Groom and Secretary, Department of Families, Housing, Community Services and Indigenous Affaris
[2008] AATA 339
•24 April 2008
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2008] AATA 339
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2007/1137
GENERAL ADMINISTRATIVE DIVISION ) Re PETER THOMAS GROOM Applicant
And
SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES & INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal Ms A F Cunningham (Senior Member) Date24 April 2008
PlaceHobart
Decision The decision under review is affirmed.
..............................................
Senior Member
CATCHWORDS
SOCIAL SECURITY - disability support pension - preclusion period as a result of lump sum compensation payment - whether special circumstances exist to warrant treating all or part of the compensation monies as not having been made - Tribunal found reckless expenditure with no regard to the consequences and no satisfactory explanation for pattern of expenditure - special circumstances found not to exist - decision under review affirmed
Social Security Act 1991, ss 1169, 1170(4), 1184K(1)
Social Security and Family Assistance Law
The Guide to The Social Security Law
Re Beadle and Director- General of Social Security (1984) 6 ALD 1.
Re McCulloch v Secretary, Department of Employment & Workplace Relations [2007] AATA 1452
Re Mazurak and Secretary, Department of Family and Community Services [2002] AATA 883
Re Dominenco Colaiacolo and Secretary, Department of Social Security [1995] AATA 91
Re Thomas and Secretary, Department of Family and Community Services [2003] AATA 842
Re Secretary, Department of Social Security and John Rodgers [1992] AATA 131
Re Secretary, Department of Family and Community Services and Szoke [2001] AATA 353
Re SDSS and Duzevich (1996) 41 ALD 461
Re Krzywak and SDSS (1988) 15 ALD 690
Re SDSS and Winterbotham [1990] AATA 6499
Re SDSS and Kirwan (1990) 22 ALD 280
Re Martin and SDSS [1990] AATA 6482
Re Kulakov and SDSS (1991) 63 SSR 879
Re Zaccardi and SDSS (1995) 40 ALD 760
Re Marsh and SDF&CS [2004] AATA 362
S,DEWR and Barrington (2006) FCA 527
REASONS FOR DECISION
24 April 2008 Ms A F Cunningham (Senior Member) 1. The applicant, Peter Thomas Groom seeks the review of a decision which rejected his claim for disability support pension (DSP) on the basis that he is precluded from receiving compensation affected payments for the period 29 August 2002 until 19 April 2017 as a result of receiving a lump sum compensation payment. The original decision was made on 28 August 2006 and affirmed by an authorised review officer on 5 October 2006 and by the Social Security Appeals Tribunal (the SSAT) on 8 December 2006.
2. Mr Groom's applications for review of the original decision were both rejected on the basis that the decision-makers were not satisfied that his circumstances constituted special circumstances within the meaning of the legislation to justify the exercise of a discretion to treat any part of the compensation payment as not having been made.
3. In July 2002 Mr Groom received a workers compensation payment of $990,000.00 as a result of a serious motor vehicle accident which he sustained on 28 June 1998 in the course of his employment as an ambulance officer with the New South Wales Ambulance Service. Mr Groom suffered extensive injuries principally to the bilateral right shoulder. In 1995 he was diagnosed with ischaemic heart disease. He has had a hip replacement and suffered from depression. Mr Groom contends that he is unable to work due to his medical disability. His application for DSP was lodged in July 2005 and rejected on the basis that he is subjected to a compensation preclusion period. It is Mr Groom's contention that the preclusion period should be reduced because he has no funds remaining with which to support himself.
4. Mr Groom has not been employed since his motor vehicle accident in 1998.
The Legislation:
5. The applicable legislation is the Social Security Act 1991 (the Act). Division 3 of Part 3.14 is relevant to a claim for a compensation affected payment which includes a disability support pension (section 19(1)). Section 1169 of the Act states that a person cannot be paid a compensation affected payment during a lump sum preclusion period.
6. Mr Groom's preclusion period as calculated in accordance with the relevant provisions of the Act concludes on 19 April 2017. This date was calculated according to a formula prescribed in section 1170(4) which divided the total amount received being $990,000.00 less the weekly payments of $84,011.87 which sum of $905,988.13 is divided by two equalling $452,994.06 which is the deemed economic loss component. This amount was divided by $592.50 being the income cut-off point at the date of settlement to produce a figure of 764 weeks which dates from the first day after the payment of periodic compensation being from 29 August 2002.
7. There was no dispute as to the preclusion period and the Tribunal accepts that the period was correctly calculated in accordance with the Act.
