Ristevski and Secretary, Department of Social Services (Social services second review)

[2017] AATA 127

Ristevski and Secretary, Department of Social Services (Social services second review) [2017] AATA 127 (3 February 2017)

Division:GENERAL DIVISION

File Number:           2016/5509

Re:Kiro Ristevski

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

Tribunal:Mrs J C Kelly, Senior Member

Date:3 February 2017

Place:Sydney

DECISION

The Tribunal sets aside the reviewable decision and remits the matter with the direction that the preclusion period is to be calculated on the basis that the lump sum compensation amount is $250,000 and there are no special circumstances within the meaning of s 1184K of the Social Security Act 1991 (Cth).

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

Mrs J C Kelly, Senior Member

CATCHWORDS

SOCIAL SECURITY – disability support pension – compensation affected payment – preclusion period – whether preclusion period correctly calculated – whether special circumstances – decision under review set aside and remitted

LEGISLATION

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

REASONS FOR DECISION

Mrs J C Kelly, Senior Member

3 February 2017

THE REVIEWABLE DECISION

1. Mr Ristevski, the applicant, has asked the Tribunal to review the decision made by the Social Services and Child Support Division of this Tribunal on 30 August 2016 (the reviewable decision).

2. The reviewable decision affirmed the decision made by an Authorised Review Officer (ARO) made on 17 May 2016 which affirmed the Department of Human Services’ (the Department) original decision made on 4 April 2016.

3. The decision under review is that:

   (a)the applicant’s claim for disability support pension was correctly rejected on the basis of his payment was subject to a compensation preclusion period from 26 September 2015 to 21 September 2018; and

   (b)there were no special circumstances for all or part of the compensation payment he received to be treated as not having been made.

   ISSUES

4. The issues in this matter are:

   (a)was the applicant’s disability support pension subject to a compensation preclusion period from 26 September 2015 to 21 September 2018; and if so,

   (b)are there special circumstances such that all or part of the compensation payment received by the applicant is to be treated as not having been made.

   BACKGROUND

5. The following findings are not contentious.

6. The applicant suffered a workplace injury on 13 April 2009 and claimed compensation.

7. On 6 April 2011, he received a lump sum payment of $26,170 which was characterised by the insurer under the relevant legislation as follows:  $16,170 for permanent impairment and $10,000 for pain and suffering.

8. The applicant claims that he and his wife separated under one roof in November 2014 and she began receiving disability support pension in November 2014. The bank statements the applicant provided show that their joint bank account closed on 13 September 2013.  The first bank statement for an account only in the applicant’s name begins on 13 December 2013.

9. On 16 June 2014, the applicant received a lump sum payment of $19,080 which was characterised by the insurer under the relevant legislation as follows: $14,080 for permanent impairment and $5,000 for pain and suffering.

10. On 28 August 2015, the Department was informed that the applicant’s claim for compensation was settled for an additional $250,000.

11. The applicant and his wife own a debt-free home that the applicant said may be worth about $700,000 to $800,000, given the values of nearby homes.

12. On 9 October 2015, the applicant received the net final settlement amount of $181,063.94.

13. The Department rejected the applicant’s claim for disability support pension on 4 April 2016. The applicant sought a review of that decision and the ARO’s decision, as set out at the beginning of this decision.

14. The applicant travelled overseas for seven weeks in 2016 to visit his parents’ grave and his sister whose husband had died.  The trip cost $7,000.  He had been back to that country ten years ago.

    SUMMARY OF THE LAW

15. The Social Security Act 1991 (Cth) (the Act) sets out a scheme to deal with what are called ‘lump sum compensation payments’ that are wholly or partly in respect of lost income or lost capacity to earn, that have been received by a person who applies for certain income support payments under the Act, including disability support payments. The Department characterised the total amount of compensation the applicant received for his workplace injury, $295,250, as a lump sum compensation payment. Consequently, the disability support pension for which the applicant applied was a “compensation affected payment” under the Act. (See ss 1169 and 17 of the Act).

16. A lump sum compensation payment generally results in a preclusion period, which is a period when a compensation affected payment, disability support pension in this case, is not payable.

17. Section 1170 of the Act prescribes the method of calculating the length of the preclusion period and the start date of that period.

18. Section 17(2) of the Act defines “compensation”. Relevantly, a payment for compensation is a payment that “is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury”.

19. Section 17(3) of the Act defines the ‘compensation part of a lump sum payment’ as 50% of the total payment if the claim was settled, or in any other case, so much of the amount as was paid in respect of lost earnings or lost capacity to earn.

20. Section 1184K of the Act allows all or part of a compensation payment to be treated as not having been made if appropriate in the special circumstances of the case.

21. The Guide to Social Security Law (the Guide) provides guidance to determine circumstances which constitute special circumstances but it is not binding on the Tribunal.

    HAS THE PRECLUSION PERIOD BEEN PROPERLY CALCULATED?

22. The Tribunal accepts that the objective of the compensation affected payment provisions of the Act is to ensure, as far as possible, that a person who receives a compensation payment for lost earnings or lost earning capacity does not also receive Social Security Income Support for the same period.

