JENNIFER TAYLOR and SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

[2009] AATA 465

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 465

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2008/1905

GENERAL  ADMINISTRATIVE  DIVISION		)
Re		JENNIFER TAYLOR

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Ms Regina Perton, Member

Date25 June 2009

PlaceMelbourne

Decision The Tribunal affirms the decision under review but, following a recalculation by the respondent, varies the end date of the preclusion period from 10 June 2011 to 13 May 2011.

[sgd] Regina Perton

Member

SOCIAL SECURITY ‑ lump sum compensation ‑ preclusion period – application for disability support pension - whether special circumstances exist – slight variation of end date at respondent’s request.

Social Security Act 1991 ss 17, 1170, 1184K

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

REASONS FOR DECISION

25 June 2009 Ms Regina Perton, Member

1.      Jennifer Taylor was seriously injured in a motor vehicle accident on 29 April 1997.  She received periodic compensation payments until 28 April 2000.  Ms Taylor was eventually awarded lump sum compensation in excess of $550,000 from the Transport Accident Commission (TAC).  Ms Taylor subsequently applied to Centrelink for disability support pension (DSP).  Centrelink, which administers DSP for the Department of Families, Housing, Community Services and Indigenous Affairs, rejected Ms Taylor’s application because she had received the lump sum compensation.  Centrelink took part of the compensation amount into consideration to calculate a preclusion period; that is a period during which Ms Taylor was not entitled to certain social security payments including DSP because she had received the lump sum compensation.  Centrelink calculated that Ms Taylor was subject to a compensation preclusion period from 29 April 2000 to 10 June 2011.  Subsequently, Centrelink recalculated the preclusion period.  Centrelink now states that the period will end on 13 May 2011. 

2.      Ms Taylor’s expenditure since she received the compensation has been such that she now finds herself in straitened financial circumstances.  This has been due to a combination of factors, some of which were self-imposed.  At Centrelink’s suggestion, Ms Taylor applied for DSP on 2 November 2007.  She had made earlier unsuccessful attempts to obtain benefits and shorten the preclusion period.  On 15 November 2007 Centrelink rejected Ms Taylor’s application due to the continued application of the preclusion period.  On 21 January 2008 an authorised review officer of Centrelink (ARO) affirmed the decision to reject the claim for DSP due to the preclusion period.  Ms Taylor sought a review of the ARO’s decision by the Social Security Appeals Tribunal (SSAT).  On 7 March 2008 the SSAT affirmed the Centrelink decision.  On 6 May 2008 Ms Taylor lodged an application with this Tribunal for review of the SSAT decision.  At the same time she sought an extension of time to lodge the application for review, which was granted.  

3.      Ms Taylor does not dispute that a preclusion period applies to her.  Neither does she dispute Centrelink’s calculation of the preclusion period.  The sole issue before the Tribunal is whether there are grounds to waive part or all of the preclusion period due to special circumstances.

Ms Taylor’s health and personal circumstances

4.      Ms Taylor suffered serious injuries in the car accident.  She was hospitalised for several months after the accident and has had several further hospital admissions since.  Ms Taylor’s three children, Luke, then aged 14, Rebekah, then aged 9 and Sarah, then aged 5, were passengers in the car she was driving and also sustained injuries.  Rebekah was hospitalised for some months.  She eventually received about $300,000 in lump sum compensation from the TAC.  Luke suffered a perforated liver and Sarah a broken collarbone. 

5.      Ms Taylor said that she is legally separated from her husband.  She now lives with her son and younger daughter.  Rebekah, now aged 21, works as a legal secretary and is studying law.  She lives in her own home which she bought with the compensation she was awarded.  Luke, now aged 26, is Ms Taylor’s full-time carer and receives carer payment and carer allowance.  After completing secondary school, Luke started an engineering degree but after doing part of the course, he deferred his studies and he has not returned to them.  He worked for a time in a factory and did security work.  He now takes care of his mother.  Sarah is doing a course at the School of Mines.  She hopes to work in landscape gardening. 