8. The provision relied upon by the applicant is section 1184K(1) which states as follows:
"(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".
9. The issues for the Tribunal to determine are firstly, whether Mr Groom's circumstances constitute special circumstances within the meaning of this sub-section and secondly, if so, whether it is appropriate to treat the whole or part of his compensation payment as not having been made.
Background Facts:
10. The Tribunal accepts the following background facts which were not in dispute and were confirmed by the documentary evidence tendered at the hearing.
11. On or about 22 July 2002 Mr Groom settled his common law damages claim in respect of his injuries sustained in the motor vehicle accident for the sum of $990,000.00. After payment of costs, weekly compensation payments and other payments the sum of $762,140.96 was paid to Mr Groom's Westpac classic bank account in two lump sums on 26 August 2002 and 16 September 2002. Mr Groom separated from his wife, Jennifer Lorraine Groom shortly after receiving his compensation monies. His marriage was dissolved by a Family Court Order which became absolute on 25 October 2003.
12. By way of property settlement Mr Groom was ordered to pay Mrs Groom the sum of $70,000.00 and transfer his interest in an investment property at 44 River Road, West Ulverstone to her. Mrs Groom was ordered to transfer her interest in the former matrimonial home at 901 West Kentish Road, Sheffield to Mr Groom and otherwise the parties retained the assets in their prospective possessions.
13. In September 1999 Mr Groom and his wife moved to reside in Tasmania having previously purchased a property at 44 River Road, Ulverstone for $60,000.00 in March 1997 and a property at 102 Leven Street, Ulverstone for $95,000.00 in May 1998. On 16 July 1999 Mr Groom received pay-out of his superannuation entitlements in the sum of $188,186.43 which he initially deposited with Perpetual Trustees and subsequently transferred to his Westpac savings account.
14. On 26 October 2001, Mr and Mrs Groom signed a contract to purchase a property at 901 West Kentish Road, Sheffield for $134,000.00.
15. The property at 102 Leven Street was sold on 22 February 2002 for $97,000.00. In 2003 Mr Groom formed a friendship with Sussan Rita Anderson. Mr Groom and Ms Anderson's communications were initially by e-mail concerning the purchase of horse gear and equipment. Mr Groom offered to pay Ms Anderson's total removal costs and she moved to live with him in his West Kentish Road property as his carer later in 2003.
16. Ms Anderson continued to share a house with Mr Groom for approximately five months during which time Mr Groom met the household expenses by depositing money into Ms Anderson's bank account on a regular basis. On 7 March 2003 Mr Groom paid $17,000.00 plus legal costs for a block of land at West Kentish which was registered in Ms Anderson's name. The block was sold by Ms Anderson to her mother for $20,000.00 on 24 February 2004. and subsequently sold for the sum of $70,000.00. Mr Groom assisted Ms Anderson with the purchase of her property at Wesley Vale where she currently resides and with the purchase of furniture, whitegoods, repairs, heating and so forth.
17. Mr Groom also financially assisted another woman, Fiona Barker, who he met via the internet in January 2006. Ms Barker subsequently agreed to move to Tasmania and was paid a carers allowance until she left in late July 2007.
The Evidence:
18. Oral evidence was provided by Peter Groom and Sussan Anderson. The Tribunal also received a written statement from Phillip Roche who is a joint owner of the Wilmot Country Store. It was Mr Roche's evidence that Mr Groom had an outstanding account in the sum of $1911.50.
19. The Tribunal received the T Documents in evidence and other documentation including bank statements, documents relating to the Family Court proceedings involving Mr Groom's former wife, cheque butts, Mr Groom's hand-written notebook regarding expenditure, written advices regarding outstanding accounts, two medical reports, valuation reports, copies of contract for purchases and sales of property, various receipts, various solicitor file notes and letters.
20. Also submitted was an analysis of Mr Groom's financial transactions prepared by BDO. The analysis was prepared from the documents which were made available during the course of the hearing and was an attempt to reconcile the bank deposits and withdrawals with the available documentary evidence regarding such transactions. The report revealed that there were significant transactions for which there was no available supporting documentation.
21. The evidence was that in July 1999 Mr Groom received superannuation entitlements in the sum of $188,186.00 and common law workers compensation damages in the net sum of $762.140.00. When Mr Groom first applied for DSP in July 2005 the documentation reveals that he had $31,885.00 in his Westpac 1 Basic Account, $61,351.00 in his Classic Account on 29 September and $30,000.00 was deposited into his Max-1 Account on 13 October. He owned a property at 19 Kop Road, Erriba, which he had purchased on 16 August 2004 for $103,000.00. On 6 August 2005 his West Kentish Road property was sold for $215,000.00. By mid to late 2006 Mr Groom contended that he had exhausted all of his bank funds including the profit earned from the sale of the West Kentish Road property which was approximately $60,000.00.
