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

[2020] AATA 1918

Hamilton and Secretary, Department of Social Services (Social services second review) [2020] AATA 1918 (26 June 2020)

Division:GENERAL DIVISION

File Number:          2019/7584

Re:Aine Hamilton

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

DECISION

Tribunal:Senior Member D R Davies

Date:26 June 2020

Place:Brisbane

The Tribunal sets aside the decision under review and decides that the Applicant’s circumstances are “special” in the relevant sense and pursuant to section 1184K of the Social Security Act 1991 (Cth) so much of the Applicant’s compensation payment should be treated as not having been made so as to reduce the preclusion period applicable to her compensation payment so that it ended on 21 May 2020.

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

Senior Member D R Davies

Catchwords

SOCIAL SECURITY – claim made for new start allowance – lump sum compensation payment – whether applicant subject to lump sum compensation payment preclusion period – whether special circumstances under subsection 1184K(1) of the Social Security Act 1991 (Cth) – where Applicant subject of severe financial hardship and abusive domestic relationship – where special circumstances relate to totality of circumstances and not a specific element of the compensation payment – decision under review set aside – preclusion period reduced.

Legislation
Social Security Act 1991 (Cth)
Social Security (Administration) Act 1999 (Cth)

Cases
Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545
O’Riordan and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2009] AATA 208
Re Martin and Secretary, Department of Social Security [1990] AATA 768
Secretary, Department of Social Security v Hales (1998) 82 FCR 154
Secretary, Department of Social Security and Thompson [1993] AATA 641
Secretary, Department of Employment & Workplace Relations v Homewood [2006] FCA 779
Ward v Commissioner of Taxation [2016] FCAFC 132

Secondary Materials

Social Security Guide 2020

REASONS FOR DECISION

Senior Member D R Davies

26 June 2020

INTRODUCTION

Definitions

1. In this decision:

   Ms Hamilton means the Applicant, Aine Hamilton.

   Secretary means the Respondent, Secretary, Department of Social Services.

   AAT1 means the Administrative Appeals Tribunal Social Services and Child Support Division.

   The Act means the Social Security Act 1991 (Cth).

   The Administration Act means the Social Security (Administration) Act 1999 (Cth).

   The Guide means the Social Security Guide 2020.

   Department means the Department of Human Services.

   NSA means new start allowance.

2. Ms Hamilton seeks the review of the decision of AAT1 of 18 October 2019 which affirmed the decision of the Department on 5 December 2017 rejecting Ms Hamilton’s new start allowance claim because she had a compensation lump sum preclusion period from         2 March 2010 to 21 April 2025.

   BACKGROUND

3. On 24 May 2007, Ms Hamilton was injured in a motor vehicle accident and subsequently made a claim for workers compensation.[1]

   [1] Exhibit 1 Tribunal Documents T4, p28.

4. Ms Hamilton received periodic compensation payments from WorkCover Queensland during the period 25 June 2007 to 1 March 2010.[2]   Those records indicate that the total weekly benefits paid under the claim was $87,087.11.[3]

   [2] Exhibit 1 Tribunal Documents T4, p70-82.

   [3] Exhibit 1 Tribunal Documents T4, p82.

5. Ms Hamilton was paid NSA from 9 November 2010.

6. On 9 July 2012, Ms Hamilton settled her compensation claim for $1,400,000.00 exclusive of rehabilitation costs of $1,181.34 and costs.[4]

   [4] Exhibit 1 Tribunal Documents T4, p28-30.

7. WorkCover Queensland recovered $343,976.99 from the settlement sum comprising the total claimed costs to that date.[5] 

   [5] Exhibit 1 Tribunal Documents T4, p31.

8. Ms Hamilton informed Centrelink on 3 January 2018 that she received “$700,000.00 in hand”.[6]

   [6] Exhibit 1 Tribunal Documents T18, p173.

9. The Department determined that Ms Hamilton’s compensation settlement resulted in a preclusion period from 2 March 2010 to 21 April 2025.  The Department also calculated that there was a recoverable charge of $26,499.58 in respect of the NSA which had been paid to her and indicated that this would be recovered from the insurer in relation to her accident compensation claim.[7]

   [7] Exhibit 1 Tribunal Documents T17, p159.

10. On 28 August 2012 Centrelink sent a letter to Ms Hamilton advising her in relation to the preclusion period and the recoverable charge.[8]

    [8] Exhibit 1 Tribunal Documents T6, p115.

