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

[2011] AATA 617

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2011] AATA 617

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2011/1785

GENERAL ADMINISTRATIVE DIVISION		)
Re		WILLIAM MARSLAND

Applicant

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

Respondent

DECISION

Tribunal Dr K S Levy, RFD, Senior Member

Date2 September 2011

PlaceBrisbane

Decision

1.      The decision under review is varied by substitution of 30 September 2020 as the ending date of the preclusion period;

2.      The decision under review in all other respects is affirmed.  

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

Senior Member

CATCHWORDS

SOCIAL SECURITY – Pensions, benefits and entitlements – Disability support pension – Preclusion period –  Preclusion period correctly calculated – No special circumstances to justify deeming whole or part of settlement amount as not being made – Decision under review affirmed

Social Security Act 1991 (Cth) ss 1169, 1170, 1171, 1184K

Beadle and the Director-General of Social Security (1984) 6 ALD 1

Browne v Dunn (1893) 6 R 67

Colaiacolo and Secretary Department of Social Security [1985] AATA 91

Dranichnikov v Centrelink (2003) 75 ALD 134; [2003] FCAFC 133

Groth and Secretary, Department of Social Security (1995) 37 ALD 797

Jess v Scott (1986) 12 FCR 187; 70 ALR 185

Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298

Secretary, Department of Social Security and Winterbotham [1990] AATA 808

REASONS FOR DECISION

2 September 2011	Dr K S Levy, RFD, Senior Member
INTRODUCTION

1.      The applicant, William Marsland, received extremely serious injuries in a workplace accident as a result of a head trauma. This has resulted in damage to facial bones, the loss of one eye and consequential deleterious effects on some memory functions as well as psychological symptoms. The accident occurred on 15 May 2007 and he received weekly compensation payments from the date of the accident until 11 June 2008, when he received a lump sum payment from WorkCover. He subsequently was granted disability support pension by Centrelink. In January 2011, he received a settlement in a compensation claim and it was determined under the provisions of the Social Security Act 1991 (Cth) (the Act), that Mr Marsland was subject to a preclusion period from accessing Centrelink benefits for the period 12 June 2008 to 23 September 2020. Mr Marsland now appeals that determination in relation to the preclusion period.

ISSUES

2.      The issues for determination by the Tribunal are:

1)Has the preclusion period determined been properly determined; and

2)If so, are there “special circumstances” to justify treating either whole or part of the settlement amount as not having been made under s 1184K of the Act?

EVIDENCE

3.      The applicant received a serious head injury as described in the Introduction. The applicant’s case is that he was inappropriately dealt with and incorrectly advised (or provided with no relevant advice) by his solicitors, WorkCover and Centrelink. He claims that he was never advised he would be subjected to a preclusion period if he were to accept the lump sum compensation payment. As a result, he says he has been seriously disadvantaged financially.

4.      Mr Marsland gave oral evidence at the Tribunal hearing. He made numerous claims of incompetence in relation to the management of his case by Centrelink. He referred initially to the letter of 3 May 2011 from Centrelink, advising him of a preclusion period and asking him to sign a letter of acknowledgement. He submitted that Centrelink should not be entitled to bind him to such an arrangement some months after he had accepted a settlement payment. He referred also to three documents seeking an estimate of preclusion based on three optional and prospective levels of settlement in December 2010. These levels were $600,000; $700,000 and $800,000 (Exhibit 1, Folios 41 – 43). The applicant agrees that he filled out some forms in the negotiation period but he said that he was never given the opportunity to object to a preclusion period.

5.      At the time of the accident, Mr Marsland had two children and lived with his partner. The evidence indicates his partner had some difficulties with alcohol and was not supportive of him, particularly after his accident. She subsequently left him. Mr Marsland is now remarried and appeared at the Tribunal with his new wife Mrs Christine Marsland. The applicant and Mrs Marsland now care for four children:  two boys, one aged eighteen and one aged fifteen; a daughter aged thirteen; and a new baby who is approximately one year old. The applicant, who cannot now perform his former work, is now providing for his wife and four children. None of the children have special needs, but there are clearly responsibilities for education for the children for some years to come.

