Kelso and Department of Family and Community Services - [2001] AATA 41

DECISION AND REASONS FOR DECISION [2001] AATA 41

ADMINISTRATIVE APPEALS TRIBUNAL )

) No Q00/853

GENERAL ADMINISTRATIVE DIVISION       )
           Re      NEVILLE KELSO
  Applicant
           And    SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
  Respondent

DECISION

Tribunal Deputy President DP Breen, Presidential Member

Date25 January 2001
PlaceBrisbane

Decision The Tribunal sets aside the decision under review and remits the matter to the respondent with the direction that so much of the compensation lump sum be disregarded as to shorten the preclusion period so that it ceases from the date of this decision.

(Sgd) DP BREEN
PRESIDENTIAL MEMBER
CATCHWORDS
SOCIAL SECURITY - compensation preclusion period - whether "special circumstances" exist to permit waiver - retention of benefit through assets.

Social Security Act 1991 ss 1184
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Groth v Secretary, Department of Social Security (1996) 40 ALD 541
Lukic and Secretary, Department of Social Security, AAT Decision 6944 delivered 6 May 1991
Secretary, Department of Social Security and Winterbotham, AAT Decision 6499 delivered 11 December 1990

REASONS FOR DECISION

25 January 2001 Deputy President DP Breen, Presidential Member

This was an appeal against a decision of the Social Security Appeals Tribunal dated 27 July 2000 which affirmed the decision of an Authorised Review Officer. That decision imposed a preclusion period from 14 March 1998 to 29 November 2001 and recovered a compensation charge in the amount of $20,033.09 from the applicant.
The matter was heard by me in Hervey Bay on 14 December 2000. The matter resumed by telephone for submissions by both parties on 21 December 2000. Mr Neville Kelso, the applicant, represented himself. Mr P Kanowski, Departmental Advocate, represented the respondent. Mr Kelso gave oral evidence at the hearing and the following documents were taken into evidence:

Exhibit 1 "T" Documents
Exhibit 2 Printout of payments made to Mrs Kelso by Centrelink
Exhibit 3 Statement of Financial Circumstances

Mr Kelso was injured in a work accident on a farm in the Atherton Tablelands on 12 February 1996. He settled his claim for damages on 9 September 1999 for $204,000. With the compensation monies Mr Kelso put money towards the purchase of a house, purchased a tractor and slasher and a tow truck.
It was Mr Kelso's intention to set himself up with a job so that he did not have to rely on social security in the future. He purchased the tractor in order to start a small slashing business. However, there were already a number of these businesses in the Gympie region. Also, Mr Kelso's back injuries prevented his working in this manner for prolonged periods. As such, this business was not viable. He told the Tribunal that he had been advertising the tractor for 11 months but has received little interest in it. The current price is $4,000 less than that for which it was purchased.
With respect to the tow truck, it was intended that both Mr and Mrs Kelso would operate this business. However, their Yellow Pages add was placed under "Tow Accessories" rather than "Towing" which detrimentally affected the business. Further, Mr Kelso purchased the truck from what he thought was a reputable dealer only to discover that the truck required extensive repairs. The truck has been advertised for sale for 4 months but, given the repairs needed, it is not selling.
The house is only partially renovated and there is an outstanding mortgage of approximately $20,000. For the house to be sold in its current state would necessarily result in a loss.
Mr and Mrs Kelso have 3 dependent teenage children and are living on Mrs Kelso's social security payments of around $670 per fortnight. After basic expenses are paid out, the Kelso's have around $200 per month to pay for food, clothing, car maintenance, school materials, medical expenses and other incidental expenses.
The issue for the Tribunal is whether there are "special circumstances" in this case to justify disregarding some or all of the compensation monies under Section 1184 of the Social Security Act 1991 when calculating the preclusion period.
There is no legislative definition of "special circumstances" but the phrase has been considered judicially on a number of occasions. In the case of Re Beadle and Director-General of Social Security (1984) 6 ALD 1, it was held that the circumstances in question must be "unusual", "uncommon" or "exceptional" in order to be considered special. In the case of Groth v Secretary, Department of Social Security (1996) 40 ALD 541, Keifel J observed that when determining whether a person's circumstances are "special" one should look at the effect upon the claimant if the waiver provisions were not applied. If the consequences were unintended by the legislation, or the effect on the person concerned was different from that which would be felt by others, then the circumstances may be "special".
The respondent referred the Tribunal to two cases which considered whether financial hardship constituted a "special circumstance". These were the cases of Lukic and Secretary, Department of Social Security, AAT Decision 6944 delivered 6 May 1991 and Secretary, Department of Social Security and Winterbotham, AAT Decision 6499 delivered 11 December 1990. These cases are authority for the proposition that the mere fact that a person chooses to convert their compensation monies into assets does not of itself constitute a "special circumstance". Where a person retains the benefit of their compensation monies, albeit in the form of assets, it would give the applicant an unfair advantage over those who used their monies to support themselves, if social security payments were to be reinstated.
This view, in principle, is one with which this Tribunal agrees. However, each case turns upon its own facts.
It is not just a matter of Mr Kelso suffering from severe financial hardship. The Kelso family as a whole are suffering as a result of the preclusion period.
The truck, in its current condition, is devalued and practically unsaleable. The tractor and slasher, although mechanically sound, are seriously devalued and, after being up for sale for over 11 months, can also be classified as unsaleable in the present economic climate. Effectively, Mr Kelso has not retained the benefit of his compensation monies in the form of these assets. Not only has he lost a lot through devaluation, he cannot use them to produce an income and, despite a concerted effort, cannot liquefy them either.
There is already a mortgage against the house making it unlikely that Mr Kelso would be able to borrow against it to support himself until the end of the preclusion period. While theoretically Mr Kelso could try to seel the house, the Social Security Act is beneficial legislation. Requiring a person to sell an unfinished family home at a substantial loss is in no way beneficial to that person, no matter how one construes it.
Where a person has retained the benefit of their compensation monies in the form of assets and can either liquefy them, or has not made a serious attempt to do so, then it is unlikely that a finding of "special circumstances" would be justified. In this case, however, the family is suffering severe financial hardship and, despite persistent efforts, have been unable to convert their assets back into cash. Further, the significant devaluation of their assets has further lessened any benefit they have retained from the compensation monies.
As such, the Tribunal finds that it is appropriate, in this particular case, to exercise the discretion under Section 1184 of the Social Security Act 1991 in favour of the applicant.
The Tribunal sets aside the decision under review and remits the matter to the respondent with the direction that so much of the compensation lump sum be disregarded as to shorten the preclusion period so that it ceases from the date of this decision.
I certify that the 17 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President DP Breen, Presidential Member
Signed:         Denise Burton         (Secretary)
Date/s of Hearing  14.12.00
Oral Submissions  21.12.00
Date of Decision  25.1.01
Solicitor for the Applicant         Applicant appeared in person
Solicitor for the Respondent    Mr P Kanowski, Departmental Advocate