Mills; Secretary, Department of Social Services and (Social services second review)
[2019] AATA 753
•23 April 2019
Mills; Secretary, Department of Social Services and (Social services second review) [2019] AATA 753 (23 April 2019)
Division:GENERAL DIVISION
File Number(s): 2018/2831
Re:Secretary, Department of Social Services
APPLICANT
Michelle MillsAnd
RESPONDENT
DECISION
Tribunal:Ms Anna Burke AO, Member
Date:23 April 2019
Place:Melbourne
The Tribunal sets aside the decision under review and in substitution decides that Mrs Mills does not satisfy Section 1184K of the Social Security Act 1991 and is subject to a preclusion period until 30 May 2023.
.......[sgd].................................................................
Ms Anna Burke AO, Member
Catchwords
SOCIAL SECURITY – compensation preclusion payment – calculation of preclusion period - straitened financial circumstances – ill health including mental health conditions – impaired decision making - evidence does not show special circumstances – decision under review varied.
Legislation
Administrative Appeals Tribunal Act 1975 (Cth)
Social Security (Administration) Act 1999 (Cth)
Social Security Act 1991 (Cth)Cases
Re Secretary, Department of Family and Community Services v Allan [2001] FCA 1160; (2001) 66 ALD 147
Re Secretary, Department of Employment & Workplace Relations v Barrington [2006] FCA 527
Ryde v Sec Department of Family and Community Services [2005] FCA 866
Re Beadle v Director General of Social Security (1984) 6 ALD 1
Re Groth v Secretary Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541
Holzhauser and Secretary, Department of Family and Community Services [2004] AATA 251
Spark and Secretary, Department of Social Services (Social services second review) [2018] AATA 1456Massoud and Secretary, Department of Social Services (Social services second review) [2017] AATA 1366
Carden and Secretary, Department of Social Services (Social services second review) [2018] AATA 1499
Secondary Materials
Guide to Social Security Law, Department of Social Services, Version 1.242 - Released 20 March 2018
REASONS FOR DECISION
Ms Anna Burke AO, Member
INTRODUCTION
The Secretary, Department of Social Services (the Applicant) is seeking a second tier review of the decision made by the Social Services and Child Support Division of this Tribunal (AAT1) to grant Mrs Mills (the Respondent) special circumstances pursuant to s 1184K of the Social Security Act 1991 (the Act) disregarding part of the compensation preclusion period.
On 21 May 2018 the Secretary sought a review of the AAT1 decision by this division of the Tribunal, as he disagrees with the decision stating: “the Tribunal erred in deciding that special circumstances applied as there was insufficient evidence to support its findings of fact. Specifically, there was insufficient evidence regarding how and why large amounts of money were expended by the Respondent, and the Respondent’s financial circumstances, including bank account details.” Additionally, the Secretary requested a stay of the AAT1 decision while this matter was under review, and a stay was granted on 4 June 2018.
The application was heard on 30 November 2018. The Secretary, Department of Social Services was represented by Ms Ailsa Bramley, government lawyer in the Freedom of Information and Litigation Team, Department of Human Services. Mr Richard Mills (Mrs Mills’ husband) appeared for the Respondent. At the end of the hearing the Tribunal directed the Respondent to provide any additional information in respect of her mental health condition. Several extensions were granted to the Respondent to allow her to gather this information and to seek legal advice, until 14 March 2019.
THE ISSUES IN CONTENTION
The issue in contention is whether the whole or part of Mrs Mills’ compensation payment can be treated as not having been made as there were appropriate special circumstances in her case.
BACKGROUND
From 12 September 2012 to 21 February 2013 Mrs Mills received newstart allowance.
On 20 February 2013 Mrs Mills slipped down stairs at a shopping centre in Queensland and allegedly sustained injuries for which she reached an out of court settlement for a public liability accident claim on 7 July 2016 for $920,000 with no entitlement to costs and no component for economic loss.
From 6 March 2013 to 17 February 2015 Mrs Mills received WorkCover payments.
On 11 September 2013 Mrs Mills lodged a Centrelink Compensation and damages form and as part of her claim for payment in it she advised she was receiving workers compensation payments. Centrelink is the service provider for the Department of Social Services.
On 16 September 2013 Centrelink advised Mrs Mills by letter that if she received weekly compensation or a lump sum payment some or all of the Centrelink payments paid to her or her partner would need to be paid back and additionally any compensation she received may also stop Mrs Mills receiving Centrelink payments in the future.
From 25 March 2015 to 19 April 2017 Mrs Mills received a disability support pension.
On 20 April 2017 Centrelink advised Mrs Mills by letter about the effect of her lump sum payment on her eligibility for income support from Centrelink, as it had been advised that she had received a lump sum payment of $920,000.00. Mrs Mills was advised she had a preclusion period from 15 February 2015 until 30 May 2023 and that she had to repay $35,902.16 for benefits she had already received in this period.
On the 24 November 2017 Mrs Mills contacted Centrelink by telephone and lodged an application for newstart allowance.
On 28 November 2017 Centrelink advised Mrs Mills via letter that her application for newstart allowance had been rejected as she was not entitled to payment until 7 June 2023.
On 6 December 2017 Mrs Mills lodged a compensation recovery statement of financial circumstances; in it she states:
My lawyers gave Centrelink incorrect information in regards to my settlement. They have overcharged me. They settled without my authority, they have charged me for amounts and things that I didn’t receive.
Payments were made by them out of the settlement that were not correct. During the course of my case they change my lawyer 5 times.
The preclusion period has been set to 2023 when I went to Centrelink I was told several times that the preclusion period should’ve been ended on October 2014.
All of the amounts that have been paid out of settlement are wrong. Even WorkCover have ripped me off with charges and appointments that I haven’t even been to or agreed to.