6.      When Ms Taylor received her lump sum compensation payment, she and her husband were joint owners of a 10 acre property subject to a mortgage.  Mr Taylor had been working in Melbourne prior to his wife’s injury and was only at the property for a few days of the week.  After the accident, Ms Taylor’s mother and Mr Taylor cared for the children.  Ms Taylor said that she could not drive for at least two years after the accident. 

7.      Ms Taylor purchased a house in Ballarat after receiving the lump sum compensation and then sold their previous 10 acre property.  In 2006 the property was repossessed by the bank as there had been no mortgage payments for some time.  Ms Taylor rented in the private rental market for a time and then lived in Rebekah’s garage.  Her place of residence has changed since she lodged the claim for DSP.  She now lives with Luke and Sarah in subsidised accommodation. 

8.      It is not in dispute that Ms Taylor suffers from medical conditions which limit the work options she now has.  Ms Taylor was a primary school teacher at the time of the accident.  She was registered for emergency teaching.  However, her impaired mobility has impacted on her ability to obtain work in that field.  Potential employers have been concerned about her ability to undertake yard duty as she is either in a wheelchair or using crutches to move about.

9.      Ms Taylor has worked since she was 15 years old.  After working in secretarial roles for about 25 years, Ms Taylor went to university and trained as a teacher.  After her compensation award, Ms Taylor acquired an existing nail and manicure business.  The business did not do well.  Ms Taylor said that after her mother’s death in 2004, she did not have the willpower to continue.  Ms Taylor eventually closed down the business, losing the money she had paid for goodwill and renovations.

10.     Ms Taylor said that she has had counselling in relation to her marriage breakdown and pain management but not in relation to her financial difficulties.  She said that she was too embarrassed to talk about that aspect of her life.

Ms Taylor’s financial circumstances

11.     Ms Taylor receives Family Tax Benefit A and B for Sarah.  Luke receives carer payment and carer allowance.  The rental of the property in which they are living is linked to his social security benefit.  Ms Taylor’s estranged husband makes payments towards Sarah’s upkeep, which either Ms Taylor or Sarah pick up weekly.  Mr Taylor is employed.  Ms Taylor said that she receives assistance from the St Vincent de Paul Society and Uniting Care. 

12.     Ms Taylor indicated that that the major items on which she spent the lump sum compensation included a house ($240,000); cars for herself, her husband and son ($80,000); the beauty business ($45,000); pool and fencing ($30,000); furniture ($25,000); drapes, blinds ($15,000); electrical and whitegoods ($15,000); holiday ($15,000); payment of debts ($20,000); and miscellaneous expenses ($10,000).   She also stated that she had given her parents $50,000.  Private school fees for the children also accounted for some of the award.

13.     Ms Taylor said that when the 10 acre property was sold, around $130,000 was owed on the property.  She said that she gave her husband the money to pay out the mortgage but he had not done so.  Ms Taylor indicated that she does not know what happened to the money.  She initially paid for the Ballarat property out of the compensation payment but then took out a mortgage, which she increased in 2004.  Her husband initially made the mortgage payments but then stopped doing so.  In 2006 Ms Taylor was declared bankrupt.  Her home was sold due to the mortgage default and her share of the proceeds after the sale was around $23,000.  She then rented in the private rental market but was required to leave when rent payments fell behind.  As indicated above, she now lives in a subsidised rental property based on her son’s social security income.

14.     Ms Taylor said that she had not pursued her estranged husband for repayment of the car she gifted him and other moneys he kept.  She said that her estranged husband had benefited by at least $150,000 since the compensation award.   

Should the preclusion period be shortened?

15. Section 17(1) of the Social Security Act 1991 (the Act) provides that compensation affected payment includes DSP. Section 17(2) of the Act provides:

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.

