Mauldon and Secretary, Department of Family and Community Services - [2000] AATA 285

DECISION AND REASONS FOR DECISION [2000] AATA 285

ADMINISTRATIVE APPEALS TRIBUNAL )

) NoV2000/0018

GENERAL ADMINISTRATIVE DIVISION )

Re DEBORAH MAULDON
Applicant

And SECRETARY, DEPARTMENT OF FAMILY & COMMUNITY SERVICES
Respondent

DECISION

Tribunal Mr J. Handley, Senior Member

Date13 April 2000
PlaceMelbourne

Decision The decision under review is affirmed.

...........Sgd. Mr J. Handley...........
Senior Member

Social Security: Applicant received Compensation Lump Sum; alleges she was advised an entitlement existed to Parenting Payment; whether precluded; whether advised of this entitlement; lump sum expended; whether special circumstances; decision affirmed.

Social Security Act 1991 s1184(1)
Administrative Appeals Tribunal Act subsections 35(3) and 36(4)

Unreported Decision - in taxation application NT94/281/NT94/291 delivered on 11 April 1995 (Matthews J)

REASONS FOR DECISION

13 April 2000 Mr J. Handley, Senior Member

The applicant applied to review a decision of the Social Security Appeals Tribunal ('SSAT') made on 16 December 1999, which decided to affirm a decision previously made by a review officer to reject a claim for parenting payment ('PP'). The review officer decided to preclude the applicant from receipt of PP because the applicant received a payment of compensation in settlement of common law proceedings arising out of injuries she sustained in an industrial accident.
Upon the hearing of the application Mrs Mauldon appeared unrepresented. Ms D'Cunha appeared on behalf of the respondent. Ms D'Cunha called Mr Achilles, a Financial Information Service Officer in the employ of the respondent as a witness.
The applicant argued that the respondent made an administrative error in the advice that he gave her with respect to her eligibility for payment, such that had she been properly advised that she would be precluded from receipt of benefit she would not have expended most of her settlement funds on the purchase of a home. Mrs Mauldon argued that these circumstances were "special" and the respondent should treat the whole or part of the Compensation as not having been received (S1184(1) of the Social Security Act 1991).
The facts surrounding this application (save for some details as to what was said by the applicant and officers of the department to each other throughout the claim processing period) were not in dispute and may be summarised as follows.
The applicant suffered injury at work on 9 April 1997. Thereafter she was totally incapacitated and received weekly compensation at $337 per week until late June or early July 1999. In early June 1999 settlement negotiations commenced and Mrs Mauldon was advised that she could expect to receive a compensation settlement, net from solicitor client costs in the sum of $250,000. At that time the expected date of payment of that sum was not known but was expected to be within a matter of weeks. Mrs Mauldon acknowledged that she was advised by her solicitor that there would be a period of time within which she would not be eligible for disability support pension and she acknowledges for the purpose of this application that she is precluded from receiving that benefit.
Armed with that knowledge Mrs Mauldon made inquiries of the Centrelink office at Dandenong as to whether she could receive any financial assistance between the time that the weekly compensation would end and the date she would receive her compensation lump sum. Mrs Mauldon said that she was scheduled to consult with a client service officer who would advise her as to investment opportunities and her rights with respect to payment of a benefit. Mrs Mauldon said when she attended for interview she was asked what she intended to do with the anticipated payment of $250,000 and she replied that she wanted to pay off her debts and purchase a home. Mrs Mauldon said that the officer advised her that she would not be entitled to disability support pension but would be entitled to PP. She said that officer consulted with another colleague and obtained for her a PP "booklet" and a "MO form" which he told her to complete and return. Mrs Mauldon then left the office with those forms.
Some days later Mrs Mauldon rang the Centrelink Office and inquired about the benefit described to her as PP. She said that she was advised that it was a payment payable to her by reason of her having dependent children in her care. She said she notified the male person that she spoke to on the telephone that she had received a compensation settlement and was advised, after that person made inquiries of another officer, that she should complete the PP "booklet" and return it to the Centrelink Office at Dandenong.
At or about this time, having received the compensation lump sum, Mrs Mauldon commenced looking for a home to purchase. She eventually contracted to purchase a home to the amount of $170,000. She paid $100 as the preliminary deposit and paid the balance of the deposit of $17,000 within a week.
Later Mrs Mauldon had another appointment to attend Centrelink at Dandenong and consulted on this occasion with a female officer. She attended the interview with the completed PP "booklet" and the "MO form".
Mrs Mauldon said that the officer, after consulting with another officer, advised that she would receive PP after the date that she settled the purchase of her home which was then scheduled to be 13 August 1999. She said an appointment was made to return to Centrelink after that date when the balance of her funds would then be known and her entitlement to PP could be calculated. She said these arrangements were made because she was also advised that she would be permitted to retain $80,000 in the bank.
