PETER UNGER ApplicantAndSECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

[2003] AATA 390

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2003] 390

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2002/651

GENERAL ADMINISTRATIVE DIVISION		)
Re		PETER UNGER

Applicant

And SECRETARY, DEPARTMENT
OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Mr O Rinaudo, Member

Date30 April 2003 

PlaceBrisbane

Decision The Tribunal affirms the decision under review. 

...............…..(Sgd)....................

O Rinaudo
  Member

CATCHWORDS

SOCIAL SECURITY – benefits and entitlements – lump sum compensation payment – preclusion period – whether part or all of the compensation monies should be treated as having not been made – whether special circumstances exist

Social Security Act 1991 s 1184K

Beadle v Director-General of Social Security (1984) 6 ALD 1
Re Beadle and Director-General of Social Security (1984) 1 AAR 362
Re Ivovic and Director-General of Social Security (1984) 3 ALN 953
Re Lukic and Secretary, Department of Social Security (AAT No 6944, 6 May 1991)
Re Secretary, Department of Social Security and Norman (AAT No 13005, 22 June 1998)
Re Krzywak and Secretary, Department of Social Services (1988) 15 ALD 690
Re Martin and Secretary, Department of Social Services (AAT No 6482, 14 November 1990)

REASONS FOR DECISION

30 April 2003  Mr O Rinaudo, Member    

Decision under Appeal

1.      The applicant appeals a decision made by Centrelink on 16 February 2001 to impose a preclusion period pursuant to Part III.14 of the Social Security Act 1991.  Centrelink calculated the preclusion period to be from 27 January 2001 to 9 January 2004. This decision was affirmed by the Social Security Appeals Tribunal by decision given on 1 July 2002.

Facts Leading to Decision under Review

2.      The applicant was injured in a work-related accident on 12 May 1995.  The action was settled for a lump sum amount of $200,000 on 7 February 2001.  On 16 February 2001, Centrelink wrote to the applicant to advise that, based on a lump sum compensation payment of $200,000, it had calculated a preclusion period starting on 27 January 2001 and ending on 9 July 2004. 

3.      The applicant states that he and his wife attended Centrelink on approximately 21 February 2001 when they were told that so long as they could show Centrelink that they had not fritted away the money it would be okay for them to buy a house.  Apparently they were told by the Centrelink officer that in those circumstances the applicant would probably be entitled to payments but there was no guarantee. The applicant and his wife purchased a house in April 2001 and moved into the house in May 2001. The applicant did not apply for Centrelink payment when he purchased the house because, at that time, he was, although having been diagnosed with kidney problems, able to work.

4.      In about August 2001, the applicant decided to use his skills as a sheetmetal worker and create his own business making bedheads, candelabras, sidetables, lamps etc.  After speaking to a number of banks, the applicant was able to organise an interest only loan of $55,000 which was substantially used to build and equip a workshop so that he could start the business.  The applicant worked in this business from September to mid-November when his health deteriorated.  By January 2002 the applicant realised that he had a serious illness and was admitted to hospital.  He was advised that he had renal failure and would be on dialysis within a short period of time. The applicant lodged an appeal against the original decision made by Centrelink determining the preclusion period.

Evidence

5.      At the hearing the applicant gave evidence and the following exhibits were tendered:

§Exhibit 1     “T” Documents

§Exhibit 2     Letter from Dr Parnham to Dr Clark dated 25 September 2001

§Exhibit 3     Letter from Dr Bazdar to Dr Clark dated 20 November 2001

§Exhibit 4     Letter from Dr Bazdar to Dr Clark dated 18 June 2002

§Exhibit 5     Letter from Dr P Campbell to Dr Clarke dated 20 August 2002

§Exhibit 6     Treating Doctors’ Report dated 25 October 2002

§Exhibit 7     Letter to Tribunal dated 29 October 2002

§Exhibit 8     Supplementary “T” Documents

6.      Mr Unger told the Tribunal that in 1995 he had sustained an accident while at work.  He said that it had taken the insurance company about twelve weeks to accept the claim.  During this time he had been living off his savings.  Mr Unger stated that he could have claimed social security sickness benefit during this period but believed that he should use his own funds first.

7.      Mr Unger told the Tribunal that he had to sell his house one year after the accident because he was running out of savings and could not afford the mortgage repayments.  He commenced to rent from then. 

