Jerome and Secretary, Department of Employment and Workplace Relations
[2006] AATA 603
•7 July 2006
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2006] AATA 603
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q2005/854
GENERAL ADMINISTRATION DIVISION ) Re RAYMOND LESLIE JEROME Applicant
And
SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS
Respondent
DECISION
Tribunal Ms MJ Carstairs, Member Date7 July 2006
PlaceBrisbane
Decision The Tribunal sets aside the decision under review and substitutes the decision that Mr Jerome’s compensation preclusion period be recalculated, by treating $30,000 of the settlement amount received on 19 July 2004 as not having been made.
....................[Sgd]..........................
Member
CATCHWORDS
SOCIAL SECURITY – preclusion period – special circumstances – period to be recalculated – decision set aside.
Social Security Act 1991: 1184K
Secretary, Department of Social Security v Hales (1998) 153 ALR 259
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Ryde v Secretary, Department of Family and Community Services [2005] FCA 866
Groth v Department of Social Security (1995) 40 ALD 541REASONS FOR DECISION
7 July 2006 Ms MJ Carstairs, Member 1. This matter concerns whether Mr Raymond Jerome can be paid disability support pension before the end of a social security preclusion period, which ends in December 2006. During a preclusion period a person cannot access social security benefits, except if there are special circumstances which warrant shortening the period.
2. Mr Jerome’s preclusion period arises because on 19 July 2004 he received a settlement sum of $330,000 in respect of a medical negligence claim arising out of hospital treatment he had received. The Social Security Act 1991 provides a formula in which the settlement sum is divided by a statutory amount and works out the number of weeks that a person’s preclusion period will last.
3. Mr Jerome does not dispute that the formula has been correctly applied in his case; that is he does not dispute the length of the period of preclusion. There were no significant disputes between the parties about how his settlement money was spent, and how much there is left. He can account for all the expenditure, and he was able to update the value of his remaining assets in the course of the hearing. I accept his estimates, and these figures are set out below.
THE ISSUES
4. What this case is about, is whether Mr Jerome’s circumstances taken as a whole are special and whether I should exercise the discretion that would allow him to receive social security payments ahead of the end of the preclusion period in December.
BACKGROUND
5. Mr Jerome is a married man with two young children, aged nine and thirteen. He has worked hard all his life and would still like to work, and believes that he can despite his considerable medical problems. Mr Jerome has attempted work since receiving the settlement.
6. Mr Jerome has very significant medical problems. These will mean life-long ongoing health management on a daily basis, with which he is assisted by his wife who has learned the techniques for daily flushing drain sites to his abdomen, and administering injections. Mr Jerome explained that before he became sick he was a fit man who weighed 70kg but during his hospitalisation he dropped to 44kg. (Exhibit A1) His doctor stated that Mr Jerome had undergone protracted hospitalisation with multiple abdominal surgeries (T30). Mr Jerome said he now has recovered his weight to about 60kg but tires easily and requires more rest than before.. He cannot lift heavy weights. He succumbs often to nausea.
7. He said that he worked for Queensland Rail for thirty years, and then he and his wife operated a lawn mowing business in partnership, which was starting to show good returns before he sustained his injury. They had taken out a business loan and this loan (some $70,000) had to be repaid from the settlement money when he could not continue with the business.
8. Mr Jerome said that he was keen to return to work and is confident that there is work he could do. However he believes that he needs retraining, and he wants to access Centrelink employment assistance for people with disabilities. Mr Jerome said his capacity for physical work is now reduced, but he tries to keep as fit as possible, and can mow his own lawns as well as his mother’s. He has found that he suffers relapses of his medical condition from time to time, unpredictably, which makes employment more difficult. For instance, he said that he obtained work sorting lychees at the place where his wife is employed in the lychee season, but he became sick after two days and could not continue. Mr Jerome thinks that the kind of work which would suit his capacities and need for rests could include school bus driving, where he could rest in the middle of the day, but he does not hold the necessary licenses. At the moment, financial circumstances preclude him paying for any courses himself. This is one reason why he would like Centrelink assistance in seeking work.
9. Mr Jerome said that he recognised that they spent a large proportion of the settlement money on vehicles but he said he did this so that they could earn income. These include a truck and caravan which were purchased for a total of $130,900 (exhibit R1, T38, T41) and enabled them to take up work caretaking on a cattle station in 2005. They worked for their keep and accommodation. Mr Jerome referred to this work in his claim for pension in August 2005 (T29) stating in that claim that they had been living in the caravan at Howlong Station via Forsayth for eight months. They enrolled their children at schools in Georgetown and were enjoying the change of lifestyle.
