Purcell; Secretary to the Department of Family and Community Serv Ices

[2003] AATA 643

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2003] AATA 643

ADMINISTRATIVE APPEALS TRIBUNAL        Nº V2003/348

GENERAL ADMINISTRATIVE  DIVISION

Re: SECRETARY TO THE DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Applicant

And:RICHARD JOSEPH PURCELL

Respondent

DECISION

Tribunal:       G. D. Friedman, Member

Date:             7 July 2003   

Place:            Melbourne

Decision:The Tribunal sets aside the decision under review and substitutes a decision that a compensation preclusion period is to be applied to the receipt of social security payments by the respondent from 18 October 1998 to 8 May 2004.

(sgd.) G. D. Friedman
  Member

SOCIAL SECURITY ‑ lump sum compensation ‑ preclusion period ‑ sale of property ‑ financial and medical difficulties ‑ whether special circumstances exist

Social Security Act 1991 s1184K(1)

Groth v Secretary, Department of Social Security (1996) 40 ALD 541

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

REASONS FOR DECISION

7 July 2003   G. D. Friedman, Member

1.      This is an application by the Secretary to the Department of Family and Community Services (the applicant) for review of a decision of the Social Security Appeals Tribunal (SSAT) dated 24 February 2003.  The SSAT set aside a decision of an authorised review officer of Centrelink dated 24 October 2002that Richard Joseph Purcell (the respondent) was precluded from receiving compensation-affected payments from 18 October 1998 to 8 May 2004.  The SSAT substituted a decision that the amount of $43,000 received by the respondent be treated as not having been made.

2.      At the hearing on 27 June 2003 Mr D. Perdon, a Centrelink advocate, represented the applicant, and the respondent represented himself, assisted by his brother Mr M. Purcell.

3. The Tribunal had before it the documents lodged under s37 of the Administrative Appeals Tribunal Act 1975 (T1-T85) and two exhibits (Exhibits R1 and R2) lodged by the respondent.

BACKGROUND

4.      On 6 May 1993 the respondent suffered a back injury at work and received periodic worker’s compensation payments.  On 2 October 1998 he settled a compensation claim against his employer for a total of $240,000, which included a component for loss of future earnings.  On 17 October 1998 periodic compensation payments ceased.  On 15 February 1999 Centrelink decided to impose a compensation preclusion period from 18 October 1998 to 8 May 2004, in relation to claims for social security benefits, and notified the respondent and his solicitor.  The respondent used the compensation money to pay off the mortgage on his family home (the Glenroy property), carry out renovations and repairs, pay  a deposit on the purchase of a rental property, pay for a holiday and for the purchase of a caravan and other vehicles.

5.      On 16 November 2000 Centrelink reviewed and affirmed the decision to impose the compensation preclusion period.  On 6 June 2001 an authorised review officer affirmed the decision.  On 19 June 2001 the respondent lodged an application with the SSAT for review of the decision.   

6.      On 26 June 2001 the respondent lodged a claim for disability support pension and on 29 June 2001 Centrelink advised him that he was ineligible to receive Centrelink payments because of the compensation preclusion period.

7.      On 26 July 2001 the SSAT set aside the decision by Centrelink to preclude the respondent from receiving compensation‑affected payments for the period 18 October 1998 until 8 May 2004, and substituted a decision that when considering the lump sum compensation payment the amount of $120,482 be treated as not having been made.

8.      On 4 September 2001 the applicant lodged an application with the Tribunal for review of the decision by the SSAT.  On 5 December 2001 the Tribunal found that there were no special circumstances to warrant disregarding the compensation received in whole or in part.  The Tribunal set aside the decision and substituted a decision that the compensation preclusion period be applied for the period 18 October 1998 to 18 May 2004.

9.      On 13 May 2002 the respondent sold the rental property to his brother, and after discharging the mortgage, the proceeds amounted to $13,000, which he used to pay off debts and loans.  On 31 July 2002 the respondent sought further review by Centrelink on the grounds of changed circumstances because of the sale of the rental property and the disposal of the proceeds.  On 26 September 2002 the original decision-maker decided not to change the preclusion period.  On 24 October 2002 the authorised review officer affirmed the decision.  On 24 February 2003 the SSAT set aside the decision and substituted a decision that when considering the lump sum compensation payment the amount of $43,000 (comprising home repairs, medical expenses for his daughter and costs of an unsuccessful legal action) be treated as not having been made.

