Levi and Secretary, Department of Family and Community Services

[2005] AATA 250

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 250

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2004/920

GENERAL ADMINISTRATIVE DIVISION		)
Re		UZIEL LEVI

Applicant

And SECRETARY, DEPARTMENT
OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Mr RG Kenny, Member

Date24 March 2005

PlaceBrisbane  

Decision The Tribunal affirms the decision under review.

.................[Sgd].......................

R G Kenny
  Member

CATCHWORDS

SOCIAL SECURITY – benefits and entitlements – lump sum compensation payment – lump sum preclusion period  – special circumstances to shorten preclusion period not found.

Social Security Act 1991 s 1184K(1)

Haidar v Secretary, Department of Social Security (1998) 28 AAR 288; (1998) 52 ALD 255
Kertland v Secretary, Department of Family and Community Services (1999) 57 ALD 600
Re Ivovic and Director-General of Social Services (1981) 3 ALN 95
Males v Secretary, Department of Family and Community Services (1999) 57 ALD 793
Beadle v Director-General of Social Security (1985) 7 ALD 670
Secretary, Department of the Social Security v Smith (1991) 30 FCR 56
Re Secretary, Department of Social Security and Ellis (1996) 43 ALD 41
Re Lukic and Secretary, Department of Social Security (AAT 6944, 6 May 1991)
Re Secretary, Department of Social Security and Bolton (1989) 18 ALD 464
Marsh and Secretary, Department of Family and Community Services (2004) 81 ALD 255
Re Secretary, Department of Social Security and Hickman (1996) 43 ALD 75
Re Department of Social Security and Turner (AAT 8739, 26 May 1993)
Re Secretary, Department of Social Security and Galea (AAT 9081, 28 October 1993)
Director General of Social Services v Hales (1983) 47 ALR 281
Re Secretary, Department of Social Security and VXY (1993) 30 ALD 681

REASONS FOR DECISION

24 March 2005 Mr RG Kenny, Member

Background

1.      Uziel Levi (the applicant) was injured in a motor vehicle accident in 1992 and, thereafter, received periodic workers’ compensation payments until 15 April 1997.  As a result of an arbitration process, Mr Levi was awarded the amount of $438,363 in damages.  On 23 December 1997, a customer services officer with Centrelink, a statutory authority within the portfolio of the Department of Family and Community Services (the respondent), made a decision to preclude the making of social security payments under the Social Security Act 1991 (the Act) to Mr Levi for the period from 15 April 1997 until 18 January 2005.  On review, that decision was affirmed by an authorised review officer from Centrelink on 21 October 2002 and by the Social Security Appeals Tribunal on 28 February 2003. 

2.      On 15 June 2004, Mr Levi lodged a claim for payment for a special benefit, a type of income support payment available under the Act and, on 20 July 2004, a Centrelink officer rejected the claim on the basis that the preclusion period had not expired.  That decision was affirmed by an authorised review officer on 18 August 2004 and, in turn, by the Social Security Appeals Tribunal on 2 November 2004.   On 3 December 2004, Mr Levi sought review of that decision by the Administrative Appeals Tribunal (the Tribunal). 

Hearing

3.      Mr Levi attended the hearing but was not represented.  Ms C Heffner, from Centrelink’s Service Recovery Team, appeared on behalf of the respondent.

4.      In evidence were the following documents:

§exhibit 1 the “T” documents (T1-T40) prepared in accordance with section 37 of the Administrative Appeals Tribunal Act 1975

§exhibit 2    an Arbitration Award, dated 7 February 1997, with attachment “Module R”

Issues and Legislation

5.      The Act makes provision for Centrelink to impose a period of preclusion from receipt of certain income support payments in situations where a person has received a lump sum compensation payment.  The duration of the period imposed in Mr Levi’s case is noted above and it was accepted by him as being correctly calculated.  That matter has been affirmed on two occasions by the Social Security Appeals Tribunal and I am satisfied that the preclusion period ended on 18 January 2005.  Since that date, Mr Levi has been in receipt of newstart allowance, another form or income support available under the Act. 

6.      There is provision in the Act for part of a compensation payment to be disregarded and this has the effect of reducing the period of preclusion.  Sub-section 1184K(1) of the Act reads:

“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.”

7.      In this matter, the issue for determination is whether there are special circumstances that make it appropriate to treat part of Mr Levi’s compensation payment as not having been made.

Consideration

8.      Mr Levi submitted that there were special circumstances in his case because of his financial position and because of the physical problems that he experiences because of his 1992 injuries.