6.      Mr Marsland said he attended a mediation with his sister and his solicitor present. The applicant said the mediator did not discuss economic loss and his lawyer did not have his annual salary income to make a determination of the appropriate amount of compensation.

7.      The Tribunal was  provided with a form headed “Instructions to settle”, which is a pro forma outlining a settlement amount plus costs, and amounts to be deducted for expenses and refunds to government/semi-government agencies (Exhibit 5). Those instructions were signed by Mr Marsland on 16 December 2010. He pointed out that there is no reference in the settlement instructions to his agreeing to a preclusion period. He also said his sister was present at the meeting and that she would confirm that there was no advice given to him about a preclusion period. The applicant also alleged that his solicitors had been negligent in that he had no knowledge of and received no advice about a preclusion period prior to its implementation.

8.      Under cross-examination by Mr McQuinlan, the applicant agreed he had authorised his sister, Mrs Pamela Blawuciak, who lives in Victoria, to act on his behalf in attending to his personal affairs. He was also represented by a solicitor from Slater & Gordon during the negotiation and settlement period. Mrs Blawuciak attended a number of meetings in Brisbane with the applicant and tried to monitor his situation on the Gold Coast from her place of residence in Victoria. She was present at the meeting on 7 December 2010, and her evidence is important to the issues in dispute in this case.

9.      Mr McQuinlan referred the applicant to the letter of 9 September 2008 which was addressed to Mrs Blawuciak (Exhibit 1, Folio 32). That letter advised that if any payments of either weekly compensation or lump sum compensation were received then “some or all of the Centrelink payments paid … since the date of injury may have to be paid back”. On being asked whether he had been advised of that by his sister, he merely said “can’t remember”. When asked “do you think she might have told you?”, he replied “can’t remember”.

10.     The applicant was then referred to the Centrelink Compensation and Damages Questionnaire completed by the applicant and his wife on 18 June 2010. He agreed he had signed the statement. On page 1 of that questionnaire there is an information section with a number of headings. One heading is “How may I be affected?” Under that heading applicants are informed that if they receive compensation, then they may not be entitled to social security payments from Centrelink. In the information provision area is another heading “What if I receive a lump sum compensation payment?” The opening sentence of that section says “Centrelink works out the period of time your payment covers – this period of time is called the preclusion period. During the preclusion period you cannot be paid most Centrelink social security payments.” This is then followed by an example and some further amplification of a preclusion period or an inability to receive further social security payments (Exhibit 1, Folio 36). The applicant, with his wife’s acknowledgment at the bar table, provided evidence that the form was completed by the applicant’s wife and he signed it. There was an issue raised by the applicant that the name and address of the solicitor was completed in a different handwriting (Exhibit 1, Folio 38). Mr McQuinlan submitted that, in the course of reviewing forms within Centrelink, it would not be uncommon for an officer to ring an applicant and ask them for the information in any missing section of the form and then to write in any information as provided by the telephone discussion.

11.     The applicant was then referred to a letter from Centrelink to Slater & Gordon, the applicant’s solicitors, dated 14 December 2010 (Exhibit 1, Folio 59). That letter included reference to amounts that may have to be repaid and also to a likely preclusion period if the matter settled, that period being 12 June 2008 to 8 July 2020. Mr McQuinlan referred the applicant again to his document headed ‘Instructions to settle’ and asked who had witnessed his signature on the settlement instructions sheet. The applicant advised that it was his solicitor who had witnessed it. There was some implication then that he must have been advised by his solicitor about the legal consequences of settlement.

12.     Settlement was agreed on 16 December 2010, and is particularised at paragraphs 20 and 21. The applicant was agitated and angry in his responses and said that he had been neglected by all parties in the action and that he had to wind up his Centrelink payments. Mr McQuinlan pointed out that they were wound up by Centrelink as they could not be ceased until Centrelink had agreed to settlement and the various deductions and other amounts in the total settlement figure.