10.     On 2 April 2003 the applicant lodged an application with the Tribunal for review of the decision by the SSAT. 

EVIDENCE

11.     In a written submission dated 18 June 2003 the respondent stated that the repairs to his home in late 1998 and early 1999 were necessary and unavoidable.  He produced an undated letter from Royglen Constructions (Exhibit R2) in which a Mr J. G. Galea stated that the respondent had approached him in about September 1998 concerning work that needed to be carried out at the Glenroy property.  In the letter, Mr Galea said that he advised the respondent that extensive repairs, including concreting, roofing and re-stumping, were needed to put it into shape..  Mr Galea also said that the respondent begrudgingly agreed to the extensive renovations as he wanted to make the house safe and more convenient for himself and his family; and that he believed the respondent subsequently paid about $80,000 to complete the repairs satisfactorily.

12.     In oral evidence the respondent told the Tribunal that the estimate by the SSAT, that one‑third of the cost should be attributed to necessary and unavoidable repairs, was conservative; and that the entire cost was incurred for health and safety reasons.  He produced copies of invoices (Exhibit R1) giving details of the repairs.  He also said that the expenditure was responsible in view of his expectation that periodical payments in relation to a work-related knee injury would continue until retirement age, but the payments ceased after the settlement.

13.     The respondent stated that the sale of the rental property was necessary because he could not afford to maintain the property and meet the mortgage repayments.  He believed that by selling the property to his brother he was repaying his brother for the considerable financial assistance his brother had provided in meeting the mortgage and other expenses.  The respondent acknowledged that he did not have the property valued on the open market, but explained that the selling price was based on the value assessed by the mortgage provider, and was fair and reasonable.  He conceded that, in hindsight, he might have realised a larger profit if the property had been auctioned.  The respondent stated that of the $13,000 he received from the proceeds of the sale, he gave $8,000 to his brother and $2,000 to his son in repayment of loans.  He kept the remaining $3,000 for living expenses and house repairs.

14.     The respondent stated that his financial situation has deteriorated since 2001, and he is unable to meet the cost of day-to day expenses for the family.  He said that his wife receives $360 per fortnight in disability support pension, and he receives $40 per fortnight in carer allowance.  Three daughters live at home.  One daughter receives youth allowance of $38 per fortnight, together with payment of $400 per month direct to The Australian Academy of Hairdressing, where she is undertaking a course.  He said that in 2002 she required surgery at a cost to him of about $2,000, with follow-up treatment required.  The second daughter works part-time and earns about $200 per week, and the third daughter works full‑time and earns about $400 per week.

15.     In cross‑examination the respondent agreed that his household income was about $840 per week and he no longer had mortgage repayments on the Glenroy property.  He explained that none of the children who live at home pays board or rent, and he does not receive financial assistance from his three other children, two of whom are in full-time employment.  He said that he is forced to rely on his wife’s disability support pension, carer allowance and ongoing assistance from his brother to meet his financial commitments.  The respondent acknowledged that assets such as a caravan and several cars that were purchased using the settlement money were a financial burden and have been given to the children.   

16.     The respondent said that he has paid $10,000 to his solicitor arising from an unsuccessful legal action against his former employer, and a further $3,000 remains unpaid.  He emphasised that his condition of anxiety and depression has deteriorated and has required further treatment by medication.  The respondent agreed that he had received about $86,000 in superannuation when he left his employment, but could not account for the money, of which none remains.

17.     Mr M. Purcell gave oral evidence that he has helped the respondent financially over a number of years, and the respondent’s health has suffered from the stress and anxiety of having to deal with medical, employment and legal issues.  Mr Purcell stated that the respondent had a strong expectation of ongoing periodic payments in relation to his knee injury, and that decisions to spend the settlement money on matters such as necessary repairs to the Glenroy property were made on this basis.  Mr Purcell said that the unsuccessful result of the respondent's legal action against his former employer was unexpected, and the costs represented a further burden for the respondent.  Mr Purcell agreed that he purchased the rental property from the respondent in an effort to help the respondent minimise further losses.    

CONSIDERATION OF THE ISSUES

18. Section1184K(1) of the Social Security Act 1991 (the Act) provides:

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.

19.     Mr Perdon submitted that in its decision on 5 December 2001 the Tribunal had considered all relevant issues, and that since that date there had been no new circumstances that could constitute special circumstances for the purposes of the Act.  He said that the home renovations or repairs were carried out in late 1998 or early 1999, and were before the Tribunal during the earlier hearing, so could not be taken into account again.  Mr Perdon said that in any case the value of the unencumbered house would have increased significantly after the repairs were completed.  He said that the decision to sell the rental property without testing the market was a choice made by the respondent that might have cost him a significant sum.  Similarly, Mr Perdon stated that the respondent chose to distribute most of the proceeds to relatives rather than retain sufficient funds to meet his financial needs during the remainder of the compensation preclusion period.  He said that the outcome of legal action against the respondent’s former employer, as with all litigation, was always uncertain.

