Richard McMillan and Secretary, Department of Social Services
[2015] AATA 277
•30 April 2015
[2015] AATA 277
Division GENERAL ADMINISTRATIVE DIVISION File Number
2014/5519
Re
Richard McMillan
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal The Hon. Brian Tamberlin, QC, Deputy President
Date 30 April 2015 Place Sydney The Tribunal varies the decision under review by treating $295,000 of the compensation received by the Applicant as not having been paid for the purpose of calculating the compensation preclusion period applicable. The matter is remitted to the Respondent to recalculate the preclusion period in accordance with these reasons.
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The Hon. Brian Tamberlin, QC, Deputy President
CATCHWORDS
SOCIAL SECURITY – Newstart Allowance – compensation preclusion period – whether special circumstances exist – purchase of property with son – dishonest conduct by son – whether to treat whole or part of compensation payment as not having been made –decision varied and remitted
LEGISLATION
Social Security Act 1991 (Cth) ss 17(3)(a), 1169, 1170 and 1184K
CASES
Boscolo v Secretary, Department of Social Services (1999) 90 FCR 531.
Groth and Secretary, Department of Social Security (1995) FCA 1708
Re Whittall v Secretary, Department of Social Services [2015] AATA 129.Re Dranichnikov v Centrelink (2003) 75 ALD 134.
SECONDARY MATERIALS
Guide to Social Security Law.
Second Reading Speech to the Bill introducing the Social Security Amendment Act (No 1) 1995
REASONS FOR DECISION
The Hon. Brian Tamberlin, QC, Deputy President
INTRODUCTION
This application is to review a decision of the Social Security Appeals Tribunal (SSAT) of 1 October 2014, affirming a decision that the Applicant is subject to a compensation preclusion period from 25 December 2008 to 2 August 2017.
ISSUES
The issues are whether the Applicant’s newstart allowance is subject to a compensation preclusion period, and if so whether there are any special circumstances which warrant the exercise of the discretion to disregard some or all of the compensation payments.
FACTUAL BACKGROUND
The Applicant, who is 50 years old, had a workplace injury on 21 July 2004 and was in receipt of weekly compensation payments, which ceased on 24 December 2008.
On 9 December 2008 the Applicant settled his compensation claim for $700,000. After expenses he received approximately $546,000 and a $30,000 refund from Medicare.
On 29 December 2008 the Applicant was informed that as a result of his lump sum compensation payments he was subject to a preclusion period that started on 25 December 2008 and ended 2 August 2017.
On 21 March 2014 the Applicant lodged a claim for disability support pension (“DSP”) and this was accepted by the Respondent as a provisional claim for newstart allowance.
On 2 April 2014 the Respondent rejected the Applicant’s claim for newstart allowance on the basis that he was subject to a compensation preclusion period, and on 29 April 2014 the Applicant requested a review of that decision. On 8 July 2014 an Authorised Review Officer (ARO) of the Respondent affirmed the decision that there was a preclusion period until 2 August 2017. The matter was then taken to the SSAT which affirmed the earlier decision on 2 October 2014.
The relevant provisions relating to the review by this Tribunal are to be found in the Social Security Act 1991 (Cth) (“the Act”) and the Guide to Social Security Law (“the Guide”).
After receiving the lump sum compensation payment in 2008, the Applicant repaid a $40,000 loan owing to his parents, bought a car for $24,000 and paid $295,000 towards the purchase of a house with his son (“the Property”). His son contributed $150,000 towards the purchase but the house was purchased solely in the son’s name. This was done to obtain a first home buyer’s grant. The Applicant says that he also spent an unspecified amount of money on furnishings for the house and has used the remaining funds on living expenses over the past six years. He is now fully dependent on his carer with whom he lives.
Soon after the house was purchased the relationship between the Applicant and his son deteriorated and the son claimed that the house was solely his, although later the son signed a statutory declaration acknowledging the Applicant’s interest in the house. The Applicant placed, but later removed, a caveat over the Property after the son pleaded with him to have it removed.
The statutory declaration by the son is dated 26 July 2011 and states that he is the co-owner of the Property together with the Applicant. On or about 7 November 2014 the Property sold for $505,000.
On 8 January 2015 QBE Workers’ Compensation (NSW) Ltd informed Centrelink that periodic payments to the Applicant had ceased on 18 March 2014 as a result of a Work Capacity Decision. QBE Worker’s Compensation then received an application to resolve a dispute which is to be decided in the Workers’ Compensation Commission. If he is successful, the Applicant will receive some wage payments.
At present the Applicant has no income and his partner’s only income is $700 per fortnight carer’s allowance and carer’s pension. The Applicant says that his car is now valued at approximately $2,000 and that his partner has mortgage repayments of $300 per week on a house valued at approximately $459,000, although all payments have been indefinitely suspended on the basis of financial hardship. He says that he pays $33 per month in child support.