Eventually an appointment was arranged for 18 August 1999. Mrs Mauldon said she was interviewed by the same female officer as referred to above and was then told that the advice previously given as to entitlement to PP was incorrect and an apology was offered. When Mrs Mauldon exclaimed that most of her funds had been expended on payment of debts and purchase of the home she said she was advised by the officer to lodge an appeal with the Social Security Appeals Tribunal. If that officer can be identified, no explanation was given why that person was not called to give evidence.
Mrs Mauldon said that she was also told by the counter officer that she had been advised in a letter sent by the department on 14 July 1999 that she had no entitlement to any benefit and that a preclusion period of approximately six years would apply. Mrs Mauldon said that she never received such a letter.
In cross examination Mrs Mauldon was taken to a file memorandum at page 32 of the T documents, which excluding irrelevant parts, reads as follows:
"cmr has accepted a 250,000 settlemnt out of courts and has no understanding of investing etc to compensate her for the preclusion period which is expected to be about six years apprx. Rang Comp and ascertained that 50% of the settlemnt divided by the av wkly earnings (416.80) will give the no of wks precluded. Cmr has 35000 debts and is thinking of buying a home for approx 100,000. This will leave her with 115000 to live off for 6 yrs. Discsd severl invstmnt optns and invited her to attend my nxt "securing your future" seminar."
Mrs Mauldon disputed the contents of that memorandum. She said the price of the home was not ever discussed and she did not ever intend to purchase a home for $100,000. She said a preclusion period was not ever discussed. She also denied that she would be left with $115,000 after purchase of a house because it was likely after payment of the house and associated costs and other debts that very little monies would be left at all.
With respect to a report from Australian Valuation Office which was filed immediately prior to the commencement of the hearing which certified the home as having a present value of $200,000, Mrs Mauldon said that it would presently be worth less than the $170,000 she paid for it. She that the interior walls are cracked and it needs repainting. She denied that the home was air conditioned as was reported and it has no back yard. Indeed, she said that the whole of the back of the house to the boundary fences had been concreted. Mrs Mauldon was also taken to a document made available to her immediately prior to the commencement of the hearing signed by a wage or personnel officer at the Reject Shop in Kensington. It is in the form of a questionnaire where it discloses that Trudy Mauldon (the applicant's eldest daughter) has been employed at the Reject Shop since October 1995 presently earning $298.13 per week. Mrs Mauldon said that her daughter was employed on a permanent part-time basis and more recently full-time but she was not sure of this. She said that she and her daughter have a "on/off" relationship and they argue frequently. She said that Trudy often lives away from home with others and on the occasions that she does live at home and is earning she does help by purchase of some groceries.
In a statement of financial circumstances completed at the request of the SSAT and lodged with it at or about the time of the hearing which gave rise to these proceedings (December 1999), Mrs Mauldon recorded that Trudy was not working. When asked to explain this entry Mrs Mauldon said that Trudy then had glandular fever (and was not working). Mrs Mauldon was questioned concerning the memorandum completed by a Centrelink officer on 9 June 1999 found at page 29 of the T documents. That document records in part
"Cust advised she now receives $337 pw gross compensation. Could someone who is familiar with compensation phone cust to discuss whether she would be eligible for any extra help from us. She would also like to know how long her waiting period would be for claiming PPS if she was paid a lump sum of $250,000."
Mrs Mauldon said that the memorandum reflects a misunderstanding on the part of Centrelink. She did not ring to request additional help. She rang because at 9 June 1999 she anticipated that her weekly compensation was about to end. She said she made enquiries only as to whether she would have any entitlement to any benefit. She said she also notified the respondent of the proposed ending of her weekly compensation because it would amount to a change in her circumstances, which she was obliged to notify.
With respect to the memorandum found at page 32 of the T documents (refer earlier) Mrs Mauldon said that the preclusion from receipt of benefits was discussed only with respect to disability support pension. She said she was told during that conversation that she would be entitled to PP and the officer that she spoke with in fact gave her a PP application form and booklet. She said if she was precluded from receiving PP she would not have been given the application forms.
Mrs Mauldon was adamant that she was given the PP application form and the compensation form (MO Form) by the interviewing officer (refer earlier) and denied having been posted the forms in a letter on 11 June 1999 (T9 page 30 and T10 page 31). In fact Mrs Mauldon denied ever having received those letters.
Mrs Mauldon was asked to explain entries in a number of bank statements which were obtained by the respondent and produced shortly prior to the commencement of the hearing. On a number of occasions there were withdrawals against her account from an automatic telling machine at the 'Fountain Gate Bingo Centre'. Mrs Mauldon disputed that she spent the proceeds of her settlement funds in gambling or bingo related activity. She said she was reluctant to use automatic telling machines in the Dandenong district because they were frequently surrounded by persons from whom she suspected assault or theft. She said she attended the Fountain Gate Shopping Complex and used an automatic telling machine near the Bingo Centre because she felt more protected with the use of security cameras in that area.
