MATTHEW CUNNINGHAM and SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

[2013] AATA 64

[2013] AATA 64  

Division	GENERAL ADMINISTRATIVE DIVISION
File Number	2012/4282
Re	MATTHEW CUNNINGHAM
APPLICANT
And	SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS
RESPONDENT

DECISION

Tribunal	Mr R G Kenny, Senior Member
Date	8 February 2013
Place	Brisbane

The Tribunal affirms the decision under review.

...............................[SGD].........................................

Mr R G Kenny, Senior Member

CATCHWORDS

SOCIAL SECURITY – Pensions, benefits and allowances – Settlement of compensation claim – Lump-sum compensation payment includes component referable to lost earnings and capacity to earn – Imposition of preclusion period – Special circumstances not established – No part of settlement treated as not having been received – Preclusion period not shortened – Decision under review affirmed.

LEGISLATION

Social Security Act 1991 (Cth) ss 17, 1163, 1169, 1170, 1184K

CASES

Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25

Davis v Secretary, Department of Family and Community Services [2004] AATA 84

Director-General of Social Services v Hales (1983) 47 ALR 281

Groth v Secretary, Department of Social Security (1995) 40 ALD 541

Re Secretary, Department of Social Security and VYS (1995) 40 ALD 745

Secretary, Department of Family and Community Services v Allan (2001) 66 ALD 147

Secretary, Department of Social Security v Smith (1991) 23 ALD 277

REASONS FOR DECISION

Mr R G Kenny, Senior Member

8 February 2013

BACKGROUND

1. As a result of injuries sustained in a workplace accident on 14 May 2010, WorkCover, Mr Cunningham and his employer signed, on 2 February 2012, a Release and Discharge for settlement of Mr Cunningham’s compensation claim in the amount of $250,213.10. Prior to the settlement, Mr Cunningham had been in receipt of disability support pension which was payable to him subject to his part-time earnings. On 17 February 2012, Centrelink advised Mr Cunningham that his disability support pension was cancelled and that he would be unable to receive income support payments from Centrelink under the Social Security Act 1991 (Cth) (“the Act”) for the period from l4 May 2010 until 4 April 2013 (“the preclusion period”). This included disability support pension in the amount of $21,535.92 which had already been paid to him in the preclusion period as well as newstart allowance which he subsequently claimed on 20 July 2012.

2. On 28 June 2012, Mr Cunningham advised Centrelink that he had expended all of the compensation monies and wished to have the Centrelink decision of 17 February 2012 reviewed. An authorised review officer affirmed the original decision on 11 July 2012. On further review, the Social Security Appeals Tribunal affirmed the decision on 3 September 2012.

   ISSUES AND LEGISLATION 

3. There is no dispute in this matter in relation to the calculations made by Centrelink for the length of the preclusion period. I am satisfied that the relevant provisions of the Act have been correctly applied and that the preclusion period has been correctly calculated.[1] Initially, Mr Cunningham expressed concern at the recovery by Centrelink of $21,535.92 of disability support pension payments made from the date of his injury until the date of his receipt of his compensation payment. After explanation, he accepted the correctness of that calculation which I am satisfied was properly made. Mr Cunningham, who was assisted by his mother Judith Cunningham, submitted that there were special circumstances applying to his situation which require that some part of his settlement monies be disregarded so that the preclusion period would be shortened.

   [1] See ss 17, 1163, 1169 and 1170 of the Act.

4. Mr McQuinlan, for the respondent, submitted that Mr Cunningham was fully aware at all material times from February 2012 of the need to preserve his compensation payment to maintain himself until 4 April 2013. He submitted that Mr Cunningham had made reckless choices to make loans to associates and to spend large amounts on drugs, consumer items and a motor vehicle such that he was the author of his own misfortune. He submitted that Mr Cunningham’s circumstances were not special such that taxpayers’ money should be used to support him for the remaining months of the preclusion period. He submitted that this was particularly the case because Mr Cunningham, even when again advised in July 2012 that he would receive no Centrelink payments until April 2013, then expended a further $40,000 in just a few weeks. In any event, he submitted, Mr Cunningham was not in straitened circumstance in that he owned a motor vehicle which, if sold, would assist him in maintaining himself until the end of the preclusion period.

