Galea and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
[2011] AATA 721
•18 October 2011
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2011] AATA 721
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2011/2559
GENERAL ADMINISTRATIVE DIVISION ) Re JASON GALEA Applicant
And
SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal Mr C. Ermert, Member Date18 October 2011
PlaceMelbourne
Decision The Tribunal affirms the decision under review.
[sgd] Conrad Ermert
Member
DISABILITY SUPPORT PENSION – Lump sum compensation payment – inconsistent advice – financial circumstances – health problems - whether special circumstances – decision affirmed
Administrative Appeals Tribunal Act 1975 (Cth) s 37
Social Security Act 1991 (Cth) ss 17,1170, 1171,1184K
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Re Davy and Secretary, Department of Employment and Workplace Relations (2007) AATA 1114
Groth and Secretary Department of Social Security (1995) 40 ALD 541
Re Manafikhi and Secretary, Department of Employment & Workplace Relations [2007] AATA 1529
Re McCulloch and Secretary, Department of Employment & Workplace Relations [2007] AATA 1452
Re Najdovska and Secretary, Department of Social Security (1998) 54 ALD 184
Secretary, Department of Family and Community Services v Allan [2001] FCA 1160
REASONS FOR DECISION
18 October 2011 Mr C. Ermert, Member INTRODUCTION
1. In 2005 Mr Jason Galea, the applicant in this matter, suffered a workplace injury which left him permanently unfit for work. On 8 November 2007, his employer’s insurer paid him an impairment benefit of $48,665. The insurer also paid periodic compensation payments until 6 December 2007. On 25 March 2009 Mr Galea settled a common law claim against his employer for $375,000. On 9 April 2009 an officer of Centrelink, the agency acting for the respondent, imposed a preclusion period on Mr Galea’s eligibility for income support payments from 8 December 2007 to 25 January 2013. Centrelink advised Mr Galea of this preclusion period in a letter dated 9 April 2009.
2. On 20 July 2010 Mr Galea lodged a new claim for disability support pension, which was rejected. A Centrelink Authorised Review Officer (ARO) affirmed the decision on review. Mr Galea sought review of the ARO’s decision by the Social Security Appeals Tribunal (SSAT). On 13 May 2011 the SSAT affirmed the decision. This matter is an application for review of the SSAT decision.
THE HEARING
3. Mr Galea participated in the hearing by telephone. Mr T Noonan, a Centrelink advocate, represented the respondent. The Tribunal had before it the documents provided by the respondent in accordance with s 37 of the Administrative Appeals Tribunal Act 1975 (the T-documents). The Tribunal also had before it the Respondent’s Statement of Facts and Contentions which included Supplementary T‑documents ST1 to ST5.
THE ISSUE
4. The parties agreed the key facts of the workplace injury, the details of the compensation payments, the amounts of money involved and the relevant dates. Mr Galea did not dispute the calculation of the preclusion period.
5. The only issue to be determined is whether Mr Galea’s circumstances should be considered special circumstances and whether, as a result, the compensation payment should be treated as not having been made, in whole or in part.
THE EVIDENCE
6. In his opening statement, Mr Galea said that in 2008 he had been advised by a social worker at the Sunshine Centrelink office that he should not have a problem getting a pension even after buying a house. Mr Galea said that, based on her advice, he proceeded to buy his house.
7. When Mr Noonan asked him whether he had received the Centrelink letter of 9 April 2009 containing the advice that a preclusion period had been applied, Mr Galea said that he could have received it. He later agreed that he did receive that letter. He also agreed that he received a letter from Ryan Carlisle Thomas, his solicitors, dated 16 April 2009, advising him of the preclusion period. When asked what action he took on receiving these letters, Mr Galea said that he again contacted Centrelink and that a social worker again advised him that, if he spent his money wisely, he would not have a problem receiving a pension.
8. When Mr Noonan asked him about seeking financial advice, Mr Galea said that he spoke to a financial adviser in a group known to him as CAFS. He said he told the adviser of the amount of his compensation payout, his living situation, his work history and that he could not work in future. Mr Galea said that the adviser told him that if he spent his money wisely he should be able to get a pension payment from Centrelink. Mr Galea asked the adviser about buying a house outright so that he did not have to meet mortgage payments. The adviser agreed that it was a better option. Mr Noonan asked Mr Galea if the adviser had told him to conserve his funds until the end of the preclusion period. Mr Galea replied that the adviser had said only that he should spend his money wisely.
9. Mr Galea agreed that he received approximately $332,000 from his compensation settlement, after paying $20,000 solicitors’ costs. He said that he also cashed in his superannuation policy and received a further $28,000. Mr Galea stated that, of this amount, he had to repay Centrelink approximately $20,000 for pension payments received, and a further $6,000 for job placement services.
