Piscopo and Secretary, Department of Education, Employment and Workplace Relations

[2008] AATA 855

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 855

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No. 2008/2566

GENERAL ADMINISTRATIVE DIVISION		)
Re		Joe Piscopo

Applicant

And Secretary, Department of Education, Employment and Workplace Relations

Respondent

DECISION

Tribunal Dr J D Campbell, Member

Date25 September 2008

PlaceGosford

Decision

The decision under review is set aside, and in substitution thereof the Tribunal finds that:
         (a) the circumstances are special; and

         (b) A part amount of the compensation payment should be treated as not having been made, with the result that the preclusion period ends on 11 September 2008.

.................[sgd].....................

Dr J D Campbell

Member

SOCIAL SECURITY – compensation affected payments – lump sum compensation payment – preclusion period – Special circumstances – decision under review set aside – Preclusion period shortened

Social Security Act 1991 – Section 1184K

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

Re Hajer and Secretary, Department of Social Security (1988) 16 ALD 716

Re Secretary, Department of Social Security v Rodgers (1992) 26 ALD 235

Riddell v Department of Social Security (1993) 42 FCR 433

REASONS FOR DECISION

25 September 2008 Dr J D Campbell, Member

1.      Mr Piscopo was born at sea in 1949.  Mr Piscopo lives alone at 12 Dampier Boulevard, Killarney Vale, and is much devoted to his small dog, a Maltese Shitsu.  Mr Piscopo purchased his current residence in August 2004, having moved to the Central Coast in early 2004 and having resided in rental accommodation at 51 Boondila Avenue, The Entrance, on moving to the Central Coast.

2.      Mr Piscopo commenced working as a permanent part-time cleaner with Tempo Cleaning Services in September 2003.  Mr Piscopo sustained a work related injury to the rotator cuff of his left shoulder on 15 June 2004.  This injury was surgically repaired in early 2005, with Mr Piscopo returning to work in October 2005, albeit with some physical restrictions relating to movements of the left shoulder.

3.      In January 2006 Transfield Services acquired Tempo Cleaning Services and following a work site inspection by a Transfield representative, Mr Piscopo was advised that he was unable to undertake his duties and that he was to remain off work with no pay until further advised.  Mr Piscopo’s services were terminated by Transfield in January 2008.

4.      On 21 May 2007 Mr Piscopo’s compensation case was settled by agreement for a gross sum of $300,000.  Mr Piscopo received from the gross sum an amount of $64,244.42, at a date shortly after 14 July 2007, with the remainder of the settlement being dispersed to costs in the agreed sum of $112,000, reimbursement of periodic compensation payment of $82,064.33, extra disbursements of CMC Lawyers in the amount of $41,361, and payment to Medicare of $335.85.

5.      On 7 January 2008 Mr Piscopo lodged a claim for Newstart Allowance with Centrelink.  On 23 January 2008 Centrelink determined that Mr Piscopo was not eligible for Newstart Allowance as he was subject to a preclusion period from 24 May 2007 to 3 November 2010.  This decision was reviewed and affirmed by an authorised review officer (“ARO”) on 21 February 2008.

6.      On 7 May 2008 the Social Security Appeals Tribunal (“SSAT”) set aside the decision of the ARO, and substituted a new decision that so much of the compensation payment received by Mr Piscopo be treated as not having been made, such that the preclusion period ends on 29 January 2009.

ISSUES

7.      The relevant issues in this matter are:

(a)Whether special circumstances exist; and

(b)If special circumstances are found to exist, what part, if any, of the compensation received should be treated as not being paid.

EVIDENCE OF MR PISCOPO

8.      Mr Piscopo detailed the salient events of his life prior to him moving on his own from a unit in Merrylands to the rental property at Boondila Avenue, The Entrance, in early 2004.  Mr Piscopo was separated from and divorced from his wife some many years earlier.  There are two adult siblings of the marriage, with the son working in Western Australia and the daughter in security.

9.      Mr Piscopo detailed the nature of his work injury that occurred on 15 June 2004, the treatment thereof, his return to work and his severance in early January 2008.  Mr Piscopo detailed that he received periodic weekly compensation payments after his injury, with such ceasing on 23 May 2007.

10.     Mr Piscopo stated that from the agreed lump sum compensation settlement he received $64,244.42.  Records (T46,47) would indicate that this was paid some time after 14 July 2007.  Mr Piscopo thought that it may have been paid earlier, but the agreement and settlement did not occur until 21 May 2007.  Mr Piscopo acknowledges that he was paid weekly period payments from 15 June 2004 and a lump sum of $28,000 in 2006, with both amounts being repaid from the settlement monies.