Mrs Mauldon was also shown some documents obtained by the respondent from Australian Guarantee Corporation Limited with respect to debts and borrowings undertaken subsequent to the receipt of settlement funds. One of the documents that was referred to Mrs Mauldon represented that she was employed by S&G Catering at $470 net per week. Mrs Mauldon confirmed that the document did contain false information and that she had completed it and submitted it to AGC in order to qualify for credit. She also confirmed that her representations to AGC that her home was worth $200,000 and that she had $32,000 in cash available to her were incorrect and again were submitted to AGC in order to qualify for credit.
DALLAS ACHILLES
Mr Achilles is a financial information service officer in the employ of Centrelink. He has been an employee of Centrelink for 24 years. He described his employment as offering free advice to Centrelink customers to encourage them to be self-reliant on invested monies and not to be reliant on welfare. He was adamant to explain that he does not offer financial planning or counselling and does not have authority to made decisions on behalf of Centrelink. Mr Achilles said that he consults with "customers" by telephone or personally or in pre-arranged workshops. He says he consults with 15 persons per week. With respect to Mrs Mauldon, Mr Achilles said he could recall meeting with her on 21 June 1999. In addition to keeping notes of interviews he said he remembered Mrs Mauldon because "allegations had been made against me". He said that another work mate had told him that it was alleged that he had issued Mrs Mauldon with a PP claim form and had advised her that she would qualify for parenting payment. He said in addition to keeping notes he was always "careful" in interviews of persons who have received compensation funds. He said his practice with respect to "compensation interviews" is to seek information on behalf of customers as to whether there is any entitlement to a benefit and if he is advised that there is, he will make available a claim form. In the present case Mr Achilles said that he recalled contacting the compensation section of Centrelink in the presence of Mrs Mauldon and was advised that she would be precluded from receiving any benefits for six years.
In cross examination by Mrs Mauldon, Mr Achilles disputed that he had been told by Mrs Mauldon that she intended to purchase a home for $100,000 or that he had given to her a parenting payment claim form. (Mr Achilles had completed the memorandum at page 32 of the T documents – refer para 13.) He was unable to respond to an exclamation by Mrs Mauldon that she would not have purchased a home had he advised her that she would be precluded from parenting payment.
Mr Achilles said that he had no memory of walking with Mrs Mauldon to another area within the Dandenong Centrelink Office where he introduced Mrs Mauldon to a female counter officer and obtained for her a PP booklet. He said that is not his practice, that he would not have done it, and that he has no delegation or authority to make any decisions or give advice for the respect of pension entitlements. He said that "when I do give forms I document it and I make an appointment for persons to see me".
CONCLUSION AND REASONS FOR DECISION
In the present application Mrs Mauldon did not challenge the decision made by the respondent to preclude her from receipt of Disability Support Pension as a result of receiving the compensation funds. Indeed there was no challenge to the preclusion from the payment of PP by reason of receipt of the compensation funds. Additionally, there was no challenge to the calculations made by the respondent as to the extent and duration of the preclusion period.
The present application was based upon the submissions of Mrs Mauldon that she was given incorrect advice as to her eligibility for PP and by reason of that advice she spent most of her compensation funds to her ultimate detriment. That is to say were it not for the advice Mrs Mauldon alleged that she had received with respect to her eligibility to receive PP (despite receipt of a compensation lump sum) Mrs Mauldon would not have purchased the home that she ultimately did and would not find herself in the impecunious circumstances that she now endures.
The relevant section of the Social Security Act 1991 is s1184(1) which reads as follows;
"for the purposes of this Part the secretary may treat the whole or part of a compensation payment as;
(a) not having been made;
(b) not liable to be made;
if the secretary thinks it is appropriate to do so in the special circumstances of the case."
There is no doubting that Mrs Mauldon has suffered significant injuries in an industrial accident which may have given rise to an entitlement to disability support pension were it not for the compensation monies that she received. The injuries, however, do not constitute a special circumstance for the purpose of the present application (having been compensated by the employer's insurer for the injuries) nor am I satisfied on the evidence heard and read that the injuries suffered nor any injuries as a sequel to the physical injuries have been responsible for or had an influence upon her expenditure of funds.
On the evidence heard, almost all of the settlement funds have been expended by Mrs Mauldon on the cost of purchase of a home and the associated costs of solicitors fees, stamp duty and estate agent fees. She has also expended funds extinguishing outstanding loans and other debts and the purchase of furniture and household items. These circumstances are of themselves not "special". The decisions to make the above transactions have been consciously undertaken by Mrs Mauldon, influenced (on her case) by the advice that she received from the respondent.
