McDonald and Secretary, Department of Family and Community Services

[2002] AATA 201

DECISION AND REASONS FOR DECISION [2002] AATA 201

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No T2001/150

GENERAL ADMINISTRATIVE  DIVISION       )          
           Re      THOMAS McDONALD    
  Applicant
           And    SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES        
  Respondent

DECISION

Tribunal       Ms A F Cunningham (Part-time Member)          

Date27 March 2002

PlaceHobart

Decision      The decision under review is affirmed.             
   [Sgd A F Cunningham]
  Part-Time Member
CATCHWORDS
Social Security – disability support pension – lump sum compensation payment – preclusion period – special circumstances.
Social Security Act 1991 – s1184K(1)
Re Ivovic and Director-General of Social Services (1981) 3 ALN at N95
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Re Secretary, Department of Social Security and Norman (AATA 13005, 22 June 1998)
Re Lukic and Secretary, Department of Social Security (AAT Decision No 6944)
Re Brown and Secretary, Department of Family and Community Services AATA 47, 29 January 2002

REASONS FOR DECISION

27 March 2002        Ms A F Cunningham (Part-time Member)   

1. The applicant has sought the review of a decision made by a Centrelink officer on 27 October 1999 which  rejected his claim for Disability Support Pension on the grounds that he was still subject to a compensation preclusion period from 18 February 1998 until 19 November 2002.    The decision was affirmed by the Social Security Appeals Tribunal on 21 August 2001.

2. The applicant was presented by Mr Marmarinos at the hearing before the Tribunal and gave oral evidence.  Oral evidence was also given by Mr Jack Wilson in support of the applicant's claim.   The respondent was represented by Mr Baker who called no evidence.

3. The T documents were tendered pursuant to s.37 of the Administrative Appeals Tribunal Act 1975.  

4. It was submitted on behalf of the applicant that the Tribunal could disregard some or all of the applicant's compensation settlement payment for the purposes of establishing a preclusion period  because of the applicant's special circumstances.

5. There was no dispute at the hearing as to the following facts which were derived from the material contained in the T documents and the Tribunal accordingly finds that:.

1. As a result of work injury suffered by the applicant on 1 February 1995 he received a workers' compensation settlement of $200,000 on 16 February 1998.         Part of the settlement included a component for economic loss.

2. When the applicant applied for a disability support pension in October 1999 he was subsequently advised by letter dated 27 October 1999 that a preclusion period would be imposed between 18 February 1998 and 19 November 2002.

1. The issue for the Tribunal to decide is whether the applicant's circumstances constituted "special circumstances" within the meaning of s.1184K(1) of the Social Security Act 1991 ("the Act") such that the preclusion period could effectively be waived.   The provisions of that sub-section state:

   "1184K(1) For 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."

2. The applicant gave evidence as to his current financial circumstances saying that whilst he is in receipt of the family payment, he often has to rely on the generosity of friends and the City Mission.    He said that of the compensation payment he only had between $2,500 to $3,000 remaining in a managed fund account.   He was keeping this sum  he said, to cover the costs of visa and other expenses associated with bringing his wife, Delores and her son to Australia from the Philippines.   The applicant said that he married his current wife, Delores in the Philippines in June 1999 and that ever since he has been attempting to bring her to reside with him in Australia.  

3. The applicant  has 2 children living with him from a former marriage and the shared care of another child.    He described the tragic death of his first wife in a motor vehicle accident which occurred approximately 13 years ago.   He remarried for the fourth time in June 1999.

4. The applicant described his current disability which resulted from a work related accident. There did not appear to be any dispute that the applicant is entitled to a disability support pension in accordance with the provisions of the Act on the basis of his current disability.

5. The applicant conceded under cross-examination by Mr Baker, that he had been made aware by his solicitor at the time when he received his settlement monies that a preclusion period would be imposed in respect of any claim for a pension.    He said in evidence however that he "didn't pay much attention to it".   

