Nguyen and Secretary, Department of Family and Community Services
[2004] AATA 249
•11 March 2004
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2004] AATA 249
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2003/796
GENERAL ADMINISTRATIVE DIVISION ) Re DAC HUNG NGUYEN Applicant
And
SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION
Tribunal Ms S M Bullock, Senior Member Date11 March 2004
PlaceSydney
Decision Pursuant to section 43 of the Administrative Tribunals Act 1975, the decision under review is set aside. In substitution therefor, the Tribunal decides that in the special circumstances of Mr Nguyen’s case, so much of the compensation paid to him should be treated as not having been made so as to allow the preclusion period to end on 11 August 2005.
...............................................
Ms S M Bullock
Senior Member
CATCHWORDS
SOCIAL SECURITY - Lump Sum Compensation - Preclusion Period - Special Circumstances
LEGISLATION
Social Security Act 1991 (Cth) ss 17, 1170, 1184K
AUTHORITIES
Beadle v Director-General of Social Security (1985) 7 ALD 670
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Secretary, Department of Family and Community Services v Allan (2001) 116 FCR 1
Re Allan and Secretary to the Department of Family and Community Services [2001] AATA 271
Re Morgan and Secretary, Department of Family and Community Services [2001] AATA 734
Re Krzywak and Secretary, Department of Social Security (1988) 15 ALD 690
Re Stephens and Secretary, Department of Family and Community Services (2001) 32 AAR 430
Re Hadchiti and Secretary, Department of Family and Community Services [1999] AATA 20
Re Gajic and Secretary, Department of Family and Community Services (2001) 67 ALD 568
Re Cvetanoska and Department of Family and Community Services [2000] AATA 459
Re Magallanes and Secretary, Department of Social Security (AAT 10044, 3 March 1995)
Re Davis and Secretary, Department of Family and Community Services (1999) 56 ALD 793
Re Secretary, Department of Social Security and Bolton (1989) 18 ALD 464
Secretary, Department of Social Security v Thompson (1994) 53 FCR 580
Re Secretary, Department of Social Security and VYS (1995) 40 ALD 745
Re Secretary, Department of Social Security and Winterbotham (AAT 6499, 11 December 1990)
REASONS FOR DECISION
11 March 2004 Ms S M Bullock, Senior Member 1. Mr Nguyen was injured at work on 23 December 1997 and on 14 April 2000, a compensation payout in the amount of $407,500.00 was made which included amounts of $282,806.16 clear of payments made in the amount $64,693.84 with legal costs agreed in the sum $60,000.00 (T8). A Centrelink delegate decided that Mr Nguyen was precluded from receiving compensation affected payments from 15 April 2000 until 22 May 2009 (T9). On internal review of that decision requested by Mr Nguyen, the preclusion period was reduced to 11 August 2006 (T17), as an amount $60,000.00 for legal fees was excluded from the calculation of the preclusion period. An Authorised Review Officer (“ARO”) found that there were no exceptional circumstances which could be termed special in the legislative sense which would allow any further reduction in Mr Nguyen’s preclusion period thus the preclusion period was determined by the ARO to commence on 15 April 2000 and conclude on 11 August 2006 (T20). Mr Nguyen sought a review of that decision by the Social Security Appeals Tribunal (“the SSAT”). The SSAT further reduced the preclusion period to 11 February 2006, a reduction of six months, in recognition of Mr Nguyen’s special circumstances of financial difficulties, repayment of a $15,000.00 loan for his mother’s medical expenses and the timing of the receipt of his settlement amount just prior to the imposition of the GST making these circumstances in combination “special” in accordance with section 1184K of the Social Security Act 1991 (“the Act”). In these circumstances Mr Nguyen has made an application for review of the SSAT’s decision to the Administrative Appeals Tribunal (“the Tribunal”).
2. A Hearing was held in Sydney on 29 August 2003 and resumed on 29 September 2003. Mr Nguyen was self-represented and provided oral evidence with the assistance of an interpreter in the Vietnamese language. Ms Thi Thuy Phuong Le (“Ms Phuong”), Mr Nguyen’s wife, also provided evidence to the Tribunal with the assistance of an interpreter. The Respondent, the Secretary, Department of Family and Community Services was represented by Mr G Lozynsky, Departmental Advocate. Documents were lodged pursuant to section 37 of the Administrative Appeals Tribunal Act1975 (“T Documents”, T1-T21). A number of additional documents were received into evidence and are described in Schedule 1 to this decision.
issues
3. The issues in this matter are whether or not the preclusion period was correctly calculated and if so, are there any special circumstances in Mr Nguyen’s case which would allow some or all of the compensation payment made to Mr Nguyen to be disregarded so as to allow a shortening of his lump sum preclusion period.
legislation
4. A decision in this matter requires consideration of the provisions of the Act. The relevant legislative provisions are contained in Schedule 2 to this decision.
evidence and submissions of mr dac hung nguyen
5. Mr Nguyen told the Tribunal that he came to Australia in 1995 and married in Australia in that same year. He has three children, Gillian, born in 1996, Karen, born in 1997 and Jennifer, born in 2002. In providing his evidence, Mr Nguyen stated that he finds it difficult to remember events and circumstances and sometimes becomes muddled.
6. Mr Nguyen believed that he received compensation in 2000 in the amount of approximately $282,806.16. Prior to that he was in receipt of weekly compensation payments of approximately $200.00 per week. When Mr Nguyen received his lump sum compensation settlement, he was advised by his solicitor of a preclusion period, which he understood meant that he was precluded from receiving any social security benefits for a certain period, which he told the Tribunal was 2008. Mr Nguyen further explained that at the time of settlement, he was in a “state”.. He did not really know what he was doing and thought he was under a great deal of pressure from his wife and family in Australia and family in Vietnam. He noted that part of this pressure related to a strained marital relationship with his wife and indeed, at the time of the settlement, he was living separately from his wife and children. They separated after his work accident in either 1997 or 1998. It had been Mr Nguyen’s hope that when he received his lump sum compensation, he would be able to return to live with his wife but this did not in fact occur. From his compensation settlement, Mr Nguyen gave his wife and children money because he knew they were suffering in many ways including financially.
