Fitzgerald and Secretary, Department of Education, Employment and Workplace Relations

[2008] AATA 271

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 271

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          N° 2007/4244

GENERAL ADMINISTRATIVE DIVISION		)
Re		RICHARD FITZGERALD

Applicant

And

SECRETARY,

DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Mr C Ermert, Member

Date10 April 2008

PlaceMelbourne

Decision The decision under review is affirmed.

. . . . . . . . . . . . . . . . . . . . . .

Mr C Ermert
  Member

SOCIAL SECURITY – lump sum compensation payment – claim for disability support pension – application of lump sum preclusion period – expenditure of compensation moneys – whether special circumstances – decision affirmed

Social Security Act 1991

Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25

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

Dranichnikov v Centrelink (2003) 75 ALD 134

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

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

Re Martin and Secretary to the Department of Social Security (AAT 6482, 14 November 1990)

Ryde v Secretary, Department of Family and Community Services [2005] FCA 866

Re Rice and Secretary, Department of Employment and Workplace Relations [2006] AATA 757

Secretary, Department of Social Security v Hales (1998) 82 FCR 154

REASONS FOR DECISION

10 April 2008  Mr C Ermert, Member

INTRODUCTION

1.      Mr Fitzgerald was injured in a road accident in March 2004 for which he received weekly compensation payments from the Transport Accident Commission (TAC) until 22 December 2006. On 13 September 2006 he received $3,707.11 and on 22 December 2006 he received $100,000 from the TAC in a lump sum settlement, by consent, of his claim for compensation for pecuniary loss and pain and suffering. On 4 January 2007 Mr Fitzgerald made inquiries of Centrelink, the service delivery agency for the Department of Education, Employment and Workplace Relations, about claiming a disability support pension. Centrelink calculated that Mr Fitzgerald was subject to a preclusion period from 23 December 2006 to 9 May 2008 and advised him of this by letter dated 4 January 2007.

2.      On 11 January 2007 Mr Fitzgerald queried the imposition of the preclusion period and advised Centrelink that he had only $3,000 left in funds. Mr Fitzgerald said that, since receiving the settlement, in addition to his legal costs he had spent his money on a car and white goods for his wife and cars and spare parts for himself. In its response to Mr Fitzgerald, Centrelink affirmed the decision to impose the preclusion period. Mr Fitzgerald requested the decision be reviewed by an Authorised Review Officer. On this occasion he advised Centrelink that he had also spent approximately $32,000 on non-prescription drugs which he used for pain relief and for which he did not have receipts. The Authorised Review Officer affirmed the original decision on 14 May 2007.

3.      On 16 May 2007 Mr Fitzgerald lodged an application with the Social Security Appeals Tribunal (SSAT) for a review of the decision. Mr Fitzgerald told the SSAT that the non-prescription drug was in fact marijuana and that he paid the $32,000 to a dealer. He provided a letter from his doctor which records Mr Fitzgerald’s continued use of cannabis. Mr Fitzgerald also provided the SSAT with documentary evidence of his purchases of a car and white goods for his wife and cars and spare parts for himself. He told the SSAT that he has no money left, that he is living out of his car, shooting rabbits for food and going to the Salvation Army for food vouchers.

4.      On 10 August 2007 the SSAT affirmed the original decision. Mr Fitzgerald lodged an application with this Tribunal for a review of the SSAT decision. This hearing is a review of that decision.

THE HEARING

5. At the hearing Mr Fitzgerald represented himself and participated via a telephone link. The respondent was represented by Mr Andrew Carson, a Centrelink advocate. I had before me the documents lodged by the respondent pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (the T-documents).

THE ISSUE

6. Section 1169(1) of the Social Security Act 1991 (the Act) provides that compensation affected social security payments are not payable during a lump sum preclusion period. Section 17(1) of the Act defines compensation affected payment as including a disability support pension. Section 1170 of the Act defines the lump sum preclusion period and provides for the determination of the start date and the method of calculating the duration of the period to be applied.

