MARK SHEEHY and SECRETARY DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
[2009] AATA 221
•3 April 2009
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2009] AATA 221
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2008/2369
GENERAL ADMINISTRATIVE DIVISION ) Re MARK SHEEHY Applicant
And
SECRETARY DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal Robin Hunt, Senior Member Date3 April 2009
Place Sydney
Decision The decision under review is set aside and in substitution IT IS DECIDED that the period of preclusion should end upon delivery of this decision. The compensation payment otherwise referrable to the period between the date of this decision and 15 May 2010 should be treated as not having been made.
....................[sgd]..........................
R Hunt, Senior Member
CATCHWORDS:
SOCIAL SECURITY – benefits and entitlements – compensation preclusion period –special circumstances – decision under review set aside.
RELEVANT ACT/S:
Social Security Act 1991 section 17(1); section 1169; section 1170 and section 1184K(1)
CITATIONS:
Re Beadle and Director-General of Social Services (1984) 6 ALD 1
Beadle v Director-General of Social Security (1985) 7 ALD 670
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Re Ivovic and Director-General of Social Services (1981) 3 ALN N95
McDowell and DEEWR [2009] AATA 144
REASONS FOR DECISION
3 April 2009 Robin Hunt, Senior Member summary
1. Mark Sheehy (“Mr Sheehy”) received lump sum compensation payments in 2005 and 2006 in connection with an injury that occurred at work in 2000. These compensation payments resulted in a compensation preclusion period during which Mr Sheehy was not entitled to receive certain social security benefits. The preclusion period imposed by way of the reviewable decision before me ends on 15 May 2010.
2. On 28 December 2007, Mr Sheehy claimed disability support pension (“DSP”) within the preclusion period saying that special circumstances in his case should allow him to receive assistance sooner. Centrelink rejected his claim and an internal review officer and the Social Security Appeals Tribunal (“SSAT”) found the decision to reject his claim was correct. Mr Sheehy has asked the present Tribunal to review his claim again and to reduce the preclusion period because of his special circumstances.
ISSUES
3. The issues I considered are:
§ Whether Mr Sheehy is precluded from receiving social security payments from 26 November 2006 to 15 May 2010? And, if so,
§ Whether there are any grounds to disregard all or some of Mr Sheehy’s compensation payment so as to reduce the length of the preclusion period and permit him to receive disability support pension payments?
consideration
4. On 21 November 2006, Mr Sheehy’s compensation claim was settled for $325,000.00. Mr Sheehy already had received the sum $73,700.00 on 21 February 2005. The settlement amount and the previous payment, when aggregated, totalled $398,700. 00.
5. According to Centrelink records, Mr Sheehy actually received $292,500.00 from his solicitors after deduction of statutory repayments, legal fees, costs and other expenses. On the basis that part of the aggregated award was for lost earnings or lost capacity to earn, a preclusion period, preventing receipt of social security benefits, was calculated on 50 percent of the aggregated sum, being $199,350. 00 A Centrelink delegate determined that Mr Sheehy was precluded from receiving payments under the Social Security Act 1991 (“the Act”) for a period commencing on 26 November 2006 and ending on 7 April 2012. That determination was communicated to Mr Sheehy and to his solicitors by letters dated 26 November 2006 and 22 November 2006 respectively.
6. Centrelink wrote to Mr Sheehy or his solicitors on several occasions about the likely preclusion period that might result in the event of settlement of his claim. A previous letter to his solicitors, dated 22 November 2006, had stated the period was likely to commence slightly earlier than previously advised on 26 November 2006, instead commencing on 23 November 2006 and ending a little earlier, on 4 April 2012. An earlier Centrelink estimate based on potential settlement for $573,700.00 was communicated to Mr Sheehy’s solicitor on 14 December 2005. The likely period then was from 15 December 2005 until 8 January 2014. For the review, the Secretary contended that the correct period commenced on 21 November 2006 and ended on 15 May 2010. These dates were affirmed by the SSAT on 1 May 2008 after review of the authorised review officer’s decision made on 6 March 2008. Mr Sheehy has not disputed the correctness of the calculation.
7. For the Tribunal’s review, Mr Sheehy said in his application form that he had more information which he had not mentioned before. Mr Sheehy gave evidence to the effect that his situation had deteriorated further.
