Madrick and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
[2009] AATA 408
•4 June 2009
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2009] AATA 408
ADMINISTRATIVE APPEALS TRIBUNAL )
) No: 2008/5914
GENERAL ADMINISTRATIVE DIVISION )
Re: DAVID MADRICK
Applicant
And: Secretary, Department
of Families, Housing
Community Services and
Indigenous Affairs
Respondent
DECISION
TribunalDr J D Campbell, Member
Date4 June 2009
PlaceSydney
DecisionThe decision under review is set aside with the relevant preclusion period to now end on 1 May 2009.
..................[sgd]............................
Dr J D Campbell
Member
CATCHWORDS
Social Security – Lump Sum Compensation Payment – Preclusion Period – Special Circumstances
RELEVANT ACT/S:
Social Security Act 1991 – sections 17, 1169, 1170, 1184K
RELEVANT CASE LAW
Re Beadle v Director-General of Social Security (1984) 6 ALD 1; 1 AAR 362
REASONS FOR DECISION
4 June 2009
Dr J D Campbell, Member
Basic facts
1. Mr Madrick was born on 30 January 1959 and left school during Year 12 in May 1976. Mr Madrick was injured in a traffic accident on 23 July 2004. Mr Madrick claimed workers’ compensation from CGU Workers Compensation, with ongoing liability declined from 6 July 2005 and with weekly payments ceasing on 5 July 2005 (T7). Mr Madrick also claimed Salary Continuance Insurance from BT Financial Group, with BT Financial Group reporting monthly payments of $2,152.77 gross at least until the period ending 27 June 2005 (T9). Mr Madrick also lodged a claim under the Motor Accidents Compensation Act 1999 (a third party claim) (T17, p 108).
2. Mr Madrick received a lump sum compensation payment of $25,500 from CGU Insurance in settlement of his workers’ compensation claim on 18 May 2006 (T 24, p 172). On 17 February 2006, Centrelink, having considered the terms of the compensation settlement concluded that there was no future preclusion period applicable to that settlement. Further, Centrelink advised Mr Madrick in the same letter that if he were to receive a further lump sum payment as a result of injuries arising from the same compensable event, a new preclusion period may be needed to be worked out (T15).
3. On 6 June 2006, Mr Madrick’s third party claim was settled with GIO (“the insurer”) for an amount of $350,000.00 inclusive of legal costs (T17, p 112). PK Simpson and Co detailed in a letter to Mr Madrick on 21 August 2006 that they had received, as a consequence of the settlement, a cheque for $233,449.93, with two amounts deducted from the $350,000 settlement amount, namely a Health Insurance Commission payment of $35,000.00 and a Workers’ Compensation payback of $81,550.07. Further, an amount of $37,544.60 was deducted for fees and other expenses, with the balance owing to Mr Madrick being $195,905.33. PK Simpson and Co summarised the total settlement monies to be received by Mr Madrick in the following terms:
Trust cheque dated 21 August 2006 $195,905.33
Workers Compensation lump sum cheque dated 18 May 2006 $25,500
HIC Re-imbursement $34,912.25.
Total settlement monies of client: $256,317.58
4. PK Simpson and Co also noted in the same letter that the Worker’s Compensation Payback has increased from $58,925.57 to $81,550.07 as a result of repaying the $25,500.00 worker’s compensation lump sum settlement (T19). It is also noted that an amount of $47,969.00 was to be repaid to BT Financial in relation to Salary Continuance Insurance, and that Mr Madrick was advised, as noted in the signed authority to settle document, that he would not be able to receive Social Security payments from Centrelink for a period of approximately 250 weeks from the date of settlement (T19, p 120).
5. Mr Madrick acknowledges that he received a lump sum payment of $195,905.33 on 26 August 2006, a refund of $35,000 from the Health Insurance Commission on 28 August 2006, as well as the Worker’s Compensation lump sum of $25,500.00 on 18 May 2006. Furthermore, Mr Madrick acknowledges that he received a further cash payment in July 2007 of $166,950 as a consequence of a settlement with BT Superannuation Employer Plan.
6. Mr Madrick lodged a claim for Disability Support Pension on 5 July 2005 (T12). The claim was granted on 23 September 2005 (T14). On 8 January 2009 Mr Madrick was advised by Centrelink that because of his compensation settlement he could not be paid Disability Support Pension until after 8 September 2009 (Exhibit R1).
7. On 24 June 2006, Centrelink calculated that Mr Madrick was entitled to a lump sum compensation payment of $314,336.49 after deducting an amount of $35,663.51 of periodic payments (Exhibit R3) and, as a consequence, Mr Madrick was subject to a preclusion period commencing on 6 July 2005 and ending on 3 November 2009 (Exhibit R2).