23. As the respondent states in its Statement of Facts, Issues and Contentions, a payment of arrears of periodic compensation payments is not a lump sum compensation payment (s s17(4A) of the Act).

24. The applicant argued that the lump sum he was paid in August 2015 was for arrears of his wages because he received no compensation payments in 2010 to 2011 and then he received a reduced payment until about March 2015 when his payments were increased to $673.32 a week.   

25. There are a number of difficulties in analysing the applicant’s bank statements. First, the statements that were provided do not include all the pages for the period specified and do not cover the whole period he claims that he received no compensation payments.  For example, the bank statements for the account he and his wife had in 2011 includes statements for the periods 25 May 2011 to 24 July 2011 and 25 July 2011 to 24 September 2011.  Only four of eight pages of the statement for the period 25 May 2011 to 24 July 2011 have been provided.  The last transaction shown is 1 July 2011.  Secondly, there were a number of cheques deposited into the accounts.  Their origin is not identified.  The Tribunal has taken into account regular cheque deposits for the same amount the applicant said was the amount of his compensation payment.  

26. There is no information in the settlement document before the Tribunal to indicate how the lump sum was determined. The Tribunal finds that the $250,000 was appropriately considered as a lump sum compensation payment used to calculate the preclusion period because it was a settlement and 50% of the total taken into account (s 17(3) of the Act). The Tribunal does not accept the applicant’s argument that the $250,000 lump sum should have been treated as a payment of arrears of periodic compensation.

27. The Tribunal accepts the respondent’s submission that the preclusion period commenced from the day the after the periodic payment ceased, which was 25 September 2015 based on the applicant’s bank statements.

28. The Tribunal does not accept that the legislative scheme under the Act requires or permits the amounts paid to the applicant in 2011 and 2014 to be taken into account in calculating the preclusion period. Those amounts were characterised by the insurer as being for permanent impairment and pain and suffering under the provisions of the relevant NSW legislation. The amounts were not for lost income or lost capacity to earn (s 17(2)). Those amounts should not have been included in the lump sum compensation payment for the purposes of calculating the preclusion period.

    ARE THERE “SPECIAL CIRCUMSTANCES” IN THIS CASE?

29. The applicant claimed the following were special circumstances in this case:

    ·His legal costs of approximately $70,000 were high;

    ·The payment he received was all back pay;

    ·He had to repay his children, one son and two daughters, because they had given him money, including paying out his mortgage;

    ·He has no money;

    ·He cannot afford to separate; and

    ·He has some health issues and cannot afford medications.

30. The Tribunal finds that the applicant’s evidence is unreliable for the following reasons. 

31. He told the Tribunal that he paid his son $145,000, which included $82,000 his children paid for his mortgage in 2011, and $35,000 for a car his son bought for him in 2009. However, in his letter in support for his application for internal review dated 30 May 2016, he wrote that he made out a cheque to his son for $170,000 for the expenses including approximately $38,000 for the 2009 car purchase and $80,000 for the mortgage discharge.  There is a bank cheque withdrawal for that amount from the applicant’s account on 14 October 2015.

32. First, the $25,000 difference in the amount he claimed he gave to his son is significant.  Taking into account the applicant’s financial history disclosed in the bank statements and the records relating to his accident compensation, large amounts of $145,000 and $170,000 were unusual.  The Tribunal does not accept that he would have just forgotten how much he had paid his son.

33. Secondly, transactions in the bank statements and the receipts he provided in relation to the car cause the Tribunal to doubt his evidence about his children repaying approximately $80,000 for his mortgage and his son’s purchase of the car for him in 2009.

34. The home loan statements the applicant provided show that a loan repayment of $12,000 was made on 1 June 2011. The bank statement for the joint account shows that on 1 June 2011 there was a “transfer to a/c” of $12,000.  On 26 May 2011 there had been a cheque deposit of $21,170 into the joint account.  The Tribunal finds that the $21,170 was part of the $26,170 paid by the insurer on 6 April 2011.  The Tribunal finds that the $12,000 home loan repayment was made from those funds. 

35. The balance in the home loan account after that repayment was $48,327.87.  On 1 July 2011 a loan repayment of $26,839.66 was made.  A home loan payment of $500 was also made from the joint account on that day.  On 5 July 2011 a home loan repayment of $9,000 was made and on 7 July 2011 an internet payment of $10,000 was made to the home loan.  A discharge fee of $931.26 was also paid. The bank statement for the joint account for the period from 1 July 2011 to 25 July 2011 is not before the Tribunal.

36. The Tribunal does not accept that the applicant’s children paid $80,000 towards the home loan. The applicant has not provided any contemporaneous documentation to show that they contributed funds to the home loan account.  The joint account shows regular weekly home loan payments of $500 prior to the home loan discharge. 

37. The balance in the joint account following the $500 loan repayment made on 1 July 2011 was $5,341.66.  That was the last transaction on the bank statement.  The next bank statement available to the Tribunal shows that on 25 July 2011 the balance was $13,788.59. The source of the approximately $8,000 increase is not apparent but is not consistent with income either the applicant or his wife was receiving.  He said he was not receiving compensation payments at that time and that his wife was not being paid by her employer following an injury in 2006.  He said that she received a payment of $60,000 in 2013.