8. The SSAT recorded that Mr Sheehy’s marriage had broken down and that he spent the initial $73,700.00 sum within three months, having given approximately $45,000.00 to his former wife. He explained that he made this payment as he was concerned for the welfare of his children. Mr Sheehy had a series of other expenses to meet, including $400.00 a month to his mother, with whom he lives, and funeral expenses of about $20,000.00 when his father died. He also paid school fees for his children, and met other expenses for them and gave them each a mobile phone. He also paid for his daughter to travel from her home to visit him in Sydney and met her mobile phone bills. He was receiving a care allowance to look after his mother at the time of the SSAT hearing. He also had heavy medical bills. He bought a car. He accumulated bills when receiving compensation but before receipt of the lump sum final amount and paid some of these when he got the final settlement. In addition, he cashed in his superannuation to make a lump sum mortgage payment on a house he had owned with his former wife.
9. To this information, Mr Sheehy added that he had been married twice and had children from both marriages. Mr Sheehy married his first wife in 1978 and his daughter, now aged 23, is a child of that marriage. In November 1985, Mr Sheehy started to live with the woman who became his second wife. He married her in 1986 and adopted her son from a previous relationship. This adopted son is now aged 30. As well, Mr Sheehy and his second wife had three children of the relationship. They now are aged about 20, 19 and 15.
10. From 1982 to 1998, Mr Sheehy had his own business hiring out building equipment. He gave evidence it had employed 250 people and had significant turnover. On 29 September 1985, he suffered a serious car accident and had ongoing problems with his legs but made no compensation claim. He continued to work but the business declined and he sold it in 1998.
11. On 19 April 1999, Mr Sheehy worked for a company and had two accidents for which he was compensated. Mr Sheehy says these accidents are central to his current position. He received medial treatment for years and underwent operations on his back. He has been in constant pain and has been treated by orthopaedic specialists, neurosurgeons, psychiatrists and psychologists. He has been prescribed high dosages of pain killers including morphine and became addicted to his medications. In 2001 he was given an overdose or had a severe reaction to one of his drugs. In February 2002, he attempted suicide and was hospitalised in Wollongong. He tried suicide on more occasions. In September 2002, Mr Sheehy was involved in another car accident. He fractured his left leg, arm and jaw but received no compensation for this accident.
12. Before the second marriage break-up, Mr Sheehy and his wife borrowed $30,000.00 from his parents to renovate what had been their holiday home. Mr Sheehy says this money came from his parents’ superannuation savings. Then, he and his wife separated in 2004 and were involved in Family Court proceedings until 17 August 2007. The breakdown of his marriage caused him additional distress as well as serious financial consequences.
13. Mr Sheehy claims that he received a cheque for $61,545.00 from the first compensation payment in 2005 and another cheque for $98,822.47 as the balance of his compensation. The discrepancy between the Centrelink record of the amount of the cheque and Mr Sheehy’s evidence was not fully explained but there were many deductions made from Mr Sheehy’s award and outstanding debts. In any event, he had spent all his money by February 2008. He has lived on assistance form his mother and others since then. He receives a carer allowance which was $100.60 per fortnight at the time of the hearing. He has medication expenses for morphine, warferon, heart tablets, antibiotics, endep and bandages of approximately $38.00 per fortnight.
14. After he received his compensation monies, Mr Sheehy made payments to his second wife and repaid debts and other expenses totalling $153,717.43 according to a schedule he furnished. The bulk of these payments were made in connection with the Family Court proceedings or pursuant to Family Court orders. The Family Court ordered he pay the sums of $25,000.00 and $45,000.00 to his ex-wife and he paid her $90,000.00 in total. He was also ordered to pay an outstanding debt and school fees, accident damage and mortgage arrears. These payments totalled $31,008.43. He further made child support payments of $10,900.00 pursuant to Family Court orders.
15. After the separation, Mr Sheehy lived in the former matrimonial home until the Family Court ordered that it be sold. Mr Sheehy was unemployed for most of the time since his accidents in 2001 and has borrowed heavily from his parents. His mortgage fell into arrears and he had other debts. He was leasing a house at the time of the hearing and relying on his mother and friends to survive. His mother receives the age pension and had savings of $40,000.00 which had dwindled to $20,000.00 because she was supporting Mr Sheehy.
