JOHN CHARLES and SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

[2009] AATA 666

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 666

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2009/2335

GENERAL ADMINISTRATIVE  DIVISION		)
Re		JOHN CHARLES

Applicant

And SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Mr S. Webb, Member

Date2 September 2009

PlaceGriffith NSW

Decision The decision under review is varied to the extent that 50 percent of Mr Charles’ lump sum compensation payment is taken not to have been made. The matter is remitted to Centrelink to calculate the amount, if any, of any payment owing to Mr Charles as a result of this decision.

.....................[sgd].........................

Mr S. Webb, Member

CATCHWORDS

SOCIAL SECURITY - compensation affected payment - lump sum preclusion period – lumbar spine and right shoulder injuries – chronic pain - addiction to prescribed opioid analgesic medication – drug abuse - impaired judgement - straitened financial circumstances - decision varied

Social Security Act 1991 ss 17, 1170, 1184K

REASONS FOR DECISION

2 September 2009 Mr S. Webb, Member         

1.      John Charles suffered a work injury and claimed compensation. The claim was settled by consent in the amount of $275,000. A lump sum preclusion period was determined. Mr Charles was not happy with that determination and requested review. The decision was affirmed by an authorised review officer and by the Social Security Appeals Tribunal (‘the SSAT’). He remains unhappy and applied for review by this Tribunal.

2.      I heard the matter in Griffith. At the outset, Mr Charles’ representative, Mr Sid Barone, informed me that there is no dispute concerning the correctness of the preclusion period calculations in respect of the lump sum Mr Charles accepted in settlement of his claim. The only issue is whether there are special circumstances that render it appropriate to reduce the preclusion period.

3.      Having carefully considered all of the material placed before me, I will proceed on the basis of the facts as agreed. On 10 August 2004 Mr Charles was injured in employment. He claimed compensation and was paid periodic compensation payments.[1] These payments ceased as Mr Charles failed to provide medical certificates. On 4 December 2006 Mr Charles lodged a claim and received New Start Allowance payments from Centrelink. On 23 July 2007 Mr Charles settled his claim against Nugan Quality Foods Pty Limited in the amount of $275,000, of which $42,625.23 was reimbursement to Allianz Insurance in respect of wages.[2] A charge of $7,182.53 was levied against Mr Charles’ insurer in respect of compensation-affected New Start Allowance payments he received in the period from 4 December 2006 to 11 July 2007.[3] Ultimately this charge was paid. Applying the formulae at s 17 and 1170 of the Social Security Act 1991 (‘the Act’) Mr Charles is subject to a lump sum preclusion period commencing on 26 August 2006 and concluding on 11 September 2009.[4] A debt was raised against him in the amount of $7,182.53, being the amount of New Start Allowance he was paid during the preclusion period.[5] By Mr Charles’ request the preclusion period decision was reviewed by the primary decision-maker, by an authorised review officer and by the SSAT.[6] In each case the decision was affirmed.

[1] T4.

[2] T5 and T23.

[3] T24, T25 and T26.

[4] T26.

[5] T11 folio 67.

[6] T27 to T34 and T2.

4.      The only issue remaining for determination is whether there are special circumstances that render it appropriate to treat all or part of Mr Charles’ lump sum payment as not having been made,[7] thereby reducing the period of the resulting preclusion period.

[7] Section 1184K of the Social Security Act 1991.

5.      Mr Barone informed me that Mr Charles was in very difficult circumstances. The reason for this, in Mr Barone’s submission, is that Mr Charles expended the compensation settlement monies he received within a short period and he has been forced to rely on charitable organisations, family and friends for support over the last 18 months. Mr Barone asserted that Mr Charles has accumulated debts that he cannot repay and is in a parlous financial position. Mr Barone says that Mr Charles had no experience managing large sums of money, having been raised in poverty, with little education and in difficult family circumstances. In his submission Mr Charles was “not in his right mind” when he received the compensation settlement monies in 2007: he was addicted to opiate-based pharmaceutical medications that were prescribed for his painful back condition at the time his compensation claim was settled.  Mr Barone also asserted that Mr Charles’ psychological state at that time was very poor as he had been badly affected by the death of his mother and his partner in 2006. Even though Mr Charles “stayed off the grog” he gambled excessively and this increased greatly when he received the compensation payout. Mr Barone asserts that Mr Charles’ circumstances are special and all or part of the compensation settlement he received should be treated as not having been made, thereby reducing the duration of the preclusion period.

6.      I agree that special circumstances exist that make it appropriate to treat part of his compensation payment as not having been made. This is unlikely to assist Mr Charles, however.