8.      Mr Unger stated that he had been diagnosed with renal problems in 2001. 

9.      In May 2001 he moved to Queensland.  He said that it was impossible to find work once he told potential employers that he had a work-related injury.  He was unable to obtain any assistance from the Commonwealth Rehabilitation Service with respect to job retraining and this is why he borrowed money to start his own business. 

10.     When the moneys came through from the settlement he purchased a house for $135,000.  Other moneys were expended on legal fees of $15,970, payout of a personal loan of $7,475, conveyancing fees of $2,290, car loan repayments to St George Bank of $26,367 and rent paid for on site cabins in various parks after he and his wife separated of $3,000.  In all, Mr Unger was able to account for $195,972 of the $200,000 payout (see Exhibit 1, T17/72). 

11.     Mr Unger stated that his kidney problem does not have any relationship to the WorkCover claim. He stated that after the accident he had moved on and was anxious to start again.

12.     In early 2002, Mr Unger was diagnosed as having renal failure and was told he would be receiving extensive dialysis treatment in the very near future.

13.     Mr Unger said that he has become depressed and angry both with respect to the issue of the preclusion period and also his inability to work and his illness.  He says that he has taken this out on his wife.  They have had a number of separations.  They are now living together. Mrs Unger receives $435 per fortnight by way of payment from Centrelink which is the only income received by them.  Mr Unger stated that he has sold a block of land at Separation Road, Dunolly, Victoria which was jointly owned with Mrs Unger for $7,000.  Mrs Unger received half the moneys after costs, back rates etc.  Mr Unger’s share was spent on bills. 

14.     Mrs Unger owns a property at Broadway, Dunolly in Victoria which is valued at approximately $3,000.  Mr Unger stated that he also owns a Hyundai Lantra as well as the property at 1 Banka Avenue, Jacobs Well, which is owned in joint names with Mrs Unger and has a value of around $150,000. He has sold an old utility motor vehicle for about $1,000.  This money was used to service a business loan.  He has also sold equipment from his workshop because he needed the money but he did not get anything near what these pieces of equipment were worth.  He stated he was prepared to continuing selling off the equipment but realises that this will be done at a loss.

15.     Mr Unger stated he was reluctant to sell his car as it is only two years old.  He said it is still under warranty and mechanically sound.  He stated that with care it would go for approximately ten years.  He said the current market value is between $17,000 - $18,000.  He needs the car to travel to medical appointments. 

16.     Mr Unger stated in his written submission that the house which he has was not bought as an asset but rather as a home.  He said it was to replace the one he lost after he had his work-related accident. He stated his wife lives there permanently.  He stated that during periods of separated he has spent time at his daughter’s and his son’s residences.  He also stays with a friend in Beenleigh.  Mr Unger stated he realises his condition is going to deteriorate.  He states that it might be that he has to be placed in a wheelchair.  If so, he says the current house is most accommodating for this because it is low set, it has open plan living that will accommodate a wheelchair and the door handles are low and only minimal expense would make the house useable for a wheelchair-bound person.  Mr Unger stated that if he were bound to a wheelchair he could not stay with his son and daughter as they had stairs in their houses.

17.     Mr Unger stated that although they have some equity in the house they do not have the income to service a loan of the amount that they currently have.  Mr Unger finished the statement by saying that he believed he had spent the compensation settlement wisely.  He stated he did not anticipate such a rapid deterioration in his health.  He stated he felt he had done all he could to try and help himself. 

18.     Attached to the written statement is a list of income and expenditure which shows that there is a shortfall of income over expenditure of $82 per fortnight.  Mr and Mrs Unger have minimal money in their bank accounts, with Mr Unger in fact being in debit.  Mr Unger indicated that he had approximately $1,909 cash on hand as a result of the sale of the utility for $1,000, sale of tools for $600 and sale of lamps and tables for $390.

19.     The Tribunal noted the medical reports tendered into evidence from Queensland Health Gold Coast Hospital to Dr Clark at Jacobs Well Medical Centre.  It is clear from these reports that Mr Unger is suffering from a serious renal failure. 

20.     In a report dated 24 January 2002 (T11/57) it is noted:

“I am writing in support of Mr Unger’s application from Centrelink.  Mr Unger’s chronic renal failure is treated by Dr Alan Parnham, a renal physician at this hospital.  It is likely that he will require some form of dialysis before too long.