11. On the same date Centrelink sent a separate letter to Ms Hamilton advising her NSA had been cancelled with effect from 27 August 2012.[9]

    [9] Exhibit 1 Tribunal Documents T17, p118.

12. On 4 December 2017 Ms Hamilton re-applied for NSA.[10]

    [10] Exhibit 1 Tribunal Documents T8, pp120-124.

13. On 5 December 2017, the Department wrote to Ms Hamilton advising her that it had rejected her NSA claim because of the preclusion period.[11]

    [11] Exhibit 1 Tribunal Documents T9, p125.

14. On 8 December 2017 Ms Hamilton contacted the Department and sought review of the decision to reject her claim.[12]

    [12] Exhibit 1 Tribunal Documents T17, p173.

15. On 5 January 2018, an Authorised Review Officer (ARO) of the Department affirmed the decision to reject Ms Hamilton’s NSA claim because she was subject to a compensation preclusion period and notice of this was given to Ms Hamilton.[13]

    [13] Exhibit 1 Tribunal Documents T11, pp128-134.

16. On 12 August 2019 Ms Hamilton applied to AAT1 seeking review of the ARO’s decision.[14]

    [14] Exhibit 1 Tribunal Documents T13, p137.

17. On 18 October 2019 AAT1 affirmed the decision under review.[15]

    [15] Exhibit 1 Tribunal Documents T2, p6-10.

18. On 18 November 2019, Ms Hamilton sought a review of the decision of AAT1.[16]

    [16] Exhibit 1 Tribunal Documents T1, p1-5.

    LEGISLATIVE PROVISIONS

19. The relevant law is contained in the Act and the Administration Act.

20. Subsection 17(2) of the Act defines compensation to include a compensation or damages payment made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injuries.  It is not in issue that Ms Hamilton’s compensation payment is in respect of a work-related motor vehicle accident injury sustained in May 2007.

21. Subsection 17(1) of the Act defines a compensation affected payment to include NSA as it is a social security benefit.  Subsections 17(3) and (4) set out how the compensation part of a lump sum compensation payment is calculated.  Under these provisions, where a claim is settled by consent, the compensation part is 50% of the lump sum compensation less any periodic compensation payments received.

22. Section 1169 of the Act provides that if a person claims a compensation affected payment and receives a lump sum compensation payment, the compensation affected payment is not payable to the person in relation to the preclusion period.

23. Section 1170 of the Act contains the provisions for the calculation of the lump sum preclusion period.  It provides that the preclusion period commences on the day on which the loss of earnings or earning capacity began.  It then continues for the number of weeks worked out by dividing the compensation part of the lump sum by the “income cut-out amount” that applies when the compensation is received.

24. Under Section 36 of the Administration Act, the Secretary is required to determine a claim for NSA, either granting or rejecting the claim.

25. Section 1184K of the Act provides that the Secretary may treat the whole or part of a compensation payment as not having been made or not liable to be made if the Secretary thinks it is appropriate to do so in the special circumstances of the case.

26. Item 8 in the table to Section 147 of the Administration Act provides that if a person does not apply for the AAT first review within 13 weeks after the person was given notice of the decision under Social Security Law, then the date of effect of the AAT’s first review decision is the date the person applied for the AAT’s first review.

27. In the present case and as noted in AAT1’s decision, Ms Hamilton did not seek the AAT first review until some 18 months after the ARO’s decision, which was notified to her on 5 January 2018.  Accordingly, if the decision presently under review is set aside, then NSA could not be paid to Ms Hamilton for any period prior to 12 August 2019.

    ISSUES

28. The issues to be decided are whether:

    (a)Ms Hamilton is subject to a lump sum compensation payment preclusion period and if so, for what period; and

    (b)there are special circumstances which allow the preclusion period to be reduced.

    CONSIDERATION

29. The Tribunal’s Hearing was conducted by telephone in accordance with the provisions of the Tribunal’s COVID-19 Special Measures Practice Direction – Freedom of Information, General and Veterans’ Appeals Divisions.  Ms Hamilton appeared by telephone and the Secretary was represented by its Principal Government Lawyer, Mr McQuinlan by telephone.

30. The evidence before the Tribunal is contained in the Exhibits which are the Tribunal Documents[17] and the Secretary’s Statement of Facts and Contentions.[18]  Ms Hamilton also gave oral evidence to the Tribunal.

    [17] Exhibit 1 Tribunal Documents.