20.     Mr Perdon acknowledged that the respondent was in a difficult financial situation, but submitted that financial hardship must go beyond straitened circumstances to constitute special circumstances.

21. The respondent referred to the house repairs, legal costs and his daughter’s medical costs, as well as his overall financial and medical situation, which he said had deteriorated significantly since December 2001. He submitted that special circumstances apply to warrant exercise of the discretion in s1184K(1) of the Act.

22.     In reaching its decision the Tribunal takes into account the oral evidence and written material, including the submissions made by the parties at the hearing.

23. Section 1184K(1) of the Act allows the decision-maker to consider the particular circumstances of each case. There must be something to distinguish the case from others, or to make it stand out from the usual or ordinary (Groth v Secretary, Department of Social Security (1996) 40 ALD 541). In Re Beadle and Director-General of Social Security (1984) 6 ALD 1 the Tribunal held that special circumstances must be unusual, uncommon or exceptional. 

24.     The Tribunal accepts that the respondent’s medical and financial situation has suffered following injuries sustained at work, and that legal proceedings initiated by him have not resulted in an outcome that he would consider satisfactory.  The Tribunal also accepts that the accommodation situation for the respondent and his family has involved expenditure that the respondent believes was necessary for their safety at the time.  The Tribunal notes that the invoices produced by the respondent relate to repairs carried out in late 1998 and early 1999, and that in its decision of 5 December 2001 the Tribunal considered the necessity of those repairs.  There has been no significant expenditure on the house since then.

25.     The Tribunal accepts the medical and other evidence that the respondent requires ongoing treatment and medication, and that in September 2002 one of his daughters had surgery and requires follow-up medical treatment.  However, the Tribunal is satisfied that Medicare and private health insurance provided a significant contribution to the cost of the daughter’s treatment, and the payment of about $2000 in remaining costs would appear to be a reasonable contribution by the respondent.  There is no persuasive evidence that his medical situation is significantly more severe than that of other recipients of social security benefits.

26.     The Tribunal takes into account that the respondent was unable to meet the mortgage and other costs of maintaining the rental property and that the sale to the respondent’s brother was made for financial and other reasons.  However, the Tribunal agrees with Mr Perdon that the respondent chose not to place the property on the open market and by doing so he lost an opportunity to make a significant financial gain.  He also chose to distribute the proceeds of the sale to his brother and other relatives, even though his brother was aware of the compensation preclusion period and was not seeking immediate repayment of loans to the respondent.  The proceeds of the sale could have been set aside by the respondent to meet his financial commitments until the expiration of the compensation preclusion period.

27.     In respect of the $13,000 in legal costs incurred by the respondent in pursuing legal action against his former employer, the Tribunal agrees that any claim of this nature involves an element of risk.  Although the respondent believed that he had a strong case on the merits, there is no evidence before the Tribunal that parties other than the respondent should bear the costs of his unsuccessful claim.

28.     The Tribunal notes that the respondent’s household receives about $840 per week.  The mortgage on the Glenroy property has been paid off, and the house has increased significantly in value following the repairs.  The three daughters living at home are largely self-sufficient and do not pay board or rent.  The respondent had several assets which he chose to give to his children, and his brother has provided regular financial assistance and is likely to continue to do so. 

29.     After considering these and all other relevant issues, and viewing the application in its entirety, the Tribunal is not satisfied that the matters raised by the respondent, are such as to make his circumstances unusual, uncommon or exceptional.  His circumstances, while difficult, are not special circumstances for the purposes of the Act. Therefore, it is not appropriate for the Tribunal to exercise the discretion under s1184K(1) of the Act, to disregard the compensation payment received in whole or in part.

DECISION

30.     The Tribunal sets aside the decision under review and substitutes a decision that a compensation preclusion period is to be applied to the receipt of social security payments by the respondent from 18 October 1998 to 8 May 2004.

I certify that the thirty [30] preceding paragraphs are a true copy of the reasons for the decision of:

G.D.Friedman, Member

(sgd)       Olympia Sarrinikolaou

Clerk

Date of hearing:  27 June 2003
Date of decision:  7 July 2003
Advocate for applicant:                Self‑represented
Advocate for respondent:            Mr D. Perdon, Centrelink