Jefferies and Secretary, Department of Family and Community Services
[2005] AATA 491
•30 May 2005
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2005] AATA 491
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2004/1091
GENERAL ADMINISTRATIVE DIVISION ) Re TREVOR JEFFERIES Applicant
And
SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION
Tribunal REAR ADMIRAL A R HORTON AO, MEMBER Date 30 May 2005
PlaceSydney
Decision The decision under review is affirmed
[sgd]
Rear Admiral A R Horton AO, Member
CATCHWORDS
SOCIAL SECURITY – preclusion period –– lump sum compensation payment following motor cycle accident – ineligibility for compensation affected payments – purchase of property – no special circumstances – decision affirmed
LEGISLATION
Social Security Act 1991, ss 17(10, 17(3), 1061ZS, 1165(1A), 1165(7), 1165(8), 1184K
CASE LAW
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Re Smith and Department of Family and Community Services [2001] AATA 541(8 June 2001)
Re Marsh and Secretary, Department of family and Community Services [2004] AATA 228 (5 March 2004)
REASONS FOR DECISION
30 May 2005 REAR ADMIRAL A R HORTON AO, MEMBER 1. This is an application to review a decision of the Social Security Appeals Tribunal (“SSAT”) made on 9 August 2004 which affirmed a decision of an Authorised Review Officer (“ARO”) made on 30 June 2004 that Trevor Jefferies (“the Applicant”) was to be subject to a preclusion period from 28 September 1997 to 25 July 2009.
2. At a hearing before the Administrative Appeals Tribunal (“the Tribunal”) on 16 May 2005, Mr Jefferies was self represented and gave evidence by telephone. Mr Gary Richardson appeared for the Secretary, Department of Family and Community Services (“the Respondent”).
3. The Tribunal took into evidence the documents provided by the Respondent pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (“the T documents”), a financial statement provided by the Applicant dated 14 February 2005 (Exhibit A1), a report from Dr Amarjit Ruba of Mitchell Street General Practice, South West Rocks, dated 23 February 2005 (Exhibit A2) and the Respondent’s Statement of Facts and Contentions dated 11 March 2005 (Exhibit R1).
BACKGROUND
4. Mr Jefferies was injured in a motor cycle accident on 28 September 1997. At that time he was living in rented accommodation at South West Rocks, and was in receipt of Newstart Allowance.
5. A third party claim by Mr Jefferies was settled for $695,000 on 1 May 2001, Centrelink being advised by Allianz CTP Claims on 1 June 2001. On 5 June 2001, Centrelink calculated that a charge of $41,368.49 was due to be recovered from the settlement, this relating to the amount of social security payments received by Mr Jefferies from the date of the accident until the date of notification of settlement. This amount was paid to Centrelink by the insurer on 13 June 2001.
6. Centrelink also calculated, and Mr Jefferies was so advised, that a lump sum preclusion period would apply from 28 September 1997, the date of the accident, to 25 July 2009, this being calculated in accordance with the provisions of subsection 17(3) of the Social Security Act 1991 (“the Act”), whereby 50 per cent of the settlement figure represents the compensation component, and is used for the calculation of any preclusion period. The effect of the imposition of the preclusion period was that Mr Jefferies was not eligible for any “compensation affected payment” vide section 1169 of the Act, until the expiration of the preclusion period. Compensation affected payments are defined in subsection 17(1) and include the Disability Support Pension (“DSP”).
7. Mr Jefferies lodged a claim for the Health Care Card on 22 October 2001, this being granted in accordance with the provisions of section 1061ZS of the Act. In March 2004, Mr Jefferies lodged a claim for the DSP, this being rejected on 18 March 2004 as he was ineligible whilst in a preclusion period. At paragraph 8 of exhibit R1 it is noted that Mr Jefferies was advised that he could not be paid a pension until after 25 July 2009. Mr Jefferies subsequently wrote a letter (T28 p54, received by Centrelink on 28 April 2004) referring to advice given to him that “I was told to apply for compensation preclusion period to be changed as I feel the lengthy period is too harsh”. Acting on that letter as a request for review of the preclusion period, Centrelink affirmed the decision on 3 June 2004, this being subsequently affirmed by an ARO and the SSAT as earlier noted. On 25 August 2004, Mr Jefferies sought review by the Tribunal of the decision in respect of the preclusion period. It was agreed at the hearing that reconsideration of the DSP claim would automatically follow should the Tribunal reduce or waive the preclusion period.
8. At the outset, the Respondent submitted that the preclusion period had been correctly calculated in accordance with the Act, and any reduction of this period could only be considered if “special circumstances” pursuant to section 1184K of the Act were deemed to exist. Mr Jefferies disagreed with the basis of the calculations as defined in the Act in that he considered that any preclusion period should be calculated on the amount of settlement actually received, in his case that being $695,000 less payment due to Centrelink and legal and other costs. His view was that the net settlement monies received by him was in the order of $500,000 and that should have been the figure used in calculating the preclusion period.
