Re Thomas and Secretary, Department of Family and Community Services

[2003] AATA 842

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2003] AATA 842

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2003/351

GENERAL ADMINISTRATIVE DIVISION		)
Re		STEPHEN THOMAS

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Mr B J McCabe, Member

Date29 August 2003

PlaceBrisbane

Decision The Tribunal sets aside the decision under review and in substitution therefor decides that the length of the preclusion period in this case should be reduced by 12 months.

...................(Sgd)......................

B J McCabe
  Member

CATCHWORDS

SOCIAL SECURITY – benefits and entitlements – lump sum compensation payment – preclusion period – whether special circumstances exist to warrant treating all or part of the compensation monies as having not been made

Social Security Act 1991

Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Re Secretary, Department of Family and Community Services and Szoke [2001] AATA 353

Re Mazurak and Secretary, Department of Family and Community Services [2002] AATA 883
Secretary, Department of Social Security v Thompson (1994) 53 FCR 580
Re Maloney and Secretary, Department of Family and Community Services [2002] AATA 320

REASONS FOR DECISION

29 August 2003 Mr B J McCabe, Member  

Introduction

1.      Mr Stephen Thomas was injured in a motor vehicle accident on 2 May 1996. He sued for compensation and received a lump sum payment of $390,000 in settlement of his claim on 12 March 1999. He received $282,000 of that amount in his hand. The latter figure was used to calculate the length of the preclusion period during which he would be ineligible to claim benefits from the respondent. The preclusion period is set to run until 13 April 2005.

2. Mr Thomas says he spent all the money he received. He wishes to apply for Centrelink benefits, but cannot do so before 13 April 2005 unless the preclusion period is shortened. The discretion to shorten the preclusion period is contained in s 1184 of the Social Security Act 1991.. The respondent has declined to exercise the discretion, as has the Social Security Appeals Tribunal (the SSAT). Mr Thomas has now approached this Tribunal for relief.

The Material Before the Tribunal

3. The Tribunal was provided with the documents required under s 37 of the Administrative Appeals Tribunal Act 1975.. It was also provided with a document setting out the details of how Centrelink calculated the preclusion period in this case, and a copy of a letter to Mr Thomas at the time he received his settlement informing him about the preclusion period and its implications.

4.      The Tribunal heard this matter in Murgon on 22 August 2003. Mr Thomas represented himself at the hearing. Ms Wallis-Dunn represented the respondent.

The Facts

5.      Mr Thomas was injured in a motor vehicle accident on 2 May 1996. He shattered both of his arms and damaged his left knee and his back. He has plates and pins in his arms. He also contracted a staph infection and Hepatitis C while recovering from his injuries. He worked as a labourer before his accident and engaged in heavy lifting work. He says he is now unfit for that work because of his injuries, and his Hepatitis makes things worse (for example, he could not get work in the abattoirs in Murgon with an infectious disease).

6.      The applicant frankly admitted he did not spend his settlement monies wisely. He gave away large amounts to friends. When questioned how much, he said “Practically all of it”.  He paid off $50,000 in debts and agreed to pay the debts of a friend and his family who owned a spray-painting business on the Gold Coast. It was anticipated the family would move to Mackay, where the applicant was living at the time, and open a spray-painting business there. The applicant agreed to finance them into the business, and planned to become a silent partner. He also bought a house in Mackay that was big enough to accommodate him and the friend and his family. He paid $146,500 for the house and spent additional money renovating it. The arrangement came to nothing: the friend took the money and then chose not to move to Mackay, leaving the applicant with a house that was too big for one person.

7.      The applicant has now sold the house in Mackay for $139,000. He also sold his Harley Davidson motorbike for $17,000 (although he received a Triumph motorbike as part of the price). He has sold another vehicle that he bought out of the settlement; he drives the Triumph bike and a 29 year old Holden ute.

8.      The applicant is currently living alone in Proston, west of Murgon. He resides in a shed on a 100-acre property that he purchased for around $62,000 out of the proceeds of the sale of the Mackay house. He has since invested around $25,000 in water tanks and other improvements. He said he originally had ideas of working the property to become self-sufficient, but they were not well thought out. The property is not suitable for growing anything, he says. He described it as a desert. The previous owners farmed goats. They went broke. He says he regrets the purchase and he is trying to sell the property. It has been on the market for about eight months, and he is not confident of making a sale any time soon.