22. The documentation reveals that Mr Groom had between July 1999 and October 2001, withdrawn his entire superannuation entitlement funds from the Westpac account. The total withdrawals made amounted to over $197,500.00. In a period of twelve months between July 1999 and July 2000 Mr Groom withdrew $112,700.00. It was Mr Groom's evidence that he had also totally exhausted his workers compensation funds in the net sum of $762,140.00 between July/August 2002 and 2006. On Mr Groom's evidence this makes his total financial expenditure without including any interest earned on the monies deposited between July 1999 and 2006, at $950,326.00. This does not include monies received from the sale of his properties.
23. Mr Groom offered no explanation or excuse for his prolific expenditure in excess of $1,000,000.00 over a period of some seven years. His counsel stated that Mr Groom acknowledged that much of his expenditure has been exceedingly reckless.
24. Mr Groom's counsel submitted that in the Tribunal's consideration as to what constitutes "special circumstances" there are a number of factors which should be considered namely, Mr Groom's incapacity to work, his ill health, his despair and depression which led to him overdose on a number of occasions, suicidal tendencies and his current financial hardship.
25. It was submitted on behalf of the respondent that the Tribunal could not be satisfied on the evidence presented that all of the funds received by Mr Groom have been totally exhausted. Mr Morgan submitted that Mr Groom bears an evidentiary onus of proof to account for the dissipation of the funds to the Tribunal's reasonable satisfaction.
Expenditure:
26. The following is the Tribunal's analysis of the evidence with respect to major items of expenditure from 1998.
·1998 purchase of River Road (between $65,000 to $68,000.00).
·2002 purchase of West Kentish Road for $135,000.00. Mr Groom's estimation of expenditure on renovations, rewiring, replumbing, purchase of antique furniture, purchase and installation of heat pump varies between $70,000.00 and $150,000.00.
·1998 purchase of Leven Street for $95,000.00. Sold in April 2002 for $97,000.00. Mr Groom's evidence of expenditure on repairs and maintenance varies between $30,000.00 and $35,000.00.
·August 2004 purchase of 19 Kop Road, Erriba for $103,000.00. Mr Groom's estimate of expenditure on repairs and renovations is between $50,000.00 and $60,000.00.
·Payment to Mrs Groom of $70,000.00 for property settlement. Approximately $17,000.00 spent on replacement of furniture following separation. Approximately $20,000.00 on divorce costs.
·$5,000.00 for Sussan Anderson's relocation expenses, $18,500.00 for the purchase and legal costs of land at West Kentish Road registered in the name of Sussan Anderson.
·$15,000.00 for a deposit on Sussan Anderson's house at Wesley Vale.
·$12,750.00 to jeweller for ring for Sussan Anderson, $6,470.00 for furniture and whitegoods for Sussan Anderson, $5,900.00 for heat pump for Sussan Anderson, approximately $12,000.00 in fortnightly bank transfer payments to Sussan Anderson of $1,000.00 for six months. Mr Groom estimated his total expenditure for Sussan Anderson was in the order of $120,000.00 but was unable to verify or provide any documentary proof other than that outlined above.
·Mr Groom estimates that he spent approximately $20,000.00 on horses and $15,000.00 on horse equipment.
·$16,000.00 spent on purchasing motor cycle and trailer,
·$34,000.00 spent on Holden Commodore. Additional $8,000.00 on changeover from Commodore to 2003 Camry.
·Mr Groom estimates that he gave his son approximately $30,000.00 and his daughter between $15,000.00 and $20,000.00 as well $1,000.00 per fortnight for a period of six months totalling approximately $12,000.00. His original evidence regarding the loan to his sister was $20,000.00 which he subsequently accepted was $5,000.00 upon sighting the documentary verification.
·Mr Groom's notebook records significant numbers of purchases via the internet, which include various items of clothing, horse equipment, music equipment, cooking items, linen, horse ornaments, the totals of which have not been calculated. The entries reveal that Mr Groom often made multiple purchases of the same item, for example, numerous sets of sheets, clothing, belt buckles, music equipment including amplifiers and so on.