Whether Mrs Mauldon received advice from the respondent that she would be entitled to PP (thereby influencing her decision to purchase a home and repay debts) is the central theme to this application and is a matter over which I must make findings of fact. This issue is complex because there have been a number of representations by Mrs Mauldon to various officers of the respondent and there have been a number of attendances upon Mrs Mauldon by the respondent's officers. These representations are the subject of some file notes and memorandums found within the T documents and are reflected in advice in various letters which the respondent says were posted to Mrs Mauldon but which Mrs Mauldon said were not received.
Having read the T documents and the various documents filed in these proceedings and having heard from Mrs Mauldon and Mr Achilles I am satisfied as follows:
(i)iIn or about 1996 Mrs Mauldon qualified for and was ultimately paid supporting parent pension;
(ii)Some time later she obtained employment but suffered injuries which resulted in total incapacity for which she received weekly compensation payments. In or about June/July 1999 Mrs Mauldon received the proceeds of a common law settlement in the sum of $265,000 from which $15,000 was retained by her solicitors for costs and received the net sum of $250,000;
(iii)In early June 1999 Mrs Mauldon notified the respondent of the impending settlement of her workers' compensation claim. The respondent apparently had been aware that weekly compensation was being received. At that time Mrs Mauldon was receiving a partial family payment with respect to the children who were dependent upon her. Arrangements were made for her to be interviewed by Centrelink staff on 21 June 1999 (T7);
(iv)On a later date inquiries were made by Mrs Mauldon as to her eligibility for PP after she had received a lump sum payment of $250,000. At that time the monies had not been received but there had been discussions between her and her solicitors and it was foreshadowed that that sum would be the amount upon which there would be a settlement of the compensation proceedings. The Centrelink staff member who received that inquiry apparently referred it to another officer familiar with compensation matters with the instruction to contact Mrs Mauldon and notify her of any entitlements (T8);
(v)One or two days later a PP claim form and a compensation questionnaire was forwarded to Mrs Mauldon by letter (T9 and T10). Mrs Mauldon says she did not receive these documents. I am satisfied that she did not receive the documents. I have found her to be a witness of truth and I note at T8 the officer who completed the memorandum on 9 June recorded her address as Narre Warren whereas the officer on 11 June forwarded the letter to her address at Dandenong;
(vi)On 21 June Mrs Mauldon had her interview with Mr Achilles. I found his evidence to be unsatisfactory and equivocal. He moved from a position in evidence of denying that he made available a PP payment claim form to Mrs Mauldon to a position of "maybe (he) gave the form" and then to a position of "when I do give forms I document it and make an appointment";
(vii)I am satisfied that Mr Achilles did give a PP form and a compensation claim form to Mrs Mauldon. I am not satisfied, however, that he then advised her that she would be entitled to a benefit. The claim form being offered to Mrs Mauldon was no more than an invitation to her to complete it and return it and have the respondent determine whether there was an entitlement to PP. Indeed the taking by Mrs Mauldon of that claim form confirms in my view that the letter of 11 June 1999 enclosing a claim form (T9 and T10) was not received although I am satisfied that it was forwarded. Had the letter been received Mrs Mauldon would have been in receipt of the PP claim form. In those circumstances there would have been no need for her to have taken another form from Mr Achilles on 21 June 1999;
(viii)On 14 July 1999 Mrs Mauldon apparently attended the Centrelink office at Dandenong and returned the completed claim form and compensation questionnaire. She also completed a statement found at T14. In that statement she asked for consideration by Centrelink of her claim for PP at the single rate. Centrelink staff apparently sought advice from the compensation section of her entitlement to PP (T16) and later on the same day (T16) advice was apparently received that a preclusion period commencing 5 June 1999 and ending 1 July 2005 would be imposed by reason of the settlement funds received. On 14 July 1999 the respondent also sent a letter to Mrs Mauldon (which she said was never received). That letter was issued by the respondent's office at Sunshine. It advises that Mrs Mauldon will be precluded from receipt of benefits during a preclusion period of 5 June 1999 until 1 July 2005 except that she will be entitled to receive "payments made for children". Mrs Mauldon was adamant that that letter had never been received. I have no reason to doubt her truthfulness with regard to this document;
(ix)On 22 July 1999 the respondent also wrote to Mrs Mauldon (T17). This is the first letter or document that refers specifically to an exclusion from entitlement to PP because of the compensation funds. The document confirms that benefit will not be paid nor is it payable until 1 July 2005;
(x)On 18 August 1999 Mrs Mauldon was interviewed by Centrelink staff and consistent with the evidence she gave in these proceedings (and to the SSAT) Mrs Mauldon notified that she had been advised by Mr Achilles that she would be entitled to PP and, acting upon that advice, she expended most of her settlement funds on the purchase of a home. She also reported that she had been advised by three other Centrelink staff members that she would be entitled to PP. I make no finding of fact that any of this advice was given to Mrs Mauldon. I simply record as a fact that Mrs Mauldon reported that she was given advice from which she acted to her detriment.