8. On 21 October 2008, the decision was affirmed by an authorised review officer.
9. On 24 October 2008, the Social Security Appeals Tribunal set aside the decision of the Authorised Review Officer and substituted that Mr Madrick was subject to a preclusion period of 226 weeks commencing on 7 May 2005 and extending to 8 September 2009.
Issues
10. The relevant issues in the matter are:
(a)What was the amount of lump sum compensation paid to Mr Madrick as a consequence of injuries received from the motor vehicle accident of 23 July 2004?
(b)Is Mr Madrick subject to a preclusion period and what is the temporal definition of such a preclusion period?
(c)Do special circumstances exist?
(d)Is it appropriate to treat the whole or part of the compensation payment as not having been made?
Consideration and findings
11. In addressing the amount of lump sum compensation paid to Mr Madrick as a consequence of injuries received from the motor vehicle accident of 23 July 2004, I concluded that Mr Madrick received settlement amounts of $25,500.00 from CGU Compensation insurers on 18 May 2005 and $350,000.00 from GIO General Insurance in relation to the third party claim. Included in the third party settlement were amounts to pay $25,500.00 to CGU Compensation insurers for the lump sum paid by them to Mr Madrick on 18 May 2005 and a further amount of $35,663.51 to repay CGU Workers Compensation for periodic compensation payments paid to Mr Madrick during the period commencing 26 July 2004 and ending on 5 July 2005. In relation to the end date of periodic compensation payments, I observe and so find that the material before clearly defines such an end date. In so finding, I refer to both the letter to Mr Madrick from CGU Workers Compensation of 22 June 2005 (T7) and the schedule of periodic payments made by CGU to Mr Madrick (Exhibit R1). I would also note that the third party claim settlement included an amount of $47,969.00 designated as repayment to BT Financial in relation to Salary Continuance Insurance.
12. In addressing the quantum of the lump sum compensation payment paid to Mr Madrick, I would make the following observations:
·The total sum settled upon in the two settlements was $375,500 but $25,500.00 agreed upon in the second settlement was to reimburse CGU Workers Compensation for its earlier payment. As such, the quantum of the lump sum compensation payment should be determined at $350,000.00, for to do otherwise would involve a double counting of the $25,500.00 compensation amount.
·The salary continuance insurance paid by BT Financial was a monthly payment. It would appear to be an insurance associated with Mr Madrick’s superannuation arrangements with BT Financial. In the absence of further detail as to actual repayment of the $47,969.00 and whether such payment was part of the superannuation settlement and payment in July 2007, I take the matter no further. In so stating I am mindful that section 17(4) of the Social Security Act 1991 (‘the Act’) speaks of periodic compensation payments. I further note that section 17(2) of the Act defines compensation, and that section 17(2A) of the Act excludes the operation of section 17(2)(d) (compensation means any other compensation or damages payment, whether the payment be in the form of a lump sum or in the form of a series of periodic payments) in the circumstances where the recipient has made contributions (for example, by way of insurance premiums) towards the payment, and the agreement under which the contributions are made does not provide for the amounts that otherwise would be payable under the agreement being reduced or not payable because the recipient is eligible for or receives payment that are compensation affected payments. To summarise, I am unable to make, in the absence of an understanding of documentation relating to the policy, any determination as to whether such salary continuance insurance payments could be considered periodic compensation payments. Furthermore, I would also need to understand whether such payments were reimbursed or whether they were included in settlement of a final superannuation payout, as it would appear that Mr Madrick elected to be responsible for repaying such payments.
·I would also note that there is confusion created by various documents as to both the quantum and make up of monies repayable to the Workers’ Compensation insurance authority. In the settlement document at T19 (p 120), the amount is nominated at $58,925.57, while in the settlement statement at T19 (p 122) the amount is nominated at $81,550.07. In a letter dated 21 August 2006 to Mr Madrick, PK Simpson & Co, state that the difference between the two figures relates to the necessity to repay the $25,500.00 to CGU Workers Compensation, which was paid to Mr Madrick on 18 May 2005.
·I would note that the documentation before me does not detail the particular items and their costs that are being reimbursed to CGU Workers Compensation and contained within the nominated amount of $58,925.57.
13. I would conclude that there is documentation (Exhibit R1) before me that clearly defines an amount of $35,663.51 being paid as periodic compensation payments to Mr Madrick between 26 July 2004 and 5 July 2005.