6. The applicant said that it was in 1999 when he first realised that his money was not going "to last the distance".   In mid 1999 he made an appointment to see a financial adviser at the ANZ Bank who advised him to "slow down" and suggested that he make an appointment with a Centrelink officer.

7. It was not contended before the Tribunal that the preclusion period had been in correctly calculated.   However reference was made by Mr Marmarinos to the decision of Heerey J in Secretary Department of Family and Community Services v Allan [2001] FCA 1160 and the impact of the GST on the compensation devisor. The Court found in Allan's case that the Tribunal was justified in using the compensation devisor which was applicable at the time of the change in circumstances. Mr Marmarinos did not submit how this Tribunal should take account of the impact of the GST other than to contend that it was a "special circumstance" within the meaning of s1184K(1).

8. The Tribunal does not accept that this factor alone constitutes a special circumstance in that it is a factor common to all Australian consumers and could not be deemed to be "so unusual" or "out of the ordinary" to invoke the discretion envisaged by s1184(1).

9. Another factor that Mr Marmarinos submitted was relevant in the applicant's case was that he could not have foreseen at the time of receiving his compensation payment, that he would again marry a Filipino woman and incur the expense in bringing her to Australia or having to support her.    Other factors that he said were unforseen at the time of receipt of the compensation payment were the amount he expended for his divorce settlement, the ongoing needs of the children in his care and the difficulties that he has encountered in organising the relocation of his wife from the Philippines.  

10. The Tribunal can take account of all of the applicant's circumstances in considering whether "special circumstances" prevail.    As stated in the decision Re Ivovic and Director-General of Social Services (1981) 3 ALN at N95:

    "Whilst it would be unwise, if not impossible, to attempt to lay down any precise delineation of what may amount to `special circumstances'… the use of the word 'special' is, we think, intended to allow the decision-maker the fullest opportunity to consider the particular circumstances of each case."

11. In Re Beadle and Director-General of Social Security (1984) 6 ALD 1, the Tribunal said:

    "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 upon the context in which they occur.   For it is the context which allows once 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."

12. The Tribunal was referred to T29, being a list of the applicant's expenditure since receipt of his compensation monies.    This document revealed that the applicant had spent approximately $83,750 on renovations to his home, a motor vehicle, a trip to Ireland with two of his children, 2 trips to the Philippines, a computer, a security alarm and repaying a bank loan for $15,500.   In addition he had calculated that he had sent a total sum of $21,870 to his wife, Delores  in the Philippines between 6 July 1999 and 8 December 2000.

13. It would appear from this document, that even after the applicant had received his letter from Centrelink, dated 27 October 1999 advising him of the preclusion period he continued to send large sums of money to his wife, Delores and in particular, the sum of $1,400 on 6.9.99, $1,100 on 20.9.99, $1,150 on 11.10.99, $1,150 on 20.10.99, $1,100 on 6.11.99, $1,200 on 20.11.99, $1,200 on 6.12.99, $1,150 on 16.12.99,  $1,200 on 30.12.99, $650 on 4.1.2000, $1,150 on 7.1.2000, $1,150 on 16.2. 2000 and so forth on a regular basis until 8 December 2000.

14. The Tribunal must be mindful of the objective of the Act being to provide financial assistance to those in need. As stated by the Tribunal in the decision Secretary, Department of Social Security and Norman  (AATA 13005, 22 June 1998)

    "It is not an unusual circumstance that a person to whom a preclusion period is applied spends their funds in a way which is unwise.   That is frequently the impetus for them seeking relief through s1184.   Financial hardship alone will not of itself constitute special circumstances under this section (See Director-General of Social Services v Hales (1993) 47 ALR 281). The provisions in the Act are there to ensure that money received in place of income as part  of the workers' compensation system is not also paid by way of Social Security benefits. (See, for example Re Groth and Secretary, Department of Social Security (1995) 37 ALD 797 at 798.    This prevention of double dipping reflects the idea that the money is there to provide a person with income, not capital for investment."

