Page and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs

[2009] AATA 370

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 370

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2008/5889

GENERAL ADMINISTRATIVE DIVISION		)
Re		KIERAN PAGE

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES & INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Dr P McDermott, RFD, Senior Member

Date21 May 2009

PlaceBrisbane

Decision

The Tribunal:

(a)       sets aside the decision under review; and

(b)       remits the decision under review to the respondent for reconsideration in accordance with the written reasons.

.................[Sgd]...................

Senior Member

CATCHWORDS

SOCIAL SECURITY – Pensions, benefits and allowances – Settlement of compensation claim – Imposition of compensation lump sum preclusion period – Meaning of “special circumstances” – Words of legislation provide primary point of reference – Special circumstances established by applicant’s personal circumstances, including ill-health and pain – Special circumstances established because legal costs and incidental expenses of settlement used in calculation of preclusion period – Part of settlement should be treated as not having been made  – Decision under review set aside and remitted.

Social Security Act 1991 (Cth), ss 8, 17(1), 17(2), 17(3), 1169, 1184K

Australian Securities and Investments Commission v PTLZ [2008] FCAFC 164

Beadle and Director-General of Social Security (1984) 6 ALD 1

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

Re Fuller and Secretary, Department of Family and Community Services (2004) 83 ALD 152

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

Shi v Migration Agents Registration Authority (2008) 235 CLR 286

Tunks v Repatriation Commission [2008] FCA 521

REASONS FOR DECISION

21 May 2009 Dr P McDermott, RFD, Senior Member  

INTRODUCTION

1.        In 1998, Mr Kieran Page received a settlement for a personal injury claim.  He then made a claim for disability support pension, which was rejected because he is subject to a compensation lump sum preclusion period from 27 October 1998 to 20 September 2021.  He is not eligible to receive payments of disability support pension during this period.  I have to examine whether the compensation lump sum preclusion period was correctly imposed.  I also have to consider whether there are any special circumstances that make it appropriate for me to treat all or part of the compensation payment as not having been made.

HISTORY OF THE MATTER

2.      On 10 February 1995, Mr Page was injured in what has been described as a “work related injury”.  In 1998, Mr Page had a common law settlement under which his claim was settled for $986,885.12[1], inclusive of costs and expenses.  The settlement was protracted and Mr Page received his settlement by three payments.  One payment of $683,957.50 was made on 2 December 1998[2].  One payment of $81,066.30 was made on an unknown date being the sum of $81,452.40 less Health Insurance Commission (“HIC”) costs of $386.10[3].  On 23 December 1999, a third payment of recovered costs of $28,646.80 was made to Mr Page[4].  It would appear that Mr Page received $793,670.60 out of this settlement.

[1] T-2, folio 4 and T-40, folio 227; see also T-22, folio 110 and T-45, folio 287 (the documents variously refer to the date of settlement as being 8 October 1998 or 9 November 1998).

[2] T-4, folio 18.

[3] T-44, folio 283; Exhibit C.  I have assumed that the reference in Exhibit C to $81,006.30 is intended to be a reference to the sum of $81,066.30, as in T-44, folio 283.

[4] T-5, folio 19.

3.      Mr Page purchased a house for $400,000 from the proceeds of his settlement.  He sold the house for $800,000 in March 2006.  His then partner, who had instigated divorce proceedings against Mr Page, was at that time paid $271,000 from the proceeds of the sale of the house.  After making that payment, Mr Page was left with the sum of $396,830.71 from the proceeds of the sale[5].  On 28 March 2006, Mr Page paid his mother (who in these reasons is referred to as “Mrs Page”) the sum of $124,481.59, which he claimed was a debt that he owed his mother.  On that day, he also made a cash withdrawal of $11,000.  On the next day, he made his first application for disability support pension.

[5] T-15, folio 47; Exhibit D.

4.      In April 2006, Mr Page had about $220,000 in his bank account.  On 14 March 2008, he had a total of $63,098.88 in his bank accounts.  Mr Page states that he has now spent all of that money and does not have any significant funds.  Mr Page is now reliant on assistance from welfare organisations.

