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

[2011] AATA 922

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2011] AATA 922

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2011/1150

GENERAL ADMINISTRATIVE DIVISION		)
Re		Glenda Randall

Applicant

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

Respondent

DECISION

Tribunal Senior Member A K Britton

Date21 December 2011

PlaceEast Maitland

Decision

The decision under review is set aside and remitted to the Secretary with a direction that providing Ms Randall: (i) sees a financial adviser recommended by Centrelink; and (ii) authorises Centrelink to make automatic deductions from her pension to pay for at least some of her “priority needs” as defined by s 123TH of the Social Security (Administration) Act 1999 (Cth) through “Centrepay” ( or an equivalent,

the preclusion period be reduced to end on the date Ms Randall completes these steps.

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

Senior Member A K Britton

CATCHWORDS

SOCIAL SECURITY – disability support pension – preclusion period – discretion to reduce the preclusion period – special circumstances – decision under review set aside

LEGISLATION

Social Security Act 1991 (Cth) – ss 17, 1169, 1170, 1171, 1184K(1)

CASE LAW

Beadle v Director-General of Social Security (1985) 7 ALD 670

Boscolo v Secretary, Department of Social Security (1999) 90 FCR 531; [1999] FCA 106

Groth v Secretary, Department of Social Security (1995) 40 ALD 541; [1995] FCA 1708

Secretary Department of Social Security v Hodgson (1992) 37 FCR 32

Fischer v Secretary, Department of Families, Housing, Community Services & Indigenous Affairs (2010) 185 FCR 52; [2010] FCA 441

Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60

Re Krzywak and Secretary, Department of Social Security (1988) 15 ALD 690

Secretary to Department of Family and Community Services v Allan (2001) 116 FCR 1; [2001] FCA 1160

OTHER INSTRUMENTS

Guide to Social Security Law

American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders: Text Revision, 4th ed, 1994

REASONS FOR DECISION

21 December 2011                 Senior Member A K Britton

1.      Ms Glenda Randall was injured at work in 2006 and received a lump-sum compensation payment of about $72,000 in February 2009 and a further amount of just under $170,000 in May 2010.  Ms Randall claims that by the end of 2010 she had exhausted those funds and spent at least $90,000 on gambling. 

2. By the operation of s 1169 of the Social Security Act 1991 (Cth) (the Act), if a person receives a “lump sum compensation payment”, they are not entitled to receive the disability support pension (DSP) or any other "compensation-affected payment" throughout the "preclusion period". The "preclusion period" is calculated by applying the statutory formula set out in ss 17, 1170 and1171 of the Act. It is not in issue that the preclusion period applying to Ms Randall is the period 10 April 2010 to 3 October 2014.

3.      There is no argument that Ms Randall is unfit for work and, but for the operation of the preclusion period, would qualify for DSP.

4. Ms Randall seeks a review of the decision made by a Centrelink Authorised Review Officer, and affirmed by the Social Security Appeals Tribunal, not to exercise the discretionary power conferred by s 1184K(1) of the Act to treat the whole or part of her compensation payment as “not having been made”.

Background

5.      Ms Randall currently lives with her former husband, Mr John Maher who she describes as her carer and friend, in a four-bedroom house, which is rented for $460 per week.  Mr Maher, Ms Randall and Ms Randall’s daughter and two grandchildren moved to the house at the end of 2010 after the forced sale of the house owned by Mr Maher where they had been living. Mr Maher was declared bankrupt in early 2010. Four months ago, Ms Randall’s daughter and grandchildren moved to alternative accommodation. Ms Randall’s daughter, who describes herself as a recovering alcoholic, claims that she decided to find alternative accommodation because she believed living with her mother was undermining her recovery.

6.      Mr Maher is in full-time employment and earns just under $800 (net) per week.  Since late 2010 he has been giving Ms Randall $100 per fortnight and sometimes buys her cask wine and cigarettes and helps out with occasional medical expenses. He claims that he struggles to provide Ms Randall with that level of assistance and is unable to provide any further assistance.