27. From the above identified sums the Tribunal has calculated that the total expenditure was in the order of $760,000.00 which is roughly the net amount received by Mr Groom from his workers compensation payout without any account for interest earned over the period. This however does not account for the expenditure of his superannuation received in 1999 nor the interest earned thereon. Mr Groom advised that he received just over $61,000.00 profit from the sale of his West Kentish Road property which he used for living expenses.
28. After the conclusion of the evidence on 20 December 2007 the Tribunal received an application from Mr Groom's solicitor by letter 20 February 2008 requesting that no decision be made by the Tribunal until additional evidence was presenting regarding a change in the applicant's circumstances. The written submissions received from the applicant's solicitor advised that the applicant had sold his house at 19 Kop Road, Erriba and had moved to Victoria where he is currently residing with friends. The application for the receipt of additional evidence of the changed circumstances which had occurred after the hearing was not opposed by the respondent.
29. The Tribunal subsequently considered the application and granted leave to the applicant to adduce further evidence of his changed circumstances.
30. The hearing was reconvened and witness statements were tendered on behalf of the applicant, Phillip Roche and Rodney Simpson. Annexed to Mr Groom's statement were copies of the Contract for Sale of the Kop Road property, settlement statement and accounts paid from the net proceeds of sale which included $2,571.60 to the Wilmot Country Store, the Westpac Banking Corporation in the sum of $8.515.00, Commonwealth Bank of Australia in the sum of $10,485.00, Telstra in the sum of $1,241.00, Aurora in the sum of $781.82 and TT Line Company Pty Ltd in the sum of $769.00.
31. The witness statement of Rodney Simpson stated that in approximately February 2008 Peter Groom had paid him $700.00 in cash for the financial assistance that he had given him over the previous twelve months. The witness statement of Phillip Roche confirmed that on 31 January 2008 Mr Groom paid off his outstanding debt in the sum of $2,571.60. None of the witnesses were required to be present for cross-examination. There was further undisputed evidence that the only chattel that remained at the Kop Road property was the refrigerator for which Mr Groom received $900.00. Mr Groom's horses have remained at the property under the care of the new owner who has agreed to care for them at no cost because she is able to use them. The Tribunal was further informed that Mr Groom's furniture, personal belongings and kitchen appliances were removed from the Kop Road property by express removalists who were paid a cash amount of $5,000.00. Despite the respondent's request for an inventory of these items, none has been provided.
32. The contract for sale was signed on 8 December 2007 and completed on 25 January 2008. The sale price was $140,000.00 which was subject to finance being made available within 21 days. As pointed out by Mr Morgan at the resumed hearing, Mr Groom had already entered into the contract to sell his property when he was giving evidence before this Tribunal on 19 December 2007. Mr Groom did not disclose this fact and it would appear had not instructed Mr Bartl who in closing submissions said that the property had little saleable value, is located in an isolated area where there is limited demand for such properties and could take between three and six months to sell.
33. The Tribunal is further troubled by the fact that Mr Groom has declined the respondent's request for an inventory of the chattels removed to Victoria at a cost of $5,000.00. The Tribunal recalls the evidence regarding Mr Groom's prolific expenditure over recent years of items such as musical equipment, furniture, kitchen appliances and so forth and Ms Anderson's evidence as to his ownership of various antique pieces of furniture. The amount paid for the removal of these items suggests they are significant. There was no evidence Mr Groom has attempted to sell chattels items in order to assist with his living expenses but instead decided to take them with him at considerable cost.
34. Mr Groom received the sum of $131,349.83 from the sale of his property after deductions of legal costs and disbursements. From this amount he paid the accounts referred to above as well as removal costs and the sum of $700.00 to Rodney Simpson which left a balance of just over $101,000.00. It would appear that Mr Groom still owns his Camry motor vehicle which is valued at around $15,000.00 and may also own a trailer which was referred to in the TT Line Company receipt.
Special Circumstances:
35. Despite the evidence and Mr Groom's acknowledgement that much of his expenditure was reckless and extravagant, it was contended on his behalf that nevertheless, due to the special circumstances of his case, part of his compensation affected payment should be treated as not having been made within the meaning of section 1184(K) of the Act.
36. Mr Bartl referred to the Tribunal's statement in ReThomas and Secretary, Department of Family and Community Services [2003] AATA 842 where it was stated:
"That is not the end of the matter, however. Even the foolish and the profligate must be protected in appropriate circumstances ...".