5.      Mr Page claims that he spent a significant portion of his funds on drugs.  He states that between 4 February and 18 April 2008 he spent some $27,000 on illegal drugs.  He withdrew that sum in amounts of $9,000 at a time.  The material before me also refers to another withdrawal of $9,000 that was made on 2 June 2008[6].  Mr Page claims to have received a discount when he made purchases of drugs at $9,000 at a time.

[6] T-2, folio 6.  There is no reference to this withdrawal in the bank statements that I have examined.

6.      Mr Page has claimed that he made numerous withdrawals of cash at clubs where he lost a lot of money playing poker machines.

PRIOR DECISIONS

7.      On 1 June 2006, Centrelink notified Mr Page that a decision had been made to reject an earlier claim for disability support pension because he was precluded from receiving disability support pension until 20 September 2021.

8.      On 3 June 2008, Mr Page again lodged a claim for disability support pension.  On 10 June 2008, Mr Page was notified by Centrelink that a decision had been made to reject his claim for disability support pension because he was precluded from receiving disability support pension until 20 September 2021. 

9.      Mr Page sought a review of the decision.  On 3 September 2008, an authorised review officer wrote to Mr Page advising him that the decision had been affirmed.

10.     On 22 October 2008, Mr Page applied for review of the decision to the Social Security Appeals Tribunal (“the SSAT”).  On 18 November 2008, the SSAT affirmed the decision under review.

11.     On 10 December 2008, Mr Page applied for review to the Administrative Appeals Tribunal (“the Tribunal”).

ISSUES

12.     I have to consider whether Mr Page is subject to a lump sum preclusion period.

13.     If I decide that Mr Page is subject to a lump sum preclusion period, I have to decide whether there are any special circumstances that make it appropriate for me to treat all or part of the compensation payment as not having been made.

CONSIDERATION

14. Section 1169 of the Social Security Act1991 (“the Act”) provides that a compensation affected payment is not payable to a claimant during the compensation lump sum preclusion period. Under s 17(1) of the Act, disability support pension is defined as “compensation affected payment”. It follows that disability support pension is not payable to Mr Page during the compensation lump sum preclusion period.

15. I am satisfied that the settlement sum is compensation as defined in s 17(2) of the Act. That provision refers to a payment in settlement of a claim for damages: see s 17(2)(c) of the Act.

16. Mr Page did not take issue with the calculation of the compensation lump sum preclusion period. However, I have examined how this period was calculated. Centrelink assessed the “compensation part of a lump sum compensation payment” as being 50% of the total settlement sum of $986,885.12, namely $493,442.56. This mode of calculation is prescribed under s 17(3) of the Act. The “compensation part of a lump sum compensation payment” was then divided by the income cut-out amount of $412.70 to give a lump sum preclusion period of 1195 weeks running from 27 October 1998 to 20 September 2021. I am satisfied that Centrelink has correctly calculated the compensation lump sum preclusion period.

17.     There is some validity to the contention of the Secretary that Mr Page is “in a mess of his own making”.  Mr Page, to his credit, has admitted that he was reckless in his expenditure and that he overindulged his children.  He did these things even though he was advised by his solicitor that the settlement would have to last for some time.  Between March 2006 and May 2008, Mr Page withdrew funds of some $336,423.  It is not apparent where a considerable portion of these funds went.  Mr Page lodged his claims for disability support pension soon after he made significant withdrawals of funds.

18.     Preclusion periods are invoked to ensure a “… fair balance of the interests of the recipient of the payment with the competing interests of others in the community whose needs must be met as far as possible from a finite budget allocation for social security measures”: Secretary, Department of Social Security v Smith (1991) 23 ALD 277 at 281-282 per von Doussa J. Section 1184K(1) of the Act assists in the maintenance of that “fair balance” by shortening a preclusion period in “special circumstances”. At the outset of the hearing, the Secretary has quite properly recognised that this case turned on whether or not I find that “special circumstances” are present in this case. I will now proceed to consider whether such “special circumstances” exist and, if so, whether it is appropriate to treat the whole or part of the compensation payment as not having been made: see s 1184K(1) of the Act.

19.     In Beadle and Director-General of Social Security (1984) 6 ALD 1 at 3, it was recognised that “an expression such as ‘special circumstances’ is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional”. There, it was also stated that one must have regard to the context in which the circumstances occur. When doing so, it is appropriate to take into account compassionate considerations and, indeed, the “total circumstances of the case”: Director-General of Social Services v Hales (1983) 47 ALR 281 at 321 per Sheppard J.