7.      In addition to the support provided by Mr Maher, Ms Randall receives occasional assistance from her daughter, who is dependent on social security payments. Ms Randall has two other children and claims that neither provides her with any financial assistance. She claims that one child has a substance abuse problem and she does not see, or get on with, the other.

8.      Ms Randall receives occasional support, mainly in the form of food vouchers, from local charities. She claims that apart from Mr Maher, no one provides her with any regular financial assistance.

9.      Ms Randall claims that she is often unable to purchase food or the medication prescribed for her various medical conditions. In addition, she claims that she cannot afford the nappies, pads and creams that she requires on account of being doubly incontinent. She claims that her doctors are aware of her predicament and sometimes provide her with samples of medication.

Medical history

10.     Ms Randall is in her mid-fifties. Her GP reports that she suffers from multiple health problems — double incontinence, severe depression, obsessive compulsive disorder, alcohol addiction, severe low back and multi joint pain, severe tremor, and numbness in her legs.

11.     Ms Randall claims that she has progressively increased her level of alcohol consumption since commencing to drink when she turned 18. On her account, throughout her twenties and thirties she was admitted to hospital for treatment of alcoholism, gambling and/or depression on about ten occasions.

12.     According to Mr Maher, Ms Randall has been a gambler and a drinker since they met in 1975. In his opinion, her “root problem” is gambling. He claims that she spends whatever she has “and then some” on the habit. On his account, only a fortnight ago she spent $200 on Keno. Ms Randall admits to stealing from Mr Maher to finance her habit over the years. On his account, while Ms Randall was generally honest with him, he agreed she sometimes stole from him. Ms Randall’s daughter testified that her mother has had a problem with gambling and drinking since she can remember. She said after her mother received her settlement following the work injury the problem became acute and her mother binge drank and gambled.

13.     On 22 November 2011, Ms Randall was admitted as a voluntary patient to the Calvary Mater Hospital and discharged the following day. She was diagnosed as suffering from mental and behavioural disorders due to use of “alcohol dependence syndrome, with a secondary diagnosis of pathological gambling”.

14.     Ms Randall has been seeing a psychologist episodically since 2006. She is currently under a Mental Health Care Plan designed by her GP. Under that plan, she has been receiving regular counselling support since March 2011 to assist with depression and anxiety. 

Psychiatric assessment

15.     At the request of her solicitors, Ms Randall was assessed by psychiatrist Dr Christopher Bench. In a report dated 16 November 2011, Dr Bench stated that Ms Randall meets the diagnostic criteria for “Pathological Gambling, Alcohol Dependence and Depressive Disorder Not Otherwise Specified” set out in the American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders: Text Revision, 4th ed, 1994 (DSM-IV). The criteria is as follows:

Diagnostic criteria for 321.31 Pathological Gambling

A. Persistent and recurrent maladaptive gambling behaviour as indicated by five (or more) of the following:

(1) is preoccupied with gambling (e.g., preoccupied with reliving past gambling experiences, handicapping or planning the next venture, or thinking of ways to get money with which to gamble)

(2) needs to gamble with increasing amounts of money in order to achieve the desired excitement

(3) has repeated unsuccessful efforts to control, cut back or stop gambling

(4) is restless or irritable when attempting to cut down or stop gambling

(5) gambles as a way of escaping from problems or of relieving a dysphoric mood (e.g., feelings of helplessness, guilt, anxiety, depression)

(6) after losing money gambling, often returns another day to get even (“chasing” one’s losses)

(7) lies to family members, therapist, or others to conceal the extent of involvement with gambling

(8) has committed illegal acts such as forgery, fraud, theft, or embezzlement to finance gambling

(9) has jeopardized or lost a significant relationship, job, or educational or career opportunity because of gambling

(10) relies on others to provide money to relieve a desperate financial situation caused by gambling