37. In that case the Tribunal commented that the applicant's difficult circumstances were not of themselves unusual for most people who are eligible for benefits are in financial difficulty. The Tribunal noted that whilst the applicant's health was poor, this had already been taken into account in the award of damages. The Tribunal found that the applicant had been reckless in his expenditure without regard to the consequences and concluded "he is in a mess of his own making". The Tribunal found that whilst Mr Thomas was the author of his own misfortune, it was satisfied that the circumstances of that misfortune set him apart from the usual run of cases.
38. This decision however is somewhat at odds with many other decisions of the Tribunal where it has been held that straitened financial circumstances of themselves do not ordinarily constitute special circumstances, particularly where they are of the applicant's own making.
39. Both Tribunals in the decisions Re Secretary, Department of Social Security and John Rodgers [1992] AATA 131 and Re Domenico Colaiacolo and Secretary to the Department of Social Security [1985] AATA 91 concluded that granting the application and ignoring the preclusion period would essentially frustrate the objectives and purposes of the Act which is designed to ensure that a person should not be compensated from public monies as well as otherwise for the same incapacities.
40. The Tribunal in Re Thomas believed that the applicant's circumstances could be distinguished from those existing in Re Secretary Department of Family and Community Services and Szoke [2001] AATA 353 where the Tribunal was unable to find special circumstances and concluded that the respondent's expenditure had been reckless with no regard to the consequences. The respondent in Re Szoke had made generous gifts to family members and was able to account for her expenditure of approximately $50,000.00 but the Tribunal was left to speculate as to how the remaining $25,000.00 was dissipated. There was medical evidence that the respondent suffered from generalised anxiety and depression and that she may, as a consequence, have been vulnerable to requests for money from family members. There was also evidence that the respondent was suffering a suicidal ideation in conjunction with the anxiety/depressive conditions and in association with abuse of alcohol. The Tribunal accepted that the respondent was living in impoverished circumstances. It concluded that this situation was the result of the voluntary actions by the respondent to dissipate her settlement funds. The Tribunal concluded:
"She did not experience misfortune, nor did she experience circumstances not envisaged by the legislation.
We are satisfied the Respondent deliberately spent the money without regard to the consequences of her action. Her behaviour in relation to the money was reckless with no regard to the consequences.
Because we cannot find circumstances which would be regarded as special circumstances and because we have been left to speculate as to approximately one third of the lump sum, ie we do not know what happened to it, we have not been satisfied that the circumstances of the respondent's case can be described as special circumstances".
41. The circumstances in the current case could give rise to the same conclusions as those reached by the Tribunal in Re Szoke. It is not clear how the Tribunal in Re Thomas was able to distinguish the facts of that case from those existing in Re Szoke, for Mr Thomas similarly gave away large sums of money to friends, paid off debts, brought property and spent large sums on renovations. The Tribunal accepted that Mr Thomas had been reckless without regard to the consequences and was "in a mess of his own making". The Tribunal appeared to place significant weight on his resultant impoverished circumstances and concluded::
"He may be the author of his own misfortune, but I'm satisfied the circumstances of that misfortune set him apart from the usual run of cases, and certainly allow this case to be distinguished from cases like Szoke and Re Mazurak".
42. The Tribunal in Re Mazurak and Secretary, Department of Family and Community Services [2002] AATA 883 affirmed the decision under review which declined to find special circumstances where the applicant had received a lump sum settlement of $300,000.00 on 23 October 1998. Prior to the separation with his wife in March 2000 the applicant spent approximately $158,000.00 and purchased a new car for $43,000.00 following separation. At the time of the hearing the applicant was residing with friends in rented accommodation and living off his credit card which was in debt at the time of the hearing in the sum of approximately $8,000.00. The Tribunal said at paragraph 18 when referring to section 1184 and in particular the phrase "special circumstances":
"In other words, the section is not designed to provide relief merely because the applicant finds himself in difficulty. Most applicants in receipt of benefits are in that position; see Director General of Social Services v Hales (1983) FCA 81 ... the difficulty must be unusual so that the case is distinguishable from the ordinary run of cases; see Groth v Secretary, Department of Social Security 1995 40 ALD 541 at 545 per Keifel J".
43. The Tribunal concluded that the applicant had not acted with the same degree of recklessness as the applicant in Re Szoke but that he had spent roughly half of his settlement monies unwisely and gone through the other half at a very rapid rate without adequate explanation. The Tribunal refused to accept the applicant's contention that his divorce was a distinguishing factor where there was no evidence that the consequences had been particularly devastating. There was evidence that the applicant still had over one half of the settlement monies in his bank account when he separated which was sufficient in the Tribunal's view, to see out the preclusion period if he had managed his finances carefully.
