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

[2009] AATA 264

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 264

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2008/4867

GENERAL ADMINISTRATIVE DIVISION		)
Re		JOHN TAYLOR

Applicant

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

Respondent

DECISION

Tribunal Mr S E Frost, Member

Date22 April 2009  

PlaceSydney

Decision The decision of the Social Security Appeals Tribunal is varied.  This Tribunal decides that so much of the Applicant’s compensation payment is to be treated as not having been made as will have the effect that his lump sum preclusion period ended on 25 June 2008, rather than on 9 September 2008.

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

Mr S E Frost
  Member

CATCHWORDS

SOCIAL SECURITY – lump sum compensation payment – lump sum preclusion period – whether some part of the compensation payment should be regarded as not having been made – special circumstances – decision under review varied

Relevant Act

Social Security Act 1991 – s 1184K

Relevant Case Law

Re Dunn and Secretary, Department of Family and Community Services [2005] AATA 404

Re Davis and Secretary, Department of Family and Community Services [1999] AATA 94

Re Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114

REASONS FOR DECISION

22 April 2009 Mr S E Frost, Member        

Introduction

1.      On 31 January 2003 at Waterfall, south of Sydney, seven people were killed when a commuter train came off the rails and crashed. 

2.      John Taylor was a passenger on that train.  Some would say he was one of the lucky ones.  He survived the accident.  He was removed from the wreckage and taken to one of Sydney’s major public hospitals.  He had sustained multiple injuries.  He was treated in the public hospital for five weeks and was then discharged to a private hospital where, it seems, he received further ongoing medical treatment.

3.      Nearly three years after the accident, in November 2005, he accepted a lump sum compensation payment from the State Rail Authority of New South Wales.  One of the consequences of the compensation payment is that Mr Taylor became subject to a preclusion period under the Social Security Act 1991 (“the Act”).  That meant that for a period of time described as the “lump sum preclusion period”, Mr Taylor would not be entitled to receive a range of social security payments or benefits.  This period was calculated to run from 31 January 2003 to 6 December 2012 – that is, for almost ten years.

4.      In 2008, Mr Taylor asked for the lump sum preclusion period to be reduced, because he had run out of money.  The Social Security Appeals Tribunal (“SSAT”) reduced the preclusion period by a little over four years.  Mr Taylor, however, thinks that it should be reduced by a further six months. 

The issue

5.      The question for my determination is whether the preclusion period should be reduced as Mr Taylor requests.

6. The answer to that question depends on the terms of s 1184K of the Act. That section provides that the Tribunal, standing in the shoes of the Secretary, may treat the whole or part of a compensation payment as not having been made if the Tribunal thinks it is appropriate to do so in the “special circumstances” of the case.

The facts

7.      Mr Taylor received about 43% of the lump sum payment made by State Rail in November 2005.  The rest of the compensation amount went in reimbursements to Medicare, reimbursement of medical expenses paid by State Rail on Mr Taylor’s behalf, and payments to his lawyers. 

8.      After the payment was made to him, he was required to repay to Centrelink the amounts that he had received by way of social security payments from the date of the accident to the date of settlement.  This took a further 5% of the settlement amount.

9.      The total amount that he received in his hands was very considerable.  However, as the Secretary accepts, Mr Taylor has now spent it all.  Mr Taylor has a long history of alcoholism, drug use and criminal activity.  His alcoholism has led to major cognitive impairment.  That has been a major factor in his inability to manage his financial affairs since he received the compensation payment.

10.     It must be said that he attempted to use the money wisely.  He rejected the suggestion of buying a house for himself, in favour of investing the money to provide an income stream.  Unfortunately, the income that resulted did not cover all his expenses, so that he consistently withdrew extra amounts of money.  Eventually the investment was gone.

11.     He paid some of the money to his ex-wife, and he also paid some of it to his teenage daughter.  There is some indication that he made “loans” to friends, but there is no prospect that any of those loans will be repaid.

12.     He tried to set up a bike hire business.  He purchased a fleet of electric bikes for that purpose.  He registered a business name and applied for and was given an Australian Business Number.  He rented premises for the storage of the bikes,  but in the end, it was to no avail.  He was unable to create a viable business.  When he needed extra money, he turned to pawnbrokers.  He put the bikes up as collateral.  As interest charges have mounted up, the stock of bikes has gradually been depleted.  He started with twenty-one; he now has only four, and these are still with the pawnbroker. 

13.     He has no financial resources.  He says that he owes money to his sister and to a storage facility for the storage of a motor home.  He says it would cost him over $1000 to retrieve the remaining four bikes from the pawnbroker.

14.     He is homeless and destitute.  He told the Tribunal that he sleeps in cars, on the beach, or anywhere else he can find shelter.  On occasions, he has lived with friends or family, but these arrangements have always been temporary.  For some reason, he has been waiting several months for a public housing placement, although it seems that he is finally about to be offered long-term accommodation.

15.     His criminal activity, which dates back to 1976, has seen him in prison more than once, most recently from July 2007 to April 2008.  It was on his release from prison in April 2008 that he applied for a reduction in his lump sum preclusion period. 

Consideration of Mr Taylor’s circumstances

16.     The SSAT decision, made in September 2008, resulted in Mr Taylor’s entitlement to a disability support pension on an ongoing basis from the date of the decision. 