5. The issue for the Tribunal is whether special circumstances arise in Mr Cunningham’s case to enable part of his compensation payment to be treated as not having been made to him. In that regard, the relevant provision of the Act issue, reads:

   1184K Secretary may disregard some payments

   1For 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.

   …

   EVIDENCE

   Mr Cunningham

6. Mr Cunningham’s evidence was that his work-related injury in 2010 was to his cervical spine. He now experiences some stiffness in the neck each morning but no other discomfort. He described himself as physically well and referred to previous diagnoses of “bi-polar disorder”, “DADD” and “ADHD” but said that he believed that he did not suffer from those conditions, the symptoms of which had been confused, he said, with the effects upon him of excessive cannabis and amphetamine use.

7. Until late in 2011, Mr Cunningham lived with his partner and their four children near Ipswich. He was in part-time employment and each of them was in receipt of Centrelink payments. In December 2011, the Department of Communities, Child Safety and Disability Services (“the department”) investigated aspects of the care of the children who were then removed into the department’s care. Since then, Mr Cunningham has had very limited contact with his children. He and his partner separated in December 2012 and Mr Cunningham has resided in Stanthorpe with his parents since then. He is prevented from approaching his partner by the terms of a domestic violence order.

8. Mr Cunningham received part of his compensation payment by cheque in February 2012. He paid a fee to a private provider for the cheque to be cashed immediately. He was unsure of the fee paid but believed it was in the order of $5,000 to $10,000. The residual amount of $132,429.06 was paid into his St George Bank account on 27 February 2012. Requests by him for financial advice from St George Bank were not forthcoming so he transferred $100,000 to the Commonwealth Bank on 20 March 2012. On 30 March 2012, Mr Cunningham received a further component of his compensation payment into his St George Bank account in the form of a Medicare Australia refund in the amount of $24,226.22. In May 2012, Mr Cunningham and his partner opened four accounts with deposits of $10,000 for each of their children. As with the other accounts with St George Bank and the Commonwealth Bank, these were joint accounts requiring the signatures of Mr Cunningham and his partner. Mr Cunningham understood that the total compensation lump sum that he received after relevant expenses such as legal costs and the Centrelink refund were deducted from the gross amount of $250,213.10 was in the order of $160,000 to $170,000.

9. Mr Cunningham had been a heavy user of cannabis for many years and had also used amphetamines prior to the birth of his first child some 10 years before his accident. He commenced using “speed” after the accident and this increased in usage because of the stress he experienced because of his dealings with the department over his children. After he received his compensation payment, this increased dramatically to the point where he was spending from $1,500 to $3,000 per day on cannabis, speed and the methamphetamine “ice”. From March to August 2012, his and his partner’s home was a focal point for his friends and associates who shared in the use of the drugs purchased by Mr Cunningham. During that time, Mr Cunningham purchased many consumer items, including ten mobile phones and four laptop computers. He frequently withdrew cash sums of $1,000 from his bank accounts and most of that money and the items he purchased were stolen by his friends and associates. He also lent a total of about $10,000 to these friends and associates in amounts of $500 to $1,000 with an expectation that these would be repaid. None of the loans have been repaid and Mr Cunningham now accepts that they will not be repaid.

10. On the encouragement of his friends, Mr Cunningham purchased a Holden Commodore car for $16,000 and spent some $8,000 to $10,000 on refurbishment and maintenance. He did no research and did not seek independent advice about the purchase. It was a “drag-racing” car which was unsuited to and unregistered for road use. He recognised that it was an “extravagance” and he described it as a “boy thing”. He still owns the car and has attempted to sell it through internet placements where he has advertised it for sale, initially at $26,000 and then at prices down to $20,000. He has had no responses. It has recently been valued by a Holden dealer at $2,000. Mr Cunningham was advised by friends in October 2012 that the original vendor would be prepared to re-purchase it for $10,000 but he has not followed up on this prospect. He does not wish to sell it for less than it has cost him and described it as the only asset that he has been able to retain from the expenditure of his compensation monies.