16. Some of Mr Sheehy’s expenditure he conceded was careless or cannot be accounted for but his solicitor has asked that I bear in mind that he is psychologically impaired by his years of misfortune and addiction to painkillers. The injuries for which these are prescribed are not the injuries for which he was compensated. A great part of Mr Sheehy’s compensation was expended in accordance with Family Court orders over which he had limited control. He is left in the position that he has nothing to live on and is ineligible for social security assistance until the end of the preclusion period. He cannot survive without his mother’s assistance and she is in a poor financial position herself. Medical reports and the sworn statements of witnesses attested to Mr Sheehy’s physical and mental health deterioration and financial situation.
findings
17. Mr Sheehy’s position is governed by statutory provisions including the meaning of a "compensation affected payment " as defined in section 17(1) of the Act and section 1169 of the Act which states that a person cannot be paid a compensation affected payment during a lump sum preclusion period. A preclusion periodfollowing a lump sum compensation payment is calculated in accordance with section 1170 of the Act. In this matter, the applicant does not challenge the calculation of the lump sum preclusion period.
18. Section 1184K of the Act makes provision for the consideration of special circumstances. The sole issue for determination is whether, pursuant to section 1184K of the part or all of the compensation payment made to the applicant can be treated as not having been made in the special circumstances of Mr Sheehy’s case.
19. The term “special circumstances" is not defined but the leading authority often cited is Re Beadle and Director-General of Social Security (1984) 6 ALD 1, where Toohey J stated at 3:
"An expression such as "special circumstances" is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend on the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special"
20. The Full Court in Beadle v Director-General ofSocial Security (1985) 7 ALD 670, followed this interpretation. In Re Ivovic and Director-General of Social Services (1981) 3 ALN N95 the Tribunal identified some principles under which special circumstances existed, including a suggestion that "regard must be had to the way in which the hardship arose". Many of Mr Sheehy’s expenditures were discretionary but he also has unavoidable expenses such as his medications and medical treatment.
21. As Deputy President Hack recently observed in McDowell and Secretary, Department of Education, Employment and Workplace Relations [2009] AATA 144, it is not to the point that, objectively viewed, it may be concluded that a social security claimant affected by a compensation preclusion period is required to repay considerably more than he received by way of damages for economic loss. The result may be arbitrary and objectively unfair but this situation did not make Mr McDowell’s circumstances “special”. I agree that a negative financial position from any cause is not necessarily an indicator of special circumstances. Mr Sheehy has paid out all of his award in one way or another before the end of the statutory preclusion period but other factors exist in his case as the basis for consideration of the exercise of discretion. His dire financial situation is not the only circumstance indicated.
22. In the present case, Mr Sheehy is suffering the painful and debilitating effects of previous injuries and has considerable medical expenses of an essential nature. I consider this is an additional special circumstance in his case. Mr Sheehy also suffers impaired judgment as a result of his accidents and the psychological effect on him of his marriage break-up. These effects are in addition to his financial woes. While the Family Court orders were by consent, his solicitor argues that the settlement in favour of his ex-wife was not excessive and I note Mr Sheehy was represented by another solicitor in this matter. His payments to his ex-wife were not excessive, foolish, reckless or irresponsible. On balance, I find that the following special circumstances exist in Mr Sheehy’s case:
· Financial hardship;
· Reliance on elderly mother for support and mother’s source of income being age pension;
· Serious physical, psychiatric, psychological and social problems and reliance on strong medications;
· Compensation award not related to the majority of the above health problems;
· Significant losses due to marriage breakdown.
23. Taking all these matters into account, I find that special circumstances exist in Mr Sheehy’s case, which warrant exercise of the discretion to shorten the preclusion period. There are grounds to disregard some of Mr Sheehy’s compensation payment so as to reduce the length of the preclusion period and permit him to receive disability support pension payments. Mr Sheehy was precluded from receiving social security payments until 15 May 2010. In view of his impecunious position, I consider the period should be shortened forthwith.
DECISION
24. The decision under review is set aside and in substitution IT IS DECIDED that the period of preclusion should end upon delivery of this decision. The compensation payment otherwise referrable to the period between the date of this decision and 15 May 2010 should be treated as not having been made.
I certify that the 24 preceding paragraphs are a true copy of the reasons for the decision herein of Robin Hunt, Senior Member.
Signed: ...........................[sgd]..................................................
AssociateDate/s of Hearing 30 January 2009
Date of Decision 3 April 2009
Solicitor for the Applicant Stephen Hodges, Stephen Hodges Solicitor
Solicitor for the Respondent George Lozynsky, Legal Services Officer
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