17.     It is not uncommon, when the SSAT decides to reduce a lump sum preclusion period, for the decision to provide that social security payments commence with immediate effect.  However, it is much less common for the SSAT to grant not only ongoing payments but back payments as well.  This, in effect, is what Mr Taylor is asking for.

18. The difficulty with his request is that he has shown that he is incapable of managing his financial affairs. Although everyone accepts that he has exhausted his entire compensation amount, he has never been able to explain, even within a reasonable tolerance, where such a lot of money went in such a short time. And now he asks for another lump sum (admittedly a much smaller one), so that he can get his life back in order. He asks the Commonwealth for assistance, when the clear expectation of the Parliament, as expressed in the Act, is that (special circumstances aside) he will not be a burden on the Commonwealth until the end of his preclusion period.

19.     He did little to advance his case before the Tribunal.  He attended the hearing by telephone, but appeared to be an unwilling participant.  He said more than once, “I don't know what you people want”.  When I explained that all I needed was for him to explain his circumstances, he resisted the invitation, complaining that he had already told his story multiple times before.  When the first hearing day ended unsatisfactorily after an hour, I reconvened the hearing later in the week.  This time Mr Taylor was assisted by his employment consultant Mr Gavin MacGregor.  Progress was once again slow and unsatisfactory, with Mr Taylor ultimately walking out of the hearing in frustration, or anger, or both.

20.     This behaviour confirms the difficulty that Mr Taylor experiences in processing information.  He could not focus on the questions asked.  He was incapable of making the only wise decision available to him – to participate openly and fully in the Tribunal hearing.  His behaviour clarifies, to a very great extent, how he reached the parlous position in which he now finds himself.

21.     It is clear, despite Mr Taylor’s failure to participate satisfactorily in the hearing, that his life since the accident has been difficult.  He is now undoubtedly destitute.  What few assets he still owns – the motor home and the four bikes – remain out of his reach as he cannot afford to retrieve them. Ongoing charges for storage of the motor home and interest payments on the bikes continue to reduce the money that he has available to live on.  That situation will continue until something is done to change it. 

22.     In a letter dated 6 March 2009, provided to the Tribunal after the hearing, Mr Taylor said this:

…

I’ve lost a business, most everything of value I had to survive.  …  I’ve got no confidence left, I feel like an animal trapped in a snare.  …  It’s all catch 22.  All I want to do is catch up.

…

Submissions and Consideration

23.     The Secretary submitted that a further reduction in Mr Taylor’s lump sum preclusion period would provide an “unwarranted windfall” to Mr Taylor.  The Secretary referred me to Re Dunn and Secretary, Department of Family and Community Services [2005] AATA 404 and Re Davis and Secretary, Department of Family and Community Services [1999] AATA 94. The applicant in Dunn had spent her compensation payment “recklessly”; the Tribunal commented that it was “not appropriate to forgive this conduct when so many other deserving persons have to rely on the public purse”.  In Davis, the Tribunal said:

… If the preclusion period is shortened or waived because of his reckless spending then that would be an invitation to others in similar circumstances to do likewise and then to become dependent on the public purse.  One could anticipate the public outcry, and reasonably so.

24.     I was also referred to Re Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114, where the Tribunal stated that consideration of whether it is appropriate to disregard all or any part of a compensation lump sum in the special circumstances of the case necessarily requires consideration of the general administration of the social security system.

25.     There are similarities between the circumstances in this case and those in Dunn and Davis, but there are also some very important differences.  Perhaps the most important difference is that in both Dunn and Davis, there was a finding of recklessness in relation to each of the applicants.  Both applicants also owned a house.  In Mr Davis’ case, the Tribunal considered that he could either sell his house – the Tribunal referred to it as a “realisable asset” – or use it for income-producing purposes by letting some of its rooms to boarders.

26.     Mr Taylor, of course, has no such means at his disposal.  He was also not reckless in the spending of his money.  He was clearly unwise, but he lacks the level of insight required to ground the “utter carelessness” that is the hallmark of recklessness.

27.     As has been pointed out in other cases, the Commonwealth’s social security budget is finite.  Every dollar provided as a result of the exercise of the “special circumstances” discretion must be recognised as a dollar no longer available to those remaining members of the community who rely on the public purse.  The discretion is therefore to be exercised carefully, and sparingly, for the benefit of those who genuinely warrant its exercise.

28.     I consider it appropriate in the special circumstances of Mr Taylor’s case to treat a further part of his compensation payment as not having been made.  While the SSAT decision had the effect of providing him with ongoing financial support, it did nothing to address the seriousness of the position he had been in since his release from prison in April 2008.  Because he was denied financial support, his position deteriorated further to the point where he became truly destitute.  His is a case which warrants a further exercise of the discretion.

Decision

29. In terms of s 1184K of the Act, it is appropriate, in view of the special circumstances of Mr Taylor’s case, to regard a further part of his compensation payment as not having been made, so as to have the effect that social security payments are made to Mr Taylor from 26 June 2008, the date of his application to the SSAT, rather than from 10 September 2008, the date of the SSAT decision.

30.     Mr Taylor’s lump sum preclusion period will therefore end on 25 June 2008.

I certify that the 30 preceding paragraphs are a true copy of the reasons for the decision herein of Mr S E Frost, Member

Signed:         .....................................[sgd]...........................................
  Associate

Date/s of Hearing  2 and 6 March 2009
Date of Decision  22 April 2009

Appearance for the Applicant    Self-represented 

Solicitor for the Respondent     Ms H Schuster, Centrelink Legal Services