Ronald Walker and Secretary, Department of Social Services

[2015] AATA 16

[2015] AATA 16  

Division	GENERAL ADMINISTRATIVE DIVISION
File Number	2014/4325
Re	Ronald Walker
APPLICANT
And	Secretary, Department of Social Services
RESPONDENT

DECISION

Tribunal	Dr M Denovan, Member
Date	14 January 2015
Place	Brisbane

The Tribunal affirms the decision under review.

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Dr M Denovan, Member

CATCHWORDS

SOCIAL SECURITY – Pensions, benefits and allowances – Age pension payment – Compensation – Statutory objectives – Affected payment – Preclusion period – Whether special circumstances – Assessment of legal expenses – Financial hardship – Decision under review affirmed.

LEGISLATION

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

CASES

Dranichnikov v Centrelink (2003) 75 ALD 134

Kulakov and Secretary, Department of Social Security (AATA 7238, 14 August 1991)

Re Beadle and Director-General of Social Security (1984) 6 ALD 1

REASONS FOR DECISION

Dr M Denovan, Member

14 January 2015

INTRODUCTION

1. The applicant, Mr Ronald Walker, was injured in a motor vehicle accident 3 May 2005.[1] He received periodic compensation and treatment from WorkCover up to and including 19 May 2006. He claimed compensation for his injures, and on 28 April 2010 his claim was settled out of court for $807,620.29. Mr Walker advised Centrelink that he received approximately $271,000.00 in June 2010.[2]

   [1] Exhibit 1, T11, page 61.

   [2] Exhibit 1, T25, page 226.

2. The Social SecurityAct1991 (Cth) (“the Act”) sets up a scheme whereby if a person receives compensation containing a component for past or future loss of income, then they must live off that compensation for a period of time. This period of time is called the “preclusion period”. The length of the preclusion period is determined by the amount of compensation received, and is set out in s 1170 of the Act. A person cannot be paid Centrelink payments during the preclusion period.

3. As a result of that lump sum payment, the respondent applied the statutory formula and determined that Mr Walker was precluded from receiving Centrelink payments until

   
   

   17 December 2015.

4. Although Mr Walker was contacted by Centrelink prior to receiving the lump sum compensation payment, and advised about the preclusion period, three months after receiving the money he claims to have exhausted all of the funds. Mr Walker applied unsuccessfully for Disability Support Pension (“DSP”) on 19 May 2011. This decision was affirmed by and Authorised Review Officer (“ARO”) on 16 June 2011, and reviewed and affirmed by the Social Security Appeals Tribunal (“SSAT”) on

   
   

   31 August 2011. On 28 March 2013 Mr Walker again lodged a claim for DSP. The claim was rejected, and affirmed by an ARO, on 6 February 2014, and by the SSAT on

   
   

   15 July 2014. He applied to this Tribunal on 19 August 2014 regarding the second DSP claim, and asks that I make a decision to the effect that the preclusion period not apply. The applicant’s claim can succeed only if I find there are special circumstances, pursuant to s 1184K of the Act.

5. It is the respondent’s position that this is not a case where there are compelling reasons to exercise the discretion to waive the preclusion period on the finding that special circumstances exist, and this care does not have any similarity to the circumstances of other cases where the discretion has been exercised.

6. It is not in dispute that the lump sum payment included a component for economic loss. The correctness of the calculation of the preclusion period is also not in dispute.

7. I have to decide whether there are special circumstances, which would allow some or all of the compensation payment to be disregarded, with the effect that the preclusion period be shortened or removed altogether.

   BACKGROUND AND EVIDENCE

8. Mr Walker is currently living with his mother and step-father. He has five children from two relationships; none of those children reside with him. He admits that, prior to receiving the lump sum payment, he was told about the preclusion period, and was aware that he would not be eligible for DSP until December 2015.

9. Mr Walker claims that at the time he spent the money he believed his then partner was going to support him when his money ran out. He relied on an oral agreement he said he had made with her. I understand the effect of that agreement was that he would buy her a car and pay for their joint expenses such as rent and utilities, and she would support him when his lump sum was exhausted. Mr Walker’s partner left him approximately eight months after he received his compensation payment. He now claims to have no money, and he claims that his mother’s relationship with her husband is strained as a result of his presence in their home. He would like to live on his own. He sees his children infrequently; he currently owes approximately $11,000.00 in child support arrears.

10. Mr Walker has not provided objective evidence to show that he received $271,000.00 of the gross lump sum of $807,620.29. To date, decision makers who have reviewed this case have noted this and chosen to assess the case on the basis that this figure is correct.

    
    

    I will do the same.

11. Mr Walker has provided no objective evidence to show how the $271,000.00 was spent. At the hearing he provided the following account of how the money was spent.