B. The gambling behaviour is not better accounted for by a Manic Episode.

16.     Dr Bench wrote  : 

[I]it is widely accepted that pathological gambling is an addictive disorder similar to addiction to substances. Ms Randall was open in her acknowledgment of having problem gambling dating back to over thirty years. She noted that essentially throughout her adult life her recalcitrant gambling has repeatedly led her to be in financial straits resulting in her failure to pay rent or be behind on her utilities. She noted that she has engaged in theft from family and friends dating back many years in order to fuel her gambling. Following her receiving the worker’s compensation payout, she had ready access to very large quantities of money which meant that she did not have to engage in illegal or immoral conduct in order to continue to fuel her gambling. In fact, she greatly increased her gambling such that she lost $5000 in a single day betting on horse races and poker-machines. It is highly probable that her pathological gambling was exacerbated by her concurrent alcohol dependence – alcohol contributing to increasingly impulsive behaviours and further impairing her judgement.

17.     In Dr Bench’s opinion, there was no evidence of any significant deficits in cognitive functioning however this could not be ruled out without formal neuropsychological testing. He noted:

[i]t is evident that Ms Randall has alienated herself from numerous individuals in her life, likely the consequence of her addictive illnesses and sequelae such as her mistreatment of those individuals close to her, putting them secondary to her addictions.

18.     Dr Bench believes that unless Ms Randall abstains from alcohol she is “doomed to persist in her current pattern of alcohol dependence, pathological gambling and quite severe depressive symptomology”. He noted that given the protracted period and severity of her alcohol dependence, Ms Randall would only be able to achieve and maintain abstinence through participation in an inpatient detoxification and prolonged rehabilitation program. He noted that she was not willing at this stage to cease her alcohol use.  He thought that regardless of whether Ms Randall attempted to cease or reduce alcohol use she should be encouraged to participate in Alcoholics and/or Gamblers Anonymous.

Where did the money go? 

19.     Ms Randall claims that by about November 2010, she had spent all the money she received in settlement of her compensation claim. To put this claim in context, it is useful to sketch in the history following Ms Randall’s work injury in August 2006.

20.     In February 2009, Ms Randall received lump-sum compensation under the Workers’ Compensation Act 1987 (NSW) for a work injury in the sum of just under $75,000. A year later, her common law claim in respect of the same injury was settled in the sum of $287,000. In addition to costs and disbursements, the sum of $38,000 was deducted from those settlement monies. According to Ms Randall, this deduction was for money lent or advanced to her in anticipation of settlement of her claim.  On 21 May 2010, she received an amount of just under $170,000. Excluding legal and associated costs, Ms Randall received a total of about $280,000 in lump-sum compensation made up as follows:

DATE	AMOUNT RECEIVED
4 February 2009	$75,000
August 2008 – May 2010	$38,000 (money lent or advanced to Ms Randall)
22 May 2010	$169,000

21.     In addition to the above, from the date of injury until May 2010, Ms Randall received either weekly compensation or DSP.

22.     A Centrelink Authorised Review Officer (ARO) recorded that Ms Randall claimed that after receiving her May 2010 settlement she had spent the following amounts:

OBJECT	AMOUNT OF EXPENDITURE
Former husband’s debts	$30,000
Bills and medical expenses	$3,430
Orthopaedic bed and bedding	$8000
New lounge	Amount not specified
New car	Amount not specified but Ms Randall claimed it was $4500
Car for daughter	$2000
“Loan” to relative	$1000
Loan to friend who subsequently “disappeared”	$10,000
Holidays	$10,000
Living costs	$3350 – the ARO took this amount from bank statements
Living expenses and gambling	$80,000
Refridgerator	$1000
Raftos Group “consultative court advice”	$3,003
Son’s phone bill	$1570
“TAB wagering”	$7450
Taverns and clubs	$4800

23.     The ARO concluded on the basis of this information together with Ms Randall’s bank statements, that the remainder of the settlement, was spent on a combination of “living expenses, lifestyle purchases and gambling”.

24.     Ms Randall confirmed in these proceedings that she had spent the above amounts as described. In addition, she claimed she gave her daughter $7500 to pay legal fees incurred in a family law matter. She testified that after receiving her settlement monies she drank “day and night” and “just gambled”. She said she tried to hide the extent of her gambling from Mr Maher and her daughter and went on short holidays with her mother whom she describes as an alcoholic and a gambler, and “just drank and played poker machines”.