    [18] Exhibit 2 Respondent’s Statement of Facts and Contentions.

31. The Hearing was listed for 10.00 am on 27 May 2020.  After the Hearing had commenced and been underway for approximately 45 minutes and whilst being cross examined, Ms Hamilton then informed the Tribunal that she had to commence work in 45 minutes time and that she needed to begin to prepare for work in 4 minutes time.  Ms Hamilton said that she had only been informed at 10.00 pm the previous night that she was required to start work that morning at 11.30 am.  Accordingly, I adjourned the Hearing until 10.00 am on the following day, 28 May 2020, when Ms Hamilton said she did not need to have to start work until 1.00 pm. 

32. On 28 May 2020 approximately one hour after the adjourned Hearing had resumed, and when Ms Hamilton’s evidence and cross examination had just concluded, Ms Hamilton informed the Tribunal that she had had enough of the Hearing, and she was going to hang up the telephone as she did not wish to participate any further and she had to now get ready for work.  Despite my request that she remain on the telephone for about another 30 minutes so that the Hearing could be completed as all that remained to complete the Hearing was for the Secretary to make its submissions, Ms Hamilton terminated the telephone call.

33. In accordance with Subsection 40(1)(b) of the Administrative Appeals Tribunal Act 1975 (Cth), I decided to proceed to complete the Hearing in the absence of Ms Hamilton because:

    ·The Hearing had already been adjourned the previous day to suit Ms Hamilton’s convenience;

    ·Ms Hamilton had advised that she did not have to start work on 28 May 2020 until 1.00 pm which was in about another 2 hours’ time;

    ·Ms Hamilton had completed giving her evidence including cross-examination and no further evidence was to be called; and

    ·The only matter remaining to complete the Hearing was for the Secretary to make its oral submissions.

    Lump Sum Preclusion Period

34. Apart from the legislative provisions to which I have referred, the Guide at Item 4.13.4.10 states:

    “The compensation recovery provisions of social security law are designed to ensure that people who receive compensation for loss of income do not also receive income support from the Australian Government in respect of the same period of time.

    Note:The special circumstances provisions should not be used to override this basic legislative intention”.

35. In the present case, Ms Hamilton’s gross lump sum compensation payment was $1,401,181.34[19] which is a lump sum payment as defined in Subsection 17(2) of the Act.  Subsection 17(4) of the Act provides that periodic WorkCover compensation payments of $87,087.11 are to be deducted from that amount.

    [19] Exhibit 1 Tribunal Documents T4, p28.

36. In accordance with Subsection 17(3) of the Act, the compensation part of Ms Hamilton’s lump sum compensation is 50% of $1,314,094.23 being $657,047.11.  The relevant income cut-out amount as at the date of settlement (9 July 2012[20]) was $831.50.[21]  In accordance with the formula in Subsection 1170(4) of the Act, the preclusion period is:

    $657,047.11/$831.50 = 790 weeks (rounded down[22]).

    [20] Exhibit 1 Tribunal Documents T4, p 30.

    [21] Exhibit 1 Tribunal Documents T17, p160.

    [22] The Act, subsection 1170(5).

37. Accordingly, I find that the applicable lump sum preclusion period is 790 weeks and that the period is from 2 March 2010 to 21 April 2025 unless special circumstances apply to reduce that period.  In accordance with Subsection 1169(1) of the Act, NSA is therefore not payable to Ms Hamilton during that period subject to any reduction of that period for special circumstances.

    Special Circumstances

38. I have previously referred to the provisions of Subsection 1184K(1) of the Act which provides that the Secretary may treat the whole or part of a compensation payment as not having been made or not liable to be made if it thinks it is appropriate to do so in the special circumstances of the case. 

39. The meaning of “special circumstances” for the purposes of the Act and other social security legislation has been considered in many cases. In Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545, Kiefel J (as she then was) observed that these were circumstances that distinguish an Applicant’s case from others and take it “out of the usual or ordinary case” and when on to say “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”.

40. In Secretary, Department of Social Security v Hales (1998) 82 FCR 154, French J stated:

    “The concept of special circumstances is broad.  A constellation of factors, including financial circumstances, may fall within it.  The express exclusion of financial hardship alone as a special circumstance is an indicator that it would otherwise be included.  This gives some measure of the range of circumstances which will qualify as special ….”.

