Re Secretary, Department of Family and Community Services and Szoke

[2001] AATA 353

DECISION AND REASONS FOR DECISION [2001] AATA 353

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2000/555

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

DECISION

Tribunal       Mr K L Beddoe (Senior Member) Miss AM Brennan, AM (Member)

Date1 May 2001 

PlaceBrisbane

Decision      The Tribunal sets aside the decision under review and affirms the decision of the Authorised Review Officer.          
  (Sgd) K L Beddoe
  Senior Member

Decision No: 353/2001
CATCHWORDS
SOCIAL SECURITY – sickness benefit – lump sum compensation – preclusion period – special circumstances - recklessness
Social Security Act 1991 s 1184, Part 3.14

REASONS FOR DECISION

1 May 2001    Mr K L Beddoe (Senior Member) Miss AM Brennan, AM (Member)   

1. The applicant Secretary determined a lump sum preclusion period applied to the respondent for the period 6 November 1999 to 14 April 2000 but the period was subsequently amended to end on 13 July 2001 (T27) and (T35).  Advice about the preclusion period was sent to the respondent by a letter dated 17 November 1999.

2. On 17 March 2000 an Authorised Review Officer affirmed the decision that there was a lump sum preclusion period from 6 November 1999 to 13 July 2001 (T39).  The Authorised Review Officer did not exercise the discretion to shorten the period of the preclusion period.  By a decision dated 24 May 2000 the Social Security Appeals Tribunal ("SSAT") did shorten the period by fixing the termination of the preclusion period as 19 April 2000.

3. By order dated 27 June 2000 Senior Member Beddoe made an order staying the operation of the decision of the SSAT from 27 June 2000.  By a further order dated 23 August 2000 Senior Member Beddoe revoked that order with effect from 23 August 2000 but so as not to affect the operation of the previous order for the period 27 June 2000 to 22 August 2000.

4. There is no dispute about the imposition of the lump sum preclusion period or the calculation of the period. The issue is whether this Tribunal should exercise the discretion in section 1184 of the Social Security Act 1991 ("the Act") to treat some or all of the compensation payment as not having been made to the respondent.

5. Section 1184 of the Act provides that, for the purposes of Part 3.14 of the Act, which deals with recovery and payment of compensation affected payments and in particular where a person is in receipt of a lump sum compensation payment, 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.

1. At the hearing Mr Kanowski represented the applicant and Ms Heyworth-Smith appeared for the respondent. The documents lodged in the Tribunal pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 were before the Tribunal as the T documents and further documents were tendered and marked as exhibits.  Oral evidence was given by the respondent, her daughter and Ms Britton, a registered psychologist.

2. There is no real dispute about the facts of this case but it is necessary that we set out a summary of the facts established before us.

3. The respondent was born in 1951 and until recent times resided in the greater Sydney area. She was injured in a work related incident on 5 February 1997. Thereafter she was in receipt of sickness benefits under the Act but also, eventually, became eligible for workers' compensation payments on a weekly basis at $395.70 per week. As a consequence sickness benefits were overpaid and the applicant recovered an overpayment of $352.12. By a notice dated 16 August 1999 Centrelink advised the respondent's solicitor that a preclusion period would apply in the future depending on the date of resolution of the claim for compensation. The duration of the preclusion period was stated to be for 90 weeks (T17).

4. The respondent's compensation claim was settled by commutation of weekly payments in an amount of $75,000.  Settlement was effective from 5 November 1999.

5. By letter dated 17 November 1999 the applicant advised the respondent about the lump sum preclusion period to start from 6 November 1999 and end 13 July 2001 (T24).

6. On 18 February 2000 the respondent notified Centrelink that she had no money.  That advice was confirmed in writing dated 28 February 2000 (T31) which included the following:

   "I wish to notify Centrelink that I have spent all of the $75,000 compensation money I received on 5 November 1999."

1. The respondent was unable to provide a rational explanation for her dissipation of the $75,000.  It is apparent however from her evidence that she was not used to handling money in other than relatively small periodical amounts.  She seems to have given significant amounts to members of her family, purchased jewellery, paid unexplained debts and spent money on general living at a generous rate.  In particular she spent a considerable amount on refurnishing her Department of Housing flat from which she was subsequently evicted for non-payment of rent.  That rent was fixed at $37.10 per week with the market rent being $190.  The respondent now lives with friends on a board and lodging arrangement.

2. The SSAT set out amounts of expenditure in paragraph 8 of its reasons and the respondent affirmed those details as found by the SSAT.  That listing covers about $50,000 in expenditure.  There is no explanation as to the other $25,000.  We do not know what has happened to the $25,000.  The respondent says she has nothing left but there is nothing to corroborate her evidence.  We have not been given any details as to bank accounts and have been left to speculate that the $25,000 was dissipated, if it was dissipated how that occurred and whether there are assets available to be recovered or whether the funds have been otherwise dealt with.

3. Certainly, in the light of the evidence of the respondent's daughter it is open to find that assets and money maybe held by members of the respondent's family.  Further it is likely that those assets and money can be traced back to the compensation payment.  We are satisfied that it is more likely than not, on the evidence, a significant value of goods continue to be held by members of the family that in fact either belong to the respondent or did belong to the respondent until she gifted them to members of her family.