7.      Exercise of the discretion to treat all or part of a ‘compensation payment’ as not having been made is preconditioned only by special circumstances that render such action appropriate.[8] Further guidance may be found in the leading authoritative cases: Dranichnikov v Centrelink[9]; Groth v Secretary Department of Social Security[10]; Re Beadle and Director General of Social Security[11]. As can be seen, special circumstances are circumstances that are out of the usual course; being unusual, uncommon or exceptional, or arising where something unfair, unintended or unjust has occurred.

[8] Section 1184K, Social Security Act 1991.

[9] [2003] FCAFC 133 at [9]

[10] (1995) 37 ALD 797

[11] (1984) 6 ALD 1

8.      Mr Charles and Mr Barone gave oral evidence, much of which was not challenged and can be accepted.

9.      I accept that Mr Charles has had little education and had no experience managing large sums of money at the time when he received the compensation settlement monies. I also accept that he disbursed the monies he received (after deduction of legal costs) in a short time frame without careful regard to the future. On Mr Charles’ evidence he expended the settlement monies without prudent consideration of his financial requirements for the remaining period in which he was precluded from receiving social security payments. By his own account Mr Charles understood that he would not be able to receive compensation affected payments during the preclusion period. Nevertheless, he disbursed his compensation settlement monies by:

·purchasing motor vehicles for himself and his three children (approximately $55,000);

·purchasing white goods, furniture and entertainment equipment for himself and his children (approximately $20,000);

·giving large amounts of money away to his children (approximately $40,000), other family members and friends ($200 to $300 at a time on request);

·gambled large amounts – up to $1,000 per night on poker machines;

·purchased illicit drugs for himself and his friends (approximately $7,500); and

·paying rental arrears ($6,840).

10.     I also accept Mr Charles’ evidence, which went unchallenged, that in 2008 he was addicted to opioid analgesic medications that were prescribed for his chronic pain condition (Oxycodeine and Oxycontin) and he went “doctor shopping” for prescriptions of such medications. There is little contemporaneous medical evidence and Mr Charles did not call any of his treating or prescribing doctors. I am reasonably satisfied nevertheless, that Mr Charles was medically addicted to opioid analgesics in 2008. A NSW Health assessment dated 27 November 2008 refers to a “Long [history] of dependence on Oxycontin (back pain) and THC [cannabis] abuse”.[12] In that report it is also recorded that Mr Charles “has additction [sic]” and he was “not willing to accept THC use is causing him problems – judgement impaired”.[13] At that time, it appears that Mr Charles reported his daily routine was “getting up, pick up my Oxycontine [sic] from chemist visit my daughter… most days will smoke between 5/10 cones [of cannabis] with friends”.[14] The assessment records the following diagnoses:

“Prescription drug addiction (Oxycontin)

Situational crisis

THC Abuse – (10 years – 5/10 cones per day)”[15]

[12] Exhibit A4.

[13] Exhibit A4, pp 3-4.

[14] Exhibit A4, p 6.

[15] Exhibit A4, p 8.

11. I accept those diagnoses and find that Mr Charles’ judgement was impaired in November 2008. I note, however, that Dr Abbas and Dr Richards report that Mr Charles was not addicted to any such opioid medications in mid 2009,[16] and Dr Giblin reported no use of opiod medications in his report dated 15 December 2005.[17] On that basis I am prepared to accept that Mr Charles’ judgement may well have been impaired during the period in which he expended the lump sum he received in settlement of his compensation claim. On any measure such expenditure was ill-considered and reckless. When this activity is viewed through the lens of addiction and impaired judgement, the course of events Mr Charles pursued points to a lack of control without regard for future consequences that can best be described as irrational. The extent to which that course was dictated by addiction cannot readily be determined on the present evidence. In all likelihood, Mr Charles’ explanation can be accepted, that is, he wanted to provide for his children and his family and he wanted to break out of his depressed and lonely hermit-like state by impressing his friends with largesse. If that is correct, rationality is not entirely absent; many are those who receive large lump sums and disburse funds to assist family members. What sets Mr Charles’ case apart from such cases is his addiction and the effect .the drugs he was consuming and abusing had on his judgement. Those circumstances, I am satisfied, are special circumstances in this case.  

[16] Exhibits A12 and A 13.

[17] Exhibit A1.

12.     I note in passing that Mr Charles gave evidence that he is not able to recoup any of the gifts he gave to family members and friends – these have either been expended, broken or are still in use by those people, many of whom have very limited financial resources or capacity to repay Mr Charles.

