Ransley; Department of Family and Community Services - [2002] AATA 394

DECISION AND REASONS FOR DECISION [2002] AATA 394

ADMINISTRATIVE APPEALS TRIBUNAL )

) No N2001/1402

GENERAL ADMINISTRATIVE DIVISION       )
           Re      SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
  Applicant
           And    LAURIE RANSLEY
  Respondent

DECISION

Tribunal MS N P BELL

Date27 May 2002
PlaceSydney

Decision The decision under review is set aside and in substitution therefor the Tribunal decides that a preclusion period from 9 August 1998 to 18 October 2003 be imposed on the Respondent.

[SGD] MS N P BELL
Member

CATCHWORDS
SOCIAL SECURITY- lump sum workers' compensation payment – preclusion period – whether special circumstances exist to justify the exercise of discretion to disregard all or part of the compensation payment – financial hardship – medical condition of family members – realisation of substantial assets

Social Security Act 1991 sections 17, 1165, 1184(1)

Re Beadle v Director-General of Social Security (1984) 6 ALD 1
Riddell v Secretary Department of Social Security (1993) 42 FCR 443
Lukic v Secretary, Department of Social Security (AAT 6944, 6 May 1991)

REASONS FOR DECISION

MS N P BELL

This is an application by the Secretary, Department of Family and Community Services ("the Applicant") for review of the decision of the Social Security Appeals Tribunal ("the SSAT") on 2 August 2001 to set aside the Applicant's decision of 7 February 2001 to impose a preclusion period from 9 August 1998 to 18 October 2003 (T2). The SSAT decided in substitution that so much of the compensation payment received by Mr Laurie Ransley ("the Respondent") be treated as not having been made so as to end the preclusion period on 18 October 2002. The Applicant's decision had been reviewed and affirmed by an authorised review officer on 11 May 2001 (T17).
A hearing was held before the Tribunal on 9 May 2002 in which the Applicant was represented by Ms Cheryl Collis and the Respondent appeared on his own behalf. The Respondent and his wife, Mrs Christine Ransley gave oral evidence to the Tribunal. The Tribunal had before it the documents lodged under section 37 of the Administrative Appeals Tribunal Act 1975 ("the T documents") and the Applicant's Statement of Facts and Contentions.
Background
It is not in dispute that the Respondent was injured in a motor vehicle accident on 9 August 1998 (T2) and, after receiving sickness allowance from 6 May 1999 to 25 January 2001 (T2), received a lump sum settlement of his compensation claim in the sum of $300,000.00 (T4).
On 7 February 2001 the Applicant imposed a preclusion period from 9 August 1998 to 18 October 2003 and on 20 February 2001 recovered a charge amounting to $7,444.88 (T5).
Issues and Legislation
It is not in dispute that the preclusion period imposed on the Respondent by the Applicant was correctly calculated as 271 weeks being from 9 August 1998 to 18 October 2003.
However, section 1184(1) (as it then was) of the Social Security Act 1991 ("the Act") provided:
Secretary may disregard some payments
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.
The Applicant contended that no special circumstances exist in the Respondent's case to warrant disregarding any part of the Respondent's compensation payment. The Respondent contended that his circumstances were indeed special and that the decision of the SSAT, that so much of the compensation payment received by the Respondent be treated as not having been made so as to end the preclusion period on 18 October 2002, should be affirmed.
Applicant's Evidence
The Applicant relied on the T documents and the attachment to its Statement of Facts and Contentions, a copy of a letter to the Respondent from the Applicant dated 15 May 1999.
Respondent's evidence
The Respondent told the Tribunal that from his compensation settlement of $300,000.00 he received approximately $240,000.00 in his hand after payment of approximately $7,000.00 back to the Applicant, legal fees and expenses. He said he received his settlement moneys about six weeks after his case settled. He said that he first found out about the preclusion period when he inquired of Centrelink, about six weeks after his settlement, why approximately $7,000.00 of his compensation payment had been withheld. He then said that he had thought there would be some reduction in his payments from Centrelink but he did not realise he would get no payment at all.
The Respondent said that if he had known about the preclusion period he would not have gone ahead and put a deposit of $500.00 on a block of land. He said he did this about four weeks after the settlement and about two weeks before he got his money. He paid the balance of the purchase price of the land ($114,000.00) on 10 August 2001. He said he then paid approximately $1,000.00 to have house plans drawn up and in September was contacted by Masterton, the firm from whom he bought the house and land package, who requested a cheque for $9,213.00 to undertake preparation of the site for building. The Respondent said that he paid that amount and although he had told the firm that he had no money to build at that time, it went ahead with the formwork in preparation for the slab. The Respondent said that when he confirmed that he did not have the money to build at that point, the formwork was pulled up, the site levelled and the contract was terminated. He said that at that stage he had about $90,000.00 of his compensation monies left.
The Respondent said that none of his compensation money is left now and confirmed that, in addition to the block of land, he spent his compensation monies as follows:

Loan from parents $8,000.00
Loans from other family members $3,000.00
Loan from AVCO $6,000.00
Australian Taxation Office $1,500.00
Car repairs $3,000.00
Car for son $5,000.00
Stereo for son $4,000.00
Daughter's wedding $5,000.00
Motorbikes for sons $11,000.00

TOTAL $46,500.00

The Respondent also told the Tribunal that he has two outstanding loans of $29,000.00 from City Coast and $10,000.00 from Illawarra Credit Union which are being met by regular payments from mortgage insurance.
The Respondent said he currently has debts of $10,000.00 to AVCO and $5,400.00 to the ANZ Bank.
The Respondent said his wife is in receipt of carer's pension and carer's allowance and his two sons, both of whom live at home, receive disability support pension. He said his son Chad, who is 19, pays the Respondent $150.00 per fortnight for the stereo the Respondent purchased for him and his son, Lee, who is 17, pays him $50.00 per fortnight for the car that the Respondent purchased for him.
The Respondent said that his son, Chad, has had two kidney transplants and has spent much of his life in hospital. He said Chad's need for hospitalisation has meant that a car detailing business the Respondent had established in Bateman's Bay had to be sold and the family had to move to be closer to hospitals.
The Respondent said that his son, Lee, was born with mild cerebral palsy which affects his walking. He said Lee has been in some trouble with marijuana and is seeing a counsellor. He has abandoned his TAFE course.
The Respondent said his daughter, who is 25, is married and living in Dapto. He said she is "doing alright". He said he and his wife lost their first son, who would now be 25.
The Respondent said there are a number of problems with the Department of Housing accommodation he and his family currently rent for $100.00 per week. He said 70 per cent of the interior of the house has mould growing on the walls and ceilings, has flaking paint, gyprock coming away and, given the age of the house, he is concerned there may be exposed asbestos. He also complained of repairs needed to the exterior of the house and the presence of a large tree that might fall at any time. He has taken these matters up with the Department of Housing but said they are slow to respond.
The Respondent said the motor in his car has recently blown and will cost $3,000.00 to have fixed. He did concede, however, that both of his sons have cars.
The Respondent told the Tribunal that his wife had an accident in December 1999 in the backyard of their Department of Housing house, injuring her back for which she had surgery. She has since developed a liver condition. She also has severe allergies. He said the family spends approximately $100.00 per fortnight on medication and Chad's frequent hospitalisation gives rise to costs for travel and accommodation.
When asked how he proposes to build on his land, the Respondent said he is waiting on settling a workers' compensation claim and on recovering his severance pay from BHP. He also referred to his wife's legal action against the Department of Housing in respect of the injury to her back.
The Respondent said he has looked into selling his land and has found out he would be able to get $150,000.00 for it. He said he has already received two offers of $130,000.00. He said that in putting his compensation moneys into a house and land he is simply trying to make his family's life better after all they have been through.
In cross- examination the Respondent said he could not remember receiving a letter dated 15 May 1999 from Centrelink advising him that if he receives a compensation payment then some or all of the social security payments made to him may have to be paid back and he may also be stopped from receiving social security payments in the future (Attachment 1 to the Applicant's Statement of Facts and Contentions). He was also shown a copy of a request from his solicitor to Centrelink for estimates of the preclusion periods applicable to compensation settlements in the sums of $100,000.00, $150,000.00 and $200,000.00 (T6). He said his solicitor had never told him about that request or any advice from Centrelink. The Respondent was also shown a copy of a file note recording information about the preclusion period sent to the Respondent's solicitors. He said that while he was aware of the charge he had no knowledge of the preclusion period. The Respondent was also shown a file note of a conversation between a Centrelink officer and the Respondent's solicitor (T9). That file note records advice from the Respondent's solicitor that the Respondent is aware of the estimates given by Centrelink as to the length of the preclusion period, that he thought he could get disability support pension anyway, that he is buying some land and that he does not want to live off his compensation. The Respondent denied the accuracy of that advice and stated that the medication he takes for pain may have affected his memory.
Mrs Ransley's evidence
Mrs Ransley confirmed that she has a compensation claim against the Department of Housing in respect of her back injury and that it is scheduled for pre trial conference in about two weeks. She also confirmed that she receives $516.10 per fortnight in social security payments and that her son Chad receives $289.70 per fortnight in disability support pension and her son Lee receives $256.20 per fortnight in disability support pension. She also confirmed that her husband is not working and on this basis the family has a combined fortnightly income of $1061.90 per fortnight.
Mrs Ransley also said she had recently spent six weeks in hospital having various tests on her liver, some of which gave rise to complications.
consideration
The calculation of the preclusion period imposed on the Respondent is not in dispute. The combined effect of sections 17 (1) and (3) and 1165 (7), (8) and (9) of the Act is that 50 per cent of the Respondent's compensation lump sum payment ($150,000.00) is to be divided by an income cut out amount, ($552.88 at the relevant time). This yields a figure of 271, the number of weeks for which the Respondent is precluded from receiving a social security payment.
The decision of the Tribunal in Re Beadle and Director-General of Social Security (1984) 6 ALD 1 is often quoted in relation to the interpretation of "special circumstances". In that decision, the Tribunal said at ALD 3:
"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 upon 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."
The breadth of the discretion in relation to "special circumstances" was also commented on by the Full Federal Court in Riddell v Secretary Department of Social Security (1993) 42 FCR 443 at 450:
"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 whatever else may move an administrator, keeping in mind the scope and purposes of the Act, to make a decision one way or the other."