11. Mr Cunningham accepted that he had advised Centrelink that he had only $1,200 available to him when he claimed newstart allowance in July 2012. He also agreed that, at that time, the monies totalling some $40,000 in the accounts opened for the four children were available and that he and his partner withdrew and expended those amounts by the end of August 2012.

12. Mr Cunningham said that he had always been aware that he would not be able to receive income support payments from Centrelink until 4 April 2013. He believed that, in the months after he received his compensation payment, he was suffering from a form of drug psychosis which overtook him and interfered with rational decision-making about expenditure. He was admitted to Ipswich Hospital in May 2012 suffering a mental breakdown due to situational crisis and drug abuse.

13. Mr Cunningham said that he had not taken amphetamines since July 2012 and has been drug free since October 2012. He has been attending programs with Drug Arm under the supervision of a psychologist to assist him with his problems and intends to undertake a parenting course in the near future.

    Car valuation

14. In an undated statement, Robert Reeves, manager of the Holden dealership Central Motors in Stanthorpe, provided a valuation of Mr Cunningham’s Holden Commodore. Having inspected it, Mr Reeves wrote that his estimate was that its current market value was $2,000.

    Bank records

15. Mr Cunningham’s St George Bank records were in evidence. These include the deposits of $132,429.06 on 17 February 2012 and $24,226.22 on 30 March 2012 as well as the transfer to the Commonwealth Bank of $100,000 on 15 March 2012. Additionally, they record frequent cash withdrawals, often in $1,000 sums, from the time of the receipt of the first compensation payment until 2 May 2012 when the account balance was reduced to zero.

16. Commonwealth Bank records show the credit of $100,000 on 15 March 2012 and then interbranch transfers of $10,000 on 30 April 2012 and $43,200 on 21 May 2012. On 27 July 2012, the balance recorded is $1,521.30; on 31 August 2012, it is $1,300.67; on 2 October 2012, it is $0.47. Also, on 21 May 2012, the records show a withdrawal of $40,000 and the establishment of four separate accounts, identified by Mr Cunningham as being for his children each in the amount of $9,500. With those four accounts, withdrawals are shown in June and July 2012 leaving a zero balance in each account on varied dates in August 2012.

    Medical documentation

17. Mr Cunningham was taken to Ipswich Hospital on 10 May 2012 by police officers after he had been aggressive towards officers from the department following a scheduled meeting with them in relation to his children. The hospital record suggest that he was there for about three hours. It was noted that he displayed “no suicidal or homicidal ideations” and no chest pain or shortage of breath. Reference is made to ADHD and bi‑polar affective disorder but no medication for those conditions is noted. He is described as having been using speed daily with his last injection four days previously. He was also described as “alert” and “rational” and calm when he spoke sensibly. The account attributed to Mr Cunningham by hospital staff was that the threats he had made were “in the heat of the moment due to his frustration about not being listened to” and that, in his settled state, he denied any thoughts of intent to harm self or others. In the hospital record, he denied any psychotic symptoms or any mood disturbance. The cognitive assessment of Mr Cunningham was that he was “oriented to time, space and person”. He was described and feeling “down” due to his children being taken away but “not depressed”.

18. Psychiatrist, Dr Ross Phillipson, completed a report on 16 January 2012 in relation to proceedings in the Children’s Court. He considered that Mr Cunningham suffered from cannabis dependence, amphetamine abuse and possible drug induced mood disorder. He also described a mixed personality disorder with antisocial and narcissistic features. His opinion was that it was difficult to substantiate a diagnosis of bi-polar disorder and considered that his observed mood changes were likely to be drug induced.

19. Dr Beata Banasiak-Lazinska is Mr Cunningham’s treating doctor. She completed a certificate, on 3 January 2013, in support of a Financial Assistance Application made by Mr Cunningham under the Victims of Crime Assistance Act 2009 (Qld) in relation to a facial injury sustained by him during a home invasion on 21 December 2012. On 12 November 2012, she completed a letter which identified Mr Cunningham as having “neck pain & back pain and possible Depression/anxiety”. Dr Beata Banasiak‑Lazinska also noted that Mr Cunningham claimed to be “very nervous” since his children were removed by the department. She also noted a past history of “?Depression/anxiety”.