14. In light of the foregoing, I conclude that Mr Madrick received a lump sum compensation payment of $350,000.00 less periodic payments of $35,663.51, namely $314,336.
15. Section 17(3) of the Act defines that in the circumstances of this matter the compensation part of the lump sum compensation payment is 50 per cent of the lump sum compensation payment, namely $157,168.
16. Section 1170 of the Act defines that in the circumstances of the matter, a preclusion period, which is to commence on the day following the last day of the periodic payment period, will be calculated by dividing the compensation part of the lump sum ($157,168.00) by the income cut-out amount ($693.88), which equates to 226 weeks.
17. In summary determination, and as a consequence of the settlement of his two claims, a preclusion period of 226 weeks is imposed on Mr Madrick which commences on 6 July 2005 and concludes on 3 November 2009. During the lump sum preclusion period, Mr Madrick, pursuant to section 1169(1) of the Act, is precluded from receiving a compensation affected payment. Section 17(1) of the Act defines a “compensation affected payment” to include a disability support pension or a carers’ payment, but not a carers’ allowance.
Special Circumstances:
18. Section 1184K(1) of the Act provides that the Secretary may treat the whole or part of the compensation payment as not having been made if the Secretary thinks it is appropriate to do so in the special circumstances of the case.
19. Toohey J in Re Beadle and Director-General of Social Security (1984) 6 ALD 1 observed that the adjective ‘special’ looks to circumstances that are unusual, uncommon or exceptional, with the focus of analysis being on the context in which they occur and a conclusion drawn that the circumstance considered must have a particular quality of unusualness that permits them to be described as special.
20. Mr Madrick provided documents (Exhibits A1 and A2) and further addressed on the issue of special circumstances. The material provided by him described the following issues:
·Living Arrangements: Since 1994, he has been sharing accommodation with a person who is HIV positive and who developed AIDS and was hospitalised in 2000. Initially, they shared accommodation in Erskineville, before moving to Department of Housing accommodation prior to Mr Madrick purchasing the current accommodation in 2007 for $240,000 on the New South Wales Central Coast with money from the lump sum settlement and superannuation withdrawal.
Mr Madrick spent a further $35,000.00 on essential repairs (electricals, floorings, cupboards). His housemate is on a disability support pension, but contributes $150 a fortnight for rent and $150 a fortnight towards utilities costs. His house mate is said to suffer difficulties with memory and concentration but is able to do physical work, while Mr Madrick is unable to do physical work because of cervical and thoracic spine disabilities.
·Family Circumstances: Mr Madrick is the remaining child of his parents. One brother suicided, while a second brother died from poisoning. Mr Madrick’s mother is elderly and frail, copes with everyday activities in her own home, but needs increasing assistance from Mr Madrick. His father has dementia and resides in a high care nursing home in Laurieton. A grandmother resides in a nursing home in Walcha, with Mr Madrick bearing responsibilities for liaison and advice and taking the parents (if able to travel) to visit the grandmother by car.
·Gambling Habits: Mr Madrick stated that he has a long term gambling habit, commencing in 1990 associated with poker machines. Was made bankrupt in 2002 and discharged in 2005. No longer has ownership of any credit cards. Mr Madrick started gambling again after the accident in 2004, and with workers’ compensation payments and lump sum compensation payments he continued to gamble heavily until 2007 when he sought treatment for his addictions. Mr Madrick estimates gambling expenditure at between $30,000.00 and $60,000.00 over a twelve month period, and presented in evidence ATM transactions totalling $58,000.00 over a 12 month period commencing 23 July 2006 (Exhibit A2).
·Financial: As at 30 April 2009, Mr Madrick’s current available cash is $1,889.91, with total accounts to be paid by the end of May 2009 amounting to $1,486.36.
·Current Health: Mr Madrick has satisfied the qualifications for disability support pension nominated in section 94 of the Act. His nominated disabilities are:
(a)Cervical spine lesion (Syringomyelia) with pain in the left side of his neck radiating down through left shoulder and left arm and leg with associated numbness and the need to use a walking stick because of balance difficulties.
(b)Thoracic spine disc lesion (T7/8).
(c)Anxiety and depression with episodic suicidal ideation and significant sleep difficulties. Mr Madrick has been treated by a psychiatrist and takes medication for depression, pain, stress and sleep. Currently he sees a psychologist monthly as well as seeking advice from his general practitioner or a similar basis (Exhibits A1 and A2).