20.     The Secretary cited decisions of this Tribunal and single judge decisions of the Federal Court of Australia in regard to what is meant by “special circumstances”.  However, as Madgwick J stated in a different statutory context, decision makers treating a decided case as “a substitute for the statute and … an algorithm, indeed the only available algorithm, seems in practice to have created at least as many problems as … [the decided case] … intended that they should avoid”: Tunks v Repatriation Commission [2008] FCA 521 at [34].

21.     I am required to give primary emphasis to the terms of the legislation itself.  In the Full Federal Court decision of Australian Securities and Investments Commission v PTLZ [2008] FCAFC 164 at [34], North and Downes JJ emphasised that “the actual words of the legislation should provide the primary point of reference”. Their Honours remarked that “[i]n most cases the words of the legislation will be a sufficient guide to the Tribunal’s exercise of jurisdiction”. I have been guided by this statement of principle as well as the observations made by Hayne and Heydon JJ in Shi v Migration Agents Registration Authority (2008) 235 CLR 286 at 311-312 [92].

22.     Thus, in the circumstances, it is incumbent upon me to also focus on the meaning of “special circumstances”.  In one dictionary, the word “special” is defined as being “not usual or commonplace”: see The New Collins Concise Dictionary of the English Language.  I must consider whether the circumstances of Mr Page are “not usual”.  This approach accords with the remarks in Beadle and Director-General of Social Security (1984) 6 ALD 1 at 3 that I must focus on “circumstances that are unusual, uncommon or exceptional”.

23.     The uncontradicted evidence before me is that Mr Page is an unstable diabetic who is in considerable pain.  The Secretary has quite properly conceded that Mr Page is unable to work.  Mr Page has had to be hospitalised because of his abdominal pain.  He has an intrathecal pump inserted in his abdomen, which regulates the amount of painkiller medicine administered into his spine.  At the hearing, he displayed the location of that pump in his abdomen.  His treating doctor describes the pump as an “intrathecal narcotic pump”[7].  The pump has to be periodically refilled with intrathecal local anaesthetic.  The medication given to relieve his pain has been varied in an attempt to avoid some of its side-effects.  While use of the pump relieves his pain, it also contributes to his postural hypertension.  There are two medications administered by the pump, namely Fentanyl and Ropivacaine, for which Mr Page has to bear the majority of the cost even when health fund rebates are taken into account.

[7] T-28, folio 189.

24. Having considered the relevant evidence, I find that Mr Page’s circumstances, including his ill-health and pain, are “special circumstances” within the meaning of s 1184K(1) of the Act. I find that Mr Page is in such pain that he had to have an intrathecal pump inserted in his abdominal region. I have taken the view that it is certainly not usual for people to have an intrathecal pump in their abdomen. In my opinion, this enables the Secretary to exercise the powers that are vested in the Secretary under s 1184K of the Act to treat the whole or part of the compensation payment as not having been made.

25.     As described earlier, Mr Page’s “work related injury” claim settled for $986,885.12.  Out of this settlement, Mr Page received three payments amounting to $793,670.60.  There is a considerable component of the settlement that Mr Page did not receive.  I am conscious that Mr Page is being less favourably treated than if his settlement was arranged on the basis of the amount that he actually received plus costs and expenses. 

26. The “Principles of administration” outlined in s 8 of the Act state “the need to apply government policy in accordance with the law and with due regard to relevant decisions of the Administrative Appeals Tribunal …”. This statutory provision reflects the normative function of this Tribunal. A relevant decision of the Tribunal is that of Re Fuller and Secretary, Department of Family and Community Services (2004) 83 ALD 152, in which the President of this Tribunal, Downes J, at 163 [29] made a recommendation about compensation paid “inclusive of costs”. The President recommended that “a decision should be made in the present and all similar cases, where there is no reason to doubt the genuineness of the assessment of costs, by which those costs are not taken into account in calculating the lump sum preclusion period”. The President pointed out, at 163 [27], that if such costs are taken into account in calculating the lump sum preclusion period, the result is “unfairness” and “hardship”: both are a basis for the exercise of the discretion in s 1184K of the Act.