25.     According to Mr Maher, it was his understanding that the $30,000 he received from Ms Randall was to help him with outstanding bills incurred in relation to his house which he subsequently lost. He said he did not consider the $30,000 to be a loan but rather repayment by Ms Randall for being able to live in the house without payment for an extended period.

26.     Ms Randall claims that she is deeply ashamed of wasting the money and burdening her family. She claims to have lost any dignity she might once have had.

Available assets

27.     Ms Randall claims not to have any realisable assets. The Secretary confirmed that there is no money in any of the bank accounts Ms Randall admits to holding. Ms Randall claims she has no other accounts.

28.     Ms Randall says she is unable to recover any of the money she loaned or gave away after receiving her settlement.  She claims that the people she lent money to have simply disappeared.

Are there “special circumstances” that make it appropriate to reduce the preclusion period?

29.     Section 1184K of the Act gives the Tribunal the power to reduce the preclusion period:

Secretary may disregard some payments

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 appropriate to do so in the special circumstances of the case.

30.     The term “special circumstances” appears in a number of provisions of the Act. Its meaning has been the subject of exhaustive consideration by the Administrative Appeals Tribunal and the Federal Court.  The Federal Court has consistently declined to adopt a prescriptive formula: see for example Beadle v Director-General of Social Security (1985) 7 ALD 670 at 673; and French J in Boscolo v Secretary, Department of Social Security (1999) 90 FCR 531 at 535. Nonetheless, the Court has emphasised that the term denotes a requirement that there be “something which distinguishes [the claimant’s] case from others, to take it out of the usual or ordinary case”: per Kiefel J in Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at [545]. This however is not to be interpreted as a requirement that the claimant’s circumstances be “extremely unusual, uncommon or exceptional” per Hill J in Secretary Department of Social Security v Hodgson (1992) 37 FCR 32 at [42]. There is no requirement that the circumstances be unique to the individual — circumstances might be special although they apply to more than one person or to a class of persons, provided they are not of universal application: per Katzmann J in Fischer v Secretary, Department of Families, Housing, Community Services & Indigenous Affairs (2010) 185 FCR 52 at [65].

31.     The Guide to Social Security Law (the Guide) provides direction to decision makers on the application of the “special circumstances” discretion. The Tribunal is not bound to apply the policy expressed in the Guide, but may do so and, indeed, will usually do so unless there are cogent reasons in a particular case for not doing so (see Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60).

32.     The Guide states (at 4.13.4.10):

When special circumstances should generally NOT be applied

Each case must be examined on its own merits by the delegate but as a general rule, special circumstances would NOT usually be applied where:

·the person has sufficient liquid assets to support themselves, and their family if applicable, for the duration of the preclusion period, or

·the person acquired realisable assets AFTER the person was advised of the preclusion period, and there is no impediment to the realisation of those assets, or

…

33.     Section 1184K requires two separate but interrelated issues to be addressed — whether “special circumstances” exist in Ms Randall’s case and, if so, whether the discretion to treat some or all of her compensation payments as not having been made, should be exercised.

34.     The Secretary contends that to constitute “special circumstances” a person’s circumstances must be more than simply “straitened” but “truly exceptional”, citing in support Re Krzywak and Secretary, Department of Social Security (1988) 15 ALD 690. He contends that Ms Randall’s financial circumstances could not be described as “truly exceptional”. In addition, he contends that it is relevant that her current predicament is entirely of her own making and the result of frivolous and reckless spending. While the Secretary concedes that Ms Randall suffers from multiple and serious health problems he asserts that of themselves they do not constitute “special circumstances” and points out that her health could not be described as ”special” relative to other DSP recipients.