From start to finish I have been taken advantage of.
If I could’ve gone back to work I would have. However I am now left mentally and physically disabled and at times don’t even have enough to get my medications.
And I’m left wondering why they would have treated me like this? My life has been turned upside down. My husband who is my full-time carer and my family have all had our lives ruined.
My lawyers reported to Centrelink that I received 920K when I actually received 178K (my husband has begun action against them). The money that I received we had already borrowed a large part of from my family just to stay afloat as we moved back home from Qld, as I couldn’t leave the house. I have desperately tried every type of therapy (natural, alternative medical etc.) to try and help with my pain and to make me feel better mentally. Everywhere I turn to for help seems to try or succeeds in ripping me off.
My youngest brother then (unknowingly to me) stole my bankcard and stole in excess of $30K from me. I couldn’t press charges as he is my brother and a drug addict and he threatened me once I found out. Everywhere I have tried to get help rip me off and take from me. I am left with nothing and nobody can help me
On 14 December 2017 a Centrelink Authorised Review Officer (ARO) affirmed the decision to reject Mrs Mills’ application for newstart allowance as she was precluded from income support until 30 May 2023. In the decision the ARO found:
It is a principle of the social security system the people who are unable to work because of a compensable injury are prevented from receiving income support from both the social security and compensation system for the same period. These rules are designed to ensure that people who find themselves in the situation receive income support from those with the primary responsibility to provide the support i.e. statutory compensation schemes and insurers. The only exception to this rule is contained in section 1184K of the Act. This allows for all or part of the preclusion period or charge to not apply if there are ‘special circumstances’ in a particular case.
I note that the department sent you letters on 16 September 2013 and 22 April 2015 that told you that receiving compensation payments may stop you from receiving Centrelink payments in the future and that receiving lump sum or weekly compensation payments may mean that some all Centrelink payments may need to be paid back. The letter told you about Centrelink’s estimate service and of its Financial Information Service – services that could help you to make informed decisions. A letter of 20 April 2017 told you that the preclusion period wouldn’t end until May 2023, and of Centrelink’s charge for $35,902.16.
Your compensation claim was settled for an amount of $920,000 and weekly workers compensation of $89,598.00 was repaid from the lump sum. This means that your lump sum payment was $830,402.00. Using the 50% rule of subsection 17(3) of the Act an amount of $415,201.00 was considered to be the “compensation part’ of your settlement.
Based on the terms of the settlement in the amount of your lump sum payment, you are precluded from receiving a compensation affected payment for a period of 432 weeks (eight years and 16 weeks). I have checked the calculation of the length of the preclusion period and I found that it is correct.
After all refunds, fees and disbursements were deducted, your net settlement was $489,884.84 and this is more than the compensation part of $415,201.00 that has been used to calculate the preclusion period. Shine Lawyers paid you $178,713.50, Brisbane Capital was paid $208,723.06, Centrelink was paid $10,454.88 to finalise two debts, $4,000.00 was deducted as repayment of an advance payment, and $87,933.00 is the refund to you from Medicare.
You indicated that you have not received the refund from Medicare. You said that an overseas holiday was taken by your family last year and the cost was approximately $90,000.00 with funds being borrowed from Brisbane Capital. You purchased a car for approximately $60,000.00 with money borrowed from your partner’s parents. An investment in gold and silver was made in May 2017 with $69,560.15. The investment has since been cashed in for $50,000 to $55,000 and the money has been used on general living expenses and for the payment of bills. You also said that your brother had stolen more than $30,000 from you. You are behind in your rent payments and the only income coming into the household is Carer Payment and Carer Allowance that is paid to your partner.
….
The special circumstances provisions are only applied in unusual, unforeseen and exceptional circumstances. This means in situation where the compensation provisions have led to extreme hardship, or created an inequitable, unjust or unreasonable situation for the compensation recipient.
I understand that your financial is very difficult and that your medical condition has not improved. Whilst not wanting to do dismiss the significance of these issues I have to consider the expenditure of your compensation settlement. I have found that there are significant settlement funds that are unaccounted for and, after looking at the available information have regard to the intent of the legislation, I have decided there are no grounds to change the decision to reject your claim for Newstart Allowance because of a conclusion period from 18 February 2015 to 30 May 2023
On 23 March 2018 Mrs Mills applied to AAT1 for a review of the ARO decision.
On 16 April 2018 the AAT1 set aside the ARO decision finding that the discretion provided for in section 1184K of the Act should be exercised in Mrs Mills’ favour and so much of the lump sum payment should be disregarded such that the compensation preclusion period is ended from 11 April 2018. In the decision the Member stated:
Mrs Mills’ own evidence suggests that the disposition of the settlement sums was characterised, to a degree, by poor judgement. She entered into an expensive bridging finance arrangement fund an expensive family holiday and ultimately had to repay more than twice the amount borrowed. Had she not done this you could have received approximately $480,000 including the refund from Medicare which, prudently invested, could have adequately supported her for the duration of the preclusion period.
I did not view the decision to spend $70,000 on a business venture, when Mrs Mills, her husband nor their daughter had any particular or relevant business experience, to be wise. I was not persuaded that was prudent to prioritise harmonious family relationships, and repay $100,000 to Mrs Mills’ parents-in-law, over Mrs Mills’ need to support herself through an extensive preclusion period.
I considered this poor judgement and decision making weighs heavily against exercising the discretion of section 1184K of the Act and did not consider that my viewing Mrs Mills’ bank statements which suggest an alternative view should be preferred.
…
I concurred with many of the concerns expressed by Senior Member Isenberg and accepted that there are significant public policy grounds that argue against exercising the discretion provided for in section 1184K of the Act in Mrs Mills’ case.
