Perry and Secretary, Department of Family and Community Services

[2003] AATA 288

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2003] AATA 288

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2002/842

GENERAL ADMINISTRATIVE DIVISION		)
Re		GRAHAM PERRY

Applicant

And

SECRETARY, DEPARTMENT

OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Mr R G Kenny, Member

Date28 March 2003 

PlaceBrisbane

Decision The Tribunal affirms the decision under review.

.       (Sgd) Mr R G Kenny

Member

CATCHWORDS

SOCIAL SECURITY - lump sum compensation payment – preclusion period – special circumstances – whether circumstances exist to warrant treating part or all of the payment as having not been made

Social Security Act 1991 ss 17, 1169, 1170, 1184

Beadle v Director-General of Social Security (1985) 7 ALD 670
Re Secretary, Department of Family and Community Services and Szoke [2001] AATA 353
Re Ivovic and Director-General of Social Services (1981) 3 ALN 95
Re Males and Secretary, Department of Family and Community Services [1999] AATA 863
Re Beadle and Director-General of Social Security (1984) 1 AAR 362
Groth v Secretary, Department of Social Security (1995) 40 ALD 541

REASONS FOR DECISION

28 March 2003  Mr R G Kenny, Member    

Application

1.      Graham Perry (the applicant) received income support payments under the Social Security Act 1991 (the Act) following a work-related injury incurred by him on 25 February 1998.  On 4 May 2000, he received a lump sum compensation settlement of $425,000 which included a component for economic loss. On 20 August 2002, a Centrelink officer, on behalf of the Secretary, Department of Family and Community Services (the respondent), determined that the applicant was subject to a preclusion period from the date of his injury until 28 August 2007, and that, as a result, he was required to repay the sum of $17,993..60 that he had received in that period through income support payments.  That decision was affirmed by an authorised review officer on 2 September 2002 and then by the Social Security Appeals Tribunal on 18 September 2002.  On 30 September 2002, the applicant sought review of that decision by the Administrative Appeals Tribunal (the Tribunal).

2.      At the hearing, the applicant was not represented.  Ms T Shea, Advocate from the Advocacy and Administrative Law Team, appeared for the respondent.

3.      In evidence were the T Documents (T1–T63) (exhibit 1) as well as the following:

§exhibit 2 – a search result, dated 21 January 2003, from the Queensland Department of Transport;

§exhibit 3 - a summary of Centrelink payments made by the respondent to the applicant;

§exhibit 4 - a current title search, dated 21 January 2003, from Natural Resources and Mines, Queensland;

§exhibit 5 - a land transaction record, dated 7 August 2002, in relation to 16 Bosworth Street, Coopers Plains;

§exhibit 6 – a record of residential addresses of the applicant;

§exhibit 7 – a record of residential addresses of Lee-Anne Perry, the applicant’s wife;

§exhibit 8 – a summary of Centrelink payments made by the respondent to Jarrad Perry, the applicant’s son;

§exhibit 9 – bank statements for the accounts of the applicant and his wife;

§exhibit 10 – a statutory declaration, dated 19 March 2003, by the applicant;

§exhibit 11 – a statement of expenditure completed by the applicant’s wife;

§exhibit 12 – an address and registration history from Queensland Transport.

Issue For Determination

4.      It is not disputed by the applicant that he received a lump sum compensation settlement of $425,000 on 4 May 2000 or that this included a component for economic loss.  Neither is it disputed that he was required to repay to Centrelink the sum of $17,993.60 that he had received after his injury through income support payments or that the preclusion period was correctly calculated.

5.      The only matter that the applicant takes issue with is that relating to whether some part of the compensation payment should be treated as not having been made because of the special circumstance of his situation so that there would be a reduction in the length of the preclusion period.

Applicant’s Case

6.      The applicant said that he was aware of the consequences of the decision about the preclusion period and that the monies he received meant that he would not be able to obtain income support payments from Centrelink until 2007.  He also said that he was given some financial counselling from a Centrelink officer after receiving the money but that the advice was about the stock market and he had no interest in that form of investment.