9.      The compensation monies that Mr Levi received in 1997 have been expended with the major items of expenditure being a residential property for which he paid $168,000, renovations on the property amounting to approximately $31,000, a car for which he paid $8,000 and travel expenses.   He has family in Israel and, in 1997, he travelled with his wife and child to Israel to visit his family and was away from Australia for approximately six months.  During that period, they also travelled to Egypt, to England and Scotland and, on route to Australia, stopped for two weeks in Thailand.  Whilst in Israel, they were accommodated by his family.  In other places, they had hotel or motel accommodation. Mr Levi provided some of his family members with financial assistance by gifting them various amounts.  He estimated the total spent in respect of the six months absence from Australia was $50,000.  After the second child was born in 1998, Mr Levi invited members of his family to come from Israel  to Australia so that they could see the child and he estimated the costs which he bore in that regard to be $15,000.  The remainder of the money was spent on incidental expenses including holidays taken by his wife to visit members of her family in Sydney and Canberra.

10.     Mr Levi is now divorced from his wife and is in dispute with her about the period of contact he can have with the children and also with the terms of any property settlement that can be reached between them.  He still lives in the house and does not want to sell it because he sees this as being of benefit to his children in the future. Also, he believes that the house will enhance his chances of having extended contact with the children. 

11.    In relation to his health, Mr Levi is in constant pain, in particular in his left knee and lower back.  He has lost the sight in his right eye and believes he suffers from depression although he has had no treatment for this. He said that these were associated with his initial accident in 1992.

12.    In 2003, Mr Levi made a further trip to Israel to attend a family wedding.  He and his wife were separated at that time but, after he had been in Israel for some months, she made telephone contact with him and asked him to return to Australia.  Mr Levi did this and they cohabited in the house for a few months before, eventually, his wife left the home with the children. She and the children now live with her mother.  Mr Levi has lived in the house on his own since June 2003.  He was unsure of the value of the house but noted that his neighbour’s home was for sale for $380,000 and he considered that his house was of an equal standard to it. 

13.    The preclusion period has now passed and, as noted above, Mr Levi is currently in receipt of income support under the Act.  During the currency of the preclusion period and since that time, he has been able to make ends meet by obtaining occasional employment in various kinds of work such as gardening, building, making retaining walls, doing rock work and making baby swings which he sold at a local market.  He said the work was not very remunerative but it had enabled him to save enough money to finance his second trip to Israel.  He said that he is currently in debt in respect of payment of utility services such as telephone and electricity and also rates.  He has had some difficulty with these in the past but has always managed to pay them. 

14.    Mr Levi recalled receiving a letter from Centrelink in 1996 which advised that, in the event the he received compensation payments, this may prevent him from receiving various kinds of income support payments under the Act.  He said he did not pay much regard to the letter because he was not receiving any income support payments under the Act and he also was distracted by the fact that his wife had had a baby only a month before and this occupied much of his time.  In addition, he said that, at that time, legal proceedings had been initiated and he had no idea whether he would receive  compensation or in what amount. 

15.    In Haidar v Secretary, Department of Social Security (1998) 28 AAR 288, Hill J referred to the purpose of scheme relating to the imposition of preclusion periods as being the avoidance of a situation where a claimant is entitled to both social security benefits and compensation benefits in the nature of income through a lump sum payment. He considered the discretion in sub-section 1184(1) of the Act, which was identical to sub-section 1184K(1) as it now reads, and said (at 297):

“…… the legislature was conscious of the possible harshness of a rule structured in an arbitrary way.  Section 1184, therefore, provided  the means whereby the Secretary or, in the event ultimately of an appeal to the Administrative Appeals Tribunal, that Tribunal, could alleviate the harshness of the statutory provision in an appropriate case but only where there were special circumstances.  The question of what constitutes special circumstances has been the subject of a number of decisions of this Court.  It suffices here to say no more than that something is required which would take the matter out of the usual ordinary case: Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545 per Kiefel J, Secretary Department of Social Security v Ellis (1997) 46 ALD 1 at 5 per Carr J.”

16.    Merkel J adopted that approach in Kertland v Secretary, Department of Family and Community Services(1999) 57 ALD 600 at 608.  There, His Honour referred to several decisions in relation to the meaning of the term “special circumstances” including Re Ivovic and Director-General of Social Services (1981) 3 ALN 95 where the Tribunal had stated that use of the word "special" is intended to allow the decision-maker the fullest opportunity to consider the particular circumstances of each case; and Beadle v Director-General of Social Security (1985) 60 ALR 225 where the Full Federal Court observed (at 228) that the phrase "special circumstances", although lacking precision, is sufficiently understood so as "not to require judicial gloss" and also that special circumstances would usually include events that rendered the operation of the statute in a particular case "unfair or inappropriate".

17.    The Tribunal, in Males v Secretary, Department of Family and Community Services (1999) 57 ALD 793, described Beadle (above) as a useful starting point in considering the concept of “special circumstances”. It  noted:

“that the Full Federal Court acknowledged that circumstances need not be unique to be ’special’ but ’they must have a particular quality of unusualness that permits them to be described as special’.  The court also said that the word ’special’ in its context ’looks to circumstances which are unusual, uncommon or exceptional’ and whether those circumstances exist will be dependent upon the context where a determination needs to be made as to whether the circumstances are different from ’the usual run of cases’.

