARS assessor. The CARS assessor assessed Ms Doan’s claim at: past loss of earnings ($70,550.00) and future loss of earnings ($125,000.00). The total award was $285,500.17 (T12). The correct approach was not to halve the total amount of compensation (which would have been appropriate had the matter been settled under 1170 (a)) but rather to use the lost earning calculation figures to calculate the preclusion period under 1170 (b). Using the loss of earning figures the total amount to be used to calculate the preclusion period is $70,550.00 plus $125,000.00, that is, a total sum of $195,550.00. Using this figure and calculating the period in accordance with s1170 (4), it is clear that the original decision makers calculations regarding the length of the preclusion period were correct. The Tribunal accordingly accepts this approach and not the approach of the SSAT.

38.     In relation to the second issue – that is, whether there are any circumstances in which all or any part of the compensation awarded to the Applicant should be disregarded for the purposes of determining the preclusion period that operates preventing payment of social security benefits or for the purposes of calculating the Centrelink debt – there are a number of matters that the Tribunal has considered. These relate to the overall situation of Ms Le Doan and more specifically her medical and financial circumstances.

39.     The Tribunal has specifically considered whether there are in fact any special circumstances which exist in the Applicant’s case.  The case law on this issue and the definition of special circumstances is relatively clear.  In the leading case of Beadle (supra, 1985) the Full Federal Court held that it was not possible to lay down precise rules but rather, a consideration of special circumstances would depend upon the facts of the case.  Further, even though the phrase ‘special circumstances’ lacks precision, it “is sufficiently understood in our view not to require judicial gloss”.  In Re Beadle (supra, 1984), the Tribunal held that the phrase ‘special circumstances’ is “incapable of precise or exhaustive definition” but said that the circumstances:

…must have a particular quality of unusualness that permits them to be described as special…the qualifying adjective looks to circumstances that are unusual, uncommon or exceptional.

40.     In Groth v Secretary, Department of Social Security (1995) 37 ALD 797; 40 ALD 541 at 545, Kiefel J stated that special circumstances would require something “to take it out of the usual or ordinary case”. Further the court agreed that hardship was a relevant consideration in the discretion conferred, however they rejected the submission that they should ignore the circumstances out of which the alleged hardship is said to have arisen.

41.     In the Federal Court decision in Secretary, Department of Social Security v Hales (1998) 82 FCR 154, French J said of the “concept” of special circumstances, that the evident purpose “…is to enable a flexible response to the wide range of situations which could give rise to hardship or unfairness”.

42.     In considering whether Ms Doan’s circumstances are special, unusual or uncommon, the Tribunal turns to consider the facts in evidence.  In terms of her ill health, Ms Doan gave evidence to the SSAT and AAT about her poor health and that she suffers from pain. The Respondent said that the evidence which was given was limited and there was little evidence about her illness and capacity and that injuries and disabilities are not severe enough to support a claim for special circumstances. The Respondent said that although the applicant suffers from ill health, and that this qualifies her for DSP, her circumstances are not special.

43.     In addition, the Respondent essentially submited that injuries and disabilities for which a person has received compensation generally ought not to be regarded as a special circumstance. In written submissions, the Respondent says:

The Applicant was compensated for her injuries and, her preclusion period having now expired, has been eligible for Disability Support Pension ("DSP") from 29 March 2010. In Re Secretary, Department of Family and Community Services and Jonauskas (2001) 65 ALD 553 at [79], DP Forgie observed in relation to individuals receiving the age pension that many suffer from ill health and have difficulties managing their affairs because of it but that this does not constitute special circumstances. The Respondent submits that the Applicant’s ill health is the circumstance that makes her eligible for DSP.  This circumstance is not so "unusual, uncommon or exceptional" as to distinguish her from others also qualified for the same pension by reason of illness or injury.

44.     The Tribunal agrees that Ms Doan suffers from continuing ill health. She takes a number of different medicines and also suffers from depression. In terms of her ill health, whilst the Applicant is undoubtedly unwell, the Tribunal finds that her illness does not of itself constitute a special circumstance. In particular the Tribunal finds that her illness and ongoing treatment are not unusual, uncommon or exceptional and notes that they are not uncommon in the context of those who receive disability support pensions. Her situation and her ill health, while no doubt very difficult for her personally, do not however, in isolation to other circumstances, constitute ‘special circumstances’ as they lack the quality of ‘unusualness’ that is required to shorten the preclusion period and which is referred to more specifically below in respect of the context of the financial and other circumstances of Ms Doan.

45.     The Tribunal agrees with the Respondents view and considers that the Applicant’s claim of special circumstances relates to her ill health and her alleged past and future financial hardship.

46.     However the Tribunal must also consider all the circumstances that Ms Doan considers are relevant and turns therefore to consider her financial circumstances. Ms Doan’s past financial situation was undoubtedly difficult, but must be considered against the circumstances of others in a similar situation and be found to have an element which makes them exceptional, which sets them apart from the rest.  Regard must be had to the fact that many claimants of social security benefits are in a difficult financial situation that is similar to that of the Applicant.