    
    

    He pre-paid his rent and electricity for six months. Four cars were purchased, two for himself. He bought himself a utility vehicle, better known as a ‘ute’, and ordered modifications that totalled $34,000.00. The total cost of the ute was $86,000.00. He also bought a 2006 Nissan Pathfinder for $50,000.00 to service his family needs. The additional two cars were for his partner and his mother, and cost $18,000.00 and $16,000.00, respectively. Approximately $7,500.00 of the compensation lump sum was utilised to buy off road vehicles for three for his children. Five thousand, five hundred dollars was spent on clothing for himself and his children; another $5,000.00 was spent on furniture, $780.00 on theme park passes for his children, $1000.00 on child support arrears, and $5,000.00 on Christmas hampers as presents for friends and family. He also spent $3,000.00 on removal costs when he briefly moved to Rockhampton, $1,000.00 on tools, and $9,000.00 on a new camper trailer.

12. Mr Walker claims his partner took the furniture and the car he bought her (which was in her name), when she left him, about eight months after he received the lump sum. He claims that he exhausted all the money within three months of receiving it, and within

    
    

    six months he swapped his two cars for others, and subsequently sold the cars as well as the children’s off road vehicles and the camper van.

13. He could not recall how much he sold most of the items for, although he did recall receiving $3,000.00 for the camper van. He said he used the money from the sales to live on, and claims there is now nothing left.

14. Mr Walker said he is currently driving a Jeep Cherokee, a gift from his mother and step-father. His mother was previously giving him $100.00 a fortnight, but she has ceased doing so since he moved in with her.

    CONSIDERATION

    Are there special circumstances?

15. The legislation relevant to this application is contained in the Act. Section 1184(1) of the Act allows the Tribunal to treat the whole or part of the compensation payment as not having been made, or not liable to be made, if it considers it is appropriate to do so in the special circumstances of the case.

16. Whilst “special circumstances” are not defined in the Act, the approach to be taken in interpretation and application of the discretionary provisions has been dealt with by the Tribunal and the Federal Court in numerous circumstances.

17. In Re Beadle and Director-General of Social Security (1984) 6 ALD 1 it was said:

    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.

18. In Dranichnikov v Centrelink (2003) 75 ALD 134 the Full Federal Court, when considering the meaning of special circumstances, observed:

    [W]hat is required will be circumstances which distinguish the case in consideration from the usual case. There will be a requirement that the circumstances are such that takes the case out of the ordinary. [4]

    [4] (2003) 75 ALD 134 at [66] per Hill, Kiefel and Hely JJ.

19. The fundamental idea is that if a person was to receive money intended for them to live on for some period of time from a compensation payment and also receive Centrelink payments, then they would effectively be “double dipping”, or being paid twice. This would not be an appropriate or responsible use of taxpayer’s resources.

20. I am not persuaded that Mr Walker’s financial circumstances are as straitened as he claims. Mr Walker’s circumstances have been reviewed several times over the last three and one half years, both at the department level, and also by the SSAT. With the exception of the cars he told me about today, the accounts of how he spent the money, as recorded in the Centrelink records and previous decisions, has not varied greatly. What has varied is the amount Mr Walker has claimed these items cost. Until this hearing he has consistently claimed the total costs of all the items he bought was $80,000.00. Today the total for the same items is approximately $190,000.00. The difference appears to be mostly explained by the two cars Mr Walker now claims to have bought for himself, not mentioned previously. Previously, Mr Walker told Centrelink he spent $10,000.00 on a car for himself.[5] In June 2011, Mr Walker claimed the money was spent on living expenses and other people “sponging off him”. No mention of a car being bought for his partner was made at that time.

    [5] Exhibit 1, T25, page 226; Mr Walker was taken to this entry during the hearing and he accepted the file note was as he advised Centrelink at the time.

21. Mr Walker has not provided any documentation or receipts to verify how the money he received was spent, despite requests from Centrelink and the SSAT for him to do so. In circumstances such as this, where there is such a large amount of money unaccounted for, and the claim is it was spend in a very short period of time, it is not enough for an applicant to point to a bank statement that shows a number of large withdrawals and a small or nil balance, and claim all funds have been used. Before I could be persuaded that Mr Walker had exhausted all of his lump sum compensation, I would need to see documentary evidence that explained how most, and preferably all, of the money was spent.

22. Mr Walker has not mentioned spending such a large amount of money on cars prior to this hearing, and no receipts or other documentary evidence, have been provided to substantiate his new claim. The possibility that the money has not been spent as he claims must be addressed before a finding that there are special circumstances in this case.

23. Even if the account of expenditure given at the hearing was correct, there is still approximately $80,000.00 of the original sum, and the money from the items Mr Walker claims have been sold, that remains unaccounted for. If Mr Walker sold his two cars, the children’s bikes and off road vehicles, and the camper van within six months of having purchased them, as he claims, there presumably was considerable residual value in those items. It was Mr Walker’s evidence that the total cost of those items collectively was approximately $150,000.00 when he purchased them, just six months prior to selling them. Exactly how much Mr Walker received for the sale of those items, and how he disposed of that money is unknown, apparently even to Mr Walker. The lack of details of how much items were sold for, or how the money received was used, raises questions of credibility of claim that the money has all been used.