11.     Mr Piscopo acknowledged that he lived alone in his residence, together with his dog, from August 2004.  Mr Piscopo stated that the value of his residence is around $280,000 and that there is no money owing on the property.

12.     Mr Piscopo acknowledged that after the injury and prior to the settlement in May 2007, he became somewhat addicted to poker machines and, in doing so, not only wasted money, but also created debts by way of a mortgage over his property ($20,000), credit card debt ($10,000) and borrowings from his ex-wife and children ($5,000).

13.     After receiving the lump sum of $64,000 (approximately) in July 2007, Mr Piscopo stated that he paid out debts referred to above totalling $35,000 and purchased a car for $5,000. He also attended to bathroom and plumbing requirements at his home ($6,300).

14.     Mr Piscopo stated that the remainder ($18,000) plus $8,000 draw down from his superannuation fund (total amount) is the quantum of money available to him to expend since settlement in May 2007 – which equates to approximately $370 per week.

15.     Mr Piscopo stated that he felt obligated to pay off his debts and his mortgage, and he did so in the belief that he would be returning to his permanent part-time employment as a cleaner.

16.     Mr Piscopo detailed that he had some debts, including telephone, light, council rates and credit card amounting to approximately $2,000, and that his car requires repair of the transmission ($1,850).

17.     Mr Piscopo stated that he has tried to secure employment as a cleaner but has been unsuccessful.  Over the past three months he has been establishing a cleaning business.  Mr Piscopo uses the internet to advertise his business and at the hearing he stated that he had received three jobs in response to such activity.

18.     Mr Piscopo stated that he had approached Centrelink in relation to assistance to find a job and for funds to help start his business.  Both requests had been declined because, in Mr Piscopo’s view, he was informed that such assistance is only available to those receiving benefits from Centrelink.

19.     Mr Piscopo stated that his financial situation was desperate.  He had approached the banks for a loan against his unencumbered property, but all had declined as he had no funds for repayment.  Further, he had given consideration to selling the property, but that in turn would take some months, with no certainty of outcome in the current market.  Mr Piscopo has sought the assistance of a Lifeline financial counsellor who referred him to various charities.  Mr Piscopo stated that he has received some financial assistance ($80) for his telephone bill from St Vincent de Paul.

20.     Mr Piscopo stated that he has some $200 in his bank account, having received a similar amount from his start up cleaning business customers, and he uses such money to juggle his credit card debt repayments.

21.     Mr Piscopo stated that he is anxious and stressed by his financial circumstances and that he has been treated by his doctor for anxiety and depression.  Mr Piscopo detailed that he has thoughts of self harm once or twice per week, and that such thoughts are becoming more frequent.  He takes medication for his depression.

22.     Mr Piscopo stated that he had received no correspondence from Centrelink concerning a preclusion period until after his application for Newstart Allowance was lodged and, in particular, the Centrelink letter of 10 January 2008 (T55). Nevertheless, Mr Piscopo acknowledged that he may have been advised by his solicitor about the issue of a preclusion period at some time during the settlement process.

CONSIDERATIAONS AND FINDINGS

23.     In addressing the issue of notice to Mr Piscopo concerning the issue and duration of a preclusion period, I note that Centrelink Blacktown was advised by Ebsworth & Ebsworth of the settlement and the address of Mr Piscopo – 12 Dampier Boulevard, Killarney Vale (T42) on 22 May 2007.  I note that Centrelink addressed the issue of a preclusion period in a letter to Mr Piscopo at 51 Boondila Street, The Entrance, on 30 May 2007 – an address which he had left almost three years ago, and an address inconsistent with what had been advised.  I also note that an earlier letter dated 18 October 2006 had been forwarded by Centrelink to the Boondila Street address and again addressing the same issue.

24.     Following a further search of their files, the Respondent advised on 10 September 2008 (Exh R1) that no further notices concerning the preclusion period had been sent to Mr Piscopo after the letter of 30 May 2007, until the letter of 10 January 2008 (T55), which was addressed to the correct address at 12 Dampier Boulevard.

25.     I have considered Mr Piscopo’s evidence in relation to his knowledge of a preclusion period.  I consider that at some stage during the settlement process his solicitors made him aware of such, but at what stage between settlement agreement on 21 May 2007 and disbursement circa 14 July 2007 I remain unsure.  The one issue that remains clear is that despite being advised of Mr Piscopo’s correct address, Centrelink sent any notification to an incorrect address, with the first correctly addressed notification occurring on 10 January 2008, after Mr Piscopo had made a claim for Newstart Allowance.  I would conclude that such notification errors by Centrelink have not assisted Mr Piscopo in appreciating the financial limitations that were before him when receiving his $64,000 around 14 July 2007.