EVIDENCE
9. Mr Jefferies, aged 38 years, left school in 1982 aged 16 and completed a five year apprenticeship as a motor mechanic. He subsequently also completed trade qualifications in refrigeration and air conditioning and in the maintenance and repair of outboard motors. His early employments were in the Sydney area, until he moved to Queensland. In his short period in Queensland he claimed and became eligible for Newstart Allowance. In 1997 he moved to South West Rocks, where he was considering establishing his own business when he suffered extensive injuries from a motor cycle accident. Later that year, he was moved from Newstart Allowance to the DSP.
10. He described the injuries as resulting in hospitalisation at Coffs Harbour for 6 weeks, followed by a short period in Port Macquarie Hospital, being wheelchair bound for a further 4 weeks, and then requiring use of a walking stick for some considerable time thereafter. He considers his present condition to be “fairly stable” but his damaged right knee gives him pain, particularly in winter, and he has a permanent limp. He has problems with his neck, such that he can spend less than 5 minutes at a computer or in similar situation before pain requires him to move. He described his hands as having suffered “lots of little fractures” in the accident, and having little feeling or strength. He takes medication daily for high blood pressure and Panadol as he needs for pain, albeit he tries to avoid such medication.
11. The only medical report before the Tribunal is that of Dr Ruba. He describes hypertension requiring medication, (although the medication is not identified) nerve and muscle injuries to the right arm, reduced power and sensation in the arm and hand and reduced flexibility in the fingers. He refers to a permanent disability of the right leg. He notes that these disabilities cause pain and the requirement to use analgesics.
12. Dr Ruba also refers to shingles on the right side, resulting in a right faclal nerve palsy. Mr Jefferies stated that this condition persisted. Dr Ruba concluded his report by stating that there is no other treatment to improve these permanent disabilities, which have reached maximum recovery. As to the ability of Mr Jefferies to work, he states “Mr Jefferies will find heavy work a problem.”
13. In evidence, Mr Jefferies thought he could work, but he could not guarantee reliability as he has good and bad days – thus he would need flexible employment, a situation that he doubts any employer would accept. He could not work in an office environment because of his neck limitations, nor could he work in his trades because of his hands and limitations on bending and crouching. He stated that in any event, his inquiries show no employment possibilities in his fields. Whilst he does odd jobs for friends, and he can mow the lawn, there is no call for additional handyman services in his locality (“there are too many in South West Rocks”). Employment at Port Macquarie or Kempsey would not be practical because he can only drive for a limited period. He has not approached Centrelink in respect of employment – “they could not help”.
14. Mr Jefferies told the Tribunal that he expected to receive a settlement “in the hand” of $500,000, and that was the figure he expected would be the basis for calculation of any preclusion period. He stated he was well aware that a preclusion period could be imposed. A Centrelink letter of 4 November 1997 (T5 p16) advised him of the implications should he receive a compensation payment, and a further letter of 5 June 2001 (T19 p 41) provided the details and explanation of the preclusion period to be imposed. The Tribunal notes a number of letters on file from Centrelink in response to requests for information, providing advice to Sheridan and Stubbs (T6 p18, dated 17 August 1999) and Fishburn Watson O’Brien (T8 p22, dated1 June 2000; T12 p30, dated 13 October 2000 and T15 p 36, dated 30 April 2001) on preclusion periods that would be applicable to various lump sum settlements.
15. In any event, in 2002 Mr Jefferies purchased the home he presently lives in at South West Rocks, the purchase being in the order of $370, 000 plus conveyancing costs. He did so because he did not wish to pay rent, and that his home would have certain features that provided ease of mobility, and that he did not wish to be faced with any future moves, as would be the case in a rental property, particularly as his health might deteriorate in later years. He anticipated he could cope with living costs until the completion of the preclusion period, although he did not expect to be faced with such a lengthy preclusion period. He did not seek a mortgage arrangement, as he considered that no bank would provide such a facility in view of his medical condition and inability to work.
16. The final sum available to Mr Jefferies after settlement was about $480,000. His legal fees had amounted to some $153,000. On receipt of settlement he paid off a credit card debt (he no longer has such a card) and some monies owed his parents and sister. It seems that after the purchase of his home and paying off his debts, he was left with about $95,000. He told the Tribunal that his living expenses have been higher than he anticipated, and he has no remaining settlement money. He had no real idea of his expenditure in the first year, but thought it to be $40,000 or $50,000. He presently borrows money from his parents in Queensland and thinks he owes them about $5000. In part, he attributed his inability to make his settlement monies last until the completion of the preclusion period to the introduction of the goods and services tax and the resultant increase in the cost of living. Suffice that his evidence is that he has no money of his own to pay for his living expenses.
17. In cross examination, Mr Jefferies defended his decision to purchase his home, and stated that he would never sell it in order to restructure his finances. He has not considered letting the property and paying rent for cheaper accommodation, and stated that was not an option. He would not consider taking in a boarder as “they don’t fit in”. He further rejected the suggestion that he move in with his parents.