7.      In this case it is not in dispute that Mr Fitzgerald is subject to a lump sum preclusion period from 23 December 2006 to 9 May 2008. However, s 1184K(1) of the Act gives a discretion to the Secretary to disregard some compensation payments if he thinks it appropriate to do so under the special circumstances of the case. The issue before this Tribunal is whether there are special circumstances which would justify disregarding all or part of Mr Fitzgerald’s lump sum compensation payment.

LEGISLATION

8.      Section 1184K(1) of the Act provides:

For the purposes of this Part, the Secretary may treat the whole or part of a compensation payment as:

(a)   not having been made; or

(b)   not liable to be made;

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

EVIDENCE AND SUBMISSIONS

9.      The issues raised by Mr Fitzgerald are contained in his application for a review of the SSAT decision in which he said:

The only reason they have said no is because they don’t believe I paid so much money out at once for my medication (marijuana) but I did, and that’s no [sic] fair. I have none of the money left and have nearly lost or Sold Everything just to try and live.

10.     At the hearing, Mr Fitzgerald gave evidence that he was living with and relying on help from his step-father. Mr Fitzgerald also gave evidence of his need to purchase marijuana as a medication for his pain. He said:

… Yes. I was addicted to morphine, I was addicted to pethidine, I was addicted to Panadeine Forte. I spent six months in the rehab centre in Geelong because my kidney nearly collapsed in 1996. And I’ve smoked marijuana ever since. Dr Tavenor was the first doctor that put me onto marijuana, but he has since deceased. (Transcript page 8)

“I’m talking about a forensic analysis from the drug court in Dandenong. …

It explains that I was addicted to morphine and pethidine and that if marijuana is the only form of pain relief that I’m on that they didn’t have a problem with that. (Transcript page 10)

… all of the reports of all the doctors I’ve ever seen, it states in there that they all know that I use marijuana and if I’m happy to do that, well, they’re happy for me to do that. More or less, they’ve never offered me anything else because I’ve been addicted to the medication before. …

[Did you ask for anything else?]  - I did, when I was addicted to the morphine and then they’ve given me pethidine and then I asked for something else, then they put me off pethidine for Panadeine Forte and then I got addicted to the Panadeine Forte and then I was told to use marijuana, and every other doctor I’ve seen since has more or less not had a problem with it. (Transcript p10)

11.     On the issue of special circumstances, Mr Carson contended that Mr Fitzgerald’s legal expenses were not unusually high and that the other expenses appear to be largely purchases of choice and not unusual, uncommon or exceptional. Mr Carson went on to say that the necessity and authorisation to use marijuana is not established. He referred to the letters from Dr Cukier which reported the claims made by Mr Fitzgerald that he was advised to use cannabis for pain relief and that he continues to use cannabis, but he noted that Dr Cukier did not endorse Mr Fitzgerald’s use of cannabis. Mr Carson also contended that the Tribunal could not consider the use of marijuana bought from a drug dealer to be appropriate in the terms of s1184K(1) of the Act.

12.     Mr Carson referred the Tribunal to the decisions of Re Rice and Secretary, Department of Employment and Workplace Relations [2006] AATA 757, Beadle and Director-General of Social Security (1984) AATA 1548, Dranichnikov v Centrelink (2003) 75 ALD 134 and Re Martin and  Secretary to the Department of Social Security  (AAT 6482, 14 November 1990). 

CONSIDERATION

13.     In considering the meaning of special circumstances I had regard to the judgement of the Federal Court of Australia in the matter of Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25 (29 January 2007). In that case Besanko J reviewed a number of previous judgements dealing with the meaning of special circumstances and included the following extracts as pertinent to the considerations:

[27] The Tribunal in Beadle 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.

[29] In Dranichnikov v Centrelink (supra) the Full Court, in considering a similar statutory provision to s 1237AAB said (as [65] and [66]) …

66. … Other cases which have considered analogous words such as "special reasons" has tended to conclude, albeit in different contexts, that what is required will be circumstances which distinguish the case in consideration from the usual case. There will be a requirement that the circumstances are such that takes the case out of the ordinary: Jess v Scott (1986) 12 FCR 187 and the cases in various contexts in the decision which Lockhart, Shepherd and Burchett JJ discuss.