Mr Unger is in dire financial straits due to his social and health situation.  Whilst on workcover leave some years ago, eh was forced to sell his house as his income was not sufficient to maintain the mortgage payments.  When he received a workcover payout he was advised that if he were to purchase a shouse he would be eligible for a benefit.  This information was incorrect and he can no longer support himself financially.  This has placed great pressure on Mr and Mrs Unger.  Furthermore, his current health problems have created more financial strain due to his ongoing need for medications and treatment.  This situation is not likely to improve as his illness has a deteriorating course.

In view of Mr Unger’s difficulties I would request that Centrelink reviews the application of its time restriction in this instance. Mr Unger is seriously disadvantaged in being unable to apply for a benefit at this time.”

21.     In a report dated 18 June 2001 from the Gold Coast Hospital (Exhibit 4), Mr Unger’s medical condition was set out as follows:

“Peter came to the Renal Clinic for usual follow up today.  He is a chap with a background history of hypertension, hypercholeste3rolemia, chronic renal failure which is mot likely secondary to hypertension, he also had pulmonary emboli in 1998 as well as carpal tunnel syndrome repair 1990.  He feels well in himself, he doesn’t have any complaints today, his clinical examination is really not remarkable today BP 140/90 with no postural drop.  His urea is 17.8, creatinine 0.32 and it has been stable for some time.  Hb is quite good 162 and his LFT’s are absolutely normal.

So altogether I think Mr Unger is stable, we need to see him in two months time just for regular check up.”

22.     A further report tendered, dated 20 August 2002 from the Gold Coast Hospital (Exhibit 5), gave an up-to-date description of his kidney functioning and noted that he had passed kidney stones at that time.  Further treatment was suggested with follow-up in three weeks. 

Issues

23. The issue for the Tribunal in this case is to determine whether there are special circumstances which permit the exercise of discretion contained in section 1184K of the Social Security Act 1991 in Mr Unger’s favour.  It is accepted that the preclusion period has been properly calculated.

Discussion and Decision

24. Section 1184K of the Act provides as follows:

“Secretary may disregard some payments

(1)  For the purposes of this Part, the Secretary may treat the whole or part of a compensation payment as:

(a)       not having been made; or

(b)       not liable to be made;

if the Secretary thinks it is appropriate to do so in the special circumstances of the case.

(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).”

25.     What this section means is that if special circumstances exist it is possible for part or all of the preclusion period to be waived.  Consideration must first be had to the issue of what is meant by the term “special circumstances”. Special circumstances is a term which has been considered by courts and tribunals on a number of occasions.  In particular, the case of Beadle v Director-General of Social Security (1984) 6 ALD 1 notes:

“Presumably in this context special circumstances must include events which would render the six months unfair or inappropriate.  For example, where the delay beyond six months was due to the claimant's being misled by a departmental officer or was due to the negligence of a third party it might be thought the normal six months would be inappropriate: that special circumstances had been shown which warranted a longer period.  More difficult would be questions of ignorance, illiteracy, isolation, illness and the like.  It would depend upon the circumstances of the particular case whether these constituted special circumstances.  We do not think it is possible to lay down precise limits or precise rules.  The matter is one for the Director-General bearing in mind the purpose for which the power is given.  The phrase ‘special circumstances’, although lacking precision, is sufficiently understood in our view not to require judicial gloss.” (at 60 ALR 228)

26.     The Court approved the approach of the Tribunal in the case, but commented: "we would place less emphasis on one dictionary definition of 'special'".  In Re Beadle and Director-General of Social Security (1984) 1 AAR 362, the Tribunal (Toohey J presiding) said:

“An expression such as ‘special circumstances’ is by its very nature incapable of precise or exhaustive definition.  The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional.  Whether circumstances answer any of these descriptions must depend on the context in which they occur.  For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases.  This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special.”

27.     The applicant points to two issues which he says are special circumstances in this case, namely, the incorrect advice alleged to have been given by a Centrelink officer and the ill health of the applicant.

28.     In so far as the first issue is concerned it is by no means certain what the applicant was told by this officer.   In submissions, the respondent noted that:

“In relation to the incorrect advice that the applicant states he was given it is now not possible to reconstruct what occurred, or the context in which the advice was given.  The interview in question occurred in a Victorian Centrelink office more than 18 months ago.  The officer concerned is no longer employed by Centrelink and it is unreasonable to expect that the person in question would have any clear recollection of one particular appointment in any event.