15. It is noted that the applicant in this case has expended considerable sums of money on improving his home, acquiring a car to the value of $14,800,  the purchase of a computer and  trips to the Philippines and Ireland totalling $16,000.   As  stated by the Tribunal in Re Lukic and Secretary, Department of Social Security (AAT 6944) at paragraph 18:

    "The assumptions behind Part XVII are that a recipient of a lump sum payment of compensation will use a proportion defined by statute, of that lump sum for normal living expenses, at a weekly rate equal to average male weekly earnings; and that if it is spent in that manner, it will provide for the person's living expenses until the expiry of the preclusion period.   Once the settlement money had been paid to Mr Lukic it was his to use as he chose.   He chose to spend it principally  on a house and a car.   He still has those assets.   It is not the intention of the legislature that a recipient of compensation for incapacity to work should use that compensation to acquire assets and then also to continue to receive a pension at public expense in respect of that incapacity for work."

16. The applicant in the decision Re Brown and Secretary, Department of Family and Community Services  AATA 47 (29 January 2002) chose to spend part of his compensation payment in caring and providing for his children. However the
    Tribunal found in that case at paragraph 30:

    "… that the applicant's lack of funds to meet the living expenses for the remainder of the preclusion period is a result of his failure to adequately manage his available funds, that the applicant's current parlous financial position cannot be attributed to some misfortune, some unforseen event or some circumstance not envisaged by the legislation and that he has deliberately spent his funds with no regard to the consequences."

The Tribunal accordingly found that such were not "special circumstances" within the meaning of the legislation.

1. Whilst the Tribunal can accept that the applicant has endured many unfortunate circumstances during his life, for instance the tragic loss of his first wife in a motor vehicle accident when their two children were aged 2 and 18 days old respectively, the breakdown of his second marriage shortly after the occurrence of his work accident, the difficulties he has encountered in bringing his fourth wife to Australia and concedes that some of these circumstances were unforseen by the applicant, they alone do not justify the exercise of the discretion envisaged by the provisions of s1184K(1). The Tribunal does not find that they were sufficiently unusual, uncommon or exceptional to come within the meaning of "special circumstances". As was the situation in Brown's case, the applicant was largely responsible for the manner in which he chose to spend his compensation monies.    In particular, the large amounts of money that he sent on a regular basis to his wife, Delores in the Philippines at a time when he was well aware of the imposed preclusion period.

2. Whilst the Tribunal can accept that the applicant is suffering financial hardship and to a large extent relies on assistance from others, the Tribunal cannot condone the applicant's chosen expenditure on the improvement of his asset position and the regular payments of significant sums of money to his wife in the Philippines. The applicant conceded that his wife had part-time employment in the Philippines and was working in 3 different jobs as a waitress before her marriage to the applicant. Such expenditure cannot justify the exercise of discretion envisaged by the pvovisions of s1184K(1) of the Act.

3. It was also contended on behalf of the applicant  that his divorce settlement payment of $20,000  was an unforseen circumstance.     However the applicant said that  his marriage had broken down shortly after his work accident.  Whilst the actual amount of the divorce settlement may have been unforseen at the time of the accident, it was settled after the applicant received his compensation monies on 16 February 1998.

4. In conclusion, the Tribunal can find nothing in the particular circumstances of the applicant's case that warrants the exercise of discretion under the provisions of s1184K(1) such that the whole or any part of the preclusion period should be waived in this case.

5. The Tribunal affirms the decision under review.

I certify that the 26 preceding paragraphs are a true copy of the reasons for the decision herein of Ms A F Cunningham (Part-time Member)

Signed:         Personal Assistant

Date/s of Hearing  20 December 2001
Date of Decision  27 March 2002
Counsel for the Applicant        Mr John Marmarinos
Solicitor for the Applicant         Launceston Community Legal Centre
Counsel for the Respondent    Mr T Baker

Solicitor for the Respondent    Advocacy and Administrative Law Team, Centrelink