21. Mr Madrick, in both written and oral evidence, placed emphasis on his belief that neither his solicitor nor Centrelink explained in sufficient details the effect of a preclusion period being imposed and what relevant factors had been taken into consideration in calculating the preclusion period. Mr Madrick readily admitted that at the time of receiving the lump sum payments, his mind was on the quantum received and not necessarily on the consequence which may eventuate in the future. Mr Madrick further emphasised that he experienced much difficulty in receiving adequate explanation from Centrelink as to the factors and issues in question in calculating his preclusion period.
22. In my assessment, Mr Madrick’s circumstances, when considered together and in the context of his current environment, do possess that particular quality of unusualness that permits them to be described as special. In so finding, I have given consideration and weighting to the following circumstances:
·His financial circumstances demonstrate current severe financial hardship in terms of available cash, and necessary weekly expenditure against a very limited revenue base (housemate’s contributions). While Mr Madrick has capital assets (an unencumbered house, furniture and a car) totalling approximately $280,000, one has to consider their existence in the context of the ascertained circumstances, namely;
(a)Mr Madrick has a significant gambling habit, and the expenditure of his lump sum cash assets on capital assets is to be commended not criticised in the light of his gambling addiction.
(b)Without an income of any substance, Mr Madrick is not in a position to borrow against such capital assets.
(c)Such capital assets are used for the accommodation of he and his housemate, both individuals having satisfied the qualifications for disability support pension.
(d)The car capital asset is maintained to assist in the caring responsibilities of Mr Madrick for both his parents (visits), grandmother (visits) and medical appointments in Sydney for his housemate.
·That Mr Madrick’s expenditures, apart from that associated with his gambling addiction, have been detailed and scrutinised.
·While hindsight evaluation may well suggest a more cautious approach could have been adopted, the expenditure of his lump sum superannuation and superannuation payments does not point to frivolous and unnecessary activities.
·His health circumstances demonstrate both physical and psychiatric disability, the latter in part related to his physical disability, but more importantly aggravated by his current financial circumstances, his acquired gambling habit and his general environmental circumstances (his housemate’s health and familial circumstances). I note both his treating general practitioner and his psychologist both consider his anxiety and depression to be so. In so stating, I would emphasise that Mr Madrick’s cervical spinal condition (query Syringomyelia) and his thoracic spine disc lesion are both disabling conditions which may further evolve or degenerate over time. I would consider Mr Madrick’s mental condition to be an intrinsic disability, much aggravated by his current circumstances.
23. In terms of Mr Madrick’s belief that he was not provided with sufficient information by either his solicitor or Centrelink on issues pertaining to a preclusion period, I acknowledge that Mr Madrick has only been concerned with such matters at a time when his available financial resources were diminishing. Whilst I acknowledge that both the solicitor and Centrelink have responsibilities to provide Mr Madrick with relevant and pertinent information at the appropriate time, it is not an uncommon happening that a person such as Mr Madrick fails to seek and absorb necessary information at the appropriate time, with the task left to a much later date and usually at a time when difficulties are being encountered. In such situations, the person seeking such information is often frustrated by being unable in communicate (either verbally or written) to put to rest a lack of knowledge or misunderstandings on matters which are in contention. In the circumstances of this matter, such difficulties may give rise to increasing anxiety and frustration – this perhaps not constituting an unusual response and hence not contributing to the context of circumstances which I consider special in the overall circumstances of this matter.
24. For the reasons enunciated, I consider that in the context of the particular circumstances of this matter that, when the circumstances are considered together, they possess that particular quality of unusualness that permits them to be described as special.
25. In addressing the essence of discretion nominated in section 1184K(1) of the Act, I conclude that the special circumstances enumerated permit me to determine that a part of the compensation payment, being an amount which would result in Mr Madrick’s preclusion period ending on 1 May 2009, paid to Mr Madrick, be treated as not having been made.
26. In conclusion, the decision under review is set aside and in substitution thereof a determination that:
(a)Mr Madrick received a lump sum compensation payment of $314,336; and
(b)as a consequence, a preclusion period is imposed which commenced on 6 July 2005 and concludes on 3 November 2009; and
(c)special circumstances are found to exist, with part of the compensation payment made to Mr Madrick to be treated as having not been made; and
(d)the amount of compensation to be treated as not being paid is that amount of the compensation payment which would permit (by having not been paid) the preclusion period to end on 1 May 2009.
(e)The decision under review is remitted to the Respondent for calculation and finalisation.
I certify that the 26 preceding paragraphs are a true copy of the reasons for the decision herein of Dr J D Campbell, Member.
Signed: .........................[sgd].................................................
Associate
Date/s of Hearing: 1 May 2009
Date of Decision: 4 June 2009
Appearance for the Applicant: Self-represented
Solicitor for the Respondent: Ms S Memmott, Centrelink Legal Services
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