24. Mr Walker’s claim that he used $20,000.00 to pay his rent and electricity in advance for six months does not add up, and no receipts have been provided to support the claim. According to Centrelink records, his rent was $340.00 per week, and was raised to $380.00 per week. He claims to have lived with his partner only, and his children visited on occasions. Even if his electricity was $1,500.00 a quarter, the total cost of rent and electricity could not have been much more than $12,000.00 for six months. This leaves another $8000.00 unaccounted for.

25. A decision to waive all or even part of a preclusion period is never made without considerable deliberation, and regard to all of the circumstances. The details of exactly how the lump sum was disposed of must be taken into account when considering special circumstances.

26. When the details of spending are vague and uncertain, such as they are in this case, the possibility that some of the lump sum has been removed from the applicant’s account and is now held in trust for the applicant must be considered. This possibility becomes more likely when a very large amount of money is disposed of in a short period of time, and no receipts or other documentation are tendered to account for how the money has been used. It is necessary to consider whether there may be assets in either the name of the applicant, or held in trust for the applicant, and in the name of others, such as friends or relatives. If so, it would normally be the case that those assets should be liquidated and the applicant live on the proceeds, prior to relying on the Australian taxpayer and the limited resources allocated to social services.

27. Proving how a lump sum has been exhausted, of course, is not enough for an applicant to be granted special circumstances. Even if Mr Walker had provided sufficient documentation for me to be able to follow the trail of his lump sum payment, and I was able to be satisfied that he had exhausted the entirety of the money in the manner consistent with his explanation, I would not find that any of the preclusion period should be waived.

28. This is because the money has not been spent in association with unusual or exceptional circumstances. Mr Walker has exhausted all of his lump sum within three months of receiving the money, because he was reckless and irresponsible, and he showed total disregard for his future. Mr Walker told me he has been in three long-term live-in relationships that have broken up. If he spent all of the lump sum because he relied upon his then partner to support him until at least December 2015, as he claims, his decision to do so was unrealistic and irresponsible. It is unfair and inappropriate to burden Australian taxpayers with the cost of Mr Walker’s living expenses, when he has received a large sum payment that was more than adequate to provide for him for until December 2015, had he acted in a responsible and reasonable manner.

29. Being fully aware that the lump sum payment he received was to last him until at least December 2015, Mr Walker spent money on items that the average tax pay would regard as indulgent. Few people in Australia own more than one car; the purchase of two cars to the total value of $138,000.00 was excessive and unnecessary. To waive the preclusion period would in effect be holding the Australian taxpayer responsible for the reckless and irresponsible spending of the applicant. It is unreasonable and unrealistic for a person to indulge on luxuries including ‘Sea World’ theme park passes, Christmas hampers to the value of $5000.00, and off road vehicles and bikes for children and then ask the Australian tax payer to pay for their living expenses.

30. Ill health, itself, does not amount to special circumstances.[6] Mr Walker has had one arm amputated. He also suffers from depression. These problems make it unlikely Mr Walker would be able to maintain full time employment. Medical problems of the nature suffered by Mr Walker are common and not exceptional for persons seeking to have a preclusion period waived so as to qualify for DSP.

    [6] Kulakov and Secretary, Department of Social Security (AATA 7238, 14 August 1991).

31. Mr Walker is fortunate that he is able to live with his mother and step-father, and that they are providing the necessities of life, as well as a car for him. Not everyone who applies for DSP is fortunate enough to have such generous family support.

32. Mr Walker’s circumstances are not, however, sufficiently unusual or exceptional to qualify as special circumstances and enliven the discretion in the Act, which would allow me to effectively shorten the preclusion period. Many people in receipt of pensions find themselves in difficult financial situations, and are also burdened by health problems. Many of those people have also been denied access to social security payments after receiving a lump sum payment. Mr Walker’s circumstances are neither unusual nor exceptional. His circumstances are not of the type which enlivens the discretionary provision of s 1184K in the Act.

    CONCLUSION

33. For these reasons I consider that there is no injustice or unfairness in Mr Walker serving the compensation preclusion period as it has been determined by the respondent, and it is not appropriate that any of the lump sum compensation payment received by him to be disregarded in calculating the preclusion period.

    DECISION

34. The Tribunal affirms the decision under review.

I certify that the preceding 34 (thirty -four) paragraphs are a true copy of the reasons for the decision herein of Dr M Denovan, Member

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Associate

Dated 14 January 2015

Date of hearing	8 December 2014
Advocate for the Applicant	Ms Isobel Coker
Solicitors for the Respondent	Jasmine Forsyth, Department of Human Services

[3] (1984) 6 ALD 1 at 3, per Toohey J, Member Wilkins and Dr Billings, Member.