41. In that case, the Court was considering the waiver of a debt and the effect of Section 101 of the Administration Act which specifically provides that there has to be special circumstances other than financial hardship.  There is no such qualification applicable under Section 1184K of the Act.

42. In Ward v Commissioner of Taxation [2016] FCAFC 132, the Full Court of the Federal Court said (paragraphs 39 and 40):

    “39 As to ‘special circumstances’ the question is what, if anything, takes this case out of the usual or ordinary case.  As Kiefel J said in Groth v Secretary, Department of Social Security……if a Tribunal were to conclude that something unfair, unintended or unjust had occurred, there must be some feature out the ordinary.

    40 In our opinion the Tribunal erred at [49] and following in proceeding on the basis that because the imposition of the tax was the natural and foreseeable consequence of the decisions of Mr Ward and his advisors, it was necessarily outside the scope of ‘special circumstances’.  This misconception also pervades the following paragraph, [50], leading the Tribunal to interpret what Kiefel J had said in Groth as meaning there could not be ‘special circumstances’ unless something unintended had occurred….”.

    This suggests that the scope of “special circumstances” is somewhat broader and that “unintended” is not necessarily an element.

43. In Secretary, Department of Employment & Workplace Relations v Homewood [2006] FCA 779, French J said (at paragraph 34) that in the determination of ‘special circumstances’ in relation to Section 1184K of the Act, the Tribunal would:

    “1. Identify the circumstances of the case which it found to be ‘special’ and the reasons for which it arrived at the finding.

    2. Explain why, in the special circumstances so found, it thought it appropriate to treat the whole or part of the compensation payment as not having been made.

    3. Explain why it selected the particular quantum (ie the whole or part) of the compensation payment as not having been made”.

44. In the present case, Ms Hamilton gave evidence that when she lodged her NSA claim on 4 December 2017, she indicated in her claim form[23] that she had savings of $140.00, owned a Kia motor vehicle worth $25,000.00 and was living with her mother.

    [23] Exhibit 1 Tribunal Documents T8, pp120-124.

45. At the Hearing, Ms Hamilton acknowledged that the summary of her evidence relating to the expenditure of her settlement funds set out in paragraph 7 of AAT1’s decision[24] was correct apart from a couple of matters to which I will refer.  It is convenient to repeat here what is set out in that paragraph:

    ·“After her accident Miss Hamilton commenced working again in the latter part of 2012.  Miss Hamilton had permanent part-time employment paying around $37,000 gross per year. 

    ·By February 2014 Miss Hamilton had a house purchased for $550,000, a mortgage of $100,000 and savings of $120,000.  Miss Hamilton also undertook renovations totalling around $120,000 and had previously given money to her three sisters as well as $90,000 to her parents to settle their mortgage.

    ·Miss Hamilton’s ex-partner Michael Fonty, commenced residing with her in February 2014.  Miss Hamilton noticed her savings were disappearing and when she ended up confronting Mr Fonty in the latter half of 2015 he admitted to accessing and gambling her savings.

    ·Miss Hamilton terminated the relationship but was obliged to sell her home.  She received $470,000 clear of her mortgage.

    ·However, Miss Hamilton lost her employment just before the sale due to ongoing disability caused by multiple fractures to both legs.

    ·Miss Hamilton reconciled with Mr Fonty just after Christmas 2015.  Mr Fonty became manipulative and threatened to beat her if she did not provide access to her funds.  Mr Fonty “took it all” and by early 2016 left Miss Hamilton “with nothing”.

    ·Miss Hamilton was obliged to move back with her mother and has basically been supported by both parents since then.  Miss Hamilton has three outstanding personal loans totalling $29,000.  Her parents have assisted with repayments although Miss Hamilton has a reduced repayment arrangement due to financial hardship.

    ·Miss Hamilton commenced full-time work 2 weeks before the Hearing and has a wage of $72,000 per annum.  However, Miss Hamilton is not certain if she will be able to keep this position as she will need further surgery in the near future.”.[25]

    [24] Exhibit 1 Tribunal Documents T2, p9.

    [25] Exhibit 1 Tribunal Documents T2, page 9.

46. In relation to those matters, Ms Hamilton said that she no longer has the job which is referred to in the last item.  She said that she had that job for about 2 months before she was terminated.  She said she is now working as a casual for People of Peony an organisation which provides assistance to disabled people and is earning $600.00 per fortnight.  She said that she has had that job for the past three months.