10. However he lost this position when he sustained another injury when he and the manager of the property were engaged in the task of welding a heavy frame used on a truck. The frame fell on Mr Jerome, and the weight of it reopened his stomach wounds and required surgery. Mr Jerome was hospitalised for 5 days in the Cairns Base Hospital (T29). When Mr and Mrs Jerome returned to the cattle station, the manager told them that he was unable to keep Mr Jerome on, for health and safety reasons.
11. When the family returned to Mareeba they discovered that while they had been away working at the cattle station, their home, which is a shed that is fitted out with living spaces, had been infested with termites. Mrs Jerome said that they have put up curtains between their bedroom and their son’s bedroom because the wall is completely eaten out. Mr Jerome said that one reason they do not wish to sell the caravan now is that they will live in it while the repairs are done. Mr Jerome estimated the repair bill will be some $50,000 as he intends to reline with steel to avoid the problem that had arisen with pine lining.
12. The outlay of Mr Jerome’s settlement sum was quite fully explained. He received a sum of about $233,000 after solicitor’s costs and repayments (including repayments to Centrelink). Within the next months he purchased a car ($46,000) and a caravan ($87,000) and repaid a loan ($70,000). He still has the car and the caravan. The car is on the market for $44,000. They purchased an Astra at the start of 2006 and this has reduced their expenditure on petrol. Mr Jerome has a Credit Union Railway Account with funds of about $20,000. On the negative side, the ANZ Equity Manager Account has run up to $61,000 at the time of the hearing. At the time that they claimed disability support pension in August 2005 the ANZ Equity Manager Account stood at some $20,000
13. In a statement of financial circumstances dated 20 February 2006 (exhibit A2) Mr Jerome stated that the household income includes Mrs Jerome’s seasonal work of fruit picking for about 5 months per year for which she receives about $8,000 and Centrelink parenting and family payments totalling about $16,500 per year. In oral evidence Mrs Jerome said that the picking season this year has been affected by cyclones, with the result that her seasonal earnings would be about $2500 less this year. They have expenses totalling $45,698 per year.
14. Taking into account Mrs Jerome’s social security payments and earned income, the shortfall in their income to expenditure annually as described in exhibit A2 was some of $22,000.
15. The value of the assets as advised at the hearing was as follows:
§ Railway Credit Union $20,000
§ Box trailer $800
§ Landcruiser $20,000
§ Caravan $70,000
§ Astra $24,500
§ Mitsubishi $44,000 (Mr Jerome has this for sale for $46,000)
§ ANZ $760
TOTAL $180,060
16. Mr Jerome turns fifty-five in July and will then be able to access his superannuation, which he believes is about $100,000. He said that he would prefer not to access his superannuation because he intends to keep working once he retrains to employment that suits his more limited capacities.
SHOULD THE DISCRETION BE EXERCISED?
17. Section 1184K of the Social Security Act 1991provides as follows:
Secretary may disregard some payments
1184K(1) 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 is appropriate to do so in the special circumstances of the case.
18. Where the discretion for special circumstances is open for consideration, the case law acknowledges that:
“An expression such as ‘special circumstances’ is by its very nature incapable of precise or exhaustive definition….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.” (Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 3)
19. The discretion addresses any circumstances that distinguish a particular case from the usual, in order to justify a departure from the ordinary rule, namely that where a person has received compensation they cannot receive social security payments until the end of the preclusion period. In Ryde v Secretary, Department of Family and Community Services [2005] FCA 866 at [26], the Federal Court held that the use of the term special circumstances in the legislation demonstrated an intention to proscribe waiver in ordinary cases and any hardship or unfairness should be sufficient to justify departure from the general rule. The discretion has also been described as one to avoid unfairness: ….. that something unfair, unintended or unjust had occurred...some feature out of the ordinary (Groth v Department of Social Security (1995) 40 ALD 541 at 545). In Secretary, Department of Social Security v Hales (1998) 153 ALR 259 at 267, French J said that the discretion enables a flexible response to the wide range of situations which could give rise to hardship or unfairness….”
20. The question of special circumstances is one that must address all of a person’s circumstances. Amongst these will be the financial circumstances, by the very nature of the subject matter. This is because the legislative scheme dealing with compensation addresses the situation where the person’s receipt of a settlement is to replace earned income. The intention of the legislation is that the preclusion period reflects, in a general way, the time when the person is expected to use compensation moneys for general living while they cannot work or cannot work to full capacity.