[30] In Secretary, Department of Social Security v Hales (supra) French J considered the provisions of s 1237AAD. His Honour said at (162):

The evident purpose of s 1237AAD is to enable a flexible response to the wide range of situations which could give rise to hardship or unfairness in the event of a rigid application of a requirement for recovery of debt. It is inappropriate to constrain that flexibility by imposing a narrow or artificial construction upon the words.

[31] French J also made the point that the Secretary has a discretion even if the three conditions in s 1237AAD are satisfied. In other words, the Secretary is not obliged to waive the debt even if the three conditions are satisfied.

[32] In Ryde v Secretary, Department of Family and Community Services (supra) Branson J considered the provisions of s 1237AAD and in particular whether the Tribunal in that case had erred in concluding that special circumstances meant circumstances which were ‘unusual, uncommon or exceptional’. Her Honour referred to the first passage from the reasons for judgment of the Full Court in Beadle. …

[34] … he referred to the following remarks of Kiefel J in Groth v Secretary, Department of Social Security (supra):

... would require something to distinguish Mr Groth’s case from others, to take it out of the usual or ordinary case ... It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary ...

[35] … The Tribunal member referred to the following remarks of the Full Court of this Court in Riddell v Secretary, Department of Social Security (supra) (at 38):

Each particular case must be considered on its merits. It is the essential nature of the provision to create a broad discretion to meet the great variety of circumstances which must occur, raising considerations of individual hardship, need, fairness, reasonableness, and whatever else may move an administrator, keeping in mind the scope and purposes of the Act, to make a decision one way or the other.

14.     Following the reasoning of these judgements I must consider whether the circumstances of this case are out of the usual or ordinary and if so, consider whether there are circumstances of individual hardship, need, fairness, reasonableness or other relevant issues sufficient to warrant a departure from the general rule which proscribes waiver in ordinary cases.

15.     In this matter the fundamentals are that Mr Fitzgerald received a lump sum payment and then immediately spent most of it, leaving himself with little on which to live. The details of Mr Fitzgerald’s expenditure are contained in the decision of the SSAT, which were not challenged at this hearing. The evidence is that the main items of expenditure were legal fees, a car and white goods for his wife, two cars and spare parts for himself, and a large sum of money to a dealer for marijuana to be used as medication for pain relief. The legal fees are largely unavoidable and I accept the submission of Mr Carson that legal fees are not unusual or uncommon. In each of the other payments there appears to be a great deal of personal choice in the amounts paid and the timings of the purchases. In particular, the purchase of two cars and spare parts by Mr Fitzgerald appears to be associated more with a hobby of restoration than with a need for transportation. While the choices of purchases may not be particularly wise in the circumstances, I find nothing unusual or uncommon about them and that they do not create special circumstances.

16.     The choice of marijuana as a medication is the only issue which appears to set this case apart from the usual cases in this area. Mr Fitzgerald relies on the recommendations of doctors that he use marijuana as a means of pain relief rather than the more usual forms of prescription medicines available through the normal channels and the Pharmaceutical Benefits Scheme. Mr Fitzgerald stated that he had such a recommendation from a Dr Tavenor who is since deceased. I note that Dr Cukier recorded in his letter (T 19, p96-97) only what he had been told by Mr Fitzgerald:

Richard states that the doctor he attended advised Richard to use cannabis for pain relief in place of morphine, pethidine and Panadeine Forte. Richard did this and continues to use cannabis.