If I was satisfied as a fact that Mrs Mauldon was advised that she would be entitled to PP, despite the imposition of a preclusion period, I would find that her circumstances were special and that the whole or part of the settlement funds should be treated as not having been made under s1184. I would make such a finding because I would be satisfied that having been given that advice Mrs Mauldon purchased a home thereby depleting her available cash funds and acted then in the belief that she would have a regular fortnightly income in the form of PP. I would have regarded those circumstances and her present circumstances as 'special'.
However, on balance I am not satisfied that advice was given to her that she would be entitled to PP. It would appear from all of the above that there have been many inquiries made as to her eligibility for PP and indeed she was asked to complete a claim form so that her eligibility may be tested. I am not satisfied, however, that advice was given to Mrs Mauldon that she would be eligible for PP. Mr Achilles said he was 'running late' in his appointment with Mrs Mauldon and he felt rushed. This may have also contributed to the quality or at least the presentation of his advice. In the event that there is any misunderstanding or innuendo drawn from this finding of fact I wish to make it clear that I am not finding that Mrs Mauldon was not a truthful witness. I am satisfied having heard her evidence and read the documents that there has been a misunderstanding by her of her eligibility for PP and, tragically, Mrs Mauldon has acted upon that misunderstanding by the depletion of most of her settlement funds on the purchase of a home. The consequence of this is that most of the settlement funds have been expended.
Under the Social Security Act, Mrs Mauldon has no entitlement to PP (subject to s1184). It is a benefit excluded from entitlement under the preclusion period imposed upon persons who receive a compensation lump sum. A parenting payment is a "compensation affected payment" for the purposes of s17 of the Act. There are many references throughout the T documents to information being sought from the "compensation section" of Centrelink as to the applicant's eligibility for benefit during the preclusion period. This is consistent with Centrelink officers making inquiries as to Mrs Mauldon's entitlement as opposed to Centrelink officers giving advice that there was an entitlement to a benefit. When it became apparently clear that there was no entitlement to PP a letter was forwarded to Mrs Mauldon confirming her ineligibility.
Having made these findings I am unable to find that any of the remaining circumstances affecting Mrs Mauldon are "special" within the meaning of s1184(1) so as to permit treating the whole or part of the compensation funds as not having been received.
Apart from the expenditure of a large proportion of the settlement funds upon the purchase of a home, it would appear that Mrs Mauldon has expended the remaining funds on outstanding debts and loans and day-to-day expenses. It cannot be denied from an examination of the bank records that large amounts of money have been spent very rapidly and frequently. In hindsight it would appear that Mrs Mauldon would have been well advised to have sought financial counselling or to have her financial affairs managed by another person. I am satisfied that none of these monies have been spent in bingo or gambling related activities.
The circumstances of Mrs Mauldon are not unusual, uncommon, or exceptional. She presently receives a family payment with respect to the four children who are dependent upon her. She owns real estate which is unencumbered and which has a value of at least $170,000. From time to time her eldest daughter lives at home and earns a full-time wage and assists her with day-to-day housekeeping costs.
The decision under review must in the circumstances be affirmed.

