Holzhauser and Secretary, Department of Family and Community Services

[2004] AATA 251

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 251

ADMINISTRATIVE APPEALS TRIBUNAL                )

) No N2003/1818

GENERAL ADMINISTRATIVE  DIVISION		)
Re		ROBERT HOLZHAUSER

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Mr M.A. Griffin

Date11 March 2004

PlaceSydney

Decision The decision under review is affirmed.

[Sgd] Mr M.A. Griffin
  Member

CATCHWORDS

SOCIAL SECURITY - New Start Allowance - preclusion period - special circumstances - gambling and drinking - decision affirmed

Social Security Act 1991 section 1184K

Dranichnikov v Centrelink [2003] FCAFC 133

Groth v Department of Social Security (1996) 40 ALD 541

REASONS FOR DECISION

11 March 2004 Mr M.A. Griffin       

1.      This is an application by Robert Holzhauser for review of a decision of the Social Security Appeals Tribunal (the “SSAT”) dated 2 June 2003. The SSAT affirmed the decision of an authorised review officer (“ARO”) of Centrelink dated 4 April 2003 to preclude Mr Holzhauser from Centrelink payments from 7 March 2001 to 26 October 2004 (the “relevant period”).

2.      At the telephone hearing of this matter on 18 February 2004, Mr Holzhauser represented himself and Ms Andrea Garcia, a Centrelink advocate, represented the Secretary, Department of Family and Community Services (the “Respondent”).

3.      The Tribunal received into evidence the documents lodged under section 37 of the Administrative Appeals Tribunal Act1975 (T1-52) as well as an exhibit marked R1 for the Respondent.

BACKGROUND

4.      Mr Holzhauser suffered an injury on 7 March 2001 in a Woolworth’s supermarket.  He sued for compensation and on 27 June 2002 the matter was settled by payment to him of a lump sum of $225,000.00, which included a component for economic loss. Centrelink calculated that Mr Holzhauser was precluded from receiving compensation affected payments from the date of injury to 26 October 2004, based on a statutory formula applied to the compensation part of any lump sum payment. Centrelink informed him of this at the time of settlement.

5.      Mr Holzhauser did not then and does not now dispute the calculation of this preclusion period. However on 8 January 2003, Mr Holzhauser asked Centrelink to review the period of preclusion because he was experiencing financial, domestic and health problems. The ARO was not satisfied there were special circumstances to disregard the compensation payment for calculation of the preclusion period. The SSAT affirmed that decision.

ISSUE

6. Whether there are special circumstances that make it appropriate to disregard some or all of the compensation payment made to Mr Holzhauser pursuant to section 1184K of the Social Security Act 1991 (“the Act”).

EVIDENCE

6.      Mr Holzhauser is fifty-three years old. He married in 1971 and has three adult children. He was born in Lismore and went to school in Narrabri. He left school at about thirteen years of age. He was employed for many years as a garbage worker for various local councils. At the time of his injury he had been with Liverpool Council for two and a half years. The injury left him with a plate and several screws in his left ankle. He also developed a ‘Golden Staph’ infection which he still has.

7.      Mr Holzhauser said he received $193,000.00 from the settlement after payment of expenses in July 2002. He said he gave his wife $160,000.00 in August 2002. He said he and his wife moved from Sydney to Gunnedah. He said $115,000.00 of the $160,000.00 was used to purchase a house, in his wife’s name, in Gunnedah that they moved into in October 2002. He said he wanted his wife to have the house in her name because he had never been able to give her anything. He said the approximately $30,000.00 that he did not give his wife was spent variously on rent for the Sydney property until their move, moving expenses, gifts of a car and furniture to his children, gambling and drinking and every day living expenses.

8.      Mr Holzhauser said that his drinking and gambling became worse after they moved to Gunnedah. He said he withdrew the remainder of the $160,000.00 he gave to his wife, after payment of the $115,000.00 price of the house and associated expenses and put it in a safe in their house. He said he used the money to gamble and drink. He was not able to estimate how much money he put in the safe. He said in one week alone he lost $5000.00 gambling. He said he was drinking very heavily and taking money from the safe. He said his wife didn’t know about it until there was nothing left. He said there were a lot of family problems. He said he left the family home in March 2003. He said the money was all gone long before he moved out of the home.

9.      Mr Holzhauser has since lived with his daughter and various friends. His daughter is divorced and lives in Department of Housing accommodation in Gunnedah with her young children. It is a three-bedroom home. He said “she is not supposed to have me here”. Mr Holzhauser has no money and relies on his daughter and friends for support. He has not been able to obtain employment despite undertaking some training courses and registering with various agencies. He says he still has the ‘Golden Staph’ infection and this causes swelling in his foot if he stands for too long. He has not had treatment for the infection since June 2003. He has not been able to afford the cost of the prescription medication for the infection. I asked if he had visited the local hospital for help. He said “not for Golden Staph but because my toes were swelling”. He said “they gave me a prescription but I couldn’t afford it”. Ms Garcia offered to assist Mr Holzhauser with information about obtaining a “low-income card” from Centrelink, which will enable him to obtain medication at a substantially discounted cost and medical treatment at the bulk-billing rate.