47.       In terms of Ms Doan’s financial circumstances it seems clear that at the time that she attended the SSAT hearing Ms Doan  was not receiving any money other than from family members. At the AAT hearing her situation was still very straitened as her entire Centrelink benefit was being paid to service her mortgage payments. The Respondent submitted that the Applicants financial circumstances should not be regarded as special for a number of reasons:

The applicant has spent her entire lump sum compensation after being advised of the preclusion period.

The decision to spend her entire lump sum on the house was deliberate and inappropriate given the applicant's financial circumstances.

The Applicant was instrumental in the purchase of the house

The purchase of the house in the circumstances was inappropriate

The purchase of the house was not the consequence of any diminished capacity on the part of the applicant.

The applicant has realisable assets that could be used to solve her current financial difficulty.

The respondent submits that where a person uses compensation proceeds to purchase a house, special circumstances should not be found.

The applicant did not seek financial advice on the consequence of her purchase, despite this being available to her.

The applicant does not owe a debt to Centrelink with respect to the compensation charge.

The applicant is able to receive assistance from other avenues of support.” (extracted from Respondent written Submissions dated 30 July 2010)

48.     Essentially, the Respondent says that the Applicant spent the entire lump sum that she received after being advised of the preclusion period. She persisted in purchasing the house under those circumstances and there was no evidence that she cannot realise the assets.

49.     Ms Doan submitted that the circumstances surrounding the purchase of the house were that her children told her to buy the house. In evidence she said:

“Ngoc telephoned me from Melbourne and told me to buy the house. Then the children said that they would give me some money and help to pay the mortgage. In the meantime I got the cheque and I did not deposit it until March. Kim and Phuc went to look at the house. It was their decision to choose the house – not mine. I did not want to buy the house but they promised to help. With 10% to each of children – I mean after I die. In general, the decision to but the house is all their decision not mine – I only nod my head. I suffer from migraine it was all their decision.”

50.     In considering the exercise of the discretion, it is clear that financial hardship must go beyond straitened circumstances and be truly exceptional see Secretary, Department of Social Security and Hill (1995) 2(1) SSR 9, Re Hajar and Secretary, Department of Social Security (1988) 16 ALD 716, Re Beadle (supra, 1984), Re Colaiacolo and Secretary, Department of Social Security (AAT 2109, 24 April 1985).  In this matter, the SSAT accepted that Ms Doan was experiencing financial difficulties as well as ongoing health problems. However the SSAT considered that those financial problems would not have been present had the Applicant not purchased the house, or if she had made a decision to sell or rent out the house.

51.     With regard to Ms Doan’s financial hardship and the question of whether she should sell the house, the decision in Re Hajar (supra) is relevant:

Here the applicant could not be said to be suffering from any real financial hardship that could in any way be regarded as special.  He is making no contribution to the maintenance or support of his wife or children…His day-to-day living needs are modest and are financed by small borrowings from friends and family. This is a continuation of the way of life he had in financial matters from the time of his resignation until the time of his settlement. His borrowings, however, are much smaller as he no longer has a liability to meet his house payments, nor does he support his family. With the possible exception of his Adelaide brother, who bowed to his wife's insistence, none of his creditors appear to have been pressing…On the question of hardship, I find it impossible to ignore the existence of the house, which is valued at approximately $175,000 and which is free of encumbrances…It is inequitable for the applicant to claim financial hardship when he owns such a valuable asset and does nothing to realise on it…

52.     In Hajar (supra), as in this case, the applicant has a valuable financial asset and has done nothing to ‘realise on it.’  The Tribunal accepts Ms Doan’s comments about her expenditure. In this regard it is clear that she is in straightened circumstances as all of her income is used to pay her mortgage. Ms Doan was however aware of the preclusion period when she purchased a large house and spent all of the funds she had received. This was done in the knowledge that she would not be entitled to receive a social security benefit for more than 200 weeks.

53.     The issue is whether Ms Doan’s circumstances are exceptional? Do they have the quality of unusualness which might justify the double advantage of receiving social security payments to supplement a compensation lump sum, the majority of which has been exhausted through the Applicant’s own choices? The Tribunal finds that the Applicant’s circumstances, as detailed, do not constitute special circumstances. In this regard, it is of note that in Re Beadle (supra, 1984), where the Tribunal, comprising Toohey J, Presidential Member, Mr Wilkins and Dr Billings, Members, said, 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 [emphasis added].

54.     As previously noted the requirement that the circumstances be unusual or out of the ordinary has been emphasised by the Federal Court in a number of later decisions. Justice Kiefel in Groth (supra) said that a special circumstance for the purposes of s 1184K must be something that takes the matter "out of the usual or ordinary case". Her Honour said at p545:

…for present purposes it is sufficient to observe that it would require something to distinguish Mr Groth's case from others, to take it out of the usual or ordinary case. That was, I consider, the only enquiry to be undertaken in this 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. The enquiry I have referred to would involve considering what would be the effect, if the provision in question or the principle of liability it creates, is applied.