7. After receipt of his compensation, Mr Nguyen was called urgently to return to Vietnam, as his mother was very ill. He told the Tribunal he was terrified that his mother was going to die. On the first occasion of his visit to Vietnam, he stayed in a hotel, as it was too crowded at his mother’s home where eight people were already living. Furthermore, Mr Nguyen would have had to sleep on a cement floor, which he considered was highly unsuitable given his back condition and associated severe pain. Mr Nguyen told the Tribunal that he travelled alone to Vietnam staying for approximately four months. In Vietnam, he not only had to pay for his mother’s medical care, but she also had debts of approximately $15,000.00, which he felt obliged to pay. In this regard, Mr Nguyen informed the Tribunal that it was part of Vietnamese expectations that the eldest son would care for his parents. Mr Nguyen estimated that he provided $30,000.00 for his mother’s treatment and cemetery plot. Overall he estimated that he spent $40,000.00 in Vietnam in four months. Mr Nguyen subsequently received a call while in Vietnam from his wife to come back to Australia, which he did.
8. Back in Australia, Mr Nguyen then provided his wife funds to purchase a car, which she did in the form of a four-wheel drive which cost almost $50,000.00, comprising a purchase price of $43,000.00, $3000.00 for accessories and $2,000.00 for insurance. Mr Nguyen noted that the four-wheel drive car was sold for approximately $36,000.00 about three years ago because the family needed the money. Another car was purchased for $12,500.00 and an additional $2,500.00 was spent on this second-hand car. The balance of funds from the sale of the four-wheel drive were kept as savings for the children.
9. Later, one month after Mr Nguyen returned from his first trip to Vietnam, he took his wife and family back to Vietnam. He stayed for longer and estimated that he spent between $22,000.00 and $30,000.00 in Vietnam on the second occasion. Mr Nguyen’s wife did not stay with him when they were in Vietnam, electing to stay with her own mother. Mr Nguyen again stayed in a hotel. He payed all his wife’s expenses.
10. Initially, when Mr Nguyen returned to Australia after the second trip to Vietnam, he lived with his wife and children but there were many arguments. Once more they decided to live apart. Mr Nguyen described becoming very depressed at his circumstances. He told the Tribunal that he was gambling heavily and estimated that in all, he gambled away $100,000.00 in various clubs and hotels, for example in Asquith, Hornsby and Waitara. It was nothing for him to gamble between $3,000.00 and $4,000.00 per day, which he would withdraw from a bank or various flexi tellers, which were located in clubs or hotels.
11. Mr Nguyen stated that when his wife refused to live with him after he received his compensation, it was such a disappointment and shock to him. Looking back on what he did, he could hardly believe that he was spending so much on gambling and on his travels to Vietnam. Mr Nguyen stated that he had tried to obtain some counselling to assist with his gambling problem and to this end he attended for counselling twice at the “G Line”, which is a counselling service for people with gambling problems. Mr Nguyen was referred to reports by Dr M K W Ng, Consultant Psychiatrist, who reported on 21 February 2000, before Mr Nguyen’s settlement, that Mr Nguyen was suffering from depression, pain and the impact of marital breakdown, financial difficulties and an inability to work because of severe back pain (T5). Mr Nguyen stated that the fact that there was no mention by Dr Ng of his gambling problem relates to the cultural reluctance of Vietnamese people to admit to a gambling problem. Mr Nguyen stated that gambling is not part of the Vietnamese culture and there is some shame attached to gambling practices.
12. Mr Nguyen was further referred to a report by Consultant Psychologist, Mr T Awad, who specifically reported on 13 January 2000 (T4), that Mr Nguyen was suffering from an “Adjustment disorder with mixed anxiety and depressed mood, chronic” (T4, p22), with medical complications, associated with pain and physical restrictions. Mr Nguyen stated that Mr Awad’s report that Mr Nguyen denied the presence of addictive behaviour such as gambling or drinking alcohol was understandable in circumstances in which Mr Nguyen again did not wish, because of cultural reasons, to admit to a gambling problem. In relation to Mr Nguyen’s current situation, he states that he does not have a gambling problem any more and if he does gamble it is only occasionally. Mr Nguyen further noted that he could not gamble even if he wanted to because of his lack of financial means.
13. Mr Nguyen informed the Tribunal that he enrolled in a computer course to increase his knowledge about computers and his skills in terms of the service and repair of computers. He received a Statement of Completion dated 12 November 2001, indicating that he had been assessed as having fulfilled the requirements for the course in personal computer service and repair (Exhibit A1). It was Mr Nguyen’s intention that this training would provide him with greater possibilities for employment in the future. The course cost approximately $3,000.00 and with the purchase of computer equipment and software, probably cost in total an amount of $10,000.00. Mr Nguyen has further purchased various software packages and textbooks.
14. In relation to other expenditure of his compensation, Mr Nguyen expended approximately $30,000.00 to repay various debts to friends and family he had accumulated prior to the receipt of compensation. In this regard, although not totally explaining his expenditure, Mr Nguyen noted that he borrowed: $10,000.00 from his solicitor; $5,000.00 from his sister in the United States of America; and, owed approximately $7,800.00 to people in Australia. Mr Nguyen also spent approximately $21,000.00 for a hi-fi system on 21 August 2000 and other articles for the family home, including a television, beds for the children, and various manchester items. He did not consider that he had been extravagant in these purchases. Mr Nguyen denied spending $250,000.00 within two years of his settlement. He states however that when his funds ran out, he began to borrow money again. Mr Nguyen believed his compensation lump sum was expended by about 2002.