35.     While the Secretary does not go so far as to challenge the diagnosis made by Dr Bench of alcohol dependence and pathological gambling, he urges the Tribunal to approach that diagnosis with a degree of caution. He points out that no mention is made of these conditions in any of the medical reports on Centrelink’s file (see for example the report prepared by Dr Anwar Kamal, 14 January 2011) and while Ms Randall’s current GP, Dr Mark Gibbs, in his report of 15 July 2011 refers to alcohol addiction he makes no mention of a gambling problem. Furthermore, the Secretary points to the following extract from the SSAT’s reasons: 

Ms Randall described herself as having ‘gone crazy’ after receipt of the compensation. She bought shirts for $170 she has never worn and that do not even fit her. She started gambling heavily, which is something she had not previously done. She said she started drinking heavily again – she had drunk heavily in her younger years but had stopped that some time ago. Ms Randall said people ‘came out of the woodwork’; she would pay for their drinks at the hotels she frequented (and at which she became a daily visitor), and even their gambling. She said she did not know what she was thinking, but she never stopped to think that she would use up all the money and have nothing to show for it.

36.     Critical to the assessment of whether special circumstances are established is the reliability of Dr Bench’s diagnosis.  I do not accept the argument put for Ms Randall that because the Secretary did not require Dr Bench for cross-examination and cannot point to any conflicting expert opinion, his opinion must be accepted. His opinion rests on, among other things, the history given to him by Ms Randall. If that history is found to be materially unreliable, it follows that Dr Bench’s opinion can be given little, if any weight.

37.     The evidence given by Ms Randall’s daughter and Mr Maher is consistent with the history recorded by Dr Bench of a long-standing drinking and gambling problem. While neither is independent, I found each to be a truthful witness. Neither sought to embellish their claims or overstate the degree to which Ms Randall was dependent on alcohol or gambling. Ms Randall’s daughter, for example, stated that while her mother drank every night she had cut back on her drinking over the past 12 months.  Mr Maher stated that while Ms Randall had been a heavy drinker throughout the entire period he had known her, he did not see this as her “root problem”.

38.     The history given to Dr Bench is also consistent with the discharge summary report prepared by Calvary Hospital which noted a diagnosis of alcohol dependence and pathological gambling. Furthermore, the history of numerous admissions to psychiatric institutions throughout Ms Randall’s twenties and thirties is uncontradicted and unchallenged and supported by Mr Maher and Ms Randall’s daughter.

39.     After carefully considering the apparent discrepancies in the evidence, I accept Ms Randall’s claim of a long history of alcohol and gambling problems. In reaching that conclusion, I have had regard to the totality of the evidence. It follows that the opinion of Dr Bench can be accepted.

40.     As the evidence reveals, in under six months, Ms Randall spent about $170,000 a large proportion on which was on gambling. It is noteworthy that this is not a case of a person who, prior to receiving their lump sum compensation payment, had been solely reliant on social security or compensation payments.  Prior to receiving the $170,000 settlement in May 2010, Ms Randall had received over $110,000 in advance of receipt of her settlement monies in addition to her weekly compensation and/or social security payments.

41.     The speed with which Ms Randall managed to spend the second settlement sum can only be described as “breathtaking” especially given, as the SSAT noted at [25] of its Reasons, that there is “almost nothing to show for it”. The SSAT raised the possibility that someone might be holding cash or assets given to them by Ms Randall. While a possibility, having regard to Dr Bench’s diagnosis, the evidence given by Ms Randall’s daughter and Mr Maher, together with the expenditure pattern evidenced by Ms Randall’s bank statements — the withdrawal of relatively small amounts over concentrated periods — it seems more probable that as claimed, Ms Randall simply squandered the money.

42.     There can be no argument that Ms Randall’s current financial position arose because of her reckless and irresponsible spending.  Her conduct, however, is not without explanation. As Dr Bench believes, she suffers from an untreated “pathological gambling” disorder. It is important to recognise that depression, alcohol addiction and addictive gambling are genuine illnesses that substantially reduce a person’s capacity to make sound judgments in their own or the best interests of others or to exercise self-control. They are not incurable or unmanageable conditions but are substantial impairments all the same. 

