Holmes and Secretary, Department of Family and Community Services

[2005] AATA 812

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 812

ADMINISTRATIVE APPEALS TRIBUNAL        Nº V2004/1246

GENERAL ADMINISTRATIVE  DIVISION

Re:         PAUL HOLMES

Applicant

And:       SECRETARY,
  DEPARTMENT OF FAMILY AND

COMMUNITY SERVICES

Respondent

DECISION

Tribunal:       Regina Perton, Member

Date:             24 August 2005

Place:            Melbourne

Decision:The Tribunal affirms the decision under review. 

(sgd) Regina Perton

Member

SOCIAL SECURITY ‑ lump sum compensation ‑ preclusion period – blind pension not means tested - whether special circumstances exist

Social Security Act 1991 ss 17(1), (2), (3), 1170(1), (4), (5), 1184K

Re Parezanovic and Secretary, Department of Social Security (AAT 8761, 4 June 1993)

Re Morgan and Secretary, Department of Family and Community Services (1999) 56 ALD 579

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

REASONS FOR DECISION

24 August 2005  Ms R. Perton, Member

1.      Paul Holmes (the applicant) is a visually impaired person who qualifies for a disability support pension (DSP) on the basis of his impairment.   As the result of a large compensation settlement received in 2001, he is subject to a preclusion period during which time he is not entitled to DSP, notwithstanding that there is no income or assets test for recipients of DSP granted on the basis of permanent blindness.  On 6 October 2004, the Social Security Appeals Tribunal (SSAT) affirmed a decision of a delegate of the Secretary to the Department of Family and Community Services (the respondent) to reject the applicant’s claim for DSP lodged on 16 June 2004.  The SSAT decided that the applicant was ineligible for DSP for a period of 1155 weeks from 31 October 1997 until 19 December 2019.

2.      At the hearing on 9 March 2005, the applicant represented himself.  Ms Elizabeth King, a Centrelink advocate, represented the respondent. 

3. The Tribunal received into evidence the documents lodged under s 37 of the Administrative Appeals Tribunal Act 1975 (T1-T21) as well as additional documents provided by the applicant at hearing.

BACKGROUND

4.      The applicant, who was born on 21 December 1962 and is now aged 42, received DSP between 19 February 1998 and 27 March 2001.  On 16 March 2001, he settled a compensation claim, lodged in the Victorian Supreme Court against two health care networks, for $1.3 million.  Following the settlement, the respondent cancelled DSP, recovered $25,373.15 in DSP payments and set a preclusion period from 16 November 1997 until 4 January 2020.  The applicant challenged the respondent’s calculations. The SSAT, on review, decided that the preclusion period should be from 31 October 1997 until 19 December 2019. 

5.      On 10 June 2004, the applicant reapplied for DSP.  The respondent rejected the claim on the basis that the applicant was subject to a preclusion period until 14 December 2019.   On 23 August 2004, an authorised review officer (ARO) affirmed the decision as did the SSAT on 6 October 2004.  On 3 November 2005, the applicant lodged an application with the Tribunal for review of the SSAT decision.

6.      The issues before the Tribunal are whether the applicant is subject to a preclusion period until 19 December 2019 and whether there are grounds to waive part or all of that preclusion period due to special circumstances.

EVIDENCE

7.      At the hearing, the applicant told the Tribunal that he was in receipt of DSP while taking legal action against two hospital networks on the ground of misdiagnosis and inappropriate treatment when he sought urgent medical attention.  He said that the respondent’s actions in cancelling his DSP and precluding him from a benefit for more than 20 years did not take account of all the additional expenses and assistance that he needed as a result of his impairment.   The applicant indicated his awareness of the legislative provisions but pointed out that the “blind pension” is paid to others with his level of impairment without application of the income or assets test.  He submitted that his preclusion period should be shortened due to special circumstances. 

8.      The applicant described the changes in his personal life that had arisen since the settlement, which included the breakdown of his marriage and a resultant payout to his former wife.  He stated that he had not anticipated this occurrence when he agreed to the settlement figure.  He also described the additional expenses he incurred in having  to pick up and return his young daughter when she comes to stay with him, as he is unable to drive and it takes a trip of some two hours and several modes of public transport, despite the fact that  he and his ex-wife live in Melbourne.  He pointed out that his impairment resulted in home maintenance, travel and other costs being higher than they would be for a sighted person.  