7.      At the hearing before the SSAT, the applicant gave evidence of the expenses he incurred since receiving his lump sum.  These were summarised in the reasons published subsequently and the applicant confirmed the accuracy of that summary.  There, it was recorded as follows:

Item

Amount

Solicitors

              $22,000

Solicitors

                $2,700

Centrelink

              $17,993

Health Commission

                   $900

Property at Salisbury

            $178,000

(later sold for $220,000)

Renovations

              $30,000

Holden Berlina

              $22,990

Furniture

              $40,000

Brian McGrath

              $20,000

Loan

                $5,000

Insurances

                 $2500

Paul McGrath

                $5,000

Damien McGrath

              $15,000

Ron McLennan

              $10,000

Clayton Burrows

                   $500

Yearly outlays

              $16,277

Property at Coopers Plains

            $145,000

(later sold for $210,000)

Six months' outlays

                $8,000

Real estate fees

                $9,000

Solicitor's fees

                   $500

Improvements

              $24,000

Trailer

                   $700

Trips to Tasmania

                $2,000

Funeral expenses

                $1,500

8.      The applicant said that he and his wife were now without funds, no longer owned any real estate and were currently renting the house at Coopers Plains which they previously owned.  He said that he had sold the Holden Berlina after twelve months for $12,000 and bought a Mitsubishi Lancer for $28,000, which was sold six months later, towards the end of 2002, for $18,000.  He then bought a Toyota, which his wife uses.  He paid $8,000 for this.  He also bought a 1974 Holden utility, which he has been renovating for his son who is 16 years of age.  They have retained the furniture and electrical goods which they purchased but have virtually nothing else. He said that his son is now in receipt of youth allowance.

9.      The applicant confirmed that his step-son had taken money from the bank accounts of himself and his wife without consent and that this had amounted to something in the order of $10,000.  However, he said that the bank had reimbursed them with a payment of that amount in August 2002 but that this had also been spent.  He said that he used $1,500 of this to purchase the utility vehicle for his son, who was then 14 or 15 years old, and another $900 on parts and renovation work on the vehicle.  He also said that some of the money had been spent in supporting his step-son before learning that he was taking money from their accounts.  He said that other monies were given as loans and have not been repaid but that an important part of the expenditure was due to his wife’s gambling.  He said that he knew his wife gambled but was unaware of the extent that she did so or the amounts that she lost.  He said that, at times, he and his wife would attend a casino together and he would see her spending and would tell her to “slow down”.  However, he said that she mainly went to gambling places on her own and without his knowledge.

10.     In relation to the family bank accounts, he said that his wife assumed responsibility for these and he was not aware of the extent of the financial position until it was too late.  He agreed that he had made a complaint to Centrelink in early 2002 about his financial position and that the monies continued to be spent on activities such as gambling after that time, after receiving the $10,000 from the bank in August and after the sale of the Mitsubishi Lancer in late 2002.

11.     The applicant said his wife has suffered Graves disease since about 1997 and that this condition had a significant impact on her health.  He also said that she had recently been diagnosed with type I diabetes mellitus but that she is now learning to cope with this condition.

12.     The applicant said that he and his wife had been foolish and reckless with the lump sum he received and that he had no prospects in the future.

Respondent’s Submission

13.     Ms Shea submitted that there were no special circumstances in this case such as to justify a reduction in the preclusion period.  She referred to Beadle v Director-General of Social Security (1985) 7 ALD 670 and submitted that, on that authority, the circumstances would need to be "unusual, uncommon or exceptional” to be special.  Further, she submitted that it is inappropriate to exercise a discretion in a person's favour where his financial hardship results from a failure by himself to adopt proper budgeting strategies and, in that regard, she referred to Re Secretary, Department of Family and Community Services and Szoke [2001] AATA 353. She also cited Re Ivovic and Director-General of Social Services (1981) 3 ALN 95 as authority for the proposition that a special circumstance is one which would create a result which was "unjust, unreasonable or otherwise inappropriate".

14.     Ms Shea submitted that the applicant and his family were not without income because his wife receives $703.31 per fortnight in benefits from the respondent and their son receives youth allowance.

15.     Ms Shea conceded that theft of money may constitute a “special circumstance”.. However, she also submitted that the amount identified by the applicant as having been stolen by his stepson was reimbursed to him in mid August 2002 and that he has had full use of this money and spent more than $2,000 of it frivolously on a car for his son, who at the time, would not be able to legally drive for at least two years.

16.     In relation to gambling by the applicant’s wife, Ms Shea submitted that this was done because the money was available and that there was no evidence that gambling was or is a "habit" or that Mrs Perry was "out of control", as those terms are used in Re Males and Secretary, Department of Family and Community Services [1999] AATA 863. As such, she submitted that this cannot be treated as a “special circumstance” to reduce the preclusion period.

17.     Ms Shea submitted that the conduct of the applicant towards the management of his financial resources was reckless or at least one of indifference as to its preservation and that it would be inappropriate to exercise the discretion in his favour.