15. Mr Nguyen was questioned about deposits made to his Commonwealth Bank Account on 27 June 2003 in the amounts of $2,000.00, $1,900.00 and $1,300.00 (Exhibit R3, p15). Mr Nguyen explained that an overseas friend, who was a student, had won some money at the Asquith RSL Club and as he had no bank account in which to deposit his winnings, he had asked Mr Nguyen if he could use Mr Nguyen’s bank account to deposit the three amounts of winnings. Mr Nguyen stated that this occurred on approximately three occasions, and the Tribunal noted further deposits to the Commonwealth Bank Account on 28 July 2003 and for August 2003 in the amounts of $2,200.00 and $1,000.00 respectively (Exhibit R3, p16). Mr Nguyen was also loaned money from a person in Melbourne who deposited $2,000.00 into his account. It is expected that Mr Nguyen will repay this debt, he stated.
16. Mr Nguyen told the Tribunal that in relation to the latter part of 2000 and early 2001, it was nothing for him to make multiple withdrawals from his account on the same day, for example on one occasion he withdrew an amount of $10,000.00. Mr Nguyen explained this expenditure either by way of his gambling or because he had friends who were reclaiming debts owed to them. On 27 November 2000, Mr Nguyen withdrew $35,973.11 and he thought this amount might have related to his trip to Vietnam (Exhibit R5). A withdrawal of $4,000.00 on 2 January 2001 (Exhibit R5), may have related to his giving his wife money to purchase some household items or it could have been that he just spent it. Mr Nguyen noted that during the separations from his wife, he would provide her and the children with funds including the approximate amount of $50,000.00 for the purchase of a motor vehicle. Withdrawal of funds from his bank account between February and April 2001, related to his gambling, Mr Nguyen stated, specifically noting amounts of $10,000.00, $1,000.00 and $6,000.00 (Exhibit R5). In May 2001, Mr Nguyen withdrew nearly $51,000.00 and $15,000.00 in June 2001. At that time, Mr Nguyen described himself as a “compulsive gambler”.. He also withdrew $4,000.00 in July 2001 as a result of his gambling activities, he stated.
17. Mr Nguyen and his wife and children are currently living together. His wife receives between $600.00 and $700.00 per fortnight in income support. The family has difficulty managing financially and his wife must regularly seek assistance from charitable organisations either by way of food vouchers or payment of various bills. Until the receipt of a Health Care Card in 2003, there was difficulty in meeting the financial requirements to buy medication for the family, particularly asthma medication for Karen. The other children require medication from time to time, for example for constipation and eczema and indeed, Mr Nguyen not only suffers from severe back pain but also eczema and has a left eye condition. Mr Nguyen stated that he will often have to forego pain-killing medication because he cannot afford to buy it. His wife suffers from a sinus condition but they are able, with difficulty, to meet the cost for her medications. There is difficulty for Mr Nguyen in buying school uniforms for his children and keeping up with various financial requirements related to the children’s school activities. Mr Nguyen does not attend specialist appointments because he cannot afford this. He is not in receipt of any counselling and will only attend his local doctor when necessary. Mr Nguyen estimated that he has current debts of about $4,000.00.
18. Mr Nguyen told the Tribunal that once he “woke up” and realised how much his family was suffering as a result of his gambling and expenditure, he tried to behave much better. He described situations in which the children could not go to school because they had no money. Mr Nguyen was worried by this and he then tried to obtain employment. The difficulty is that with a back condition, no one wishes to employ him, he explained to the Tribunal. Even after completing the computer course, Mr Nguyen was not able to obtain employment. Mr Nguyen told the Tribunal that it would be better if he died but he cannot countenance such action because he has his young children to care for.
19. Mr Nguyen stated that he knows in his heart that he was wrong in expending all of his compensation lump sum. He asked the Tribunal to consider his situation and that of his family. They are struggling to make ends meet and some days, he only has one meal, as he cannot afford more. Mr Nguyen tries to stay happy for his children, but this is becoming increasingly difficult. Mr Nguyen requested that the Tribunal give him a chance to start his life afresh so he can help his wife and children. He asked the Tribunal when making its decision to consider the whole of his circumstances. He is in poor health, as is his wife and children. His wife does not speak English well and has found it difficult to obtain suitable work. Mr Nguyen himself cannot find employment. Mr Nguyen was the only person who could provide income for the family up until the time of settlement and then he acted foolishly in expending all of the funds. He is very uncertain about his family’s future. In this context, Mr Nguyen stated that he cannot sleep because he is constantly worrying. He is unable to do anything with his time in terms of helping the family around the house and spends his day not doing very much at all, apart from possibly going out for a cup of coffee. Mrs Nguyen manages the financial circumstances of the family, Mr Nguyen informed the Tribunal.
20. Mr Nguyen stated that prior to the compensation settlement, he had never had a gambling problem. He was a qualified music teacher in Vietnam and gambling was culturally abhorrent. He has come to his senses and he asked the Tribunal to recognise this. Mr Nguyen stated that he knows legally he does not have much evidence to support his situation or to prove his gambling problems. Mr Nguyen asked the Tribunal to consider that he was so distressed at the time he received the compensation in terms of his marital situation, the physical pain he experienced, the debts he had and worrying for the future, that he was unable to think sensibly, rationally or plan for his and the family’s future financial needs.
evidence of ms thi thuy phuong le (ms phuong)
21. Ms Phuong was born on 7 October 1966. She came to Australia in 1992 and married Mr Nguyen in Australia in 1995. She and her husband have three children, Gillian aged seven years, Karen aged five years and Jennifer aged one year.
22. Ms Phuong receives income support from Centrelink comprising approximately $850.00 gross or approximately $700.00 net per fortnight.