21. In assessing the financial matters here, I accept Mr Jerome’s submission that the reality is that they are in quite reduced circumstances, for reasons not of their own making. On the one hand they do have assets that they might sell. They are making genuine efforts to sell the Mitsubishi at what seems to be a realistic price. However, even if they sold that vehicle and applied the proceeds as well as the $20,000 from the Railway Credit Union, this would only cover the debt they now owe on the ANZ Equity Manager Account, quite apart from whatever credit card debt they have currently outstanding.
22. On the other hand they still retain three vehicles. The associated costs of insurance, registration, servicing and fuel for these vehicles feature significantly in the overall household expenditure of over $45,000 (exhibit A2). Nevertheless this household realistically needs two vehicles in view of Mrs Jerome’s need to travel for seasonal work, his needs for a vehicle because of his compromised health, the needs of school age children, as well as possible future employment for Mr Jerome. I doubt they need three vehicles, but they are trying to address that.
23. I accept that when they purchased the caravan it was intended to assist with obtaining employment. Mr Jerome put the caravan to that use when he and his wife were caretaking at the cattle station in 2005. It was a costly item, but I accept that it was not a frivolous purchase in the circumstances for which they intended it. It was not purchased for merely recreational purposes. I accept as Mr Jerome submits that has set out to expend his settlement money wisely and with a view to his future employment.
24. It seems to me that the more difficult circumstances for the family now were precipitated by the further injury in 2005 as well as the unexpected damage to their home by termite infestation. It is noteworthy that Mr Jerome only made this claim for pension after he lost his employment on the cattle station. It seems clear also that their financial position took a downturn from then. When Mr Jerome was before the Security Appeals Tribunal in November 2005, the amount owing on the ANZ Equity Manager Account was $25,000. As stated it now stands at about $62,000. From Mr and Mrs Jerome’s evidence their financial position has been affected by her reduced capacity to earn this year due to the effects of cyclones on the fruit crops that provide her with seasonal work.
25. Taken globally, their circumstances constitute special circumstances. In so concluding I took into account the unexpected termite infestation of their home. I also took into account that Mr Jerome suffered an additional injury when he was in the caretaking job and this was a supervening event that taken with the unexpected costs in repairs takes their case out of the ordinary range of cases. I also took into account that Mrs Jerome’s ability to earn income to support the household has been reduced by the effects of cyclones on fruit crops in North Queensland. I concluded that the discretion should be exercised in their case.
26. In working out what part of the compensation payment might be disregarded, I was mindful of their current indebtedness, the costs of repairs to their home and their existing assets. Unfortunately I do not have any independent quotes about the costs of the repairs, which Mr Jerome estimates at $50,000. I accept Mr Jerome was not exaggerating the cost, but I do not accept that the full cost of this replacement should be factored in when exercising the discretion, because he is exercising his preference to upgrade, when a lesser expenditure would suffice for replacement. I also took into account that the Jeromes will need to move out of the house while repairs are carried out and I accept their evidence that this is not the time to sell the caravan, as they need to live in it. For this reason, I consider that the caravan should not be taken into account in the calculation of their realisable assets.
27. Bearing in mind that selling the vehicles and taking the Railway Credit Union funds now would only cancel out the debt, it seems to me that the Jeromes should not be required to take this action. I also did not take into account Mr Jerome’s possible access to his superannuation money when he turns 55 in July because he should not be required to liquidate this when it is needed for his retirement.
28. Taking all matters into account I concluded that the settlement amount should be reduced by $30,000 from the original amount of $330,000. This means that the respondent should recalculate the preclusion period by applying the statutory formula to the amount of $300,000.
29. As pointed out by Ms Dole at the hearing, Mr Jerome must re-apply and be assessed for any social security entitlements as his earlier claim in August 2005 has lapsed.
DECISION
30. The Tribunal sets aside the decision under review and substitutes the decision that Mr Jerome’s compensation preclusion period be recalculated, by treating $30,000 of the settlement amount received on 19 July 2004 as not having been made..
I certify that the 30 preceding paragraphs are a true copy of the reasons for the decision herein of Ms MJ Carstairs, Member
Signed: .....................................................................................
B. Hitchcock, Administrative AssistantDate/s of Hearing 27 June 2006
Date of Decision 7 July 2006
The Applicant was unrepresented.
For the Respondent Ms S Dole, departmental advocate
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