13.     Mr Marsland then attacked the competence of his solicitors, WorkCover and Centrelink again and said that he did not have enough money for himself and his family to survive. Mr McQuinlan pointed out that there was an offer in writing to the applicant to be able to obtain free financial advice from a service within Centrelink. The applicant told the Tribunal he did not need that service because he had advice from the Commonwealth Bank. Mr McQuinlan also referred to a conversation with a call centre operator by Mr Marsland (Exhibit 1, Folio 30). That record notes a conversation on 27 January 2011 where Mr Marsland called Centrelink, saying that he was not happy and wanted the settlement amount and all charges to be processed immediately. He was again advised of the financial advisory service but the record notes that Mr Marsland replied “he wanted nothing to do with the Government or anything from the Government and that he would look after himself and his kids himself.” The call centre officer noted “I advised the customer that he needed to ensure that he financially sustains himself for the duration of his compensation preclusion period and the customer stated that he was well off and would do just fine”.

14.     Mr McQuinlan then referred to the applicant then buying a house and two cars and now claiming that he did not have sufficient money. The applicant was then referred to a letter sent to him by Centrelink on 27 January 2011 advising of the preclusion period as a result of the settlement (Exhibit 1, Folios 80 – 81).

15.     The applicant’s financial circumstances were then examined. In particular, his statement of financial information (Exhibit 4) was referred to. At page 3 of that Questionnaire, the applicant said his income was $100 a week of bank interest and $13 a fortnight for child support. The applicant told the Tribunal he had $67,000 in the bank (in May 2011) and then said he would now have about $62,500 in the bank. A short time later he told the Tribunal he had $59,930 in the bank. Mr McQuinlan pointed out that the income declared by the applicant was not a full account. The applicant’s statement amounts to $226 per fortnight, as shown on the Financial Statement in Exhibit 4. However, Mr McQuinlan pointed out there was an additional $740 per fortnight which the applicant receives as part of the family tax benefit. Mr Marsland did not deny that he was entitled to this payment. Therefore there was approximately $966 per fortnight which the applicant receives in addition to owning his own home. As a result, he has no obligation to pay rent. The applicant responded that he did not get one million dollars in compensation but there were substantial amounts taken out in deductions for legal fees and repayments to WorkCover and Centrelink.

16.     Evidence was then called from the applicant’s sister, Mrs Pamela Blawuciak. She had provided the Tribunal recently with a letter along similar lines of the evidence of the applicant. In oral examination she was asked by her brother whether she had ever been given advice about a preclusion period, to which she said “no”. He then referred to whether she had been given any information about “economic loss”, to which her response was “what do you mean”. She said she understood he would get $700,000 and that it would all be tax-free.

17.     The applicant then asked his sister about the letter sent to her in December 2008 and whether she had ever seen that letter referring to a preclusion period. She answered “no”. She then seemed a little hesitant or uncertain. She said the only things that she dealt with from Centrelink were payments for the applicant and money for his children. She then went on to say that she did not understand much of the information discussed. The applicant also said then there are “a lot of things I don’t understand”. In response to a question from the applicant, Mrs Blawuciak said “I wish they had never given you the money … you are an adult”.

18.     Mrs Blawuciak was then cross-examined by Mr McQuinlan, and admitted that she did not read the letters from Centrelink, nor did she advise her brother during the meeting in December 2010 about settlement. She said that she was just there to support him as he had solicitors to advise him.

19.     I subsequently asked Mrs Blawuciak to further explain her comment earlier to her brother “I wish they had never given you the money”. She informed the Tribunal that he was not capable of controlling the money himself and would have preferred if it had been in a term deposit so that he just dealt with an income. She said he was not competent to deal with such matters.

20.     In subsequent evidence from the applicant the amount of compensation and other money he had received over the period was said to be as follows:

1)Lump sum payment on 10 October 2008 of $253,969.21 – $184,000 (net)

2)Lump sum compensation payment on 16 December 2010 – $775,000

21.     In addition, the applicant was awarded costs of $41,530.92 and certain amounts were required to be refunded for Medicare and Centrelink payments previously made to him. The net compensation over the period resulting from the accident was therefore $1,011,946.47.

22.     The applicant pointed out also that he had also received two payments during the period of $50,000 (one from each of two superannuation policies), and he had also received $50,000 from an entitlement from his mother’s estate. In other words the applicant received an additional $150,000, in addition to the one million dollar (gross) compensation payment. Even though the applicant was required to refund certain amounts to WorkCover and pay legal and other expenses, he said he only received approximately $700,000. That does not include the additional $334,000 which he received over the same period ($184 000 in October 2008 and the $150 000 mentioned above).