23. Ms Phuong noted that she and her husband first separated in about 1995 or 1996. The couple have had several separations and reconciliations since that time, renewing their relationship in 1998 and then separating in 1999. This separation occurred, Ms Phuong stated, because Mr Nguyen became violent after his work accident and was constantly in a bad mood. In 2002, the couple reconciled and remained so at the time of the Tribunal’s hearing. Ms Phuong stated that on reflection, she realised that Mr Nguyen was not a bad person. He had, when they were separated, visited the children and continued to provide financially for herself and the family, including provision for the purchase of a family car in the amount of between $51,000.00 and $52,000.00 in April or May 2001. The car was kept for approximately eight months but was sold, Ms Phuong stated, as she could not afford the insurance and maintenance. The four-wheel drive vehicle was sold for between $36,000.00 and $37,000.00. The money was used to purchase a Toyota Camry, 1995 model, for approximately $12,000.00 to $13,000.00. With the remainder of the sale proceeds, Ms Phuong purchased clothes for the children and other household items such as furniture. Ms Phuong also took the children sightseeing in Sydney. Further funds were provided to Ms Phuong by Mr Nguyen from time to time for example $4,000.00 in June 2001.
24. During the separations, Ms Phuong noted that her husband suffered from mood swings. She had heard that he became a heavy gambler and believed that he sought professional assistance. Ms Phuong stated that her husband told her that he had commenced gambling because he was experiencing poor physical health and because he was suffering from loneliness. He confessed to Ms Phuong about his gambling problem in 2002 and asked her to take him back. He promised that he would give up gambling and that he would study. Mr Nguyen told Ms Phuong that he was “broke” and that he did not gamble anymore as he had no money. Ms Phuong told the Tribunal that she does not know how her husband spent all his lump sum compensation.
25. Ms Phuong explained to the Tribunal that it is difficult for her, as the family’s financial manager, to make ends meet financially. The family at the time of hearing had recently received a Health Care Card and it was useful in terms of purchasing medicine for the children, particularly Karen, who suffers from asthma. Gillian requires medication for constipation, which costs approximately $18.00 per month. Gillian does not enjoy good health and has frequent nosebleeds, coughing and chronic constipation. Ms Phuong herself requires a nose spray for a sinus condition and this costs approximately $14.00 every two months. Ms Phuong stated that she has not enough money to live on and has to seek assistance from charitable organisations twice a month, asking for food and assistance to pay various bills. In this regard she seeks assistance from St Vincent de Paul, Centacare and the Salvation Army. Ms Phuong has family in Australia, but they are unable to help financially because they have their own families to look after. There are frequent arguments over money between Ms Phuong and her husband. Ms Phuong stated that Mr Nguyen does not sleep much at night because he is worrying about the family’s financial situation. Furthermore, Mr Nguyen has difficulty getting out of bed because of back pain and is unable to help around the house.
26. In terms of Mr Nguyen’s attempts to find employment, Ms Phuong had observed her husband telephoning a number of factories seeking employment but he has to date been unsuccessful in his attempts. Ms Phuong believes that her husband is serious about finding employment but in her opinion, he has no possibility of obtaining a job because of his physical health alone. Ms Phuong also stated that her husband is not physically able to care for the children properly making it difficult for her to obtain employment and leave him caring for the children. Furthermore, Ms Phuong herself is unable to work because of severe sinus difficulties. She had two operations to attempt to rectify her sinus problems when she was in Vietnam before coming to Australia. Mr Nguyen does not consult a specialist doctor, as there are no funds to see any specialist, particularly about his back and his mental health.
27. Ms Phuong stated that she has a separate bank account to her husband. She believes that her husband’s account has no funds in it. As Ms Phuong is in charge of the family’s finances, sometimes she will give her husband “a few hundred dollars” to repay money which he has borrowed from various friends. If Ms Phuong obtains money from a charitable organisation, she does not give that to her husband as he has “free food with her”.. Ms Phuong did not know of any outstanding debts held by her husband. If the preclusion period stays in force until February 2006, Ms Phuong stated that it will be difficult for her to cope financially, particularly with food for the family.
evidence of dr m k w ng, consultant psychiatrist
28. Dr Ng provided a report dated 21 February 2000 (T5). Dr Ng opined that Mr Nguyen suffers from depression with pain in the back as a result of his work accident (T5, p25). Mr Nguyen was prescribed the anti-depressant medication “Luvox” 100mg at night but had not taken the medication because he had no funds to buy it and furthermore, he had lost the prescription. When Dr Ng examined Mr Nguyen on 3 February 2000, Mr Nguyen was “severely depressed”.. Mr Nguyen’s depression related to the change in his social situation with his marital break-up, his lack of finances and his inability to undertake his pre-injury work, Dr Ng opined.
evidence of mr t g awad, consultant psycholigist
Mr Awad provided a report dated 13 January 2000, prior to Mr Nguyen receiving his lump sum compensation settlement (T4). Mr Awad concluded that Mr Nguyen was provisionally diagnosed with an adjustment disorder with mixed anxiety and depressed mood as a chronic condition, complicated by pain and physical restrictions. Mr Awad also noted suicidal ideation, headaches and sleeplessness. Mr Awad noted that Mr Nguyen denied the presence of addictive behaviours such as gambling or the consumption of alcohol.
respondent’s submissions
29. Mr Lozynsky noted that under the Act, a person who receives a lump sum compensation payment and seeks to be paid or is being paid compensation affected payments may be liable to a preclusion period. The imposition of a preclusion period has the effect of preventing the person from receiving compensation affected payments for a certain period of time. Mr Lozynsky noted that a “compensation affected payment” is defined under subsection 17(1) of the Act to include a social security benefit. In this regard, Mr Lozynsky noted that Mr Nguyen received compensation within the definition of subsection 17(2) of the Act and it was made either wholly or partly in respect of lost earnings or capacity to earn pursuant to subsection 17(2) of the Act.