    Dr John Brown

20. Psychiatrist, Dr Brown, completed a report on 17 February 2000. He saw Mr Cunningham in relation to a court proceeding pending at that time. He described a strong history in Mr Cunningham’s family of bi-polar disorder and concluded that he showed features of this condition. Dr Brown identified other emotional problems associated with drug use with a probable history of ADHD.

    Department material

21. Correspondence from the department refers to the concerns held in relation to contact between Mr Cunningham and his children. On 10 September 2012, an officer of the department wrote:

    You have been previously observed during family contact visits to act in an inappropriate and non child friendly manner at which time you have spoken in a derogatory manner towards departmental staff and despite repeated requests to stop acting in this way, you have continued this behaviour. This has resulted in your family contact visits being suspended on two occasions, most recently with the condition that it is not reinstated until you had completed an anger management program and met with the department to discuss the concerns. 

    Drug Arm

22. David Entermann, a clinical worker with Drug Arm in Stanthorpe, competed a report, dated 18 September 2012, in which he advised that Mr Cunningham had been assessed in August 2012 for inclusion in the entity’s programs and that he had completed five sessions which focussed on anger management, cognitive distortions and misplaced attributions. Mr Entermann described him as engaging enthusiastically and indicated that he had been offered support with weekly meetings over the following three months.

    CONSIDERATION

23. The provisions in the Act relating to preclusion periods have been described as operating as a:

    …fair balance of the interests of the recipient of the payment with the competing interests of others in the community whose needs must be met as far as possible from a finite budget allocation for social security measures.[2]

    [2] Secretary, Department of Social Security v Smith (1991) 23 ALD 277 at 281-282 per von Doussa J.

24. Similarly, they have been described as a safeguard against “double dipping” in that:

    People should not receive social security payments for loss of earnings where they have received compensation for that same loss of earnings from another source.[3]

    [3] Secretary, Department of Family and Community Services v Allan (2001) 66 ALD 147 at 148 per Heerey J.

25. Those considerations must be kept in mind when determining, for the purposes of applying s 1184K(1) of the Act, whether or not special circumstances exist in a given case. The issue of special circumstances arises in various parts of the Act. In the context of other aspects of the Act, it was observed that what is required is:

    … something to distinguish ... [the] … case from others, to take it out of the usual or ordinary case. … It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.[4]

    [4] Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545 per Kiefel J.

26. That observation is equally applicable to s 1184K(1) of the Act. Accordingly, there must be something about Mr Cunningham’s situation which makes it “unusual” or “uncommon” such that it distinguishes it from the ordinary or usual case.[5] I am satisfied that Mr Cunningham’s circumstances do not meet that description.

    [5] Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25 at [33] per Besanko J.

27. When considering the discretion in s 1184K(1) of the Act, all relevant circumstances are to be taken into account.[6] In this matter, these include health issues as well as financial and personal circumstances.

    Health matters

    [6] Davis v Secretary, Department of Family and Community Services [1999] AATA 84.

28. Mr Cunningham was clear in his evidence that he no longer experiences any significant symptoms associated with the cervical spine injury he incurred in 2010 and which provided the basis for his compensation payment. He described a nervous breakdown in May 2012 when he was taken to the Ipswich Hospital. That is not supported by the records from the hospital at that time. He was taken to the hospital by the police because of his behaviour towards officers of the department which was associated with the care arrangements for his children. The record noted his recent drug injections and described him as alert, rational, calm and oriented to time, space and person and, while feeling “down”, he was not depressed. Mr Cunningham denied to hospital staff that he had any psychotic symptoms or any mood disturbance.

29. The hospital record also referred to ADHD and bi-polar affective disorder with no medication being taken for those conditions. Indeed, Mr Cunningham denied that he suffered from those conditions and considered that the symptoms he displayed were really associated with his drug use. That view is entirely consistent with the medical evidence in this matter. Dr Phillipson’s opinion was that it was difficult to substantiate a diagnosis of bi-polar disorder and considered that observed mood changes were likely to be drug induced. Dr Brown described a strong history in Mr Cunningham’s family of bi‑polar disorder and, while concluding that he showed features of this condition, Dr Brown did not enter a diagnosis of that condition. Rather, he identified emotional problems associated with drug use with a probable history of ADHD. Dr Banasiak‑Lazinska described possible depression/anxiety and noted Mr Cunningham’s claim that he was “very nervous” since his children were removed by the department.