The Tribunal has no reason to doubt the evidence given by the Respondent and by Mrs Ransley in all respects save for the Respondent's recollection of advice received by him of the preclusion period.
There is ample evidence of discussions and correspondence between Centrelink and the Respondent's solicitor about the possible range of settlement figures and the likely preclusion periods to be imposed. There is also evidence of the solicitor's advice to Centrelink that the Respondent was aware of the various estimates of preclusion periods. In addition, there is the letter to the Respondent from Centrelink dated 15 May 1999 (T5) advising of the possibility of a charge and of a period of non payment of social security in the event of a compensation payment to the Respondent.
In any event, it was the Respondent's evidence that, had he known of the preclusion period at an earlier date he would not have committed himself to the purchase of a block of land. However, on his own evidence, the only commitment he made to that purchase prior to learning of the preclusion period was the payment of a $500.00 holding deposit. The balance of the purchase monies were paid by him well after the time he says he became aware of the preclusion period.
In Lukic and Secretary, Department of Social Security (1991) AATA 6944, the Tribunal said:
"The assumptions behind Part XVII are that a recipient of a lump sum payment of compensation will use a proportion, defined by statute, of that lump sum for normal living expenses, at a weekly rate equal to average male weekly earnings; and that, if it is spent in that manner, it will provide for the person's living expenses until the expiry of the preclusion period. Once the settlement money had been paid to Mr Lukic it was his to use as he chose. He chose to spend it principally on a house and a car. He still has those assets. 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."
The Tribunal considers that the view expressed by the Tribunal in Lukic (supra) has equal application to the circumstances of this case. It is not the intention of the statutory scheme that the proceeds of a compensation settlement should be used to acquire assets while receipt of social security payments continues.
There is no doubt that the Respondent and his family have suffered misfortune over the years. The medical conditions suffered by their sons, and particularly Chad, have not only caused them substantial grief but have served to disadvantage them financially by requiring a business to be abandoned in order to be closer to medical treatment. Now, Mrs Ransley has developed a condition that requires close medical attention. There is a quality of unusualness about this aspect of the Respondent's circumstances and in these circumstances it is understandable that the Respondent wishes to provide his family with a home of the standard planned by him. It is also understandable that he finds the accommodation currently provided by the Department of Housing to be substandard.
However, while the Respondent has none of his compensation moneys left now, he has a readily saleable block of land for which he has already been offered $130,000.00. He also has two cars, two motorbikes and a stereo he purchased for $4,000.00. He also has a combined household income of over $1,000.00 per fortnight. The sale of the block of land would no doubt be a disappointment to the Respondent and to his family. However, given that it is a vacant block and he does not have any funds with which to build on it at present, its loss would have none of the same practical effects as the sale of a principal home. As to the family's current accommodation, the realisation of the Respondent's relatively substantial assets would allow for the family to rent more appropriate accommodation.
On balance, the Tribunal considers that, viewed in the context of his family's history of severe health and consequential other problems, the current availability of readily realisable assets and a continuing household income mean that the Respondent's circumstances now and around the time of his settlement are not special within the meaning of section 1184 of the Act.
For these reasons the decision under review should be set aside and the original decision of the Applicant should be reinstated.
Determination
The decision under review is set aside and in substitution therefor the Tribunal decides that a preclusion period from 9 August 1998 to 18 October 2003 should be imposed on the Respondent.

I certify that the 38 preceding paragraphs are a true copy of the reasons for the decision herein of MS N P BELL
Signed:         S. Swamy           .....................................................................................
  Associate
Date of Hearing  9 May 2002
Date of Decision  27 May 2002
Advocate for the Applicant  Cheryl Collis
Representative for the Respondent        Self Represented