Leaving this aside, it is very clear that the applicant received appropriate written notice of the compensation preclusion period.  The notice was sent to him a week prior to the interview and the applicant himself is unclear whether he drew the interviewer’s attention to its contents.”

29.     The Tribunal is satisfied that the applicant was aware of the preclusion period and what it meant.  In this regard the applicant had the letter from Centrelink dated 16 February 2001 (see T4 9-10) in which the position is clearly set out.  That letter says in part:

“When a person receives a lump sum payment of compensation, part of the payment is considered to be for lost earnings or lost capacity to earn.  This amount is then used to calculate a period of time when a person will be eligible to receive social security payments, with the exception of payments for children, Carers Allowance and Mobility Allowance.  This period of time is called the preclusion period.

I have been advised that you are entitled to a lump sum compensation payment of $200,000.00.  In case you need to apply for social security payments in the future, I have calculated that the preclusion period start date is 27 January 2001 and the end date is 9 July 2004.”

30.     It is clear that the applicant was aware of the effect of the preclusion period on his entitlement to obtain benefits in the period of preclusion.

31.     The Social Security Appeals Tribunal opined that there may have been an element of misunderstanding in the advice given to the applicant. Regrettably it is now not possible to establish with any certainty what was said by this Centrelink officer to the applicant.  In any event the Tribunal is satisfied that the officer did not give the applicant advice which has caused the applicant to act to his detriment as a result of that advice (were it given). The applicant has converted cash into a fixed asset, the house.  The applicant is in that sense no worse off were he required to sell the house. The Tribunal is of course sympathetic to the applicant, when the applicant says that the accident, for which the compensation was paid, caused him and his wife to lose their home and they wanted to use the compensation to put them back, in so far as was possible, the position they were in before the accident.

32.     Accepting this the Tribunal cannot find that any advice given to the applicant which caused him any detriment and accordingly this cannot be taken into account.

33.     In so far as the applicant’s current condition is concerned, it is a different condition to the accident caused injuries.  He now suffers from renal failure.  As noted by the Social Security Appeals Tribunal this factor alone cannot of itself constitute special circumstances but must be considered along with any other special circumstances.

34.     In the Tribunal’s view there are no other circumstances other than consideration of the applicant’s financial circumstances which are so “unusual, uncommon or exceptional” as to be described as “special” in the context of section 1184K(1).

35.     In so far as financial circumstances are concerned, whilst it is clear that the applicant and his wife are in a very tight financial position, this is so primarily because of the fact that they purchased the home.  In the circumstances it is not possible to say that the applicant is suffering financial hardship having unencumbered assets of approximately $168,000.00. This does not take into account any increase in the value of the home since purchase.

36.      Next it is important to consider what the Government tried to achieve in respect of the compensation preclusion scheme.  In this regard consideration can be had to the decision of Re Ivovic and Director-General of Social Security (1984) 3 ALN 95.  Essentially the legislation sets up a scheme whereby a predefined part of any lump sum payment paid by way of compensation will be used for the normal living expenses during the preclusion period.  In this case, it is accepted that the preclusion period has been calculated correctly based on a lump sum payment of $200,000.

37.     In the decision of Re Lukic and Secretary, Department of Social Security (AAT No 6944, 6 May 1991), it was determined that:

“…It is not the intention of the legislature that a recipient of compensation for incapacity to work should use that compensation to acquire assets and then also continue to receive a pension at public expense in respect of that incapacity for work.”

38.     This consideration was also noted in the decision of Re Secretary, Department of Social Security and Norman (AAT No 13005, 22 June 1998) where the Tribunal held that:

“This prevention of double dipping reflects the idea that the money is there to provide a person with income, not capital for investment.”

39. Accordingly in all the circumstances of this case the Tribunal does not consider it appropriate to exercise the discretion contained in section 1184K in favour of the applicant in part or at all.

40.     Accordingly the application is dismissed and the original decision to impose a preclusion period from 27 January 2001 to 9 July 2004 is affirmed.

I certify that the 40 preceding paragraphs are a true copy of the reasons for the decision herein of Mr O Rinaudo, Member

Signed:         Sarah Oliver
  Associate

Date of Hearing  30 October 2002
Date of Decision  30 April 2003

The Applicant Appeared in Person
Solicitor for the Respondent     Mr S Letch, Departmental Advocate