16. Section 1170 of the Act sets out the method of calculating a compensation preclusion period. There is no dispute between the parties, or any evidence before the Tribunal, that the lump sum compensation paid to Ms Taylor should not result in a preclusion period. Ms Taylor was aware that a preclusion period would be imposed; but she believed that she would remain entitled to the parenting payments she was receiving when she was on periodic compensation payments prior to the lump sum compensation award. However, her parenting payments were cancelled because, with the lump sum compensation, she exceeded the assets limit for such a social security benefit.

17. 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.

18. For the Tribunal to use the discretion provided in s 1184K it must be satisfied that there is something to make the case stand out from the usual or the ordinary. The term special circumstances is not defined in the legislation.  It has been discussed in many court cases, where it has generally been defined as requiring a departure from the norm.  In Ryde v Secretary, Department of Family and Community Services [2005] FCA 866 Branson J stated (at paragraph 26) that the circumstances of a particular case must give rise to hardship or unfairness sufficient to justify departure from the general rule.

19.     Special circumstances need to be considered on a case by case basis.  In considering this concept the Tribunal must maintain a balance between the circumstances and difficulties of the individual involved and the purpose of the legislation.

20.     Centrelink and Ms Taylor’s solicitors informed Ms Taylor in writing about the existence and likely length of the preclusion period before and after the compensation award; and of the need for the compensation award to provide her with income for the duration of the preclusion period.  Ms Taylor acknowledged that there had been such correspondence.

21.     The Tribunal accepts that Ms Taylor has numerous, ongoing medical problems.  The Tribunal accepts that she is on a limited income and reliant on her son’s payments as her carer and the family tax benefit for her younger daughter.  Her estranged husband also provides some financial support for his younger daughter.

22.     Mr Carson, Centrelink’s advocate, submitted that Ms Taylor should be trying to retrieve at least a portion of the funds she had given her estranged husband.  Ms Taylor estimated that her estranged husband had benefited by at least $150,000 from the compensation award.  She conceded that she has not asked him to repay any of those moneys.  She is aware that she is able to initiate legal proceedings against him for moneys he may have wrongfully obtained, particularly the money he was given in 2001 to pay out a mortgage, which he did not do.  She also conceded that if she divorced her husband, she may be entitled to some settlement including part of his superannuation.  Ms Taylor stated that she had not asked any of her siblings for assistance; notwithstanding that she had given her parents $50,000 which appears to have been absorbed by her siblings.  The money was to be spent on renovations for her parents’ home but these were not undertaken.  Ms Taylor also paid for her mother’s funeral personally and did not ask any of her siblings to assist.  Ms Taylor said that she no longer mixes with her siblings.

23.     Ms Taylor’s ongoing medical problems and her limited income undoubtedly make life very difficult for her.  However, most people who receive large lump sum compensation payments for injuries received in traffic or work-related accidents would be in similar circumstances to Ms Taylor.  Her circumstances are by no means unique.  The Tribunal agrees with Centrelink that Ms Taylor should attempt to seek repayment from her estranged husband of some of the large amounts he retained from the compensation settlement.  If she is unsuccessful (and can demonstrate her attempts), or if there are other changes to her circumstances, she is entitled to reapply to shorten the preclusion period.

24.     After considering all relevant matters and viewing Ms Taylor’s case in its entirety, the Tribunal is not satisfied that her circumstances, though admittedly difficult, are special circumstances which would warrant a shortening of the preclusion period. 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, Ms Taylor does not qualify for DSP for the entire preclusion period (as re-calculated) from 29 April 2000 to 13 May 2011.

DECISION

25.     The Tribunal affirms the decision under review but, following recalculation by the respondent, varies the end date of the preclusion period from 10 June 2011 to 13 May 2011.

I certify that the twenty-five [25] preceding paragraphs are a true copy of the reasons for the decision of:

Ms Regina Perton, Member

[sgd]:  Leah Berardi

Clerk

Date of hearing:  17 April 2009
Date of decision:  25 June 2009
Advocate for applicant:                Self-represented
Advocate for respondent:            Mr Pat Carson, Centrelink Legal Services