47. Ms Hamilton also said that her parents are not assisting her with the repayment of her personal loans.  She said that her parents have since separated and she now lives with her mother who expects her to pay $150.00 per week in rent, which she does.  She said that from the settlement amount which she received, she gave $100,000.00 to her parents to settle the mortgage on their house which is the house in which she currently lives with her mother.  She also said that she gave money from the settlement amount to each of her three sisters, although she was vague and uncertain as to whether it was $45,000.00 or $75,000.00 in total which she gave to them.

48. In relation to her personal loans, she said that there is a loan of $15,000.00 owing to Heritage Bank and $4,000.00 owing to Latitude Financial.  She said that there was a loan of $10,000.00 owing to Rapid Loans which she had repaid a couple of weeks ago with $10,000.00 from the redemption of that amount from her superannuation fund pursuant to the Government’s recent arrangements in response to Covid-19.  She also said that she has about $14,000.00 remaining in her superannuation fund.

1. Ms Hamilton said that when she sold her house in December 2015, she received $470,000.00 after repayment of the mortgage.  After she sold her house she lived with her mother.  She said that her relationship with her ex-partner Mr Fonty had been an “on and off relationship”.  She said that they reconciled and resumed the relationship around Christmas 2015 and it continued for some months into early 2016.  Ms Hamilton was not able to be specific about when their relationship finally ended but said that it was some months after Christmas 2015.  Ms Hamilton became somewhat upset when discussing this matter and was vague about aspects of it saying that she had “shut these things from her mind”.  Ms Hamilton said that when smihe resumed her relationship with Mr Fonty in December 2015 she continued to live with her mother and he was living at his own house.  She said that over the ensuing months Mr Fonty took all of the money which she had received from the sale of her house which was $470,000.00.  She said that he would regularly take her ATM card and take money and took money from her Heritage Bank account.  She said that she became aware that he was taking her money “pretty much straight away”.  She said that when she asked him about this he kept telling her he would put the money back but he didn’t.  She said she was in a relationship with him at that time and “I thought it would be okay”.  She said that he threatened to beat her if she did not give him her ATM card.  She also said that subsequently, she did not take any action against Mr Fonty in relation to the money which he took from her and did not go to the police about it because she was frightened as to what Mr Fonty would do to her.

2. The only bank statements for Ms Hamilton’s Heritage Bank account which are in evidence are those in Exhibit 1 Tribunal Documents T16, pages 149-154.  Those statements show transactions for the period 19 July 2012 to 31 July 2017.  For the period 25 June 2015 to 29 June 2016, which covers the period when Ms Hamilton said that Mr Fonty took the money from her account, the statements show withdrawals totalling $15,470.00.  Ms Hamilton says that those statements only show transfers of money from her account and do not show the cash withdrawals made by Mr Fonty using her ATM card.  She said that because the account has been closed, it would cost her to obtain bank statements for the account.  At first, she said that the statements would cost 10c per page. She then it said it might be $1.00 per page and that it would cost her hundreds of dollars as there were hundreds of pages.  She said that the bank has told her that there are hundreds of pages of statements.  She said that she doesn’t have the money to get these statements.  At the Hearing I asked her whether if she was given some additional time, say another 7 days, whether she could obtain the bank statements.  She replied “no I cannot afford it.  I am suicidal over my loans and I cannot afford to pay this”.

3. Despite this evidence of Ms Hamilton, I have some reservations in accepting that there would be hundreds of pages of bank statements which would cost hundreds of dollars for transactions for a period of about 6 months on an individual’s bank account. 

4. It should also be noted that the bank statements which are in evidence show transfers from her account totalling $3,301.00 for the period 29 June 2016 to 31 July 2017 which is after Ms Hamilton finally terminated her relationship with Mr Fonty.

5. Ms Hamilton said that her NSA claim[26] sets out the assets which she had at that time.  Those assets were:

   ·ANZ Bank savings account - $140.00

   ·Household and personal effects - $2000.00

   ·Kia motor vehicle - $25,000.00

   Ms Hamilton said that her ANZ bank account currently has a balance of 3c and she still has the Kia motor vehicle which she uses in relation to her work as well as for personal use.

   [26] Exhibit 1 Tribunal Documents T8, pp120-124.