Regardless, having considered the matter and in spite of these factors that I have discussed that weigh against a finding of special circumstances, I was satisfied that Mrs Mills’ financial situation is so dire that it weighs more heavily in favour of finding a special circumstances. She has no financial resources in the family’s income (carer payment, carer allowance and potential youth allowance) is, in my view, insufficient to support a family unit three without recourse to charity and welfare services. Mrs Mills is now is also facing eviction and the possibility of homelessness.
I therefore decided that the discretion provided for in section 1184K the Act should be exercised in Mrs Mills’ favour…..
RELEVANT LEGISLATION AND ISSUES
Section 17(2) of the Act defines compensation as:
(a)a payment of damages; or
(b)a payment under a scheme of insurance or compensation under a Commonwealth, State or Territory law, including a payment under a contract entered into under such a scheme; or
(c)a payment (with or without admission of liability) in settlement of a claim for damages or a claim under such an insurance scheme; or
(d)any other compensation or damages payment;
(whether the payment is in the form of a lump sum or in the form of a series of periodic payments and whether it is made within or outside Australia) that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury.
Section 17(3) and (4) of the Act defines a lump sum compensation payment as:
3)Subject to subsection (4), for the purposes of this Act, the compensation part of a lump sum compensation payment is:
(a)50% of the payment if the following circumstances apply:
(i)the payment is made (either with or without admission of liability) in settlement of a claim that is, in whole or in part, related to a disease, injury or condition; and
(ii)the claim was settled, either by consent judgment being entered in respect of the settlement or otherwise; or
(iii)(ab) 50% of the payment if the following circumstances apply:
(ab) the payment represents that part of a person's entitlement to periodic compensation payments that the person has chosen to receive in the form of a lump sum; and
(iv)the entitlement to periodic compensation payments arose from the settlement (either with or without admission of liability) of a claim that is, in whole or in part, related to a disease, injury or condition; and
(v)the claim was settled, either by consent judgment being entered in respect of the settlement or otherwise; or
(b)if those circumstances do not apply--so much of the payment as is, in the Secretary's opinion, in respect of lost earnings or lost capacity to earn, or both.
(4) Where a person:
(a) has received periodic compensation payments; and
(b) after receiving those payments, receives a lump sum compensation payment (in this subsection called the LSP ); and
(c) because of receiving the LSP, becomes liable to repay an amount (in this subsection called the Repaid Periodic Compensation Payment -- RPCP ) equal to the periodic compensation payments received;
then, for the purposes of subsection (3), the amount of the lump sum compensation payment is:
(4A) For the purposes of this Act, a payment of arrears of periodic compensation payments is not a lump sum compensation payment.
Section 1169 of the Act provides that social security payments are not payable during lump sum preclusion period:
1) If:
(a) a person receives or claims a compensation affected payment; and
(b) the person receives a lump sum compensation payment;
the compensation affected payment is not payable to the person in relation to any day or days in the lump sum preclusion period.
2) In this section:
"lump sum compensation payment" does not include a lump sum payment:
(a) to which section 1164 applies; or
(b) that relates only to arrears of periodic compensation payments.
Section 1170 of the Act sets out the calculation of a lump sum preclusion period:
(1) Subject to subsection (2), if a person receives both periodic compensation payments and a lump sum compensation payment, the lump sum preclusion period is the period that:
(a) begins on the day following the last day of the periodic payments period or, where there is more than one periodic payments period, the day following the last day of the last periodic payments period; and
(b) ends at the end of the number of weeks worked out under subsections (4) and (5).
2)If a person chooses to receive part of an entitlement to periodic compensation payments in the form of a lump sum, the lump sum preclusion period is the period that:
(a) begins on the first day on which the person's periodic compensation payment is a reduced payment because of that choice; and
(b) ends at the end of the number of weeks worked out under subsections (4) and (5).
3)If neither of subsections (1) and (2) applies, the lump sum preclusion period is the period that:
(a) begins on the day on which the loss of earnings or loss of capacity to earn began; and
(b) ends at the end of the number of weeks worked out under subsections (4) and (5).
4)The number of weeks in the lump sum preclusion period in relation to a person is the number worked out using the formula:
5)If the number worked out under subsection (4) is not a whole number, the number is to be rounded down to the nearest whole number.
Section 1184K provides the Secretary with the discretion to reduce the whole or part of the lump sum preclusion period if they think it is appropriate on the basis of special circumstances:
Secretary may disregard some payments
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.
EVIDENCE
Shine Lawyers (who acted for Mrs Mills in her compensation claim) on 13 July 2017 provided Mrs Mills with a final breakdown of the settlement monies she received as follows:
settlement amount $920,000.00
less total refunds $257,404.16
less total disbursements $33,424.67
less total professional fees $123,861.96
less previous solicitor’s fees and disbursements $15,424.37
net amount payable to you $489,884.84
less amount refunded to you by Medicare $87,993.40
less debts -Brisbane Capital $208,723.06
less debts – Centrelink $10,454.88
less amount paid to you by way of advance $4000.00
net amount paid to you by Shine Lawyers $178,713.50
Mrs Mills advised the Tribunal at the AAT1 hearing that she had spent the compensation money in the following way:
·$90,000 for a surprise family holiday and cruise in 2016, which she had funded through a loan from Brisbane Capital;
·$100,000 was paid to her parents-in-law to repay a debt accrued prior to settlement; which she explained had been incurred to pay for her and her husband to undergo urgent surgery (a hysterectomy for Mrs Mills and shoulder surgery for her husband) which they could not wait for on the public health system. The remainder of borrowed funds were used to buy and modify a vehicle to accommodate her disabilities;
·$70,000 to set up a business for their daughter - which comprised of $35,000 to the vendor for the business itself, rental for the shop at $3,100 per month for six months, $10,000 for a builder to do a fit out and an additional $5,000 in outgoings. The business never opened with both the landlord and the builder taking advantage of them; and
·her brother, who has an ice addiction, had stolen money from her bank account.