30. Mr Lozynsky submitted that the preclusion period had been correctly calculated in accordance with subsection 1170(1) of the Act. The “compensation part” of a payment is defined under subsection 17(3) of the Act. As is often referred to in such cases, the “50 per cent rule” applies in Mr Nguyen’s case and Mr Lozynsky contended that this rule provided a “a fair reflection” of the compensation actually received. Mr Lozynsky noted that there is no dispute that Mr Nguyen received a component of compensation for economic loss. The start day of a preclusion period begins on the last day following the last day of the periodic payment period. The length of the period, Mr Lozynsky further noted, is calculated using the formula and the preclusion period was correctly calculated from 15 April 2000, the date that the periodic payments ceased. In calculating the preclusion period, and following internal review, the Respondent disregarded an amount of $60,000.00. This amount related to legal costs incurred in the compensation matter. This was a very generous concession, Mr Lozynsky submitted, and this was also noted by the SSAT, as in normal circumstances the legal costs would not be disregarded in calculating a preclusion period.
31. The primary issue, given that the preclusion period is correctly calculated, Mr Lozynsky contended, is whether or not the preclusion period should be reduced because of any special circumstances, which might apply to Mr Nguyen and as is provided in section 1184K of the Act.
32. Mr Lozynsky submitted that the term “special circumstances” is not defined in the Act but there are numerous Tribunal and Federal Court decisions, which have considered this term. The Federal Court in Beadle v Director-General of Social Security (1985) 7 ALD 670, agreeing with the Tribunal in Re Beadle and Director-General of Social Security (1984) 6 ALD 1 determined that special circumstances look to situations which are “unusual, uncommon or exceptional”.. The circumstances need not be unique but must have a particular quality of unusualness, which would permit a description of being “special”. A similar discussion is to be found in Groth v Secretary, Department of Social Security (1995) 40 ALD 541.
33. Mr Lozynsky did not agree with the SSAT that there were special circumstances to be found in Mr Nguyen’s financial situation, the repayment of $15,000.00 for his mother’s medical expenses or the impact of the GST making the divisor in the calculation of the preclusion period less, which was not available to Mr Nguyen because of the timing of his settlement.
34. The Tribunal must bear in mind, Mr Lozynsky submitted, the purpose of the legislation is to ensure that a person in receipt of compensation does not “double- dip”, that is, receive income from compensation in addition to income security from the Respondent. To shorten the preclusion period would in Mr Nguyen’s case, Mr Lozynsky submitted, frustrate the object of the legislation in the absence of any special circumstances.
35. In relation to the timing of Mr Nguyen’s settlement, Mr Lozynsky noted the Federal Court decision in Secretary, Department of Family and Community Services v Allan (2001) 116 FCR 1 which accepted the determination of the Tribunal in Re Allan and Secretary to the Department of Family and Community Services [2001] AATA 271 in which the timing of the Mr Allan’s settlement prior to the imposition of the GST, was considered by the Tribunal to place him at a disadvantage and hence became a special circumstance. Mr Lozynsky submitted that the Federal Court in Secretary, Department of Family and Community Services v Allan (supra) could be distinguished from Mr Nugyen’s case because there were a number of circumstances in that case which were considered special.
36. Mr Lozynsky supported his contention that the timing of the settlement should not be a special circumstance in terms of the imposition of the GST, by reference to Re Morgan and Secretary, Department of Family and Community Services [2001] AATA 734 and also Re Stephens and Secretary, Department of Family and Community Services (2001) 32 AAR 430. Mr Lozynsky contended that the increase in the compensation divisor on 1 July 2000, as a result of the GST is not in itself a special circumstance.
37. Considering any financial hardship experienced by Mr Nguyen, Mr Lozynsky further referred the Tribunal to Re Krzywak and Secretary, Department of Social Security (1988) 15 ALD 690, in which the Tribunal noted that financial hardship alone would not amount to a special circumstance. Mr Lozynsky noted that Ms Phuong is receiving approximately $850.00 gross per fortnight in income support and this is sufficient to provide for the family, Mr Lozynsky contended.
38. There is no doubt, Mr Lozynsky submitted, that Mr Nguyen knew of the preclusion period but he chose to spend his compensation regardless of his knowledge of the requirement to responsibly and carefully manage his finances until such time as the preclusion period was at an end. Furthermore, Mr Nguyen gave evidence that he could endure the preclusion period until 2006 even though this may be difficult.
39. The Tribunal was referred by Mr Lozynsky to the spending by Mr Nguyen of between $40,000.00 and $50,000.00 on trips to Vietnam in 2000, in addition to expending $15,000.00 on a loan relating to his mother’s medical expenses. There were also gifts in the amount $30,000.00 to Mr Nguyen’s mother. Mr Lozynsky noted that Mr Nguyen has only provided corroborative evidence relating to his airfares to Vietnam. The Tribunal was referred to Re Hadchiti and Secretary, Department of Family and Community Services [1999] AATA 20, in which the Tribunal found no special circumstances in a situation where the applicant’s mother was sick in Beirut and where he also paid for his two children and wife to see his mother in addition to paying for his mother’s hospital and medical expenses. This was similarly decided in another case, Re Gajic and Secretary, Department of Family and Community Services (2001) 67 ALD 568. Mr Lozynsky submitted that Mr Nguyen incurred excessive travel expenses, which should not be considered a special circumstance. Mr Lozynsky further submitted that Mr Nguyen spent approximately $250,000.00 in 12 months without giving any thought to budgeting his income until 2006. Such expenditure, in Mr Lozynsky’s submission, was imprudent and extravagant, showing a total disregard of the compensation preclusion period and for his or his family’s future security. Mr Lozynsky contended that Centrelink’s obligation is to the taxpayer to ensure that those who receive compensation are not also benefited with social security payments.
40. In relation to the cultural demands on Vietnamese men in respect of care and assistance to parents, Mr Lozynsky submitted that this consideration must be balanced with the circumstances of the compensation preclusion period and the reality of the need for Mr Nguyen to provide for himself and his family for the duration of the preclusion period. In Re Cvetanoska and Department of Family and Community Services [2000] AATA 459 this very principle was acknowledged. Thus, while acknowledging the social, cultural and religious pressure placed on customers, this must be taken within the context of what can be afforded, Mr Lozynsky contended.