6. Ms Hamilton said that there is currently about $20,000.00 still owing to Heritage Bank and Latitude Financial in relation to her personal loans.  She said that the repayments to Heritage are $300.00 per fortnight and $100.00 per fortnight to Latitude.  She said she is behind on these loans and last made a payment to Latitude a couple of weeks ago.  She said that she cannot remember when she last made a repayment to Heritage.  She said that apart from the $300.00 per fortnight rent which she pays to her mother, she has telephone bills of $100.00 per month, pharmaceutical expenses (insulin) of $40.00 per month, personal car expenses of $40.00 per week and other living expenses of $150.00 per fortnight.  At the start of the Hearing, Ms Hamilton said that her situation is that she has no money left from the settlement sum and needs help.  She said she is 40% disabled and can only get casual work.

7. The Guide at Item 4.13.4.20 provides information on the factors to be considered when determining special circumstances.  Relevantly, it says one of those factors is ill-health in respect of which one should look for ill health that has a major bearing on the individual’s circumstances.  In relation to this, the general principles referred to in the Guide are:

   ·“State of ill health should be more severe than the majority of DSP recipients

   ·Injury that a person received compensation for cannot generally be regarded as a special circumstance”.

8. Another relevant factor referred to in Item 4.13.4.20 of the Guide is Financial Circumstances, in respect of which some of the things to be considered are:

   ·“Is the person likely to face financial hardship in the near future?

   …

   ·Has the person been financially deprived because of financial abuse and other forms of family and domestic violence?”

9. In relation to these, the Guide says that the general principles to be considered relevantly are:

   ·“Financial circumstances need to be severe and worse than the majority of social security recipients

   …

   ·Generally, where people chose to wantonly/irresponsibly spend all of their compensation proceeds and do not set aside sufficient funds to meet their living costs during the preclusion period, decision makers should NOT find special circumstances unless there are truly compelling reasons to do so.

   ·Where a person has been the subject of family and domestic violence and the financial abuse resulting in financial deprivation/hardship, special circumstances may be granted”.

10. Another factor referred to in Item 4.13.4.20 of the Guide is where there has been expenditure of compensation funds due to fraud by another person.

11. The factors relevant to determining whether there are special circumstances in relation to financial circumstances have been considered in a number of cases.  To qualify as “special circumstances” financial hardship must go beyond “straitened” circumstances and be truly exceptional.[27]

    [27] See Re Krzywak and Secretary, Department of Social Security (1988) 15ALD 690 and Re Zaccardi and Secretary, Department of Social Security (1995) 40 ALD 760.

12. In ReMartin and Secretary, Department of Social Security [1990] AATA 768, the Tribunal said (at paragraph 10):

    “In considering the question of the financial hardship it is relevant to consider the reasonableness of the Applicant’s action in disposing of his compensation monies….

    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”.

13. In Secretary, Department of Social Security and Thompson [1993] AATA 641, the Respondent had spent a large proportion of a $575,000.00 lump sum on friends, alcohol, cars, gambling and drugs and also lost more through poorly handled investments. The Tribunal reduced the preclusion period having regard to the investment losses, “money lost due to psychological imbalance and social and intellectual disadvantage at the date of the receipt of the lump sum payment” (at paragraph 10) and “the respondent’s background, psychological state and poor management skills” (at paragraph 12).  The preclusion period was not reduced to zero as the Respondent still had substantial assets namely a house which could be rented or sold.

14. An Appeal to the Federal Court in that case[28] was dismissed.  The Department did not seek to overturn the exercise of discretion finding special circumstances and the Appeal was argued on the manner in which the reduction in the preclusion period had been calculated by the Tribunal.  The Court commented (at page 586):

    “The width of the discretion under the section clearly extends to all the circumstances of the case, including circumstances not specifically related to a particular portion of the compensation payment.  It is not therefore outside the section for the Tribunal to consider the general factors such as the mental health and social conditioning of the individual including that the preclusion period should be shortened”.

    [28] Secretary, Department of Social Security and Thompson (1994) 53 FCR 580.

15. In Thompson’s case[29] the Court further stated (at page 586):

    “In some cases, the special circumstances identified by the Tribunal will direct attention to a specific part of the compensation payment that ought to be treated as not having been made…

    But where a special circumstance relates not to a specific element of the compensation award, but to the general circumstances of the recipient, the decision maker (in this case the Tribunal) would rather direct its mind to the effect on the recipient of any reduction in the preclusion period.  It may be that after such consideration the Tribunal decides on some time by which the period should be reduced.  If so, and having determined on a time, accepting the Department’s argument would mean that the Tribunal must then go through the mechanical process of justifying the reduction by working back to or from a decrease in the compensation sum.  According to this argument, the Tribunal must at least include in any reasons for Judgment a formula to the effect that, for example “the compensation payment may be reduced by such amount as will have the effect of reducing the preclusion period by” whatever time has been decided. 