9.      The applicant described the innovative research and treatment program he is participating in which will allow him to become more independent through the use of technology.  He said that he is the first Australian participant in the program which is being conducted in the United States of America (USA) and Portugal. The applicant described the technique, which involves the implanting of electrodes in the visual cortex, a miniature camera in the lens of a pair of glasses and a small computer which processes the transmitted information it receives.  The applicant said that through use of contrasts, the system allows him to navigate more readily around his home and local area thereby eliminating his reliance on a cane.  He described the advances in the technique whereby the camera and computer  had become smaller over time.  The applicant indicated that he has had to travel to Portugal and the USA, as there is no similar program being conducted in Australia.  He said that he had been unsuccessful in gaining any financial assistance towards the cost of the treatment from the Government, hospitals or Medicare.  The applicant said that he had been told by medical specialists in Australia that there was no treatment available in this country to improve his vision.  He said that he had become aware of the treatment program after his sister found out about it through the internet.  The applicant said that he had sought professional medical and legal advice before embarking on the program and while he had been told that it was a novel program that is yet to be proven, the specialists and Vision Australia were interested in the outcome.   The applicant said that 14 people had undergone the program so far, with a 98% success rate.  

10.     The applicant indicated that the cost of the procedure and equipment is high, as it involves overseas travel to Portugal and the US on a number of occasions and the personalising of the equipment.  He estimated that the medical procedures, specialist fees, air fares and accommodation for himself and his partner, specialists, technical development and equipment costs would eventually be around $180,000.  However, he said that it would be worthwhile if it increases his independence.  The applicant stated that he had considered but dismissed the idea of a guide dog due to the cost, training, maintenance and other issues and felt the program was a better and more practical option for him.    The applicant described the voluntary work he and his partner, Hazel Hockney, who is also visually impaired, undertake, which includes talking to primary school children about the impact of blindness and the aids they use.  The applicant indicated that he and his partner, as president and secretary of a voluntary committee, are organising a national tournament for visually impaired ten pin bowlers which includes arranging for sighted volunteers to assist with driving etc. 

11.     In response to Ms King’s questioning, the applicant indicated that the combined annual income he and his partner generate is around $50,000.  The applicant has no mortgage on his home.  Their income comes from primarily from Ms Hockney’s pension, superannuation payments from the applicant’s former employer and income from his investment of part of the settlement moneys. 

12.     Ms Hockney corroborated and expanded on the evidence provided by the applicant.

CONSIDERATION OF THE ISSUES

13. Section 17(1)(a) of the Act provides that compensation affected payment includes disability support pension.  Section 17(2) of the Act provides:

17.(2)     Subject to subsection (2B), for the purposes of this Act, compensation means:

(a)a payment of damages; or

(b)a payment under a scheme of insurance or compensation under a Commonwealth, State or Territory law, including a payment under a contract entered into under such a scheme; or

(c)a payment (with or without admission of liability) in settlement of a claim for damages or a claim under such an insurance scheme; or

(d)any other compensation or damages payment;

(whether the payment is in the form of a lump sum or in the form of a series of periodic payments and whether it is made within or outside Australia) that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury.

14.     Under s 17(3) of the Act, 50 per cent of a lump sum settlement payment is held to be the compensation part of the payment.  Section 1170 of the Act sets out the method of calculating a compensation preclusion period, which commences on the day following the last day of periodic payments (s 1170(1)(a)).  Section 1170(1)(b) provides that the length of the preclusion period is calculated by dividing the compensation part of the lump sum payment by the income cut-out amount (s 1170(4) and (5)).  Income cut-out amount is defined in s17(1)(t), according to a formula set out in s17(8).  The Tribunal finds that the compensation received by the applicant falls within the definition of compensation in s 17(2) of the Act.  Under s 17(3) of the Act, 50 per cent of the lump sum settlement is the compensation part of the payment.  The Tribunal is satisfied that the SSAT correctly calculated the preclusion period, namely from 31 October 1997 until 19 December 2019. The Tribunal notes that the applicant did not challenge that calculation.

15.     Section 1184K(1) of the Act gives the decision‑maker discretion to treat the whole or part of a compensation payment as not having been made or not liable to be made, if the decision‑maker thinks it is appropriate to do so in the special circumstances of the case.  For the Tribunal to use its discretion to determine that the applicant’s situation constitutes special circumstances, it must be satisfied that there is something to make the case stand out from the usual or the ordinary.  In Ryde v Secretary, Department of Family and Community Services [2005] FCA 866, Branson J held that the use of the term special circumstances in the legislation demonstrated an intention to proscribe waiver in ordinary cases.  She was considering s1237AAD, which involves consideration of special circumstances in relation to waiver of a debt to the Commonwealth but her comments appear pertinent to other provisions in the Act where there is discretion to take special circumstances into account, such as s1184K.   Branson J went on to state that the hardship or unfairness should be sufficient to justify departure from the general rule in the particular case.