41. Mr Lozynsky noted that the preclusion period was calculated by disregarding an amount of $60,000.00 in legal costs, which is a quite generous concession not normally afforded to customers.
42. Mr Lozynsky noted that Mr Nguyen has no significant assets to show for his large settlement and is currently in financially straitened circumstances. Mr Nguyen spent $50,000.00 on an expensive car, then sold it and purchased another car. That is not a special circumstance, Mr Lozynsky submitted. Furthermore, the expenditure of $10,000.00 on a computer course and equipment is also not a special circumstance. These expenditures are a result of Mr Nguyen exercising choice in how he dealt with his lump sum and no allowance should be made for that in terms of consideration of special circumstances, Mr Lozynsky further submitted.
43. In relation to Mr Nguyen’s gambling, the SSAT discussed cases involving gambling and where it was not considered to be a special circumstance [Re Magallanes and Secretary, Department of Social Security (AAT 10044, 3 March 1995); Re Davis and Secretary, Department of Family and Community Services (1999) 56 ALD 793]. There are two relevant reports, one from a Consultant Psychiatrist, Dr Ng and the other from a Consultant Psychologist, Mr Awad, in which there is reference to Mr Nguyen having a degree of depression and anxiety. In the psychologist’s report, Mr Nguyen is reported to have denied having addictive behaviours such as gambling. Mr Nguyen’s evidence was that gambling was a problem for a relatively short period and that he sought assistance on two occasions from the “G Line” but did not follow through with counselling. Mr Nguyen acknowledged in evidence and to the SSAT, that gambling was no longer a problem for him. Mr Lozynsky submitted that the SSAT correctly concluded that there was no evidence Mr Nguyen’s gambling was related to an “imbalance of mind”.. Furthermore, Mr Lozynsky submitted, in agreement with the SSAT, that there is no evidence to indicate that Mr Nguyen spent $100,000.00. Mr Nguyen’s claim of spending such a substantial sum of his lump sum compensation on gambling should, Mr Lozynsky contended, be given little weight by the Tribunal.
44. There is inconsistency in Mr Nguyen’s evidence, Mr Lozynsky contended, for example, the differing amounts offered by Mr Nguyen as to the purchase of the four-wheel drive and the amount received for its sale. Mr Lozynsky submitted that there needs to be close scrutiny of Mr Nguyen’s evidence to determine whether or not he can be considered to be a credible witness. Mr Nguyen was unable, when asked for an explanation for withdrawals from his bank account, to provide an adequate explanation for withdrawing such large amounts of money. Furthermore, the large deposit in June or July of 2001, which he said was done as favour to a friend, was not believable, Mr Lozynsky concluded.
45. Turning to Mr Nguyen’s health, Mr Lozynsky submitted that the SSAT correctly decided that although Mr Nguyen has ongoing health issues, they are related to his compensable injury and there is no evidence to suggest that his health issues should constitute a special circumstance. The Tribunal was referred to Re Secretary, Department of Social Security and Bolton (1989) 18 ALD 464 in which that Tribunal found that ill health was not enough to be considered a special circumstance. Mr Lozynsky contended that Mr Nguyen’s reference to inability to meet medical expenses cannot constitute a special circumstance, given the provision of the Health Care Card. Mr Lozynsky submitted that if Mr Nguyen was able to enrol and complete a computer course in 2001, this demonstrated that he was not as incapacitated to the extent where he exhibited an imbalance of mind that severely affected his ability to lead a normal life or to comprehend what he had to do with his lump sum payment.
46. In conclusion, Mr Lozynsky submitted that there are no special circumstances in Mr Nguyen’s case to allow the preclusion period to be reduced. If however, the Tribunal decided that there were special circumstances, then in the alternative, Mr Lozynsky submitted that the preclusion period should not be reduced any more than was determined by the SSAT.
findings
47. I have reached a decision in this matter taking into account the oral and documentary evidence, the legislation, submissions and case law.
48. I find that Mr Nguyen’s evidence was provided to the best of his ability. The Tribunal acknowledges his difficulty in recalling details about the compensation lump sum payment and his expenditure. I note that there are inconsistencies in the evidence as pointed out by Mr Lozynsky and Mr Nguyen’s explanation as to various deposits and withdrawals is not, in my view, adequately explained.
49. Mr Nguyen received compensation in the amount of $282,806.16 on 14 April 2000 clear of payments of $64,693.84 and legal costs of $60,000.00. The total compensation package was $407,500.00 (T8). At the time of settlement, I find that Mr Nguyen knew that there was a preclusion period and understood that the implication of this was that he would not be able to access income support from Centrelink.
50. I find that the preclusion period was correctly calculated noting however, that it is not usual that legal fees would be excluded from the calculation. The concession of $60,000.00 for legal fees not being made part of the calculation of the preclusion period is a concession which this Tribunal will not disturb and it is noted that neither the Respondent nor the SSAT have taken issue with this. On internal review, the preclusion period was reduced so that it operated from 15 April 2000 until 11 August 2006. I find that applying the relevant legislative provisions, the calculation of the preclusion period is correct.
51. The only issue then for the Tribunal is whether or not there are special circumstances in the legislative sense which might apply to enable some or all of the compensation to be treated as not having been made so as to allow the preclusion period to be reduced. Mr Lozynsky has correctly identified that there is no precise definition of the term “special circumstances”.. Such a term encompasses considerations in the individual case such as of unusualness, fairness and exceptional circumstances, which if ignored, would produce an unfair or unjust result. It is important in such matters to consider the combination of a person’s circumstances, thus taking a whole case scenario.