The Applicant states that he and his partner’s household expenses are about $100 per week for groceries and $100 per month for pharmaceuticals, together with rates of $230 per month, plus electricity bills, telephone, and car registration and running expenses. He has a credit card debt owed to General Electric and a personal loan of $28,000. He has some debts to his father and a Family Tax Benefit debt which is being paid off at $25 per month.
The Applicant has been told he requires a nerve decompression operation but cannot afford it, and says that he has no money and no guarantee of receiving any money from the sale of the property. In any event, he says that he cannot afford to take legal action through the Supreme Court if his son does not give him, or is not ordered to pay him, part of the property proceeds. He has received an estimate from his solicitors that if the litigation were fought to its conclusion on a hearing it would cost somewhere between $20,000 and $50,000. The solicitor expressed the view that he had reasonable prospects of success in an action to establish a resulting trust.
ISSUE 1: Whether a compensation preclusion period should be imposed in respect of the lump sum payment received by the Applicant and if so for what period.
There is no real dispute as to the extent of the preclusion period in this case.
I am satisfied that in the present circumstances having regard to the nature and amount of the settlement that the preclusion period has been properly calculated in accordance with ss 17(3)(a), 1169 and 1170 of the Act, as detailed in the written submissions of the Respondent.
ISSUE 2: Are there grounds to allow any part of the Applicant’s compensation payment to be treated as not having been made due to the presence of special circumstances.
Under s 1184K of the Act the Respondent is given discretion if it is thought appropriate in the special circumstances of the case to treat the whole or part of a compensation payment as not having been made or as not being liable to be made.
The Act does not define the expression “special circumstances”. However, the case law indicates that to amount to special circumstances, the circumstances must be such as to distinguish the case from the usual or ordinary case. The circumstances do not need to be unique, but there must be something about them which allows them to be described as “special”. It has been said that the discretion under s 1184K is not lightly to be enlivened: see Boscolo v Secretary, Department of Social Services (1999) 90 FCR 531.
The Guide directs attention to the person’s circumstances involving considerations of ill health, limitations with respect to decision-making capacity, straitened financial circumstances, incorrect or insufficient legal advice, legislative amendment that produces an unforseen or inequitable outcomes and collapse or failure of a well-considered investment/business which was meant to generate self-supporting income. In the present case the health of the Applicant is not good but the Guide indicates that an injury in respect of which a person receives compensation cannot generally be regarded as a special circumstance.
There is no indication that the Applicant’s decision-making capacity is in anyway limited or impaired. He acquired a car, paid back a loan to his parents and purchased the property with his son.
It is clear that the Applicant’s financial circumstances are difficult but having regard particularly to the statutory declaration of his son, it seems that he has a potential claim to a significant sum in respect of the property with a reasonable prospect of success. However it is estimated that his legal costs could amount to something in the order of $50,000 which he does not have. Moreover, there can be no guarantee of success.
The Guide indicates that if compensation proceeds are used to purchase a house then special circumstances would generally not be found. According to the Second Reading Speech to the Bill introducing the Social Security Legislation Amendment Act (No 1) 1995:
“The compensation recovery provisions of the Act protect the social security system from “double dippers” – that is, those who might receive social security payments, as well as compensation for the same period…”
In Groth and Secretary, Department of Social Security (1995) 40 ALD 541 at [546] the Federal Court stated:
“The phrase “special circumstances”, it has been said, although imprecise is sufficiently understood not to require judicial gloss…it is sufficient to observe that it would require something to distinguish Mr Groth’s case from others to take it out of the usual or ordinary case. That was, I consider, the only enquiry to be undertaken in this case. It would … follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.”
The Applicant’s contention is that the discretion should be exercised under s 1184K of the Act to reduce the preclusion period due to the Applicant’s financial circumstances.
In my opinion the Applicant’s circumstances are unusual or special in that his son has repeatedly refused to honour the legal and moral obligation to his father even after signing the acknowledgement of his father’s interest in the property. This is not an occurrence which could have been reasonably predicted or anticipated. This takes the circumstances outside the ordinary or usual course of events or circumstances. In the present case, having regard to the resources of the Applicant and to the great expense, as estimated by his solicitor, of pursuing the legal action against the son, without knowing the son’s present financial resources or capacity to pay, I am satisfied that the circumstances including his financial hardship and medical problems are sufficient to amount to special circumstances within the meaning of s 1184K of the Act: cf. Re Whittall v Secretary, Department of Social Services [2015] AATA 129.
DECISION
For the reasons set out above the decision of the SSAT is varied by treating the amount of $295,000 of the Applicant’s compensation payment as not having been paid for the purposes of calculating the preclusion period applicable . I remit the matter to the Respondent for calculation of the preclusion period in accordance with these reasons.
I certify that the preceding 27 (twenty -seven) paragraphs are a true copy of the reasons for the decision herein of The Hon. Brian Tamberlin, QC, Deputy President
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Associate
Dated 30 April 2015
Date of hearing 27 January 2015 Applicant In person Solicitors for the Respondent Department of Human Services
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