16.     Preclusion periods are prescribed for recipients of compensation who would otherwise qualify for DSP and other benefits.  The respondent submits that the intent of the legislation is to ensure that compensation settlements are used for the purpose they are paid, namely the replacement of income and, therefore, to allow the applicant access to DSP payments sooner than others who have received compensation would give him an advantage over others.  The respondent also submits that the applicant is not in financial hardship given he has a significant investment portfolio and expects to receive payments from his former employer until retirement age. The applicant submits that the assets and income test is not applicable to DSP for persons who are blind and therefore, he should not be subject to a preclusion period.  He also pointed to the expenses associated with the treatment he was seeking, as well as the additional day to day expenses of a blind person.

17.     In Re Morgan and Secretary, Department of Family and Community Services (1999) 56 ALD 579, the Tribunal considered whether a blind person receiving weekly compensation payments which barred him from receipt of DSP should be exempted on the grounds of special circumstances. The Tribunal commented:

38. It can be argued that the inclusion of the Blind Pension as a form of disability support pension in the definition of "compensation affected payment" in s 17(1)(a) is inconsistent with the special treatment of the Blind Pension in exempting it from the income test, and is thus an anomaly. In the applicant’s case, this anomaly means that his entitlement to the Blind Pension will be reduced on a dollar for dollar basis as a result of the application of s 1168(3A).

39.      Nevertheless, faced with the clear language of the Act....if this is an anomaly then, in the Tribunal's view, it is one which should be addressed by legislative amendment. Such an anomaly could potentially affect many thousands of people given the significant number of visually impaired persons in Australia. Ms Koller quoted Royal Blind Society figures of about 90,900 persons in Australia between the ages of 15 and 64 having a visual impairment. While most of those will not have become impaired in similar circumstances to those of the Applicant, nevertheless, it is appropriate, given the number of people who may be affected and the consequences for the public purse, that this is a matter which should be addressed by Parliament. In the circumstances, the Tribunal does not consider it appropriate that any such anomaly is, of itself, sufficient to establish "special circumstances" and warrant the exercise of the s 1184(1) discretion.

18.     This Tribunal concurs that it is odd that a social security benefit that is paid to others with the same disability as the applicant, regardless of income or assets, should not be paid to the applicant for a period in excess of twenty years because of the timing and size of his compensation payout.  However, the relevant Departments have been aware of the apparent anomaly for more than a decade, as evidenced in Re Morgan and an earlier matter of Re Parezanovic and Secretary, Department of Social Security (AAT 8761, 4 June 1993) where the Tribunal considered matters which arise in this case.  

19.     The Tribunal accepts that the applicant has additional expenses as a result of being blind. The Tribunal notes that the applicant has wisely invested some of his compensation in a way that will allow him to have ongoing income.  It is satisfied that he is not in financial hardship at the present time, although it notes his concern about the future. 

20.     The Tribunal commends the applicant’s willingness to participate in an innovative program which he anticipates will increase his mobility and independence and notes that he is unable to access financial assistance to help ameliorate the high cost of the program.   It concurs that through his participation in the research and treatment program, the applicant will not only be helping himself, but if it works well, will lead the way for others.   However, the Tribunal does not consider that the applicant’s decision to participate in the program should be considered as constituting special circumstances.

21.     After considering all relevant matters and viewing the applicant’s case in its entirety, the Tribunal finds that the applicant’s circumstances are not special circumstances.  Therefore, it is not appropriate for the Tribunal to exercise the discretion under s 1184K(1) of the Act, to disregard the compensation received in whole or in part.  As a result, the Tribunal finds that the preclusion period as calculated applies.

DECISION

22.     The Tribunal affirms the decision under review.

I certify that the twenty-two [22] preceding paragraphs are a true copy of the reasons for the decision of:

Regina Perton, Member

(sgd)       Catherine Thomas

Clerk

Date of hearing:  9 March 2005
Date of decision:  24 August 2005
Advocate for applicant:                Self-represented
Advocate for respondent:            Ms E King, Centrelink