10.     Mr Holzhauser said he returns to the family home on approximately a weekly basis, he mows the lawn, his wife gives him a meal and he stays the night. He said it was his decision to leave the home in March 2003. He said it was not at his wife’s instigation. I asked if his wife would welcome him back to live with her. He said “we do talk about it and hopefully it will happen”.  I asked if the reason he didn’t go back was not because of his wife’s attitude to him but because he felt he could not contribute to the home. He said that was the case. He said the house was owned outright and was valued at around $130,000.00. I asked if he had discussed a divorce and property settlement with his wife to obtain some share of the value of the house. He said he had recently consulted a financial adviser at the request of Centrelink who had raised this issue with him. He said “the financial adviser mentioned the house but I explained to him that it was not an easy thing to do to take a house away from someone”.

CONSIDERATION OF ISSUES

11.     The relevant section of the Social Security Act 1991 is section 1184K which provides:

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

(a) not having been made; or

(b) not liable to be made;

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

12.     In reaching its decision, the Tribunal takes into account the written material, the oral evidence and the submissions made at the hearing.

13.     The issue is whether or not there are special circumstances in this case, which make it appropriate to regard the whole or part of the compensation payment as not having been made. In Dranichnikov v Centrelink [2003] FCAFC 133 (19 June 2003) at paragraph 65, Hill J in considering the term ’special circumstances’ said:

“65. … The origin of the test apparently adopted by the Secretary appears to be the decision of the first instance Judge in Beadle v Directory-General of Social Security (1985) 60 ALR 225.  That was a decision under previous legislation, the history of which is referred to by French J in Secretary of Department of Social Security v Hales (1998) 82 FCR 154.  The Full Court in Beadle comprising Bowen CJ, Fisher and Lockhart JJ, however, was of the view that it was not possible to lay down precise rules as to what constituted special circumstances under the then s 102(1)(a) of the Social Security Act 1947 (Cth).  Their Honours point out that the question whether there were special circumstances was one for the decision maker (in that case the Director-General) bearing in mind the purpose for which the power was given.  The reference to the first instance decision from which the words “unusual, uncommon or exceptional” come was not actually affirmed by the Full Court.

66. To some extent the question whether there were special circumstances must depend on how it came about that the error occurred.  Again that is not a matter to which the decision maker apparently averted.  Other cases which have considered analogous words such as “special reasons” has tended to conclude, albeit in different contexts, that what is required will be circumstances which distinguish the case in consideration from the usual case.  There will be a requirement that the circumstances are such that takes the case out of the ordinary: Jess v Scott (1986) 12 FCR 187 and the cases in various contexts in the decision which Lockhart, Shepherd and Burchett JJ discuss”.

14. The legislative objective of the Act can be found in the “Guide to Social Security Law” as published by the Department on its website ( where under the subheading of “Rationale for the lump sum preclusion period” it is stated that “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”.

15.     In Groth v Department of Social Security (1996) 40 ALD 541 at 545, Keifel J in consideration of the phrase ’special circumstances’ said, “it would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary”.

16.     There have been several cases in which the Tribunal has considered the manner in which lump sum settlements have been expended. The reasonableness of the person’s expenditure has been a significant consideration in the determination of special circumstances. With these case law and policy considerations in mind, the Tribunal has had regard to the factors, which Mr Holzhauser submits amount to special circumstances and to the history of use of Mr Holzhauser’s lump sum settlement.

17.     Mr Holzhauser managed to expend the entire sum of $193,000.00 in less than one year. While aware of the preclusion period he did not make any financial provision to tide him over that preclusion period. He spent many thousands of dollars on gifts to his children and purchased a house in his wife’s name. He then embarked upon a binge of gambling and drinking. The Tribunal is satisfied this pattern of expenditure was extravagant.  Mr Holzhauser says he had a drinking problem and a gambling problem. That may well be so but there is no specialist evidence to indicate that he was suffering from any psychological or mental abnormality, which made this behaviour beyond his control. The Tribunal is satisfied this expenditure was unreasonable.

18.     Mr Holzhauser claims to suffer from a ‘Golden Staph’ infection and other disabilities which limit his employability and make life very difficult for him. Again there is no specialist medical evidence of these conditions. Moreover, it appears that despite being unable to afford prescription medication there has not been any serious consequence or deterioration of his health. He visited a hospital five months ago, was given a prescription, could not take it and nothing has happened since.

19.     Mr Holzhauser has a substantial interest in the home which is worth approximately $130,000.00 debt free but has consistently refused to take any action to derive financial benefit from that asset. Mr Holzhauser lives variously with his daughter and friends. This is a situation entirely of his own making, in that he removed himself from the family home and is free and apparently welcome to return at any time. Indeed, he does so on a weekly basis.

20.     On the evidence presented I am not satisfied that Mr Holzhauser is destitute or in precarious circumstances. It is clear that he has made do for some considerable time with the assistance of family and friends. He may also be able to obtain further medical assistance and benefits with the low-income card.  It is open to him to seek some substantial financial benefit from his interest in the family home, or alternatively he can return there to live.

21.     Having regard to the case law and policy considerations, the pattern of expenditure of the lump sum, the health, domestic and financial issues, the Tribunal finds that there are no personal, financial, health or other matters raised by Mr Holzhauser that constitute special circumstances for the purposes of section 1184K of the Act.

DECISION

22.     The decision under review is affirmed.

I certify that the 22 preceding paragraphs are a true copy of the reasons for the decision herein of Mr M.A. Griffin

Signed:         Neil Glaser
  Associate

Date of Hearing  18 February 2004
Date of Decision  11 March 2004
Representative for the Applicant    Robert Holzhauser (Self-represented)
Advocate for the Respondent        Andrea Garcia