10. Mr Galea said that in May 2009 he bought a house for $235,000, paid out a loan on his car of $8,000, bought household items and furniture to a value of $10,000, had some work done on steps to the house and the garden beds, and paid court fees of $7,000 to $8,000. He said that he spent the balance of the money on living expenses from about April 2009 to January 2011. Mr Galea said that his money ran out at Christmas 2010 and that he currently relied on the Salvation Army for food and the hardship relief scheme for his household utilities.
11. When Mr Noonan asked him about his reasons for buying a house, Mr Galea said that he wanted a roof over his head. He said that he had previously been homeless. He did not want to take out a mortgage as he did not have an earnings income with which to make the repayments. He said that he was not willing to rent a house until the end of the preclusion period as he wanted a place for his children and he could be forced to move from a rented house. He also said that it was a waste of money paying off someone else’s mortgage.
12. Mr Galea said he did not approach lending institutions on the advice of the financial advisers. He said further that he does not want to sell the house, because he wants to provide security for his two children, who stay with him fortnightly and for half of their holidays. When Mr Noonan asked why he had paid off the balance owing on his car and did not continue the periodic payments, Mr Galea said that he did not want the debt. Mr Noonan asked again whether Mr Galea had considered selling his house and renting for the preclusion period. Mr Galea responded [i]t is not an option for me.
CONSIDERATION
13. Mr Galea does not dispute that the preclusion period was correctly calculated. His application is that because of his special circumstances the preclusion period should not be applied. The relevant legislation is contained in s 1184K(1) of the Social Security Act 1991 (the Act), which states:
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.
14. The term special circumstances has been extensively considered in case law. In Re Beadle and Director-General of Social Security (1984) 6 ALD 1, the Tribunal stated:
... 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. ... 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. ...
15.In Groth v Secretary Department of Social Security (1995) 40 ALD 541 at 545,Kiefel J in the Federal Court stated:
it is sufficient to observe that it would require something to distinguish Mr Groth’s 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..
16. The Tribunal notes also the decision in Re Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114, in which the Tribunal said at paragraph 80 that consideration of special circumstances requires a consideration of the person’s individual circumstances but also a consideration of the general administration of the social security system. ...
17. In support of the argument that his circumstances should be considered special circumstances, Mr Galea submitted that he has no money and that he needs the pension payments to live. Although Mr Galea did not specifically submit that he considers his health problems and the advice he received from Centrelink social workers to be special circumstances but only alluded to it in his evidence, the Tribunal accepts that Mr Galea also considers his health problems and the advice he received from Centrelink social workers to be special circumstances. The Tribunal will consider the issue of the Centrelink advice first.
18. Mr Noonan submitted that, although there are records of telephone calls with Mr Galea, the records do not contain the advice that the Centrelink officer gave him on the subject of the preclusion period. Mr Noonan referred to the Centrelink letter of 9 April 2009 and the solicitors’ letter of 16 April 2009, which stated that a preclusion period had been applied to Mr Galea. Mr Noonan said that Mr Galea appears to have accepted the telephone advice of a Centrelink social worker, even thought it was inconsistent with those letters. Mr Noonan submitted that a social worker would not have the expertise to give advice on the effects of buying a house on a preclusion period. He submitted further that Mr Galea may have mis-interpreted information given him over the telephone.
19. The Tribunal notes the absence of evidence that corroborates Mr Galea’s version of the telephone advice from Centrelink. If the advice given was as stated by Mr Galea, he would have reason to feel aggrieved about receiving incorrect advice and he could seek compensation through other avenues. However, the presence or otherwise of incorrect advice does not, of itself, give rise to special circumstances.
20. Mr Galea made a choice of which advice to accept, the oral advice of a Centrelink social worker, or the written advice from Centrelink and the identical written advice from his solicitors. He apparently made that choice without referring back to his solicitors, and then acted upon it. This was not a case where the only available advice was incorrect. Mr Galea had before him the correct advice in letters from Centrelink and his solicitors but chose instead to accept advice from the less qualified source. The Tribunal does not consider that the receipt of inconsistent advice is so unusual, uncommon or exceptional as to amount to special circumstances.
21. Turning next to the issue of Mr Galea’s financial situation. The Tribunal notes the evidence that in Mr Galea received approximately $332,000 in April 2009 after paying his solicitors’ costs. In addition, he cashed in a superannuation policy of $28,000. Mr Galea paid $26,000 to Centrelink in repayment for pension payments and for job service fees. He bought a house for $235,000, paid off a loan on his car of $8,000, bought furniture for $15,000, paid $1,000 for fence and garden works and paid court fees of $7,000. By the end of 2010 Mr Galea had run out of cash, although he still had a major asset in the house that he owned.