13.     It appears that Mr Charles has very few assets other than the household furniture and a Toyota Celica he purchased in 2007.[18] On his evidence, the Toyota Celica vehicle was damaged in a motor vehicle accident in Canberra and Mr Charles is hoping that it will be repaired under warranty. However dubious that proposition appears, it is reasonable to expect that the vehicle has some value, although no estimate arises from the evidence. On the present evidence, the vehicle remains unrepaired in Canberra. It appears that Mr Charles’ assets, such as they are, may have little market value.

[18] T35.

14.     Mr Charles lives with a friend at the Three Ways Bridge Reserve outside Griffith in a house that has allegedly been condemned. He owes more than $8,000 in rental arrears to the Griffith Aboriginal Land Council (rent is payable at $90 per week) and is under threat of eviction.[19] He has not paid his electricity accounts with Country Energy and Jackgreen Energy (approximately $3,000 owing in each case).[20] Similarly, Mr Charles told me that he has accumulated debts at the Amcal Chemist in Griffith ($400) and he has not paid the water rates for which he is liable but he was unable to recall the amount owing.

[19] Exhibits A2, A3 and A7.

[20] Exhibit A14.

15.     Plainly enough Mr Charles is impecunious, but that alone does not constitute special circumstances for present purposes.

16.     It is also abundantly clear on the evidence that Mr Charles suffers from a number of health problems including old injuries affecting his left knee, his lumbar spine and his right shoulder; he suffers from chronic pain and depression; he has been addicted to opioid analgesic medications; and he suffers from untreated glaucoma. He is receiving treatment through the Aboriginal Medical Service and he has recently applied for appointment of a financial manager through that Service.[21]

[21] Exhibit A19.

17. In sum and having regard to all of the circumstances I am reasonably satisfied that Mr Charles’ case is one that is apart from the usual course. His case constitutes special circumstances that render it appropriate to treat part of his compensation lump sum payment as not having been made. The Social Security Act is beneficial legislation; its purpose is to alleviate penury and destitution within its terms. It is difficult to conceive of a case that is more redolent of penury and destitution than this case. On Mr Barone’s evidence, the Aboriginal Medical Service “scraped Mr Charles out of the gutter” and I have no reason to find otherwise. Nevertheless, it is necessary to take into account the interests of taxpayers when considering the exercise of the discretion conferred by section 1184K of the Act.

18. The purpose of the preclusion period provisions of the Act is clear enough; it is to prevent ‘double dipping’ in so far as income support payments are concerned. Mr Charles received New Start Allowance payments in the period from 4 December 2005 to 11 July 2006 and Centrelink recouped the amount of those payments from Mr Charles. That is correct and appropriate in the circumstances. Mr Charles must take some responsibility for the rational actions he took to provide assistance to his family. Whether or not there are issues of praxis and culture behind those decisions, I am satisfied that he took those decisions as an exercise of his own will. His explanation of the manner in which he made those decisions in respect of his immediate family, in which he considered issues of fairness between siblings for example, are consistent with rational thought. For these reasons it is not appropriate to treat all of the compensation lump sum payment as not having been made.

19. On balance, the preferable decision is exercise the s 1184K discretion in Mr Charles’ favour and to treat 50 percent of the lump sum payment as not having been made, thereby reducing the applicable preclusion period from 159 weeks to approximately 80 weeks (the precise duration is to be determined by Centrelink).

20.     Unfortunately for Mr Charles, this may not provide any immediate benefit or relief. The fact is that Mr Charles was qualified for a New Start Allowance as of 11 July 2006 but has made no subsequent claim. He informed me that he attended a Centrelink office in July 2009 with the intention of applying for a Disability Support Pension (DSP), and he was subsequently sent a claim form. He has not yet lodged this form. Thus, with regard to the revised preclusion period, it is not established that Mr Charles is qualified for a DSP or any other social security payment. With regard to a DSP, if all the qualification criteria are satisfied, and that remains to be tested, the earliest possible start date would be the day on which Mr Charles attended a Centrelink office in July 2009. Whether Mr Charles is entitled to any social security payment as a result of this decision is a matter to be determined by Centrelink on remittal.

21.     I note in closing that it is unfortunate that Centrelink did not inform Mr Charles when he first applied for review on 20 May 2008 that if he was successful he may not be entitled to any payment without first having made a claim.

decision

22.     The decision under review is varied to the extent that 50 percent of Mr Charles’ lump sum compensation payment is taken not to have been made. The matter is remitted to Centrelink to calculate the amount, if any, of any payment owing to Mr Charles as a result of this decision.

I certify that the 22 preceding paragraphs are a true copy of the reasons for the decision herein of Member S. Webb.

Signed:  ..................[sgd].............................................
  J. Lakin, Associate

Date of Hearing  27 August 2009
Date of Decision  2 September 2009

Applicant self-represented
Advocate for the Respondent       Ms J. Furner, Centrelink Legal Services