Mrs Mills also claimed that it was unreasonable to expect her to sell the car which she estimated would fetch only $25,000 to $30,000 as they had purchased and modified it to suit her disabilities; and they had sold all other assets in their possession.
Mrs Mills did not provide bank statements to corroborate these claims to the AAT1 hearing.
In a statement to the Tribunal dated 4 June 2018 for this hearing Mrs Mills asserted:
I am currently experiencing extreme financial hardship. I am living in a car since 9 May 2018 with my husband and daughter. My husband is my full-time carer and his carer payment of $811 per [fortnight] is grossly inadequate to allow us access to a rental home. I also have my two birds (my therapy birds) living in the car with me (along with the family dog).
Due to a work accident sustained 5 years ago I suffer from serious back injury and chronic pain. I have also been diagnosed with Major Depression and PTSD. I have seen a psychiatrist in the past (but presently I’m unable to attend to my psychiatrist due to the prohibitive cost). The stress of my current situation has negatively impacted on my mental state. Especially during the last few weeks I have been quite suicidal. I bring this to your kind attention to highlight the emotional, physical and mental toll my circumstances are taking on me.
My chronic pain condition is also aggravated by my inability to have any proper sleep in the car and not being able to move around (which also affects my leg condition which otherwise necessitates me to put up my feet and rest to avoid fluid build-up). I use a walking stick to assist with my mobility.
I am absolutely impecunious. I have sold everything valuable including my wedding and engagement ring to survive. We are relying on the local community centre to support us with weekly food and fuel vouchers ($20 to $30 value) to meet some basic day-to-day needs. We often go hungry as the assistant is simply not enough.
I do not have any family of my own. Our relationship with my parents in law had become very strained due to past money loans (which I was compelled to repay due to the family stressors) we are unable to stay with them and they do not support us. Due to our extreme distress and embarrassment surrounding our current extreme predicament, we have become very reclusive as well. The charities are no longer able to continue supporting us on any ongoing basis especially as they are already doing well above the standard level of involvement.
Mr and Mrs Mills rented a property in Dromana at the cost of $1868 per month and continued to live there until 24 November 2017. Despite being in arrears they moved to another rental property in Mornington which cost $2084 per month. On 9 May 2018 the Victorian Civil Administrative Appeals Tribunal ordered them to vacate the property as they were in arrears on their rental payment.
The Support Services Coordinator from the Mornington Community Information Support Centre provided a letter to Mr Mills dated 21 March 2018 which indicated the centre had been providing assistance to the Mills family. The letter indicated that the major concern at the time was the family’s risk of homelessness as they were seven weeks behind on their rent. The letter explained that housing services would be unlikely to assist in providing rental assistance to the Mills as their rent currently exceeded their income and that this situation was not sustainable. The letter went on to state that the centre was unable to offer indefinite financial support for the family at the level required and therefore they supported the family’s application on the grounds of hardship.
Prior to the Tribunal hearing the Applicant requested Mrs Mills’ financial records from various financial institutions including Brisbane Capital and the Commonwealth Bank in accordance with s 196 of the Administration Act and lodged these as supplementary documents.
Appended to the decision is a breakdown of the relevant expenses which the respondent contends were highly unreasonable in all the circumstances. The Tribunal subsequently reviewed these records finding the respondent had not included expenditure which would be considered by the average person to be general living expenses.
The Tribunal noted the following in particular:
·Brisbane Capital bridging finance
13 April 2017 $10,695 (interest $151.13)
17 March 2017 $26,738 (interest $775.85)
7 February 2017 $31,985 (interest $1610.05)
12 January 2017 $21,390 (interest $1394.20)
7 December 2016 $104,950 (interest $9033.83)
Additionally, there were numerous transfers of large sums between various Commonwealth Banks accounts.
At the hearing the Applicant asked Mrs Mills to explain where and how she had spent her compensation lump sum payment. Mr Mills acting, as Mrs Mills’ representative, and Mrs Mills explained that:
·they had received $178,000 in hand and Centrelink had calculated the compensation payment on the incorrect amount;
·they had not received the $87,000 refund from Medicare (the respondent indicated in the bank statements that this money had indeed been repaid to the Mills);
·they understood there would be a preclusion period but their lawyers had indicated they would end up with no less than $500,000 in hand and they had assumed that $178,000 was just a part payment;
·Mr Mills was unaware of the loans through Brisbane Capital, his wife had been dealing with this but he had subsequently taken over as she was not in the right mental state to be making such decisions;
·Mrs Mills had embarked on a business venture for their daughter and had paid out $35,000, mostly in cash, for the business as that was the request of the vendor The family had hoped to get out of the Centrelink trap and all the stressors. There were a lot of mental health issues with both Mrs Mills and their daughter and it simply got the better of them. The business did not proceeded and they calculated that $75,000-$80,000 has been used up on this venture;
·Mrs Mills had made many decisions that cost the family dearly. Her brother had taken from her approximately $25,000 and he was also given $20,000 because she feared he was going to be killed and she could not have reported the theft from her bank account as it was her brother;
·she has given another loan to a friend of $10,000 who was fearing eviction;
·they had taken the trip to America as it was desperately needed after all the stressors of the litigation involving Mrs Mills’ accident and they did not appreciate how much it would cost;
·the trip to Hamilton Island was not excessive and again was a family holiday. Mrs Mills had about 25 different specialists, lawyers and other professionals all questioning their validity and they needed a break so they had taken a family holiday;
·they had travelled to the Northern Territory to help out some friends lending them $12,000;
·the payments to Ladbroke’s were made by their daughter who has a gambling problem and had access to Mrs Mills’ banking details;
·Mr Mills eventually knew of the debt to Brisbane Capital but he had loaned money to his friend as he still assumed they were to receive the $500,000 from the settlement as promised by the lawyers;
·Mrs Mills just didn’t know what she was doing. She said it was hard enough dealing with everything as after the accident her whole life fell apart; she forgets everything and can’t do anything for herself anymore. She thought she would never end up on Centrelink and finds it hard to express herself because of what has happened. She’d been overcompensating to their daughters by spending money on them because she wasn’t like a normal mum anymore and although she knows it’s stupid, at the time she just threw money at everybody because she felt that it was the only purpose she had now. She said that she had a very difficult upbringing;
·previously they had had a standing in the community; he (Mr Mills) had been a football coach and they had been respected throughout the community and now that was all gone she simply was not in a fit mental state to deal with anything; and
·they were currently living in their car as they had nowhere else to go (the Applicant queried this as the Mills are currently in receipt of rental assistance).