22. Mr Galea’s major expenditure from his compensation payment was his outright purchase of his house. Mr Galea stated that he needed a roof over his head, having previously been homeless. He said he also needed the security of home ownership for his children. His reasons for not taking a mortgage on the house were that, as he could not work in the future, he would not be able to meet mortgage payments. Mr Galea said that he had never applied for a loan on the house. In regard to the possibility of renting a house over the preclusion period, Mr Galea said that he did not want to rent, he was not willing to do that, and it was a waste paying off someone else’s mortgage. Mr Galea also said that he does not want to sell the house.
23. In his written submissions, Mr Noonan referred to Secretary, Department of Family and Community Services v Allan [2001] FCA 1160, in which Heerey J noted at paragraph 1:
The basic policy, understandably enough, is that there should not be "double dipping". People should not receive social security payments for loss of earnings where they have received compensation for that same loss of earnings from another source.
24. Mr Noonan also referred to Re McCulloch and Secretary, Department of Employment & Workplace Relations [2007] AATA 1452, in which the Tribunal noted that the applicant spent in excess of half of a lump sum compensation payment in retiring debt against a house and motor vehicle. While the Tribunal in that case accepted that the applicant had insufficient funds to meet his living expenses and those of his children, it pointed out that the source of that shortfall was investment in capital assets derived from the compensation payments. At paragraph 41 of the reasons for the decision, the Tribunal said:
while recognising that sale [of his place of residence] involves relocation and disruption, I must conclude that the overall financial situation is not one lacking availability of financial resolution, albeit involving sale of assets including the home. That such a circumstance is unusual, uncommon or exceptional is not really in contention, as such an event is a common, albeit unwelcome and disruptive, event in our modern society. That such an event be considered unfair or unjust fails to acknowledge both the source of the difficulty and the means of resolving the difficulty, and would fail to recognise that any finding of special circumstances must be within the proper construct of the Act which makes provision for such a finding.
25. Mr Noonan submitted that it would be inappropriate for the Tribunal to exercise the discretion under subsection 1184K(1) of the Act for the following reasons:
(i)The applicant was fully aware of the existence and duration of the preclusion period prior to expending his compensation proceeds.
(ii) The applicant’s financial situation is essentially of his own making.
(iii)There is nothing unusual or uncommon about the applicant’s circumstances.
26. Mr Noonan submitted further that Mr Galea made no concerted effort to preserve the compensation payment in order to support himself until the end of the preclusion period.
27. In this case, the Tribunal considers that Mr Galea wants to double dip in the sense used by Heerey J in Allan. Mr Galea spent most of his lump sum payment on the outright purchase of a house and as a consequence has now run out of cash. He is now seeking the pension to cover his loss of earnings, for which he received the lump sum. The Tribunal also adopts the reasoning in McCulloch that Mr Galea’s financial circumstances are capable of resolution. There is no impediment to Mr Galea selling his house or borrowing money against the asset of his house, other than his unwillingness to do so. As in McCulloch, the Tribunal sees nothing unfair or unjust in either of these solutions to his financial situation. Accordingly, the Tribunal finds that Mr Galea’s financial circumstances are not special circumstances as provided for in the Act.
28. In regard to Mr Galea’s health, Mr Noonan submitted that his health problems are a direct consequence of his employment injuries, for which he received the lump sum compensation payment. Mr Noonan referred to the decision in ReNajdovska and Secretary, Department of Social Security (1998) 54 ALD 184, in which the Tribunal said:
Mrs Najdovska does have health problems which are the reason for her receipt of disability support pension ... There is no evidence which would allow me to find that her health problems are special or unusual in the context of people receiving disability support pensions. .
29. The Tribunal considers that Mr Galea’s circumstances are similar to those of Mrs Najdovska. There is no evidence before the Tribunal which would allow a finding that Mr Galea’s health problems are special or unusual. Accordingly, the Tribunal finds that Mr Galea’s health problems do not amount to special circumstances.
30. The Tribunal has considered, in turn, the issues of inconsistent advice, financial circumstances and health problems and found that they are not special circumstances as provided for in subsection 1184K(1) of the Act. Accordingly, there is no basis for considering Mr Galea’s lump-sum compensation payments as not having been made, in whole or in part. As a result, the Tribunal finds that the preclusion period as applied remains in force. Therefore, Mr Galea’s application is unsuccessful.
DECISION
31. The Tribunal affirms the decision under review.
I certify that the thirty-one [31] preceding paragraphs are a true copy of the reasons for the decision herein of:
Mr C. Ermert, MemberSigned:...........Dianne Eva.............
ClerkDate of Hearing 26 September 2011
Date of Decision 18 October 2011
Advocate for the Applicant Self-representedAdvocate for the Respondent Mr Tim Noonan, Centrelink Advocacy Branch
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