26.     In addressing the issue of Mr Piscopo’s financial circumstances I do conclude that his current financial circumstances are dire.  I observe the analysis undertaken by the financial counsellor from Lifeline of 13 August 2008 (Exh A1), the financial analysis that is evident from the financial details supplied by Mr Piscopo.  Further, I observe the evidence by Mr Piscopo regarding his attempts to generate income (search for jobs, establishing his own cleaning business) (Exh A2, A4).  Similarly, I acknowledge his efforts to seek funds by way of a loan from a bank (no ability to repay); by selling his home (uncertain market and prolonged time frame), and his approach to community charities for some financial assistance.

27.     I also recognise that Mr Piscopo acknowledges that during the period after his accident to time of settlement he did have a problem with poker machines, which did result in some debt accumulation.  Further, I observe that Mr Piscopo cleared such debts upon receiving his compensation payment of $64,000 in mid July 2007, in an effort that he did not waste further money and in the belief that he had a job to return to which would provide for his living expenses.  That such was not the case only became evident in January 2008, when his services were terminated, a termination that he is still seeking to redress (Exh A7).

28.     Finally, it is evident that Mr Piscopo suffers from a number of medical disabilities.  I note that there is a residual restriction of movement disability of the left shoulder – a disability which is permanent and restricted to modified duties with a current capacity for work of 22-29 hours per week (Job Capacity Assessment Report of 27 November 2007 – T49).

29.     I note that Mr Piscopo has been suffering from anxiety and depression associated with his shoulder condition.  Certificates provided by Dr Scullin, his attending general practitioner, attest to such (T39, T40, T41).  In a report dated 8 August 2008 (Exh A3) Dr Scullin states that the diagnosis was established in May 2006, with some symptoms being present for some months prior to that date.  Dr Scullin notes that his depression is associated with both a transport phobia (unable to use public transport) and a gambling problem.  Dr Scullin notes that he self medicated with marijuana, and these associated conditions tend to worsen his depression.  Use of antidepressant medication and assistance of a counsellor has provided only a partial reprieve, with Dr Scullin observing that lack of income and threat of losing his house are increasing the depression.  Dr Scullin considers if Mr Piscopo was forced to sell his house, his depression would worsen and he would have fear for Mr Piscopo’s safety.

30.     I am mindful that the Social Security Appeals Tribunal shortened the length of the preclusion period after considering the amount of compensation that was distributed to Mr Piscopo ($64,000), and in so doing acknowledged legal costs of $154,000 and repayment of periodic payments of approximately $82,000.

31.     I am mindful that section 1184K of the Social Security Act 1991 provides for a discretion to be exercised in determining the amount of compensation to be taken into consideration when calculating the preclusion period during which period the compensated individual is not entitled to receive compensation affected payments, eg. Newstart Allowance.  Such a discretion can only be exercised in circumstances which have been found to be special.

32.     The phrase ‘special circumstances’ has been subject to much consideration.  In Re Beadle and Director General of Social Security (1984) 6 ALD 1 Toohey J stated that the qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Further, whether circumstances answer any of these descriptions must depend on the context in which they occur.

33.     In Re Hajar and Secretary, Department of Social Security (1988) 16 ALD 716 Senior Member McMahon stated at para 43 that:

Financial hardship has been considered as a possible component of special circumstances in a number of decisions. It is clear, however, that standing by itself, it would not amount to a “special circumstance” (Re Beadle 6 ALD 1 at 4). Furthermore, the financial circumstances must be more than straightened. They must be “exceptional”: Re Colaiacolo (unreported, 24 April 1985, No 2109, (19)).

34.     In Re Secretary, Department of Social Security v Rodgers (1992) 26 ALD 235, the issue of self inflicted financial hardship was considered in the following extract at P235:

Although the respondent now faced financial hardship, the fact that the hardship was self inflicted diminished the significance of that hardship.

35.     The Full Federal Court in Riddell v Department of Social Security (1993) 42 FCR 443 provided the following:

Each particular case must be considered on its merits.  It is the essential nature of the provision to create a broad discretion to meet the great variety of circumstances which must occur, raising considerations of individual hardship, need, fairness, reasonableness, and what ever else may move an administrator, keeping in mind the scope and purposes of the Act, to make a decision one way or the other.