44. Apart from the Tribunal's decision in Re Thomas referred to above, the line of cases which have similar factual circumstances to those present in this case, appear to support a conclusion that there is nothing in Mr Groom's circumstances which is particularly unusual or uncommon such as to constitute "special circumstances".
45. The term special circumstances appears in several sections of the Act but is not defined. The Tribunal has consistently adopted the interpretation of the phrase as first expressed by the Tribunal in Re Beadle and Director-General of Social Security (28 May 1984) and approved by the Full Federal Court in its decision reported at 6 ALD 4 that the circumstances should be examined in the context in which they occur and whilst they need not necessarily be unique, they should be otherwise unusual, uncommon or exceptional. Whilst that case was concerned with the meaning of the term "special circumstances" in the context of extending the payment period of a handicapped child's allowance, the Tribunal said in Re SDSS and Duzevich (1996) 41 ALD 461 that the expression "special circumstances" as appearing in section 1237AAD(b) of the Act should be interpreted and applied in the same way as the identical expression in section 1184(1) of the Act.
46. The Tribunal has held that to qualify for special circumstances, financial hardship must go beyond "straitened circumstances" and be truly exceptional (see Re Krzywak and SDSS (1988) 15 ALD 690, Re SDSS and Winterbotham [1990] AATA 6499, Re SDSS and Kirwan (1990) 22 ALD 280, Re Martin and SDSS [1990] AATA 6482, Re Kulakov and SDSS (1991) 63 SSR 879 and Re Zaccardi and SDSS (1995) 40 ALD 760 as referred to in Peter Sutherland's, Social Security and Family Assistance Law (Second Edition).
47. The Tribunal in Re Dominenco Colaiacolo and Secretary, Department of Social Security [1995] AATA 91 said at paragraph 15:
"There can be no doubt that the circumstances of the applicant in this case are "unusual" and I so find. However the point is rather whether those circumstances are so unusual that it would be "unjust, unreasonable or otherwise inappropriate" to uphold the recovery decision made by the respondent".
And at paragraph 16:
"In my opinion, the circumstances considered up to this point are not as unusual as should be required, that there would be no lack of justice or of reasonableness in recovery, because the Act is designed to ensure that a person should not be compensated from public monies as well as otherwise for an identical incapacity (the identity of the incapacity is not in dispute). Accordingly it remains to be decided whether to uphold the recovery action would be "otherwise inappropriate". This is a very critical criterion but some light is thrown upon it by the remarks made in Re Ivovic supra - namely, whether by exercising the discretion in a particular way, ends or objectives come conformable with the scope and purpose of the Act will be achieved or frustrated?"
48. At paragraph 20 the Tribunal concluded that whilst the applicant's circumstances could be described at straitened, they were not exceptional and even if they were, the Tribunal has previously ruled that the financial position of an applicant of itself would not ordinarily constitute a special circumstance (see Re Beadle and Director- General of Social Security (1984) 6 ALD 1. As noted by Sutherland in his text Social Security and Family Assistance Law, the cases suggest that when considering financial hardship, it is necessary to consider it in the light of the person's assets, the nature of the expenditure of the lump sum and the health of the person which reflects on their capacity to work in order to relieve the hardship.
49. The Tribunal in Re McCulloch v Secretary, Department of Employment & Workplace Relations [2007] AATA 1452 concluded that the applicant's expenditure had been both excessive and extravagant and that a psychiatric appraisal had provided no understandable explanation for such an expenditure pattern. The Tribunal considered the applicant's current financial circumstances and whilst recognising her desire not to realise assets which had been sourced from her compensation monies, concluded at paragraph 41 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 destructive 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".
50. It was submitted on behalf of Mr Groom that he had suffered from depression and had been admitted to the North West Regional Hospital with suicidal tendencies in August 2007.
51. The only medical evidence presented was in the form of two reports. In the first report Dr Fisher said on the 11 April 2007 that Mr Groom had a prolonged episode of severe depression and he considered him to be "at high risk of self harm". However in a subsequent report of 8 August 2007, Dr Kirkman said that Mr Groom had developed a depressive illness about 12 months ago but that there was no evidence of current depression. He also opined that Mr Groom was not suicidal but had been "very worried at times and sought to sedate himself with excessive Oxazepam but without any attempt at self harm". Dr Kirkman noted that Mr Groom's "anxiety about his financial situation was understandable". The Tribunal is not able to conclude from the medical evidence available that there is any explanation for Mr Groom's excessive and reckless pattern of expenditure.