CONSIDERATION

23.     I have considered all of the evidence provided at the Tribunal hearing as well as the documentary evidence.

24. The relevant legislation is contained in ss 1169, 1170, 1171 and 1184K of the Act.

Issue 1 – Has a lump sum preclusion period been properly determined?

25. In simple terms, this refers to whether Mr Marsland should be entitled to disability support pension for any part of the preclusion period. This is relevant as disability support pension is a “compensation affected payment” (see subparagraph (a) of the definition in s 17 of the Act). The term “compensation” is defined to include settlement to claims of damages in respect of economic loss (s 17(2) of the Act). Section 1169(1) of the Act states that any such “compensation affected payment” will not be payable for “any day or days in the lump sum preclusion period”. From June 2008 to January 2011, the amount of settlement payments amounted to $1,011,946.47.

26. The determination of the number of weeks of a preclusion period is ascertained by using the formula in s 1170(4) of the Act as follows:

Compensation part of lump sum

Income cut-out amount

27. The numerator of that formula, “compensation part of lump sum”, is defined in s 17(3)(a) as 50% of the payment made in settlement of a claim. This is a statutorily determined amount. The denominator of that formula, “income cut-out amount” is $789.10 (see Exhibit 1, Folio 76); therefore, the formula provided for in s 1170(4), when dividing the income cut-out amount into the compensation part of the lump sum as set out above, amounts to a preclusion period of 641.2 weeks. This must be rounded to 641 weeks (s1170(5)).

28.     I therefore find the calculation of the preclusion period is correct, however, the actual ending date of that period should be 30 September 2020.

Issue 2 – Are there special circumstances so that some or all of the compensation payments may be disregarded for the purposes of calculating the preclusion period?

29. This is provided for in s 1184K of the Act.

30.     The law regards the term “special circumstances” as being exceptional in the sense that they are unusual (Beadle and the Director General of Social Security (1984) 6 ALD 1). It has been said that “… to conclude that something unfair, unintended or unjust had occurred there must be some feature out of the ordinary” (Groth and Secretary Department of Social Security (1995) 37 ALD 797.) It must take the case out of the ordinary (Jess v Scott (1986) 12 FCR 187; 70 ALR 185, cited in Dranichnikov v Centrelink (2003) 75 ALD 134; [2003] FCAFC 133). The Tribunal must consider the financial circumstances of the applicant but even if somebody is in straitened financial circumstances, that does not mean that they are exceptional or that it would constitute a “special circumstance” (Colaiacolo and Secretary Department of Social Security [1985] AATA 91).

31.     In considering this issue the respondent submitted that if the applicant is in difficult financial circumstances he owns a house, which is a valuable asset. The respondent referred me to the case of Secretary, Department of Social Security and Winterbotham [1990] AATA 808, where the Tribunal commented that a comparison might be made between a person who owns a house as opposed to equity investments, such as in shares, and it was said there that neither investor “should expect the taxpayer to support him while he holds on to assets he could well realise and use to support himself”.

32.     In the present circumstances, I note the applicant has been placed in some considerable hardship and now has a new wife who has only been in Australia a short time. She is competent and willing to work but also has a very young child. She appears to speak English quite well but does not read English well. She has been unable to find work. They have purchased a house out of the compensation payment and this should provide some security and stability for the future. It is undoubtedly also a better financial investment than having to rent for years to come. It would be prudent for the applicant to retain that asset for as long as possible.

33.     In determining whether there are special circumstances there is one preliminary issue to be considered before making findings of fact. That preliminary issue relates to the claim made by the applicant that he was poorly advised and not informed that a preclusion period would apply. There is sufficient documentary evidence to show that in the ordinary course of reaching settlement, estimates were sought from Centrelink and the solicitors then engaged in a negotiation settlement period. This included ascertaining estimates of what a preclusion period might be (based on optional settlement figures) and the applicant subsequently signed a release and discharge to his solicitors. While the applicant has suffered severe setbacks, and has lost the sight of one eye, it was apparent from his participation in the hearing that he can see and read. He told me that he does suffer some pain in his head after reading for a period. However, he has bought two cars with part of the settlement monies and has indicated that he is licensed to drive and can use a ‘Navman’ in his car.