36.     I have given much consideration to the reasoning underlying the decision of the SSAT insofar as it pertains to the basis for such a decision.  The decision to exclude the significant legal costs and disbursements ($154,000) and the repayment of periodic payments and other compensation sums ($82,000) is both fair and reasonable when considering what compensation should be taken into consideration in determining the length of the preclusion period.  It would appear to me to be anomalous to include repayment of period payments, for those payments were made to provide an income pending settlement of a compensation claim, which may be a period of years in being finalised.  To include such in the calculation of a preclusion period could only be justified if the preclusion period commenced with the commencement of such payments, not as indicated here from the date of settlement.  To do otherwise places an unfair and unjust outcome on a compensation payee for receiving monies to which he was entitled and because they were included in a settlement agreement, the individual is penalised by way of being unable to be paid compensation affected payments in the future for a period which indeed reflects payments in part for a benefit properly received prior to the settlement.

37.     While not wishing to pursue this argument any further, I note that the Respondent in this matter does accept the outcome concluded by the SSAT.  In particular, I acknowledge the position stated by the Respondent in their Statement of Facts and Contentions dated 2 September 2008:

The Respondent does not take issue with the SSAT decision and the reduction of the preclusion period as found by the SSAT for the reason given by the SSAT.

38.     In turning my attention to the circumstances of the matter, I conclude that Mr Piscopo’s financial circumstances are dire, and not merely straightened.  In making such a finding I do conclude that he has no access to a money supply for a minimum period of at least four months, if not longer.  In so finding I acknowledge that he owns an unencumbered house, but attempts to mortgage and/or sell are frustrated by his inability to make repayments and the time taken to realise on such an asset in uncertain market conditions.  I also acknowledge that Mr Piscopo has in part been responsible for his financial predicament, and that it has been suggested that he could ameliorate such a position by taking in a lodger and borrowing money from his children (if indeed they are in a position, and willing, to make a sufficient loan).  Nevertheless, any consideration of such issues must be undertaken in the knowledge that there was a failure by Centrelink to properly notify Mr Piscopo of the facts of his preclusion period, together with the anxiety and depressive conditions associated with his work related injury.  I would further observe that Mr Piscopo’s anxiety and depression are being made worse as a consequence of the stress arising from his financial situation, as evidenced both by Mr Piscopo’s statements concerning self harm and Dr Scullin’s assessment of such. I would also consider that either borrowing from family members or having a lodger are speculative situations that may not eventuate, and that the revenue from a lodger could be of marginal financial impact, once costs and outlays are considered.

39.     I do note and accept that Mr Piscopo has made many endeavours to seek work and that they have been unsuccessful.  I note his latest endeavour to start a local cleaning business and fear that this endeavour may falter for lack of finance to maintain the work vehicle, which is necessary in light of Mr Piscopo’s phobic avoidance of public transport.

40.     I have addressed all the material before me.  I conclude that such circumstances when considered as a whole are special.  In so finding I acknowledge the reasoning of the Social Security Appeals Tribunal insofar as it pertains to a shortening of the preclusion period.  I conclude that for the reasons outlined, Mr Piscopo’s financial circumstances are more than straightened and indeed are dire.  I also conclude that such financial circumstances are causing clinical worsening of his anxiety and depressive conditions to the point of Mr Piscopo having frequent thoughts of self harm.  I would also acknowledge that his work related injury is associated with the anxiety and depressive conditions, and that such decisions have made a contribution to activities and decisions that have led to his dire financial circumstances.  I would also consider that the failure by Centrelink to properly notify Mr Piscopo of his preclusion period when advised of his correct address by the solicitors on 22 May 2007 may have made a contribution to Mr Piscopo not fully appreciating the seriousness of his financial circumstances when he received the $64,000 compensation lump sum in mid July 2007.

41.     Having concluded that the circumstances in this matter are special, and for reasons which extend beyond those found in the SSAT decision, I conclude by exercising the discretion by way of a determination that a part amount of the compensation payment should be treated as not having been made, with the result that the preclusion period ends on 11 September 2008.

DETERMINATION

42.     The decision under review is set aside and in substitution thereof I find that:

(a)The circumstances are special; and

(b)A part amount of the compensation payment should be treated as not having been made, with the result that the preclusion period ends on 11 September 2008.

I certify that the 42 preceding paragraphs are a true copy of the reasons for the decision herein of Dr J D Campbell, Member.

Signed:         ....................[sgd]............................................................
  T Aviram, Associate

Date/s of Hearing  5 September 2008
Date of Decision  25 September 2008       
Advocate for the Applicant       Self-represented             
Solicitor for the Respondent     Mr J Larcombe, Centrelink Legal Services