4. The applicant's present circumstances are that she has very little money and relies on the generosity of the couple she lives with.  There are indications that that generosity may not be open-ended.

5. Exhibit 1 is a comprehensive psychological assessment by Denise Britton, Psychologist, dated 26 September 2000.  The report is addressed to Welfare Rights Centre.

6. Ms Britton found clinical and psychometric evidence of symptoms of generalised anxiety and of depression.  If she was suffering anxiety and depressive symptoms at the time when she received her compensation monies it is likely that she would be vulnerable to requests for money without understanding the consequences of giving the money away.  However Mrs Britton was unsure as to whether the depressive state was pre or post the time of receiving and dissipating the compensation payment.  She may have become anxious and depressed since realising her financial plight.  Financial strain can be a stressor expected to exacerbate a pre-existing depressive illness.

7. We note from Exhibit 2 that the Respondent has been described as having suicidal ideation in conjunction with the anxiety/depressive conditions and in association with abuse of alcohol.  We also note from Exhibit 5 that the Respondent made a deliberate decision not to participate in a return to work rehabilitation program.
   The Applicant's Contentions

8. Much of the $75,000 has not been accounted for. She has not insisted on return of assets by members of her family. This is not a case where the person was not properly informed about the lump sum preclusion period and the consequences in respect of compensation affected payments under the Act.
   The Respondent's Contentions
   The issue arises under section 1184 of the Act. This is a special circumstances case because of:

   (a)extreme financial hardship;

   (b)psychological illness, and

   (c)social conditioning

1. As to (a) the respondent's circumstances are well beyond "straitened" and should be accepted as being exceptional.  She no longer has any effective support from her family.  The expenditure of the compensation payment was frivolous rather than reckless.

2. As to (b) the respondent now suffers from depression and symptoms of generalised anxiety disorder.  She has had a substance abuse disorder (excessive consumption of alcohol).  The financial strain is likely to exacerbate her depressive illness.

3. As to (c) her social conditioning is that of a difficult life in economic terms where she had to make financial sacrifices while raising her children.  The compensation payment allowed her to redress the previous financial circumstances by allowing her to offer to her children that which she had been unable to offer previously.

4. Ms Heyworth-Smith made comprehensive submissions to the Tribunal including seeking to distinguish previous "spent it all" cases from the present case. She also sought to rely on the International Convention on Economic, Social and Cultural Rights to show that the respondent had a right to state aid and section 1184 should be used to ensure the realisation of this right.
   Consideration

5. The clear intention of the Act is that where compensation in a lump sum amount has been provided then payments under the Act are to be limited in accordance with the provisions of the Act. That is achieved by imposing a lump sum preclusion period during which compensation affected payments are not payable under the Act.

6. Contrary to the respondent's submissions the provision for payment of workers' compensation seems to be the issue relevant to the International Convention relied upon by the respondent.  If the Convention is an issue before us, which we doubt, the payment of the compensation payment might well be thought to satisfy the obligations of the Convention.

7. This matter raises the operation of section 1184 of the Act. The discretion in the section is unfettered but depends for its operation on there being special circumstances of the case

8. In this case we have been unable to find that the provisions of the Act have operated in any way which might be thought to be unintentional. We are aware that the formula applied to determine the lump sum preclusion period has been liberalised so that a lesser period of time would have been calculated in the respondent's case if the payment had been made after 1 July 2000. We are not satisfied however that a subsequent change in the law can be accepted as a special circumstance. The same situation applies to all lump sum compensation payees who received payment prior to amendment of the legislation.

9. In the ultimate the Respondent's case is that she is now impoverished by her failure to make financial provision for the lump sum preclusion period.  That was, on her own case, clearly the result of voluntary actions by the Respondent to dissipate the money received by her in settlement of her compensation claim.  She did not experience misfortune, nor did she experience circumstances not envisaged by the legislation.

10. We are satisfied that the Respondent deliberately spent the money without regard to the consequences of her action.  Her behaviour in relation to the money was reckless with no regard to the consequences.

11. Because we cannot find circumstances which would be regarded as special circumstances and because we have been left to speculate as to approximately one-third of the lump sum, ie we do not know what happened to it, we have not been satisfied that the circumstances of the Respondent's case can be described as special circumstances.  In that regard we are satisfied that Ms Heyworth-Smith made submissions which said everything that could be said in the Respondent's favour and we have given careful consideration to those submissions.

12. With respect, we do not agree with the decision of the SSAT.  That decision will be set aside and the Authorised Review Officer's decision will be affirmed.

    I certify that the 31 preceding paragraphs are a true copy of the reasons for the decision herein of Mr K L Beddoe (Senior Member) and Miss AM Brennan, AM (Member)

    Signed:         .....................................................................................
      Associate

    Date/s of Hearing  29 September 2000
    Date of Decision  1 May 2001
    For the Applicant  Mr Kanowski, Advocate
    For the Respondent                 Ms Heyworth-Smith, Counsel