38. On 8 and 9 September 2011, the sums of $5,000 and $4,000 are shown as “internet withdrawal” to an account number, which is a Commonwealth Bank in Wetherill Park, based on its BSB number.   On 7 October 2015 a sum of $5,000 was transferred from the applicant’s account to the same account.  Wetherill Park is near the applicant’s home.  Many transactions on the bank accounts were undertaken there.

39. Those transactions raise a possibility that the applicant has another bank account.  The transactions took place when the balance of the account from which they were transferred was relatively high, giving the impression that they may have been transferred to an account with a higher interest rate.

40. The applicant has not provided a receipt for the purchase of a Commodore car in 2009 for $35,000 or $38,000.  He did provide copies of two receipts from a Holden dealer in the name of his son dated 27 September 2009 for the sum of $500.  One copy appears to have had stapled to in the top left corner a small receipt for the same amount printed from a machine.   

41. The home loan account statement shows a redraw amount of $35,000 on 21 September 2009.  When the Tribunal drew the applicant’s attention to that transaction, he said that he had renovated his house.  He had new balustrades installed because they did not comply with minimum standards, the inside of the house was painted, new gutters were installed and a brand new kitchen, and the roof tiles sprayed. When the Tribunal commented that it was a lot of money to spend when he was injured, the applicant said that he did not think that he would be on compensation for long.

42. On the evidence, the Tribunal does not know whether the $35,000 was spent on renovations or a new car. However, the Tribunal does not accept that the applicant’s son paid $35,000 for a car for the applicant in 2009.

43. For the above reasons, the Tribunal does not accept that the applicant’s evidence is reliable.  It does not accept that his financial circumstances are as he claims or that various transactions were as he claims.  It accepts that a bank cheque for $170,000 was paid out of his account on 14 October 2015 but does not accept that it was paid to his son.  It does not know what happened to those funds.  The Tribunal could not understand the applicant’s evidence about the $170,000 cheque. He said that it included the $145,000 he owed his son and $25,000 for him to keep which includes his funeral expenses which he has since got back and spent when he was refused the disability support pension.

44. There are transactions in the account showing deposits into the joint account and the applicant’s account from his children from time to time, however, it does not accept that they were to assist him to live.  For example, over the years, his son has regularly deposited amounts that began as $110, and increased to $120 and are currently $130.  Those deposits were from time to time annotated “Foxtel”.  Such a payment is not essential for someone in straightened financial circumstances. 

45. There have been payments of $1,000 from his son over the years.  For example, on 14 July 2014 the applicant’s son deposited $1,000 into the applicant’s accounts with the annotation “tyres”.  However, on 21 July 2014, the sum of $21,672 was deposited into the account, which the Tribunal finds was part of the 16 June 2014 lump sum payment he received.  The applicant would have known that amount was coming to him. The Tribunal does not consider that the payment of $1,000 was essential for the applicant’s financial existence. Thereafter, there were four internet withdrawals of $5,000 from the applicant’s account.  The Tribunal does not know where those funds went. 

46. The Tribunal has taken into account that the applicant told the ARO in May 2016 that he “paid back the money he owed” after he had received the letter regarding the preclusion period but did not think it was fair.  That is, he paid his son the money after being aware of the preclusion period. The Tribunal does not accept the applicant’s evidence that he did not know about the preclusion period.

47. When the Tribunal commented that he could sell his home and rent, the applicant said that he has been paying tax for 43 years and is not going to sell his house to make somebody else rich.  He told the Tribunal that he and his wife own the home.

48. The Tribunal does not accept that the applicant’s financial circumstances are difficult because it does not accept his evidence is reliable.   

49. The Tribunal does not accept that the applicant’s legal costs were unusually high.  They included an expert report and counsel fees of almost $14,000.  The solicitor’s fees were $55,016.06.  The injury occurred in April 2009 and payment sent to the applicant by his solicitors’ on 9 October 2015. If the applicant had a complaint about those fees, he could pursue that with the solicitors or the New South Wales Law Society.

50. The applicant told the Tribunal that he takes Panadeine Forte for his back pain and another medication for a stomach complaint.  The Tribunal accepts that he has on-going pain from his back injury in 2009. He said that he has no pension card. The Tribunal does not accept on the evidence before it that he cannot afford those medications. 

51. For the above reasons, the Tribunal is not satisfied that there are special circumstances in this case such that all or part of the compensation payment the applicant received should be treated as not having been made.

52. The Tribunal sets aside the reviewable decision and remits the matter with the direction that the preclusion period is to be calculated on the basis that the lump sum compensation amount is $250,000 and there are no special circumstances within the meaning of s 1184K of the Act.

I certify that the preceding 52 (fifty -two) paragraphs are a true copy of the reasons for the decision herein of Mrs J C Kelly, Senior Member

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

Associate

Dated: 3 February 2017

Date of hearing:	19 January 2017
Applicant:	In person
Solicitors for the Respondent:	Mr A Lones, Department of Human Services