1. On the material available to me does not establish diagnoses of bi-polar disorder, ADHD or ADD. I am satisfied that Mr Cunningham’s mental or behavioural problems have been associated with his excessive use of cannabis and amphetamines. I have noted his evidence that he had ceased the taking of drugs since October 2012 and also that he is undertaking rehabilitation courses with Drug Arm in Stanthorpe. However, his excessive use of drugs was a matter of personal choice on his part and I am satisfied that his conduct in that regard does support a shortening if his preclusion period.

   Financial matters

2. Special circumstances may be found in financial hardship where that goes beyond straitened circumstances which are truly exceptional.[7] Mr Cunningham is not in remunerative work but his basic sustenance and accommodation needs are met by the willingness of his parents to have him live with them in Stanthorpe. With his immediate needs met, Mr Cunningham is not in straitened circumstances and I note that the preclusion period ends only nine weeks from the date of the Tribunal hearing. It is also significant that Mr Cunningham’s depleted financial position is due to his indulgence in reckless and extravagant expenditure on drugs, for others as well as himself, on property items which, on his evidence, were mainly purloined by friends and associates and in lending sums of money to those friends and associates. That expenditure was made with knowledge, from February 2012, of the extent and purpose of the preclusion period as well as, from 26 July 2012, when he was again made aware by Centrelink of the preclusion period. At that stage, Mr Cunningham falsely advised Centrelink that his available finances amounted to $1,200 when he had some $40,000 in bank accounts, notionally for his children, but accessible by himself and his partner. That money was withdrawn and expended within a month.

   [7] Director-General of Social Services v Hales (1983) 47 ALR 281 at 321 per Sheppard J.

3. Moreover, in relation to his financial situation, Mr Cunningham retains an asset in his Holden Commodore. The evidence of the current value of this vehicle is far from satisfactory. Mr Cunningham’s attempts to sell it have been for amounts of $20,000 or more; he referred to the prospect of receiving $10,000 in October 2012 for the vehicle from its previous owner; Mr Reeves’ undated statement indicating a market value of $2,000 was unsworn and he did not give evidence. Mr Cunningham’s evidence was that he did not wish to sell the vehicle because it was the only asset he retained from his compensation payment. I am satisfied that it would be contrary to the purposes of the Act to shorten the preclusion period to enable Mr Cunningham to retain that asset which was purchased with his compensation.

   Personal matters

4. Mr Cunningham has been separated from his partner since December 2012 but that, in itself, is not an unusual feature of family relationships in Australian society. An additional factor in Mr Cunningham’s life has been his separation from his children since December 2011. That situation predated his receipt of compensation payments and his dramatic increase in drug-taking from March 2012 when he was able to afford them. It is not the task of this Tribunal to assess the appropriateness of otherwise of the department’s actions in removing the children and, in any event, relevant evidence of the department’s reasons for doing so was not provided. I have noted the reference to Mr Cunningham’s conduct in the department’s letter of 10 September 2012[8] which is consistent with the basis on which Mr Cunningham was taken to the Ipswich Hospital in May 2011 and to the existence of a domestic violence order against him in relation to contact with his partner. The evidence that exists points firmly to a degree of fault on Mr Cunningham’s part in the present circumstance relating to his partner and children and I am satisfied that this does not make it appropriate to include those arrangements in an assessment of whether there are special circumstances to treat some part of Mr Cunningham’s compensation payment as not having been made to him.

   Summary

   [8] See para 21 (above).

5. I am satisfied that there are no circumstances, either individually or in conjunction with each other, that are special such as to meet the requirements of s 1184K(1) of the Act.

   DECISION

6. The Tribunal affirms the decision under review.

36.       I certify that the preceding 35 (thirty-five) paragraphs are a true copy of the reasons for the decision herein of Mr R G Kenny, Senior Member.

......................... [SGD]...........................................

Associate

Dated  8 February 2013

Date of hearing	31 January 2013
Applicant	In person
Advocate for the Respondent	Mr Rick McQuinlan