52. Mr Nguyen was severely injured at work and received compensation for this including for non-economic loss. He continues to suffer from severe back pain, has eczema and a left eye condition. It is noted that there is no medical confirmation of these latter two conditions. There is evidence from Dr Ng and Mr Awad that at the time just prior to settlement, Mr Nguyen was suffering from depression, anxiety and possibly an adjustment disorder associated with chronic back pain, loss of employment and the impact of the break down of his marriage at that time. Certainly, in the Tribunal’s understanding of the evidence of Mr Nguyen and his wife, Mr Nguyen does continue to suffer from low moods, sleeplessness, thoughts of suicide and is restricted physically because of his back condition and its associated pain. There is no medical evidence to corroborate the current situation, but the Tribunal can accept that Mr Nguyen’s health situation is poor. As was noted in Secretary, Department of Social Security v Thompson (1994) 53 FCR 580, it is not outside the scope of section 1184K of the Act (section 1184 of the Act as it then was), to consider factors such as mental health and the social conditioning of an individual in concluding that a preclusion period should be shortened. Certainly, there is no dispute as to the diagnosis of depression and adjustment disorder and while this was prior to the settlement, nothing in Mr Nguyen’s or his wife’s evidence now, would suggest other than a conclusion that with ongoing symptoms such as sleep disturbance, suicidal thoughts and low moods, that this continues to be reflective of Mr Nguyen’s health and that this clouded his judgement in the management of his finances.
53. In relation to the health of his wife and children, while there are health concerns, there is nothing in the evidence available to me to suggest that those circumstances are so unusual or serious as to warrant being considered as a special circumstance.
54. It is important in this matter to consider how Mr Nguyen came to be in a situation where he has no funds available from his substantial lump sum compensation. At the time of his receipt of compensation, Mr Nguyen was separated from his wife. Mr Nguyen believed that the receipt of compensation would in fact lead his wife to reconsider the separation and return to him. This did not occur, at least initially. I accept that Mr Nguyen was upset by this and his reaction is documented by the medical and psychological experts as being part and parcel of his depressed condition. However, Mr Nguyen asserts that because of his being upset at his health and his separation from his wife, this led him to gamble excessively. It is true that there is no evidence apart from that provided by Mr Nguyen and his wife that he expended large amounts on gambling. However, there is a ring of truth to his assertions concerning gambling and it is possible that the denial to Mr Awad about gambling was related to Mr Nguyen’s cultural sensitivity to admitting a gambling problem. I cautiously have come to the view on balance and taking into account the beneficial nature of the legislation, that the extraordinary expenditure of large amounts of compensation may be related to gambling. Certainly there is evidence of depression, anxiety and an adjustment disorder. A gambling habit would not be inconsistent with such pathology. However, the gambling problem appears to have been relatively short-lived and I do not consider that it is indicative of addictive behaviour given Mr Nguyen’s current circumstances. Not so easily explained by Mr Nguyen are the series of deposits of substantial amounts of money into his bank account and I am left wondering what the truth of that situation is. Even if there was a gambling habit, which I have cautiously accepted, it still remains that such expenditure was reckless and inappropriate in the face of undeniable knowledge of the preclusion period and its implications for the future.
55. Other expenditure was incurred in the repayment of debts to family and friends. Mr Nguyen expended considerable funds in visiting his ill mother in Vietnam. He undertook two trips, the second of which involved him taking his wife and children and providing for their expenses. I accept that Mr Nguyen felt the responsibility to care for his mother and that this, in Mr Nguyen’s circumstances, required him to visit his ill mother in Vietnam and to assist her with her medical expenses. Such actions must however be tempered with acknowledgment of what is reasonable and realistic in terms of the expenditure in the context of a preclusion period for a period of nearly six years. Such considerations were dealt with in Re Cvetanoska and Department of Family and Community Services (supra). While I consider it reasonable to take into account Mr Nguyen’s expenditure on his mother’s medical expenses, the length of stay is questionable as was his taking his wife and children in the context of the impact of the preclusion period. While understandable, in the context Mr Nguyen found himself in, it was not prudent.
56. I agree with the SSAT that a relevant consideration is the devisor in calculating the preclusion period in the context of the imposition of the GST, shortly after Mr Nguyen’s preclusion period was calculated and the impact of that generally reducing preclusion periods. In Secretary, Department of Family and Community Services v Allan (supra), Heerey J noted the Tribunal’s decision in that matter that the GST is a tax which affects the entire community, persons and wage earners alike and that Heerey J could find no error of law in the Tribunal’s decision. Heerey J considered that the Tribunal in that matter came to a rational view and that this was taken to have occurred in the context of a number of circumstances constituting special circumstances. In Mr Nguyen’s case, I am of the view that it is reasonable to take into account as a special circumstance, along with other special circumstances, the impact of the GST.
57. There is no doubt that in terms of his finances, Mr Nguyen’s situation is financially difficult. I do not accept that there is a difficulty in terms of medical expenses now, given the availability of the Health Care Card. Mrs Nguyen receives income support of between $700.00 and $800.00 per fortnight, which must cover issue of rent, utilities, bills, food and other needs of the family including the children’s school expenses. I accept evidence that Mrs Nguyen seeks regular financial assistance or assistance in kind from various charitable organisations. I do not want to propel Mr Nguyen and his family into a situation where because of their straitened financial circumstances, they are therefore further financially disadvantaged. I consider that it is therefore appropriate, as did the SSAT, that Mr Nguyen’s financial circumstances should be taken into account as a special circumstance.
58. Thus, it is my view that in combination, Mr Nguyen has a number of special circumstances in his case relating to his straitened financial situation, the cultural and social requirements to assist his mother in Vietnam, his mental health status and the circumstance of the calculation of the preclusion period at a time just prior to the imposition of the GST, which, if taken into account in his case, would have resulted in a shorter preclusion period. Those circumstances in combination are considered to be special and if they were disregarded, I find that an unfair result would be produced.