Consideration

18.     It is not disputed and I am satisfied that the applicant received a lump sum compensation settlement of $425,000 on 4 May 2000 and that this included a component for economic loss.  Neither is it disputed, and again I am satisfied, that he was required to repay to Centrelink the sum of $17,993.60.  As a result of the amount and form of the lump sum payment to the applicant, the respondent was obliged to calculate a preclusion period utilising sections 17, 1165, 1169 and 1170 of the Act.  The application of those provisions is detailed in the reasons published by the SSAT and I am satisfied that this leads to the preclusion period calculated initially and confirmed by that Tribunal as being from 25 February 1998 until 28 August 2007.  Again, this was not disputed by the applicant.

19.     Although the evidence does not disclose where all of the money of the applicant has been spent, I am satisfied that the only remaining legacy of the sum received by him is that reflected in his ownership of two vehicles, some household items and other personal items.

20.     There is provision for part of a compensation payment to be disregarded where sub-section 1184(1) of the Act applies. It reads:

“1184(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.”

21.     The Act provides no guidance as to the meaning of the term “special circumstances” in that section of the Act.  In Beadle v Director-General of Social Security(1985) 7 ALD 670, the Full Court of the Federal Court was dealing with the phrase in another provision of the Act but one which has a similar overall purpose as sub-section 1184. The Court stated that it was not possible to lay down precise limits or precise rules for the meaning of the term, but indicated that this would depend upon the circumstances of each particular case, commenting that, even though the term lacks precision, it was sufficiently understood “not to require judicial gloss" (at 674).  There, the Court affirmed the decision of the Tribunal (Re Beadle and Director-General of Social Security (1984) 1 AAR 362) where (at 364) the Tribunal had acknowledged that the term was "incapable of precise or exhaustive definition" and that, to be special, the circumstances must be “unusual, uncommon or exceptional” and must have “a particular quality of unusualness that permits them to be described as special”.

22.     In Groth v Secretary, Department of Social Security (1995) 40 ALD 541, Kiefel J, after referring to the Federal Court's decision in Beadle, observed (at 545) that special circumstances:

“would require something to distinguish... [the] case from others, to take it out of the usual or ordinary case. … It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.”

23.      In this case, the applicant and his family have been responsible for the dissipation of the monies that the applicant received on 4 May 2000. This was achieved in a relatively brief time frame.  From the beginning, he was well aware that the preclusion period was applicable to him.  As noted above, it is not clear on the evidence where or how all of the money was spent or by whom this was done and, in particular, it is not clear to what extent it was gambled away by the applicant’s wife. However, her gambling practice was known to him and he was at times present when she engaged in that activity.  He made no realistic attempt to prevent her from indulging in that practice.  Moreover, he entrusted her with the financial management of the family funds and this continued even after he first raised the matter with Centrelink in January 2002.  Some of the money was stolen by the applicant’s step-son but the bank reimbursed him to the extent of $10,000 in August 2002.  This money has since been spent with some $2,400 of it used for the questionable purpose of purchasing and renovating a motor vehicle for his then 14 or 15 year old son.

24.      The applicant’s wife experiences health problems but the most serious of these pre-dated the receipt of the compensation payment.  In that situation, with knowledge of both the health problems and a preclusion period, prudence would demand that any reasonable person take steps to quarantine some proportion of the funds to meet future needs. Obviously, on the applicant’s evidence, this was not done.  More recent health problems are associated with diabetes mellitus but the applicant said that his wife was learning to cope with that condition.  There was no evidence before the Tribunal that she suffers or has suffered any form of psychiatric condition which may have played a role in her commitment to gambling: see Re Males and Secretary, Department of Family and Community Services [1999] AATA 863 (at para 26).

25.      Where the discretion in sub-section 1184(1) of the Act is exercised, there is an obvious double benefit to the person in the applicant’s position.  The provision requires special circumstances before that outcome can be achieved.  In this case, I accept the correctness of the submissions of Ms Shea and am satisfied that the conduct of the applicant was frivolous and, indeed, reckless in the manner that he spent the funds and that he failed to exercise control over his wife’s management of the funds.  I am satisfied that there is nothing in this case that makes it uncommon or exceptional or that gives it the character of unusualness or unfairness and I am satisfied that there are no special circumstances in the applicant’s case that would justify waiver of the debt under section sub-section 1184(1) of the Act.

26.      The decision under review is affirmed.

I certify that the 26 preceding paragraphs are a true copy of the reasons for the decision herein of Mr R G Kenny, Member

Signed:
  Associate

Date of Hearing  19 March 2003
Date of Decision  28 March 2003

The applicant appeared in person
Solicitor for the Respondent    Ms T Shea, Departmental Advocate