CONSIDERATION
The public rightly expect that social security benefits are paid to those who have no other source of income and as such the system has been designed to ensure those who can and do receive compensation from other sources are precluded from receiving benefits during the period for which they have received such payments. Fundamentally they cannot double-dip. Heerey J addressed this succinctly in two decisions. First, in Secretary, Department of Family and Community Services v Allan[17] he noted:
“This appeal from the Administrative Appeals Tribunal (the tribunal) concerns the application of provisions of the Social Security Act 1991 (Cth) (the Act) which deal with the suspension (preclusion) of Social Security benefits were recipients have received compensation for loss of earnings by awards under workers compensation legislation or damages at common law. The basic policy, understandably enough, is that there should not be “double dipping”. 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.”
Secondly, in Secretary, Department of Employment & Workplace Relations v Barrington[18]. Heerey J made the following observations:
“The rationale is that a person receiving the benefit of a compensation payment for a disability should not also receive payments out of public funds for the same disability until the compensation payment is exhausted.”
Based on all the evidence before the Tribunal, it finds that Mrs Mills is subject to a preclusion period from 18 February 2015 to 30 May 2023, a period of 432 weeks, based on the formula set out in section 1170 of the Act.
As the Tribunal has found a preclusion period applies, it next has to consider if discretion could be exercised under section 1184K of the Act, to treat whole or part of the lump sum compensation payment as having not been made or not liable to be made if they think it is appropriate to do so in the special circumstances of the case.
Special circumstances
The expression “special circumstances” has not been defined in the Act. However, the meaning of special circumstances has been considered extensively by the Federal Court and the Tribunal.
In Ryde v Sec Department of Family and Community Services [2005] FCA 866, Branson J said:
[…] the evident purpose of s 1237AAD is to enable a flexible response to the wide range of circumstances which could give rise to hardship or unfairness, the statutory requirement for special circumstances discloses an intention to proscribe waiver in ordinary cases. The hardship or unfairness to which French J referred must be understood to be hardship or unfairness sufficient to justify departure from the general rule in the particular case.
In Brian Lewis Groth v Secretary Department of Social Security [1995] FCA 1708, Kiefel J said:
[…] for present purposes it is sufficient to observe that it requires something to distinguish Mr Groth’s case from others, to take it out of the usual ordinary case. That was, I consider, the only enquiry to be undertaken in this case. It would of course follow if one to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.
In summary, it has been held that for circumstances to constitute special circumstances they must be circumstances which are unusual, uncommon or exceptional, markedly different from the usual run of cases, special, or out of the ordinary, and they include events which would render the strict application of the rule in question unfair or inappropriate.
Additionally, the Guide to Social Security Law outlines factors which may be relevant to a decision maker when applying special circumstances as envisaged by section 1184K, noting there is not a prescriptive list but each case should be based on a holistic view of the individual’s circumstances and can only be applied in unusual, unforeseen or exceptional circumstances.
What are special circumstances?
The discretionary nature of the special circumstances provisions makes it impossible to give a precise list of factors that should be taken into account when considering whether the provisions should be applied.
Explanation: It is not possible to set out a complete list of the relevant factors to be taken into account in determining whether special circumstances exist. Each case must be considered on its own merits (Secretary, Department of Social Security v Hulls (1991) FCA 58; 22ALD 570/13 Aar 414).
There is usually not one factor which makes a situation unusual, unforeseen or exceptional, but a combination of factors applying to each individual.
Factors to consider are ill-health, emotional state, decision-making capacity, straitened financial circumstance, addictions, incorrect or insufficient legal advice, unjust operation of legislative amendment, change circumstances and other. The Guide explains when to apply special circumstances:
The decision to apply the special circumstances provisions by the delegate should be based on an holistic view of an individual's circumstances (Hales Federal Court), i.e. the decision would not usually be based on just one factor but a combination of factors.
The special circumstances provisions should ONLY be applied in unusual, unforeseen or exceptional circumstances.
Explanation: In order for 'special circumstances' to exist, it must be possible to say that the circumstances in the case in question are 'markedly different from the usual run of cases'. The circumstances must have 'a particular quality of unusualness that permits them to be described as special' (Beadle v. Director-General of Social Security (1985) 7 ALD 670).
This means in situations where the compensation provisions could lead, or have led to extreme hardship or created an inequitable, unjust or unreasonable situation.
Mrs Mills indicated that her health had been severely impacted by her workplace accident; that she was no longer capable of performing many daily living tasks; and that her husband was her full-time career. Mr Mills advised he could not leave his wife for long periods of time as she suffers from dizzy spells and he was fearful of her falling, causing herself more harm. Mrs Mills reiterated that prior to the accident she had been running a successful business managing staff, many sites, and generating significant returns; and that the accident had left her completely debilitated.