52. According to Mr Groom prior to its recent sale, the Kop Road property was essentially all that remained of his compensation payment. Mr Morgan submitted at the conclusion of the hearing in December that Mr Groom should be required to use this asset as a means of sourcing income to see out the balance of the preclusion period. Mr Morgan contended that the sale of the Kop Road property could produce sufficient funds to see out the preclusion period for it would equate to roughly the same amount as a disability support pension for ten years on the basis of fortnightly payments of $530.00. Whilst Mr Morgan acknowledged that there is little capacity for Mr Groom to raise and meet interest payments on a mortgage, he referred to the possibility of a reverse mortgage which would only be payable on the sale of the property. He contended that Mr Groom would then have the financial capacity to rent a property within a township which could also eliminate his need for a motor vehicle.
53. The Tribunal has generally shown a reluctance to force the sale of a family home, particularly where the property has been assessed as being towards the bottom end of the market and where the applicant has family responsibilities. In such cases the outcome is unlikely to improve the applicant's overall circumstances. Mr Groom however has no dependants, his current financial circumstances are totally of his own making. He was at all times aware of the preclusion period and chose to ignore it. The expenditure of his compensation payments and superannuation entitlements was utterly reckless, completely irresponsible and without any regard for his future needs despite his acknowledgement in a Family Court affidavit that he needed to keep as much of his damages proceeds intact in order to provide him with sufficient income for the future. Mr Groom has offered no reasonable explanation for his pattern of expenditure and even when his initial application for DSP was refused in 2005, he continued to dissipate his funds. On his own evidence he spent all remaining funds which included a Westpac account of $38,885.00, $61,351.00 in his Classic Account, $30,000.00 in his Max 1 Account - totalling at least $122,000.00.
54. Mr Groom's circumstances have changed since the sale of his house at the end of January 2008 in that his remaining asset has been realised and he has approximately $101,000.00 after payment of various accounts. Mr Morgan submitted that Mr Groom would be left with approximately $120,000.00 from the sale of his property which could be invested. A conservative interest rate of 5% would yield approximately $6,000.00 per annum which he could use to support himself together with periodic drawdowns on the capital amount. A balance of $100,000.00 invested at 5% would yield interest of $5,000.00 per annum. Mr Morgan submitted that the sale proceeds would be sufficient for Mr Groom's needs if he adopted a conservative pattern of expenditure for the remaining nine years of his preclusion period.
55. Mr Bartl submitted that if the remaining preclusion period was waived, Mr Groom could use the remaining sale proceeds to purchase a property in which to reside. He contended that the preclusion period should be waived from the date when Mr Groom lodged his application.
56. There is little to differentiate Mr Groom's circumstances from those in Re Marsh and SDF&CS [2004] AATA 362 where the Tribunal declined to reduce the preclusion period from 2012, where the applicant had squandered settlement monies of $1.1 million over several years. His remaining assets included a modified car valued at $18,000.00 and unencumbered house which had been purchased in 2000 for $95,000.00. The Tribunal refers to a statement by Heerey J in S,DEWR and Barrington (2006) FCA 527 at paragraph 33:
"The bare fact of spending compensation money on an asset after becoming aware of a preclusion period would often tell against a finding of special circumstances, as the Guide points out".
57. It is appropriate to have reference to The Guide to The Social Security Law (The Guide) (2 October 2007) (see Drake v Minister for Immigration & Ethnic Affairs (No 2) (1979) 2 ALD 634) which explains the rationale for a lump sum preclusion period at 4.13.2.60 as:
"The compensation provisions of Part 3.14 reflect the principle that if a person has been compensated for loss of income, they should use that money to live off rather than receive a tax payer funded payment. Lump sum compensation payments are treated on the basis that people who cannot work because of a compensable injury should not receive income support for the same period from both the:
·Social Security system AND
·compensation payments.
This reflects the view of successive Australian governments that primary responsibility for the support of people who are incapacitated because of a compensable illness or injury rests with the relevant State or Territory compensation schemes and not with tax payer Social Security programs".
58. Apart from Mr Groom's claimed desperate financial circumstances, there are no other circumstances in the Tribunal's view that could constitute special circumstances to warrant the exercise of a discretion in this case. The Guide refers to other relevant factors as ill health, emotional state, decision-making capacity, addictions, incorrect or insufficient legal advice, unjust operation of legislative amendments and changed circumstances. None of which are applicable. Nor could it be said that there were any unforeseen circumstances which could have led to this outcome. The Guide states that special circumstances should not generally be applied where the person has sufficient liquid assets or the person acquired realisable assets after being advised of the preclusion period and there is no impediment to the realisation of those assets.