18.    I am satisfied that the respondent advised Mr Levi of the effect that the receipt of the compensation lump sum may have on social security payments. This was done by letter, dated 18 May 1996, a copy of which was in evidence. Therein, a range of types of income support payments were listed. This list included special benefit and new start allowance. The letter advised that these may be affected in the future if a lump sum compensation payment was received; it indicated that, if he had any questions about the content of the letter, he could contact a nominated Centrelink officer; it said that the letter was very important; and it advised Mr Levi to keep it in case he needed to read it again.

19.    I accept that Mt Levi suffers continuing health problems.  His evidence was that his problems are associated with his 1992 accident.  He said that he also suffers from depression but there is no evidence of any formal diagnosis of that condition and it was Mr Levi’s evidence that he receives no treatment for it.  It was for the continuing effects of accident-related injuries that the compensation payment was made and I am satisfied that this does not constitute a special circumstance for the purpose of subsection 1184K(1) of the Act.  In Secretary, Department of the Social Security v Smith (1991) 30 FCR 56, special circumstances were found where the claimant has been incapacitated for a condition of hepatitis but that condition was unrelated to the work-related injury in that case. 

20.    A person’s financial position may lead to a finding of special circumstances where that position goes beyond straitened and is truly exceptional: see, for example, Re Secretary, Department of Social Security and Ellis (1996) 43 ALD 41. In determining whether a person’s financial position reaches that level, regard must be had to the assets that are available to the person. In this case, the applicant is a joint tenant, along with his former wife (see exhibit 2) of an unencumbered house in Mullumbimby and he also has his own motor vehicle. Although I am not in a position to make findings in relation to the market value of the house, Mr Levi’s evidence suggests that the house has a value somewhere in the order of $380,000. Some of Mr Levi’s expense may be considered extravagant. In particular, I am satisfied that this description applies to the first of his trips to Israel when he also visited parts of Europe and gifted sums of money to his family in Israel. However, the purchase of the house can only be described as a prudent use of his compensation monies as it enabled at least some of his settlement monies to be preserved and, indeed, to increase in value.

21.    Given the availability of his assets, the overall financial circumstances of the applicant can not be described as being beyond straitened or truly exceptional.  However, his submission was that the house should not be taken into account because of his desire to keep it as a future asset for his children and also as a base for him to have contact with them.

22.    In some cases, it has been considered reasonable for a person in Mr Levi’s position to sell, either actually or notionally, an asset acquired with monies from a lumps sum payment of compensation, even the family home, in order to alleviate financial difficulty: see Re Lukic and Secretary, Department of Social Security (AAT 6944, 6 May 1991), Re Secretary, Department of Social Security and Bolton (1989) 18 ALD 464 and Marsh and Secretary, Department of Family and Community Services (2004) 81 ALD 255. In other cases, it has been considered unreasonable to require this to be done: see Re Secretary, Department of Social Security and Hickman (1996) 43 ALD 75, Re Department of Social Security and Turner (AAT 8739, 26 May 1993) and Re Secretary, Department of Social Security and Galea (AAT 9081, 28 October 1993).

23.      Each case will turn on its own facts and, in Mr Levi’s case, the situation may well change after property matters are settled with his former wife.  In his evidence, he said that if, as part of the property settlement, the house had to be sold, he would allow his wife to live there with the children.  That, of course, is a matter of choice for Mr Levi. However, if he is deprived of his share of the house or surrenders it to his former wife, he is relieved to some extent of financial obligations to her and the children.  He will need to find rental accommodation for himself and to use for any contact that he has with his children.  In that regard, he would be in a position not significantly different from that of many other recipients of social security benefits who, as noted in Director-General of Social Services v Hales (1983) 47 ALR 281 at 321, are not uncommonly in that situation: see also Re Secretary, Department of Social Security and VXY (1993) 30 ALD 681 at 692 and Marsh and Secretary, Department of Family and Community Services (2004) 81 ALD 255.

24.    An exercise of the discretion in sub-section 1184K(1) of the Act would bestow a double benefit on a person in Mr Levi’s position.  The provision requires special circumstances before that result can be achieved.  In this case, I am satisfied that the matters, raised by Mr Levi do not constitute, individually or in combination, circumstances that are unusual, uncommon or exceptional such that it would be unfair or inappropriate to give effect to the legislative intention reflected in the scheme which imposed the preclusion period.  I find that there are no special circumstances such as would justify the exercise of the discretion under sub-section 1184K(1) of the Act to treat some part of Mr Levi’s compensation sum as not having been paid.

25.    The decision under review is affirmed.

I certify that the 25 preceding paragraphs are a true copy of the reasons for the decision herein of Mr RG Kenny, Member

Signed:     Camille Banks 

Associate

Date of Hearing  16 March 2005 (Coolangatta)
Date of Decision  24 March 2005   

The Applicant Appeared in Person

For the Respondent                  Ms C Heffner, Departmental Advocate