9.      The applicant says he has no money in the bank and no other assets. He has no other means of supporting himself and wants to receive the disability support pension.

The Legislation

10. The formula for calculating the length of the preclusion period is set out in s 1165. Section 1184 includes the discretion to treat the whole or part of a payment as not having been made (effectively shortening the preclusion period) if there are special circumstances.

11.     Kiefel J explained in Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545 that the discretion could only be exercised in cases that were clearly distinguishable from the cases of others. The circumstances must be exceptional.

12.     The fact the applicant is in difficult financial circumstances is not unusual. Most people who would be eligible for benefits but for the preclusion period are in financial difficulty. His health is poor, but that has already been taken into account in the award of damages. The difficulty here is that the applicant has not managed his finances properly. 

13.     Mr Thomas’s position has both improved and worsened since he appeared before the SSAT. It has improved in that he sold his house and his motorbike. He had access to enough cash to see him through to the end of the preclusion period. He subsequently spent a significant part of that money on a property he now admits he should not have bought. But even after that purchase, he still had in the order of $52,000 in cash at his disposal. That is gone, and he is unable to explain where it went.

14.     The Tribunal has dealt with a number of cases like this where the applicant “spent it all”. The Tribunal’s decision in Re Secretary, Department of Family and Community Services and Szoke [2001] AATA 353 merits particular attention. In that case, the Tribunal concluded the respondent:

“…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.

We are satisfied 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.”

15.     Mr Thomas has also been reckless, and he has not had regard to the consequences – even after those consequences were made clear to him at the SSAT. He is in a mess of his own making.

16. That is not the end of the matter, however. Even the foolish and the profligate must be protected in appropriate circumstances through the exercise of the discretion embodied in s 1184. Mr Thomas is marooned in the bush on his only realisable asset. He says it is difficult to sell at anything like the price he paid for it. If he leaves the property, the chances of selling it will presumably diminish even further. He is unlikely to get a job in the area. He cannot sell the vehicles – the bike is in working order but will not sell for much, and the ancient and unreliable Holden utility is presumably almost worthless. He may be the author of his own misfortune, but I am satisfied the circumstances of that misfortune set him apart from the usual run of cases, and certainly allow his case to be distinguished from cases like Szoke and Re Mazurak and Secretary, Department of Family and Community Services [2002] AATA 883.

17.     In all the circumstances, I think it is appropriate to treat a portion of the settlement monies as having not been paid so that the preclusion period is effectively reduced by 12 months. (This approach to reducing the preclusion period – starting by identifying the amount of time by which the period is to be reduced, rather than by identifying an amount of money to be disregarded – was accepted by Einfeld J in Secretary, Department of Social Security v Thompson (1994) 53 FCR 580 at 586; see also Re Maloney and Secretary, Department of Family and Community Services [2002] AATA 320). Mr Thomas should redouble his efforts to sell the property in the meantime – perhaps at a less ambitious price. He should also take steps to seek financial counselling.

Conclusion

18. Mr Thomas was an unfortunate victim of an accident. But he has subsequently made a mess of his own affairs. That is entirely his own fault. The taxpayer is entitled to be annoyed that the Commonwealth is expected to pay for Mr Thomas’s mistakes. But fault, while relevant, is not the only consideration. I am satisfied that the discretion under s 1184 ought to be exercised in this case in favour of Mr Thomas. The decision under review is therefore set aside and in substitution therefor the Tribunal decides that so much of the settlement monies be disregarded that the preclusion period is reduced in length by 12 months.

I certify that the 18 preceding paragraphs are a true copy of the reasons for the decision herein of Mr B J McCabe, Member

Signed:         Sarah Oliver
  Associate

Date of Hearing  22 August 2003 (at Murgon)
Date of Decision  29 August 2003
The Applicant appeared in person
For the Respondent                  Ms Wallis-Dunn, Departmental Advocate