59. Having found that a number of circumstances exist which together are considered to be special, how should the preclusion period be reduced? In Secretary, Department of Social Security v Thompson (supra), it was noted that in many cases, the special circumstances may not relate to a specific element of the compensation payment but to the combined or overall circumstances of an individual. Such conclusions do not necessarily invite an artificial exercise in the calculation process and to do so would “take legalism and bureaucratic pedantry too far, especially in a socially beneficial legislative framework where intuitive justice will often be as fair a criterion and as faithful to the legislative intention as any other approach” (at p586). The Court further noted that “The law should not encourage decision-makers to engage in theoretical mathematical exercises that only distort the true nature of and reasons for their decision” (at p588).
60. The SSAT reduced the preclusion period by six months to have it conclude on 11 February 2006, noting the special circumstances of Mr Nguyen’s case in terms of his financial situation, the impact of the GST and its timing on the calculation of the preclusion period, Mr Nguyen’s cultural and social responsibilities and his mental health. Prior to the SSAT’s decision, there had already been a concession made in relation to Mr Nguyen’s legal fees in terms of the calculation of the preclusion period.
61. In the context of the operation of the preclusion period it was noted in Re Secretary, Department of Social Security and VYS (1995) 40 ALD 745 and in the dissenting decision by a Member of the Tribunal, Mr Trowse, in Re Secretary, Department of Social Security and Winterbotham (AAT 6499, 11 December 1990), that it is not appropriate for a system of social security to require a person to take a “one way ticket to poverty”. Such principles are applicable in this matter. I have therefore decided that on all of the evidence available to me, it is appropriate in Mr Nguyen’s special circumstances particularly of his and his family’s straitened financial situation and his poor mental health, in addition to the cultural and social requirements to assist his mother in Vietnam and the circumstance of the calculation of the preclusion period at a time just prior to the imposition of the GST, to determine that so much of his compensation payment be treated as not having been made so as to allow the preclusion period to end on 11 August 2005.
62. Accordingly, for all the reasons expressed above, pursuant to section 43 of the Administrative Tribunals Act 1975, the decision under review is set aside. In substitution, the Tribunal decides that in the special circumstances of Mr Nguyen’s case, so much of the compensation paid to him should be treated as not having been made so as to allow the preclusion period to end on 11 August 2005.
I certify that the 62 preceding paragraphs are a true copy of the reasons for the decision herein of Ms S M Bullock, Senior Member
Signed: .......................................................................................
AssociateDates of Hearing 29 August 2003 and 29 September 2003
Date of Decision 11 March 2004
Representative for the Applicant Self-Represented
Representative for the Respondent Mr G Lozynsky, Departmental Advocate
schedule 1
Exhibit No
Description
Date
A1
Statement of Mr Nguyen and Annexure “A”
21 August 2003
A2
Facsimile to Mr Nguyen from Ho Chi Minh City
9 July 1999
A3
Facsimile to Mr Nguyen from Ho Chi Minh City
16 May 2000
A4
Prescription for Gillian Nguyen for Ventolin Nebuliser
13 March 2003
A5
Prescription for Ms Phuong from Edgeworth Medical Centre, Hornsby
17 July 2003
A6
Prescription for Karen Nguyen for Seretide Powder issued by Dr Paul Thorogood
23 June 2003
A7
Invoice for accommodation at Union District Hotel
25 December 2000 to 10 February 2001
A8
Resume of Mr Nguyen
2 September 2002
A9
Statement by Ms Phuong
21 August 2003
R1
Secretary’s Statement of Facts and Contentions
22 August 2003
R2
Compilation of documents including prescriptions, Mr Nguyen’s passport, travel documentation
R3
Information from Mr Nguyen’s Commonwealth Bank Accounts in relation to accounts for period from March 2001
R4
Payment summary in relation to Ms Phuong
R5
Additional Commonwealth Bank Statements for Mr Nguyen
schedule 2
legislation
1. Section 17 of the Act deals with compensation recovery definitions. Compensation is defined by subsection 17(2) of the Act, which states:
“17(2) Subject to subsection (2B), for the purposes of this Act, compensation means:
(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.
17(2A) Paragraph (2)(d) does not apply to a compensation payment if:
(a)the recipient has made contributions (for example, by way of insurance premiums) towards the payment; and
(b) either:
(i)the agreement under which the contributions are made does not provide for the amounts that would otherwise be payable under the agreement being reduced or not payable because the recipient is eligible for or receives payments under this Act that are compensation affected payments; or
(ii)the agreement does so provide but the compensation payment has been calculated without reference to the provision.
17(2B)A payment under a law of the Commonwealth, a State or a Territory that provides for the payment of compensation for a criminal injury does not constitute compensation for the purposes of this Act.
17(2C)The reference in subsection (2B) to a criminal injury is a reference to a personal injury suffered, or a disease or condition contracted, as a result of the commission of an offence.”
2. Subsection 17(3) of the Act defines the “compensation part of a lump sum compensation payment” and is referred to as the “50 per cent rule”, which generally means that where a payment has been made for non-economic loss, 50 per cent of the compensation will be taken to be in respect of lost earnings or lost capacity to earn.
3. Preclusion periods are calculated in accordance with subsection 1170 (formerly section 1165) of the Act. To calculate a preclusion period, only the compensation part of the lump sum payment is taken into account. The compensation part is determined under the provisions of subsection 17(3) of the Act. The start day of the preclusion period begins on the day following the last day of the periodic payments period. The length of the period of preclusion is calculated using a formula contained in the relevant provisions of the Act.
4. Chapter 3, Part 3.14 of the Act deals with compensation recovery. Subsection 1184K deals with circumstances where a whole or part of a compensation payment maybe treated as not having been made or not liable to be made if the Secretary thinks it is appropriate to do so in special circumstances of a case. As relevant, section 1184K states:
“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.
1184K(2) If:
(a)a person or a person's partner receives or claims a compensation affected payment; and
(b) the person receives compensation; and
(c) the set of circumstances that gave rise to the claim for compensation is not related to the set of circumstances that gave rise to the person's or the person's partner's receipt of, or claim for, the compensation affected payment;
the fact that those 2 sets of circumstances are unrelated does not alone constitute special circumstances for the purposes of subsection (1).”
5
6
0