    To invalidate a decision of the Tribunal for failure to engage in this process would in my opinion take legalism and bureaucratic pedantry too far.  Especially in a socially beneficial legislative framework where intuitive justice will often be as fair a criterion and as faithful to the legislative intention as any other approach.  In this case there was no suggestion that the Tribunal was guided by improper considerations, or arrived at other than a fair and proper result.  The only criticism is that in failing to address the formula to arrive a deemed reduction in the compensation payment, the Tribunal erred in law.  That proposition I entirely reject……A Tribunal that decides it is appropriate in light of accepted and acceptable “special circumstances” to reduce the length of the preclusion period, may express that opinion in terms of the length by which the period should be reduced, without specifying the corresponding reduction in the compensation sum”.

    [29] (1994) 53 FCR 580.

16. In O’Riordan and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2009] AATA 208, the Applicant was the subject of fraudulent withdrawals from her bank account by her housemate. The Tribunal reduced the compensation lump sum by this amount finding that “those circumstances are special to the extent that they were unintended and certainly unjust” (at para 40).

17. In the present case, Ms Hamilton received a large compensation settlement of which on her evidence she received $700,000.00 in the hand.  Of this she gave $100,000.00 to her parents and either $45,000.00 or $75,000.00 to her three sisters in appreciation of the support which the family had given to her.  I do not consider that it was extravagant or unreasonable for her to have done so.  On her evidence, she then invested $550,000.00 in a house and spent $120,000.00 in renovations on the house taking the mortgage of $100,00.00 to pay for the house.  Again, I do not consider that to have been extravagant nor unreasonable.

18. Ms Hamilton’s evidence is that she was in abusive relationship with Mr Fonty and in the latter half of 2015 he admitted to accessing and gambling her savings, some of which he had taken.

19. Ms Hamilton then terminated the relationship but had to sell her home which she did in December 2015.  She received a net $470,000.00 from the sale of the house.  A short while later she resumed the relationship with Mr Fonty and he began to use her ATM card to take money from her bank account which he used for his own purposes.  Ms Hamilton says she was aware he was doing this but believed him when he said he would pay the money back to her which he never did.  Ms Hamilton says that Mr Fonty was very manipulative and threatened to beat her if she did not give him her ATM card to access the money in her bank account.  The relationship with Mr Fonty continued for some months until early 2016 before she finally terminated it by which time she says he had taken all the money which she had following the sale of her house which represented all that remained of the settlement sum she had received.  She says that she has not taken any action against Mr Fonty to recover the money he took nor has she reported it to the police because she was afraid of what he might do to her.  Whilst it might be that she could have taken steps to change bank accounts, reported the matter to the Police or sought assistance from domestic violence support organisations, I do not consider that in the circumstances it was unreasonable for her to have failed to do so.

20. I do have some reservations about Ms Hamilton’s failure to provide copies of bank statements which evidence the cash withdrawals made by Mr Fonty in the period between Christmas 2015 and early 2016.   I note that at the AAT1 Hearing Ms Hamilton agreed to supply bank statements covering the period and to attach an explanation of the relevant transactions[30].  I also note from the AAT1 decision[31] that Ms Hamilton only supplied partial transactions from the Heritage Bank for an account that was closed in August 2017.  The bank statements for those transactions are in evidence as Exhibit 1 Tribunal Documents T16.  As I previously mentioned, those statements only show transfers from the account during the period 25 June 2015 to 29 June 2016 totalling $15,470.00.   I also note that on 21 May 2020 at 210 pm, Ms Hamilton sent an email to the Tribunal as follows:

    “I would like to ask if I can send my bank statements through, if I could request that the member let me know what dates they needed”.

    [30] Exhibit 1 Tribunal Documents T2, p9, paragraph 19.

    [31] Exhibit 1 Tribunal Documents T2, p9, paragraph 20.

21. At approximately 9.10 am on 22 May 2020, the Tribunal sent an email to Ms Hamilton and the Respondent as follows:

    “…The Senior Member constituted to this matter has instructed you may send to the Tribunal and the Respondent any additional bank statements which you consider to be relevant provided they are received by 5.00 pm today 22 May 2020. 