43.     I am satisfied that a combination of factors establish special circumstances in this case including Ms Randall’s multiple physical and psychiatric conditions, her inability to support herself and meet health expenses for the balance of the preclusion period. While the discretionary power to reduce the preclusion period is enlivened, the more difficult issue is whether it should be exercised. Consistent with the authorities, that power must be exercised sparingly. To do otherwise could undermine the “basic policy” underlying those provisions of the Act aimed at suspending social security where recipients have received compensation for loss of earnings. As Heerey J commented in Secretary to Department of Family and Community Services v Allan (2001) 116 FCR 1 at [1], these provisions were designed so that “people should not receive social security payments for loss of earnings where they have received compensation for that same loss of earnings from another source”, in short, to prevent “double dipping”.

44.     I think it unlikely, at least in the short term, that even if Ms Randall did not assist Mr Maher with the payment of rent and household expenses that she would find herself homeless. The evidence makes plain that Mr Maher has tolerated her excesses for a significant period and feels responsible for her welfare. Nonetheless in my opinion there is a risk that the current arrangement will not survive for the balance of the preclusion period, especially given Mr Maher’s own financial difficulties.

45.     Even if Ms Randall’s current living arrangements were to remain unchanged, her financial position remains perilous. The evidence indicates that she has exhausted the assistance of local charities and her one child who appears willing to provide her with some support.  She has significant health costs that she is currently unable to meet. While, as pointed out by the Secretary’s representative, these could be reduced if Ms Randall were to take steps to obtain a health card, she will continue to incur the significant costs of maintaining personal hygiene as a consequence of her incontinence problems. The evidence is that these costs are significant. Not surprisingly, this particular health problem is a source of great distress and personal embarrassment to Ms Randall. 

46.     Furthermore, as the history given to Dr Bench, counsellors and the Calvary Hospital make clear, Ms Randall is deeply distressed at the prospect of having no means to support herself over the next three years.  Given her psychiatric history, there is a real risk that her mental health will further decline unless a degree of financial certainty is restored.

47.     Weighing against the exercise of the discretion to reduce the preclusion period is the risk that Ms Randall will simply use DSP on gambling and alcohol and not contribute towards household expenses or pay for her health costs and other basic needs. While on the one hand, double-dipping must be discouraged and deterred, it is a mistake to make harsh moral judgments about a person such as Ms Randall whose capacity to make decisions is impaired on account of a psychiatric condition.  Each case must be dealt with discretely on its own merits.  This case, and any case in which there are genuine “special circumstances”, is not precedent.

48.     While Ms Randall indicated in these proceedings that she is now prepared to seek treatment, as Dr Bench’s report indicates, given the length of her alcohol addiction and the relationship between it and her gambling problem, the prospects for recovery even in the medium term are fairly bleak.  Ms Randall also indicated that if DSP were to be reinstated she would use it to pay medical costs and assist with household expenditure.  Given her history, there is no guarantee that this will occur, however it would appear that she has less difficulty managing small amounts of money received on a regular basis than large one-off sums.

49. Notwithstanding my concerns, I believe it appropriate to reduce the preclusion period subject to some evidence that Ms Randall will, as claimed take steps to break the cycle of financial mismanagement. I have decided to set aside the decision under review and remit it to the Secretary with a direction that providing Ms Randall: (i) sees a financial adviser recommended by Centrelink; and (ii) authorises Centrelink to make automatic deductions from her pension to pay for at least some of her “priority needs” as defined by s 123TH of the Social Security (Administration) Act 1999 (Cth) through “Centrepay” ( or an equivalent, the preclusion period be reduced to end on the date Ms Randall completes these steps. I also recommend that if and when “income management” becomes operational in NSW, (Part 3B of the Social Security (Administration) Act 1999) that the Secretary review whether Ms Randall is an appropriate person to make subject income management.

I certify that the 49 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member A K Britton

Signed:         .......................[sgd]..........................
  Associate to Senior Member A K Britton

Date/s of Hearing  6 December 2011
Date of Decision  21 December 2011
Counsel for the Applicant         Ms Goodchild
Solicitor for the Applicant          Neisha Shepherd Solicitors
Solicitor for the Respondent     Ms S Mantaring