34.     One significant evidentiary issue to be determined as a preliminary issue is whether the applicant’s claim that he was neglected and provided with no advice from his solicitors (and quite apart from his allegations against WorkCover and Centrelink) has some basis in fact. This is a particularly serious allegation given the nature of these injuries and that he now claims “special circumstances”. I suggested that it would be useful to the Tribunal to have a comment from his solicitor. The respondent argued this was merely a matter between the applicant and his legal adviser. However, I was not prepared to accept that as how the issue should be determined. The seriousness of the allegations places an obligation for the parties (and the Tribunal particularly where an applicant is unrepresented as in the present case) under the rule Browne v Dunn (1893) 6 R 67, in that the person against whom a serious allegation is made should have an opportunity to respond. It is also relevant to the weight that can be placed on the evidence relative to his assertion. The seriousness of the allegation as well as the serious consequences that might flow for the applicant which should be considered before “special circumstances” can be determined. There was an adjournment for the purpose of allowing the applicant to contact his solicitor to see if she would be available to provide some corroboration of his claim. After the adjournment he advised the Tribunal that he had rung the solicitor’s office and she was not available but he was advised to ring her mobile phone and leave a message on it. He told the Tribunal he chose not to do so. In the context of making an assessment of the weight of evidence for that assertion that he received no advice prior to settlement, I have concluded that I should put less weight on that claim (Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298).

35.     In making that determination I have noted also the documents pointing to the applicant being advised of a preclusion period, both to himself, his lawyers and to his sister (see Exhibit 1, Folios 32, 36 – 39, 59; Exhibit 5, Folios 62 – 64).

36.     I now make the following findings of fact:

1)The applicant has experienced serious injury which has affected permanently his capacity to work.

2)Mr Marsland has also suffered a high degree of frustration and some short term memory loss (based on evidence from his wife and his own evidence).

3)The claimant has been advised on multiple occasions that he would be subject to a preclusion period.

4)Mr Marsland and his sister lacked some understanding of some of the process. The applicant had some support by his sister and wife to a limited degree.

5)I find that he had competent legal advice.

6)The applicant received compensation in 2008 and 2011. As advised in Issue 1 above, this was over one million dollars (gross). In addition, the applicant received a further $334,000 being superannuation payments ($100,000), payment from the estate of his late mother ($50,000) and a lump sum payment from WorkCover ($184,000).

7)Apart from the purchase of a house and two cars, the applicant has approximately $60,000 in the bank, although he cannot remember how a significant amount of these monies was expended over the past four years, apart from the house and cars.

8)In addition to the income stated by the applicant as $213 per fortnight, there is an additional $740 per fortnight which he receives as family tax benefit. His income is therefore $966 per fortnight.

37.     It is clear that the applicant has had difficulty in managing some of his financial affairs and that may remain an ongoing challenge for him for the future. However, he has an asset (his own home and two cars); income from money in the bank; and some certainty as to income for the foreseeable future from the family tax benefit. This seems to me to be a far superior position than most people seeking a claim for “special circumstances”. Certainly, in absolute terms, it is far greater than most people on unemployment benefits. I do not agree with the respondent’s submission of comparing his absolute quantum of income differently, being far greater than the average pensioner. That is not a complete assessment as most pensioners would not have necessarily the same degree of disability and frustration, a new wife (who is extremely supportive of the applicant) and the number of children yet to be educated.

38.     The applicant clearly has a degree of anger and negativity and his circumstances are, undoubtedly, partly a product of his own perception. However, that perception is different from the objective facts. He has had significant monies which have been spent and the applicant cannot explain how they were spent. That cannot be attributed to any fault of Centrelink or his solicitors. The proper management of his financial assets for the further welfare of himself and his family are important. However, the facts do not point to “special circumstances” as referred to in the legislation. Consequently his application must fail.

39.     The decision under review is affirmed, with the exception that the ending date of the preclusion period should be 30 September 2020.

I certify that the 39 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member Dr K S Levy RFD

Signed: .............................[Sgd]................................................
  Associate

Date/s of Hearing  6 July 2011
Date of Decision  2 September 2011
The Applicant was accompanied by his wife

For the Respondent                 Mr Rick McQuinlan, departmental advocate