    The Tribunal cannot provide advice as to dates of statements or any other matter.  You need to provide any documents which you consider to be relevant to both the Tribunal and the Respondent….”

22. Ms Hamilton did not provide any further bank statements and as previously mentioned, at the Hearing she said she could not do so even if given further time because it would cost hundreds of dollars which she could not afford.

23. Whilst it would be preferable for there to be some corroborating evidence as to the money taken from Ms Hamilton’s bank account by Mr Fonty and her present financial circumstances, to support the claim for special circumstances, it is the case that the only evidence available to the Tribunal is that of Ms Hamilton.  Whilst Ms Hamilton was at times emotional and vague in some of her evidence, I am satisfied that on balance her evidence should be accepted.  There is no reason not to accept her evidence that the money has gone.

24. Ms Hamilton has given evidence as to the financial hardship of her present circumstances.  She says that as a consequence of her injuries she has only been able to obtain casual work.  She has been working as a casual with her current employer for some 3 months and is earning $600.00 per fortnight.  She has given evidence that this is consumed in rent, phone expenses, car expenses and other living expenses.  While she is paying rent to her mother, who benefited from the money which she gave to her parents from her compensation settlement, if she wasn’t living with her mother she would still have rent expenses somewhere else.  Ms Hamilton also has personal loans currently totalling $19,000.00 which are in arrears.  She recently took advantage of the Government’s early superannuation redemption arrangements to redeem $10,000.00 to pay off another personal loan.

25. I am satisfied that Ms Hamilton is experiencing severe financial hardship and that this situation is not likely to alter in the near future.

26. I am also satisfied that Ms Hamilton has been the subject of an abusive domestic relationship with Mr Fonty and that this together with his financial abuse in taking a large sum of money from her has resulted in her financial deprivation and hardship.

27. Having regard to all of these matters and the totality of Ms Hamilton’s circumstances to which I have referred, I am satisfied that these circumstances are unusual and out of the ordinary and that something unfair, unintended and unjust has occurred which has adversely impacted on the compensation payment which she received in respect of her injuries to the extent that none of that compensation amount remains.

28. Accordingly, I find that in this case there are special circumstances in accordance with subsection 1184K(1) of the Act.

29. It therefore is necessary to consider whether it is appropriate to treat the whole or part of Ms Hamilton’s compensation payment as not having been made and what the resulting preclusion period, if any, should be.

30. I am mindful of the three step process which French J set out in Homewoods case[32] to which I have previously referred.  However, I consider that the circumstances of the present case are more appropriate to the approach taken by the Court in Secretary of the Department of Social Security and Thompson[33].

    [32] [2006] FCA 779.

    [33] (1994) 53 FCR 580.

31. In the present case the special circumstances relate to the totality of Ms Hamilton’s circumstances including her financial hardship, her injuries, her financial deprivation following domestic violence and financial abuse and that these special circumstances relate not to a specific element of the compensation payment, but to the totality of Ms Hamilton’s circumstances.  Accordingly, it is appropriate to consider the effect on the recipient of any reduction in the preclusion period.  Whilst Ms Hamilton currently has some casual employment, her evidence is that she has not been able to obtain continuous employment, at least in the period leading up to and since she made her NSA claim in December 2017.  She is also experiencing severe financial hardship which as I have found is likely to continue into the near future. 

32. In all of these circumstances, I consider that it is appropriate that the preclusion period applicable to Ms Hamilton’s compensation payment should be reduced so that she would be eligible for any applicable social security benefit to which she might be entitled, at the present time.

33. For these reasons, I am satisfied that pursuant to subsection 1184K(1) of the Act, so much of Ms Hamilton’s compensation payment should be treated as not having been made so that the preclusion period applicable to Ms Hamilton’s compensation payment should be reduced so that it ended on 21 May 2020. 

    CONCLUSION

1. The application for review is successful.  The decision under review is set aside.  Ms Hamilton’s circumstances are “special” in the relevant sense and pursuant to section 1184K of the Act so much of her compensation payment should be treated as not having been made so as to reduce the preclusion period applicable to her compensation payment so that it ended on 21 May 2020.

I certify that the preceding 82 (eighty-two) paragraphs are a true copy of the reasons for the decision herein of    Senior Member D R Davies

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

Associate

Dated: 26 June 2020

Dates of Hearing:	27 May 2020, 28 May 2020
Applicant:	By telephone
Solicitors for the Respondent:	Services Australia, by telephone