The Applicant contended that Mrs Mills’ ill-health is not more severe than the majority of disability support pension recipients and that she had indeed received compensation for the ill-health. The Applicant argued that Mrs Mills’ ill-health could not be considered as a special circumstance. It referred the Tribunal to the matter of Massoud and Secretary, Department of Social Services (Social services second review) [2017] AATA 1366 where the Member had stated:
The Applicant is in bad health, but in most cases involving a preclusion period that would be expected. The fact that an applicant has been injured and received a compensation payout usually results in that person being in ill health during the preclusion period or immediately thereafter. The various Tribunal determinations focus on the consequences of that ill health in making a determination as to special circumstances. In short ill health is the starting point of the exercise, not the determining factor. Further, it is usually the case when determining that ill health is a special circumstances, the ill health being experienced by an applicant is more severe than the majority of DSP recipients.
Mrs Mills indicated to the Tribunal that she was suffering from numerous mental health conditions and that she was not capable of making informed choices about how she had spent the compensation money. Mr Mills reiterated this, stating that he was unaware of how his wife had been spending large parts of the compensation payment, and that he had now taken over administration of all their financial outgoings.
The Applicant indicated that Mr and Mrs Mills had not substantiated the numerous claims they had made throughout these proceedings. The Applicant indicated Mr and Mrs had provided no corroborating medical evidence which indicated Mrs Mills’ mental health status during the preclusion period, additionally arguing that her decision-making capacity should be considered in the context of the couple’s capacity, as numerous spending decisions had been undertaken by Mr Mills during this period. The Applicant took the Tribunal to numerous decisions which had dealt with this factor, referring the Tribunal to the matter of Holzhauser and Secretary, Department of Family and Community Services [2004] AATA 251 where Member Griffin stated:
Mr Holzhauser managed to expend the entire sum of $193,000.00 in less than one year. While aware of the preclusion period he did not make any financial provision to tide him over that preclusion period. He spent many thousands of dollars on gifts to his children and purchased a house in his wife’s name. He then embarked upon a binge of gambling and drinking. The Tribunal is satisfied this pattern of expenditure was extravagant. Mr Holzhauser says he had a drinking problem and a gambling problem. That may well be so but there is no specialist evidence to indicate that he was suffering from any psychological or mental abnormality, which made this behaviour beyond his control. The Tribunal is satisfied this expenditure was unreasonable.
Mr Holzhauser claims to suffer from a ‘Golden Staph’ infection and other disabilities which limit his employability and make life very difficult for him. Again there is no specialist medical evidence of these conditions. Moreover, it appears that despite being unable to afford prescription medication there has not been any serious consequence or deterioration of his health. He visited a hospital five months ago, was given a prescription, could not take it and nothing has happened since.
Mr Holzhauser has a substantial interest in the home which is worth approximately $130,000.00 debt free but has consistently refused to take any action to derive financial benefit from that asset. Mr Holzhauser lives variously with his daughter and friends. This is a situation entirely of his own making, in that he removed himself from the family home and is free and apparently welcome to return at any time. Indeed, he does so on a weekly basis.
On the evidence presented I am not satisfied that Mr Holzhauser is destitute or in precarious circumstances. It is clear that he has made do for some considerable time with the assistance of family and friends. He may also be able to obtain further medical assistance and benefits with the low-income card. It is open to him to seek some substantial financial benefit from his interest in the family home, or alternatively he can return there to live.
Having regard to the case law and policy considerations, the pattern of expenditure of the lump sum, the health, domestic and financial issues, the Tribunal finds that there are no personal, financial, health or other matters raised by Mr Holzhauser that constitute special circumstances for the purposes of section 1184K of the Act.
The Tribunal was concerned that Mr and Mrs Mills had not provided corroborating medical evidence about Mrs Mills’ mental health and its impact on her decision-making capacity. Mr Mills indicated there were voluminous medical records indicating his wife was suffering from severe psychiatric disorders and that these would be made available to the Tribunal. After numerous requests and extensions of time, Mr and Mrs Mills did not furnish the Tribunal with any medical evidence which could substantiate their claim that Mrs Mills’ emotional state and decision-making capacity were severely impacted by her mental health conditions.
Mr and Mrs Mills strenuously asserted to the Tribunal that they were in perilous financial circumstances, living in their car with their dog and two birds, with access to no other income. They indicated that their financial circumstances were severe, that they had expended all the compensation payments, had cashed in numerous superannuation policies, were relying on charities and had sold everything of value. They believed their circumstances worse than the majority of Social Security recipients. They argued that that this had been recognised by the Member at their AAT1 hearing and they could not comprehend why the Secretary was appealing this decision. They did concede they were in receipt of Centrelink benefits in the form of Mr Mills’ carers payment but argued no individual or family could survive on such a meagre amount per fortnight.
The Applicant conceded that Mr and Mrs Mills were indeed facing difficult financial circumstances. However they argued it was one factor among many. The Applicant contended Mr and Mrs Mills had not fully explained where the compensation had been spent and they calculated the Mills still had access to part of the compensation payment. The Applicant argued Mr and Mrs Mills had made inappropriate choices with how they had spent the compensation knowing full well they had an extensive preclusion period. The Applicant also contended Mr and Mrs Mills still had assets they could realise and their circumstances were not precarious as they were receiving in excess of $938.20 per fortnight from Centrelink benefits. Again the Applicant referred the Tribunal to relevant cases noting the decision in Spark and Secretary, Department of Social Services (Social serves second review) [2018] AATA 1456 where the Member found:
The Tribunal cannot be satisfied regarding what Mr Spark did with the bulk of his Settlement Sum. This significantly weighs against the exercise of the discretion in section 1184K of the Act. Mr Spark has been vague in his responses and has not provided the Tribunal with any documents to substantiate his economic position. These facts, together with the fact that Mr Spark has potentially realisable unencumbered assets, means that the Tribunal cannot find that Mr Spark is suffering from significant financial hardship.