LEGISLATION AND DECISION
18. The Respondent submitted that Centrelink had correctly calculated the preclusion period against 50 per cent - the compensation component - of the settlement figure in accordance with subsections 17(3), 1165(7) and 1165(8) of the Act. In turn, no compensation affected payment was payable to Mr Jefferies for the duration of the preclusion period vide section 1165(1A) of the Act. Thus the only potential relief available to Mr Jefferies was that provided in section 1184K of the Act, which makes provision for whole or part of the compensation payment to be waived should special circumstances be deemed to exist.
19. The Respondent contended that there were no special circumstances in this matter. Mr Jefferies had been advised directly by Centrelink and through his lawyers of the implications in respect of the preclusion period. He is ineligible for the DSP which is a compensation affected payment. As to the inability or otherwise of Mr Jefferies to work, the Respondent acknowledged his medical disabilities, but observed that whilst Dr Ruba opined that Mr Jefferies would find heavy work a problem, he did but did not exclude performance of lighter work. In effect, Mr Jefferies was compensated for his injuries with the expectation that he would use part of his lump sum settlement to maintain himself.
20. The evidence before the Tribunal is quite clear. Centrelink advised Mr Jefferies in writing both prior to receiving a lump sum compensation payment and after settlement of his claim, of the implications of the preclusion period. The Tribunal must assume that the same advice, as provided to his lawyers, was also being passed on to Mr Jefferies. In oral evidence, Mr Jefferies informed the Tribunal that he was aware of the preclusion period requirements. In the face of such advice, he nonetheless purchased a property, thereby reducing by some 75 per cent the amount of funds left at his disposal to enable him to meet living expenses for the following 8 years. In addition, his debts at the time further reduced his financial assets. Whether he could have gained approval for a mortgage in order to reduce his immediate commitment is a moot point; he may well be right that in his situation that may not have been an option. Nonetheless he did not seek advice, and proceeded with the purchase.
21. Mr Jefferies was quite adamant before the Tribunal that he would not consider selling the property and returning to a rental situation, nor moving to a cheaper rental alternate, nor taking in a boarder. Thus he is in reality giving no consideration as to how he might minimise a financial problem effectively of his own making. Further, whilst he referred to various medical conditions, his evidence being confirmed in the report by Dr Ruba, he seemingly has decided that he cannot work in any circumstances, although he conceded that he does odd jobs for friends from time to time. It may be that he has more capacity than he thinks. The Tribunal notes that Mr Jefferies saw no point in approaching Centrelink for assistance with employment, and further notes that Dr Ruba only referred to the problems associated with heavy work.
22. The Respondent referred the Tribunal to four case law decisions. Re Beadle and Director-General of Social Security (1984) 6 ALD1 is very relevant and authoritative in respect of the meaning of “special circumstances”. In that widely referred to decision, the court, with Toohey J presiding, stated:
“An expression such as “special circumstances” is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend on the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special.”
23. In Groth v Secretary, Department of Social Security (1995) 40 ALD 541, Keifel J referred to Re Beadle, and held that the discretion in special circumstances required that such circumstances must be out of the usual or ordinary and that circumstances the same as those applicable to other people would not fit that criteria. The decisions in Re Smith and Department of Family and Community Services [2001] AATA 541 (8 June 2001) and Re Marsh and Secretary, Department of Family and Community Services [2004] AATA 228 (5 March 2004) followed Re Beadle and other authorities. Both those matters were similar to that before this Tribunal in that the applicant purchased a property from the residual of a lump sum compensation settlement during a preclusion period, resulting in financial difficulties. In both cases, special circumstances were deemed not to exist. It might be argued that in both those matters, the evidence in support of the exercising of discretion in respect of special circumstances was more pressing than is the case in this matter.
24. The Tribunal is unable to exercise the discretion found in section 1184K of the Act, in that the circumstances in this matter are not “special”, and to exercise such discretion would give Mr Jefferies a double benefit against those in a similar position. His circumstances were not unusual, uncommon or exceptional; they did not have a particular quality of unusualness to permit them to be described as special. Mr Jefferies was well warned, and by his admission, well aware of the implications of purchasing a property during a period of preclusion. There should have been no doubt in his mind that he had to make financial provision for himself until July 2009, a quite lengthy period. His reasons for purchasing the property, elaborated as they were by him, and understood by the Tribunal, do not nonetheless indicate that he was under any unusual or uncommon pressures; he made the decision because of his desire to make provision for the future in a home of his own. There were other options open to him at the time, and indeed there are now. He has a substantial and unencumbered asset, and it may be that he has to seriously consider what options may be available
25.The decision under review is affirmed.
I certify that the 25 preceding paragraphs are a true copy of the reasons for the decision herein of REAR ADMIRAL A R HORTON AO, MEMBER
Signed: .....................................................................................
Niamh Kinchin AssociateDate/s of Hearing 16 May 2005
Date of Decision 30 May 2005
Solicitor for the Applicant Self-Represented
Solicitor for the Respondent Mr Gary Richardson
1
2
0