55.     Clearly, financial hardship alone may not be sufficient. Carr J in Secretary, Department of Social Security v Ellis (1997) 46 ALD 1 at p5 held that the Tribunal had not erred in finding that Mrs Ellis was suffering "extreme financial hardship." He then considered whether that was a "special circumstances". He said at 6:

In my opinion, the evidence to which the Tribunal referred which was before it, and had previously been led before the Social Security Appeals Tribunal, raised a strong prima facie case of circumstances which were so out of the ordinary as to amount to "special circumstances". If the truth of the matter is that these are ordinary circumstances to be found throughout Australia, then the applicant could quite easily have led that evidence by, for example, producing the statistics.

56.     In this matter, whilst it is clear that Ms Doan has straitened financial circumstances, these straitened circumstances would be alleviated if the Applicant sold her major asset – her house; or if she asked her children to contribute to the house or rented rooms out or took some other action. There is no suggestion that selling the house and purchasing a more modest home would have a detrimental impact upon the applicant's health or that her health condition has prevented her form doing so. As the Respondent has noted:

Further, the applicant has alternative means of alleviating her financial situation besides selling her home, that is, by renting it out or taking boarders. When asked whether she had explored these avenues, the applicant stated:

I'm still thinking. I don't know.

With regard to taking boarders specifically, the applicant stated:

I don't know. If I let someone as a boarder, may be some conflict. Maybe one day my children come back to stay.

57. Another matter, which must be considered when deciding whether it is appropriate to exercise the special circumstance discretion in s 1184K of the Act, is that the discretion must be exercised in conformity with the objects of the Act. However, as O'Loughlin J explained, in Secretary, Department of Social Security v Hulls (1991) 22 ALD 570, that does not mean that the discretion cannot be used to alleviate the strict enforcement of certain provisions of the Act if otherwise their operation "would be unjust, unreasonable or otherwise inappropriate", or in the words of the Full Court in Beadle (supra) "unfair or inappropriate". O'Loughlin J, at 581, quoted with approval the following passage from the reasons for decision of the AAT in Re Ivovic & Director-General of Social Services (1981) 3 ALN No 61:

The reference to special circumstances "by reason of which" a person liable "should be released" requires, in our view, that there must exist in the circumstances of the case, a factor or factors which justify the making of an exception in whole or in part to the principle of liability which the Act otherwise establishes. In the exercise of the discretion which s 115(4A) confers, the decision-maker must have regard to whether, by exercising the discretion in a particular case, he will be achieving or frustrating ends or objects which are conformable with the scope and purpose of the Social Services Act 1947: cf Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492 at 505 per Dixon J. Thus whilst keeping the dominant principle of s 115 in mind, he [sic] must nevertheless be prepared to respond to the special circumstances of any particular case by reason of which strict enforcement of the liability created by the section would be unjust, unreasonable or otherwise inappropriate.

58. The Tribunal considers that one factor that is relevant in considering the exercise of the discretion having regard to the objects of the Act, is a consideration of the circumstances in which the hardship arose (see Groth supra). This circumstance must be considered in the context of all the circumstances. In Ms Doan’s case this means that the Tribunal should consider how Ms Doan came to be in her current situation as well as her medical and financial status.

59.     Here, the Tribunal finds that Ms Doan has some serious financial issues. To some extent the evidence given was a little contradictory on this point. For example, when asked about her electricity supply Ms Doan was unable to indicate whether her electricity supply had been reconnected following the SSAT decision. She was evasive and unclear about her situation and could not recall when her children moved out or whether she had the electricity connected or reconnected within the past few months. The lack of clarity in her evidence could be related to her medical condition. It is clear that Ms Doan has ongoing health issues and receives treatment and medication for a serious depression and pain syndrome.

60.     However, whilst the Tribunal finds that the Applicant may have serious financial and medical issues these cannot be regarded as ‘special’, particularly once consideration is given to how the monies received by Ms Doan were dissipated. In addition, apart from this consideration it is clear that the major asset of the house has remained and could be used to alleviate her financial circumstances and could have been utilised before any claim was made in respect of social security benefits.

61.     In this regard, the Tribunal notes that in one sense the decision of Ms Doan to purchase the house for $395,000 was a wise one. According to Ms Doan the house is now valued at more than $400,000 and the mortgage is approximately $200,000. If she were to sell her home now, she would effectively have retained the entire compensation amount that she received and may even have increased this sum. It is clear that the purchase of the house or a realisable asset cannot be used to circumvent the application of the legislation. A person cannot claim that they have special circumstances because they have spent all their compensation monies on a large asset which is realisable. To allow this would be contrary to the objects of the legislation.

Conclusion

62. Accordingly, the Tribunal finds that there are no special circumstances in the applicant's case such as would warrant the whole or any part of the compensation payment to be disregarded pursuant to s 1184K of the Act.

63.     The Tribunal varies the decision of the SSAT and finds that the preclusion period was correctly calculated by the original decision maker for the Respondent.

I certify that the 63 preceding paragraphs are a true copy of the reasons for the decision herein of Professor T Sourdin, Member

Signed:         ……………[SGD]………………………………
  Associate

Date of Hearing  28 July 2010

5 September 2010

Date of Decision  21 September 2010

Solicitor for Applicant  Self represented

Advocate for the Respondent        AGS, Laura Combes