The Applicant also referred the Tribunal to the decision of Carden and Secretary, Department of Social Services (Social services second review) [2018] AATA 1499 where the Member found:
The Tribunal notes that the Applicant and his wife had pre-existing medical conditions prior to receiving the lump sum compensation payment.
The Tribunal agrees with the Secretary's contentions that the purchase of the property was a choice made by the Applicant.
The Tribunal is of the opinion that the Applicant could have continued receiving rental assistance and using the $200,000 that he received from the Department for medical purposes, or the Applicant could have provided less money towards the purchase of the property. The Tribunal considers that these were his decisions.
The Applicant argued there was no evidence that Mrs Mills suffered from any addictions. Mrs Mills did not indicate to the Tribunal she had any addiction issues, only advising the Tribunal her daughter had a gambling problem. Mrs Mills advised the Tribunal her daughter was responsible for the numerous payments to gambling agencies recorded in Mrs Mills’ bank statements.
Mr Mills strenuously argued they had been given incorrect and insufficient legal advice from their lawyers; that they had been charged excessive amounts for the legal services they had received, for which they had little to show. The Applicant contended there was no evidence to support this claim. Additionally, the Applicant argued if Mr and Mrs Mills believed they had received poor legal representation they had other avenues through which they could pursue this claim.
Mr and Mrs Mills argued that their circumstances were indeed special as they were in extreme financial stress, suffering from debilitating poor health and compounding mental health issues, living in their car and surviving on charity.
The Applicant argued there was nothing special about Mrs Mills’ circumstances and they were not out of the ordinary in respect to individuals who have suffered a serious workplace injury. The Applicant argued that Mrs Mills had received a sizeable compensation payout, was fully aware of the preclusion period, had not accounted for how she had spent the bulk of the compensation payment, had undertaken numerous highly unreasonable expenditures, still had access to a sizeable part of the compensation payout, still had assets available which she could realise, had prioritised payments such as loans to friends and the re-payment of loans to her in-laws above her own needs, and that Mr Mills was in receipt of a fortnightly carer’s payment; and that they had not demonstrated with any corroborating evidence their mental health or financial circumstances.
CONCLUSION
The Tribunal finds Mrs Mills has not substantiated her numerous claims about how she had expended her compensation payout including claims that money had been taken from her by her brother, the failed business venture, loan repayments and numerous other expenditure. Mrs Mills has not provided evidence of expenditure such as receipts, invoices, settlement papers or other corroborating evidence which could account for where the bulk of her compensation monies had gone. The Tribunal could not ascertain what monies were still available to Mrs Mills but did note that Mr Mills was still in receipt of carer’s payment, an amount equivalent to that on which many families survive.
The Tribunal finds Mrs Mills had not substantiated her numerous claims about her mental health condition and its impact on her decision-making process, despite the Tribunal’s best efforts to accommodate Mrs Mills in providing such documentation.
The Tribunal finds that the bulk of Mrs Mills’ expenditure of her settlement fund would be considered by the average individual as highly unreasonable in all the circumstances. One such example being the family’s extravagant holiday to the United States valued at $90,000, funded via bridging finance at exceptionally high interest rates. This was not a prudent or wise use of her funds, especially in light of the fact she had been made fully aware that she would be excluded from receiving any Centrelink benefits until 2023.
Mr Mills’ explanation that they had been misled by their lawyers about the size of Mrs Mills’ compensation payout was not borne out by the evidence which clearly indicated a statement of final settlement had been provided by Shine Lawyers. His claim that they had expended monies on the understanding they had only received part of Mrs Mills’ compensation payment was not plausible. Mrs Mills numerous assertions that she was unaware of the preclusion period and that she had been misled by Centrelink about when payment could commence was also not borne out by the evidence.
The Tribunal having considered all the evidence placed before it, finds that Mrs Mills’ situation was not unusual, uncommon or exceptional, markedly different from the usual run of cases, special, or out of the ordinary. As such discretion to treat part or all of her compensation payout as having not been received could not be exercised.
DECISION
The Tribunal sets aside the decision of AAT1 and in substitution determines that Mrs Mills was not entitled to special circumstances treating all or part of her compensation as not having been received thereby disregarding her compensation preclusion period.
I certify that the preceding 58 (fifty-eight) paragraphs are a true copy of the reasons for the decision herein of Ms Anna Burke, Member
..[sgd]......................................................................