17.     I note that Dr Eaton, in his report prepared for the Transport Accident Commission (T19, p103-108) said:

Mr Fitzgerald stated that, relevant to the transport accident injuries, he takes no regular medication. Mr Fitzgerald has regularly used marijuana], as a form of pain relief, since he was injured in a fall in 1994. He takes no other analgesic medication (T19 page 105) and Mr Fitzgerald stated that he was treated with anti-depressant medication for a time following the injuries. In approximately 2000, he received counselling and assistance with the analgesic substance abuse. He stated that he subsequently ceased use of opiate analgesia approximately five years ago. Mr Fitzgerald stated that he continued to use cannabis as a form of analgesia thereafter, and up to the present time. (T19, p106-107)

18.     The reports of Doctors Eaton and Cukie are in line with the evidence given by Mr Fitzgerald at the hearing. From the evidence, I accept that Mr Fitzgerald has been using marijuana regularly for many years. Although there is no evidence confirming Mr Fitzgerald’s account of the cost of the marijuana, I have no difficulty accepting $32,000 as being quite possible. The payment of a large amount of money to a dealer for marijuana sets the circumstances of this case out of the ordinary and I find accordingly.

19.     I must now consider whether there are circumstances of individual hardship, need, fairness, reasonableness or other relevant issues such as to warrant a departure from the general rule which proscribes waiver in ordinary cases.

20.     In regard to the issues of hardship and need, I note the evidence of Mr Fitzgerald that he is currently living with and being supported by his step-father and that this is likely to continue until he becomes eligible for payment of his disability support pension. While Mr Fitzgerald may prefer to be in a better position I do not consider his present circumstances to constitute unreasonable hardship or need and I find accordingly.

21.     In considering the issue of reasonableness I turned to a decision of the Tribunal in the matter of Re Martin and Secretary to the Department of Social Security AAT No. N90/622 which also considered the application of special circumstances to compensation payments in regard to lump sum preclusion periods. At paragraph 10 the Tribunal said:

In considering the question of financial hardship it is relevant to consider the reasonableness of the applicant’s action in disposing of his compensation monies. Re Wilson and Director-General of Social Services 4 ALN 94.

While the Tribunal does not consider the applicant’s actions in disposing of the compensation monies to be sufficiently extravagant or unwise as to be unreasonable it has not been such as to warrant special consideration and therefore to constitute special circumstances.

22.     In this case, I note from the evidence given to the SSAT and not challenged at this hearing, that Mr Fitzgerald spent $48,000.00 on the purchase of three cars and some white goods and $4,156 on repairs and spare parts. He purchases were made up of $7,000 for a Monaro and $4,156 for repairs and spare parts for this car, $7,000 for a Pajero and $10,000 for a Holden utility. He also spent $20,000 on whitegoods (T2, p16). I consider that the expenditure of approximately $48,000 to be an unwise choice and not a matter of necessity. I also consider the expenditure of approximately $32,000 on marijuana to be a matter of choice. Without medical evidence, I cannot accept that Mr Fitzgerald’s pain could not have been managed with medications prescribed by doctors together with appropriate medical treatment with costs subsidised by publicly funded schemes such as Medicare and the Pharmaceutical Benefits Scheme. I consider that these large expenditures on cars and marijuana to be matters of choice by Mr Fitzgerald and not matters of necessity. Accordingly, I consider these particular expenditures to be an unreasonable disposition of his compensation monies.  They do not warrant special consideration such as to depart from the general rule which proscribes waiver in ordinary cases.

23.     From these considerations, I find that Mr Fitzgerald’s circumstances do not constitute special circumstances within the meaning of s 1184K(1) of the Act. Accordingly, I find it is not appropriate to treat the whole or part of Mr Fitzgerald’s compensation payment as not having been made or not liable to be made in accordance with s 1184K(1) of the Act. As a result Mr Fitzgerald’s application is not successful.

DECISION

24.     The Tribunal affirms the decision under review.

I certify that the 24 preceding paragraphs are a true copy of the reasons for the decision herein of Mr C Ermert, Member

Signed:         ..................[Sanjiv Shah].....................
  Associate

Date of Hearing  11 February 2008
Date of Decision  10 April 2008

Advocate for the Applicant       Mr Richard Fitzgerald, Self Represented
Advocate for the Respondent   Mr Andrew Carson, Centrelink Legal Services