RELEASE OF DOCUMENTS

One disturbing feature of this application was the release to applicant by the respondent of a number of documents approximately one hour before the hearing commenced. Those documents were a statement of facts and contentions, copies of bank statements from the Commonwealth Bank (apparently received by the respondent on 2 March 2000 when the hearing was listed for 30 March 2000), a valuation report from the Australian Valuation Office with respect to the applicant's home at Narre Warren dated 14 March 2000 and a copy of the letter forwarded by the respondent to Mrs Mauldon on 14 July 1999 (which was referred to by the SSAT in its reasons for decision but was not provided to the AAT as part of the T Documents).
During the hearing of the application the respondent's representative made available for the first time, for the express purpose of forensic advantage in cross examination, a copy of a letter received from the Reject Shop in Kensington dated 1 March 2000, copies of statements from AGC, and copies of loan applications.
The practice of release of documents immediately before and during a hearing in Social Security applications is virtually unheard of and is inconsistent with the respondent's policy of fairness, applying the social security legislation beneficially and its observance of the model litigant policy.
The conduct exhibited by the release of these documents in the manner that they were released during this hearing should not ever be repeated. It is inconsistent with the policies of the Tribunal for release of documents prior to hearing and is inconsistent also with the equality of opportunity available to parties in citizen review to challenge and defend decisions of Government and its agencies. As her Honour Mathews J in taxation application NT94/281/NT94/291 delivered on 11 April 1995 said:
"The Tribunal is bound, under s33 of the AAT Act, to conduct is proceedings with as little formality and technicality as the circumstances permit. It is of course bound to apply the rules of procedural fairness. But unless these rules or a legislative enactment require that relevant material be withheld from a party, then the fundamental principles under which the AAT operates – as enshrined in subsections 35(3) and 36(4) of the AAT Act – dictate that there be openness in its proceedings, and that each party be made aware of all relevant material in the possession of the other. The principle of trial by ambush is in retreat even in the court system. It has never held sway in this Tribunal and I hope it never will. One of the great strengths of the AAT is its capacity to deal flexibly and informally with a wide range of disputes. Co-operation rather than confrontation has been encouraged at all levels of its proceedings, an approach which has generally proved extremely successful. Forensic devices designed for adversarial purposes have no part to play in the normal processes of the Tribunal".
I certify that the 42 preceding paragraphs are a true copy of the reasons for the decision herein of Mr J. Handley, Senior Member
Signed:         Linda Nemeth    ............................................
  Secretary
Date/s of Hearing  30 March 2000
Date of Decision  13 April 2000
Counsel for the Applicant        Self represented
Solicitor for the Applicant
Counsel for the Respondent    Ms D'Cunha
Solicitor for the Respondent