Associate
Dated: 23 April 2019
Date of hearing: 30 November 2018
Date of further submissions: 14 March 2019 Advocate for the Respondent: Mr Richard Mills (Applicants husband) Advocate for the Applicant: Ms Ailsa Bramley Solicitors for the Applicant: Department of Human Services,
Freedom of Information and Litigation BranchAnnexure A – Breakdown of Relevant Expenses
Compensation details
Lump sum compensation payable
Item
Date
$920,000.00
Compensation
8/05/2017
Deductions from lump sum compensation
Item
Date
$217,134.90
Refund to WorkCover
$35,902.16
Refund to Centrelink
$92,000.00
Medicare charge
$33,424.67
Disbursements
16/05/2017
$123,861.96
Legal Fees (Shine Lawyers)
16/05/2017
$15,424.37
Legal Fees (previous solicitors – CMC Lawyers)
27/06/2017
$208,723.06
Debt – Brisbane Capital (including expenditure and repayment of $90,000 holiday)
09/05/2017
$10,454.88
Debt – Centrelink garnishee
$4,000.00
Advanced previously paid to Mrs Mills
$740,926.00
Total (Amount A)
Amount received
Item
Daye
$178,589.90
Compensation
08/05/2017
$87,993.40
Medicare repayment [refund]
27/05/2017
$266,583.30
Total (Amount B)
Lump-sum payments made to [Mr & Mrs Mills]
Amount
Account
From
Date
$2,000.00
xx3912
Shine Lawyers
21/03/2016
$232,214.79
xx3912
Cash Deposit Toowoomba
22/03/2016
$7,815.92
xx3912
AMP Life Ltd
13/10/2016
$100,000.00
xx3912
Brisbane Capital Pty Ltd
07/12/2016
$20,000.00
xx3912
Brisbane Capital Pty Ltd
12/01/2017
$30,000.00
xx3912
Brisbane Capital Pty Ltd
07/02/2017
$25,000.00
xx3912
Brisbane Capital Pty Ltd
17/03/2017
$10,000.00
xx3912
Brisbane Capital Pty Ltd
13/04/2017
$2,000.00
xx4122
Shine Lawyers
28/04/2017
$178,589.90
xx3912
Shine Lawyers
08/05/2017
$87,993.40
xx3912
Medicare
10/05/2017
$7,816.12
xx3912
AMP Life Ltd
23/10/2017
$29,664.59
xx3912
AMP Life Ltd
03/11/2017
$733,094.72
Total (Amount C)
Everyday living, medical and veterinary expenses
Amount Expended
Item
Date
Medical Expenses
$60.00
Mornington Village Medical
~2015
$535.00
Medical
03/12/2015
$189.10
Radiology
03/12/2015
$55.00
Consultation with Dr Keith How
12/04/2016
$67.45
Pathology
06/04/2014
$870.00
Hysterectomy
21/04/2016
$300.00
Surgery
21/04/2016
$192.00
Biopsy and examination
01/07/2016
$876.55
Anaesthetist
21/04/2017
$3,750.00
Hospital
21/04/2017
$1,174.00
Ambulance Victoria
16/03/2017
$60.00
Medical Consultation
08/04/2015
$189.10
Ultrasound/joint injection
21/04/2015
$16,700.00
Right shoulder scope release
03/05/2016
$440.00
Dental work
03/062016
$1725.00
Dentist (root canal)
16/03/2015
$68.00
Surgery Consultation Level B
06/05/2015
$210.00
Dentist
12/06/2015
$88.54
Meloxicam medication
03/06/2016
$24.95
Wicks magnetic pet collar
10/12/2015
$120.00
Surgery Consultation Level C
08/04/2015
$231.35
Veterinarian bills
23/03/2015
$27926.04
Subtotal
Other expenses
$249.95
Queen bed underlay
10/12/2015
$114.95
Wicks Magnetic Wool Quilt Cover King
10/12/2015
$33.00
The Brace Shop Postage
10/12/2015
$13,076.00
Rent
Ongoing
$11,296.00
Rent
Ongoing
$3,020.00
Bond
Unknown
$5,990.00
Course fees for Brooke O’Neill
27/03/2015-26/03/2017
$33,779.90
Subtotal
General Living Expenses
$360.00
Water and sewerage rates
03/12/2017
$360.00
Contents insurance
03/12/2017
$1,800.00
Electricity
03/12/2017
$1,440.00
Gas/heating
03/12/2017
$1,200.00
Telephone
03/12/2017
$2,400.00
Food/groceries
03/12/2017
$1,800.00
General medical expenses
03/12/2017
$9,840.00
Chemist
03/12/2017
$24,240.00
Subtotal
$85,945.94
Total (Amount D)
Other expenses
Amount expended
Item
Date
Vehicle expenses
$271.30
Toyota 2007 Car Insurance
11/04/2016
$253.37
Toyota 2007 Car Insurance
11/04/2017
$59,555.00
Toyota 2015 Prado
Unknown
$220.00
Rosebud Toyota Service
17/08/2016
$200.00
Rosebud Toyota Service
17/05/2017
$60,499.67
Subtotal
$69,560.15
Gold and silver
26/05/2017
$3,000.00
Furniture Storage (QLD)
14/12/2017
$72,560.15
Subtotal
$133,059.82
Total (AMOUNT E)
Additional amounts claimed to have been incurred
Amount
Item
Date
$40,000.00
Alleged theft
Unknown
$70,000.00
Beauty salon business venture
Unknown
$100,000.00
Repayment of loan
Unknown
$210,000.00
Total (AMOUNT F)
Amount withdrawn between July and September 2016
Amount withdrawn
Account
Date
$400.00
xx7799 CommBank
11/07/2016
$1,000.00
xx7799 CommBank
11/07/2016
$500.00
xx7799 CommBank
11/07/2016
$1,490.00
xx7799 CommBank
12/07/2016
$800.00
xx7799 CommBank
13/07/2016
$1,700.00
xx7799 CommBank
18/07/2016
$70.00
xx7799 CommBank
19/07/2016
$200.00
xx7799 CommBank
21/07/2016
$1,690.00
xx7799 CommBank
27/07/2016
$700.00
xx7799 CommBank
28/07/2016
$120.00
xx7799 CommBank
01/08/2016
$1,330.00
xx7799 CommBank
07/08/2016
$200.00
xx7799 CommBank
11/08/2016
$1,650.00
xx7799 CommBank
12/08/2016
$1,510.00
xx7799 CommBank
21/08/2016
$50.00
xx7799 CommBank
26/08/2016
$600.00
xx7799 CommBank
26/08/2016
$300.00
xx7799 CommBank
27/08/2016
$1,270.00
xx7799 CommBank
28/08/2016
$100.00
xx7799 CommBank
17/09/2016
$1,560.00
xx7799 CommBank
21/09/2016
$500.00
xx7799 CommBank
22/09/2016
$17,740.00
Total amount (AMOUNT G)
Assets
Assets
Item
$10,000.00
2007 Toyota Hilux
$69,560.15
Gold and silver
$40,000.00
2015 Toyota Prado
$119,560.15
Total realisable assets (AMOUNT H)
2
6
0