27.     Here, there is no reason to doubt the genuineness of the assessment of costs which have been paid.  The respondent has treated this component of the compensation payment without any regard to the decision in Re Fuller mentioned above. This is not only contrary to the principles outlined in s 8 of the Act, but has also caused unfairness and hardship to Mr Page. In these circumstances, I consider that it is fair and appropriate that I make an order for the costs of the settlement to be treated as not having been made. I consider it appropriate to make this decision because this sum cannot be applied towards the future support of Mr Page.

28.     It is necessary for me to make an assessment of what amount of the settlement should be treated as not having been made.  Annexed to these reasons is a Schedule which lists amounts relevant to the settlement.  I consider that I should exclude amounts which are costs as well as expenses incidental to the settlement.

29.     The entire lump sum that is referred to by Centrelink and which is mentioned in the previous decisions is the sum of $986,885.12[8].  The letter dated 2 December 1998, received by the applicant from his lawyer, refers to a settlement amount of $814,524.02 “plus costs”[9].  I have treated the difference between the amounts of $986,885.12 and $814,524.02 as costs.  On this assumption, there is an amount of costs of $172,361.10.  It would appear that a significant portion of these costs are in the nature of party and party costs.  I have made this assumption because the amount of costs recovered from the defendant was $28,646.80[10]. On this basis, the amount of costs that Mr Page did not receive is the difference between $172,361.10 and $28,646.80, being $143,714.30.

[8] T-2, folio 4; T-40, folios 227 and 230; T-45, folio 287.

[9] T-4, folio 18; Schedule, row 1.

[10] T-5, folio 19. 

30.     It should be appreciated that Mr Page did not actually receive the sum of $814,524.02, as various sums which total $130,566.52 were deducted from that sum.  This explains why, on 2 December 1998, Mr Page received the sum of $683,957.50[11]. I am conscious that the sum of $130,566.52 represents amounts which are not strictly costs but also amounts which are incidental to the settlement.  I have thought it appropriate to have regard to such sums as Mr Page could not call on such moneys for his support.  I should also take account of the sum of $386.10 which was deducted from the payment of $81,452.40 made on an unknown date[12]. The costs and expenses discussed in this paragraph amount to $130,952.62.

[11] T-4, folio 18; Exhibit C (which was tendered by the Secretary). 

[12] Exhibit C. 

31.     I consider that the amount of the compensation payment that should be treated as not having been made is $274,666.92.  This amount is calculated by adding the sum of $143,714.30 (see paragraph 29, above) and the sum of $130,952.62 (see paragraph 30, above).

32.     I have decided to remit this matter to the respondent, for the respondent to make a decision in accordance with these reasons.  I have taken this step so that the respondent has the opportunity to make any investigations that it considers necessary to make a final determination of the actual amount of costs and expenses that it is appropriate to treat as not having been made.  It is my view that these costs and expenses amount to some $274,666.92.  However, I think that it would be fair to allow the Secretary to consult any available records in order to settle the final amount.  I also mention that I do not have any primary evidence before me of the actual settlement.

33.     After selling his house, Mr Page had to provide $271,000 of the proceeds as part of a divorce settlement.  I have given consideration to the payment of this amount to the then partner of Mr Page.  There is no evidence that she supports Mr Page.  They are now divorced[13]. I have borne in mind that this divorce settlement cannot be realistically called upon to support Mr Page. However, I decline to make an order under s 1184K(1) in relation to this sum, as it came from the proceeds of the sale of his home. I have borne in mind that Mr Page received from those proceeds of sale about the same amount that he originally invested in the house.

[13] T-26, folio 134.

34.     I have examined the evidence Mr Page provided of his financial circumstances.  I make the initial observation that this material is certainly not complete.  Mr Page lodged a statement of his expenditure and circumstances on 30 August 2008[14], which contains information not accurate at the time of its completion.  In particular, the statement refers to personal loan repayments of $670 per month despite there being no loan at the time Mr Page completed the statement.  At the hearing, he admitted that his estimate of grocery expenses was overstated by $50 per week.

[14] T-39.