59. Mr Groom has over $101,000.00 remaining from the sale of his property that he would not have had but for his compensation payment. He also owns a car valued at $15,000.00 and significant chattels which cost him $5,000.00 to transport from Tasmania to Victoria. No evidence was led as to whether some of these chattels and the car could be sold. Mr Groom failed to provide an inventory and any evidence regarding the value of his chattels. It is noted that he also received the sum of $900.00 for his refrigerator. Mr Groom is the only person who is in a position of being able to provide conclusive evidence regarding his expenditure. He has failed to account for the dissipation of his funds to the Tribunal's reasonable satisfaction. There was little if any evidence regarding his credit card expenditure with the Westpac and Commonwealth Banks which totalled over $18,000.00. Whilst Mr Groom contends that all of the funds have been dissipated, his evidence in this respect is not entirely reliable. He essentially relies on his extravagant and reckless pattern of expenditure to support his claim.
60. There were several inconsistencies in the evidence Mr Groom gave to the Tribunal. In some instances he was prone to exaggerate the truth or deliberately misled the Tribunal. For instance it was his evidence that he had not been aware of the preclusion period until he was informed of this fact by his Family Court lawyer. He stated in his affidavit to the Family Court that at the time of settlement of his workers' compensation claim he had been informed of the preclusion period by his barrister. It was Mr Groom's evidence that his wife had taken $50,000.00 from his bank account by electronic transfer when it was stated she had these funds remaining from the sale of her Charmhaven property in New South Wales. Mr Groom also grossly exaggerated the value of the Hyundai motor vehicle retained by his wife, contending that it was worth $34,000.00 at the time of settlement when it had been purchased for $28,000.00 in 1998. The Statement of Agreed Valuations referred to the vehicle as being worth $7,500.00. Mr Groom had previously stated that his wife received 50% of his settlement monies which was utterly incorrect. There were occasions when he disputed many of his wife's statements about his extravagant expenditure, for instance, that he had purchased some nine guitars and sixteen saddles, claiming that he only ever had eight saddles. The documentary evidence confirms his wife's contentions in this regard. The Tribunal is also not convinced as to the claim of expenditure regarding Sussan Anderson where many of the entries in Mr Groom's notebook and cheque butts were made subsequent to the claimed expenditure. Mr Groom maintained in his evidence to the Tribunal that he had lent his sister $20,000.00. However after viewing a solicitor's letter he agreed that the amount was only $5,000.00.
61. The applicant contends that the preclusion period should be shortened in his case because of his desperate financial circumstances. There is essentially no other justification that he relies on or that can be gleaned from the evidence as outlined above, that could be considered as a special circumstance under section 1184K(1) of the Act.
62. In the Tribunal's view it would be contrary to the spirit and purpose of the legislation to acknowledge Mr Groom's circumstances as being sufficiently unusual, uncommon or exceptional to justify the exercise of a discretion and treat part of his compensation payment as not having been made. Mr Groom's circumstances are entirely of his own making and occurred despite him having received legal advice of the preclusion period and its consequences. The Tribunal cannot accept that it would be inequitable, unjust or otherwise unfair not to grant the application for there is not basis for such conclusion. To grant the application would result in Mr Groom being compensated from both the Social Security and the compensation systems for almost the same period of time. Mr Groom currently has cash of over $100,000.00, a car worth $15,000.00, chattels of unknown value but likely to be considerable and accommodation at a nominal rent. As concluded above, such circumstances could not be assessed as sufficiently special in order to waive the remaining preclusion period. There may be however, some time in the future, prior to the end of the preclusion period, when Mr Groom is able to satisfy the respondent that his circumstances are sufficiently special to justify a waiver of the balance of the preclusion period. In the meantime Mr Groom will need to be particularly cautious and conservative with the expenditure of his remaining monies.
63. For the above reasons the Tribunal affirms the decision under review.
I certify that the 63 preceding paragraphs are a true copy of the reasons for the decision herein of Ms A F Cunningham (Senior Member)
Signed: R Hunt (Administrative Assistant)
Date/s of Hearing 5/11/07, 6/11/07, 19/12/07, 20/12/07, 17/4/08
Date of Decision 24 April 2008
Counsel for the Applicant Mr B Bartl
Solicitor for the Applicant Hobart Community Legal Service
Counsel for the Respondent Mr B Morgan
Solicitor for the Respondent Mr D Wilson, Australian Government Solicitor
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