35.     I have given careful consideration to the payment of $124,481.59 that Mr Page made to his mother on 28 March 2006.  Mr Page claimed this to be a debt that he owed his mother.  There appears to be no record of Mrs Page ever making a declaration of such a loan as an asset.  An inspection of the accounts of Mrs Page that were submitted after the hearing reveals that the day after this payment was made, an amount of $120,005.40 was withdrawn from her account.  I should mention that Mrs Page was not called as a witness by Mr Page even though she had provided oral evidence to the SSAT.

36.     I have taken the view that there has been no proper explanation of how this alleged debt of $124,481.69 was calculated.  On 31 July 2008, Mr Page provided Centrelink with a list of what he has claimed to be expenses incurred by Mrs Page.  It is not clear to me who was responsible for compiling the list.  At the hearing, I extended an invitation to Mr Page to obtain additional evidence from Mrs Page in support of his claims that the list represents his expenses paid for by Mrs Page.  There have been some banking records provided.  I cannot regard the list as a complete list of transactions between Mr Page and Mrs Page.  This is because on both 28 and 29 August 2003 there were transfers to Mr Page of $2000: these unexplained transactions do not appear on the list.  The list cannot be regarded as just relating to expenses, as it includes references to interest received by Mr Page.  It is not apparent why Mr Page would repay interest he receives to Mrs Page.

37.     The Secretary has submitted that the list is more likely than not a statement in the form of income and expenditure on the part of Mr Page, rather than any amounts loaned to Mr Page.  However, I cannot regard the list as any complete statement of income and expenditure.  The list does not, for example, refer to the cash withdrawal of $11,000 that Mr Page made on 28 March 2006.  On the state of the evidence before me, I do not consider it appropriate to make an order in relation to the amount that Mr Page paid to Mrs Page.

38.     At the hearing of his application, Mr Page gave evidence of his expenditure on illicit drugs.  On 30 August 2008, Mr Page lodged with Centrelink a statement of expenditure and circumstances.  There, Mr Page stated that “the money has been used up on bills health living and family”[15].  That document contains no mention of his expenditure on illicit drugs even though it lists other significant items of expenditure.

[15] T-39, folio 216.

39.     The medical reports tendered at the hearing or provided to Centrelink contain no mention of the addiction of Mr Page to illicit drugs.  There is also no mention in any of the records of Mr Page seeking assistance for his addiction.  Mr Page has not provided Centrelink with any information concerning his addiction to illicit drugs.  I note that on 2 June 2008, he withdrew the sum of $9000 from his account and on the very next day he made his application for disability support pension. 

40.     On the state of the evidence before me, I cannot be satisfied that Mr Page has spent the funds that he claims on illicit drugs.

41.     I have taken into account that Mrs Page has informed the SSAT that she is willing to provide a home for her son.  This would provide much needed support for Mr Page.

42.     This decision will provide some needed relief to Mr Page by substantially reducing the compensation lump sum preclusion period.

DECISION

43.     I set aside the decision under review and remit the matter to the respondent to make a decision in accordance with these reasons.

SCHEDULE

Settlement of compensation claim: relevant amounts

1.  Settlement amount plus costs,      payment of 2 December 1998[16] Less deductions: 2.  Centrelink   $2,258.94 3.  10% to HIC  $81,452.40 4.  Weekly payments since award             $1,804.00 5.  H L Burn & Associates  $2,375.00 6.  M G Cummings  $5,000.00 7.  Reimbursement of applicant’s Union for preparing his case  $1,176.18 8.  Legal fees  $36,500.00	$814,524.02 $130,566.52	$683,957.50
9.  Settlement amount, paid on unknown date[17] 10.  Less: HIC costs	$81,452.40 $386.10	$81,066.30
11.  Costs recovered from the Defendant[18]	$28,646.80
12.  TOTAL RECEIVED	$793,670.60

[16] T-4, Folio 18.

[17] Exhibit C; T-44, folio 283.

[18] T-5, folio 19.

I certify that the 43 preceding paragraphs and schedule are a true copy of the reasons for the decision herein of Dr P McDermott, RFD, Senior Member.

Signed: .........................[Sgd]...............................................
             Mátyás Kochárdy, Research Associate

Date of Hearing  12 February 2009
Date of final submissions         24 March 2009
Date of Decision  21 May 2009
Applicant was self-represented  
Solicitor for the Respondent     Mr R Hamilton, Departmental Advocate