Rooney and Secretary, Department of Family and Community Services

[2004] AATA 162

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 162

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          N2003/1557

GENERAL ADMINISTRATIVE  DIVISION		)
Re		Keith Rooney

Applicant

And Secretary, Department of Family and Community services

Respondent

DECISION

Tribunal Dr M E C Thorpe, Member

Date19 February 2004

PlaceSydney

Decision The Tribunal affirms the decision under review. 

[Sgd] Dr M E C Thorpe   Member

CATCHWORDS

SOCIAL SECURITY – lump sum compensation payment – compensation preclusion period – no special circumstances which warrant part or all of debt being waived – decision affirmed.

Social Security Act 1991 sections 17(3), 1184K

Re Krzywak and Secretary, Department of Social Security (1998) 15 ALD 690

Re Beadle and Director General of Social Security (1985) 7 ALD 670

Groth v Secretary Department of Social Security (1995) 40 ALD 541

REASONS FOR DECISION

19 February 2004   Dr M E C Thorpe, Member  

1.      This is an application by Mr Keith Rooney (“the Applicant”) for review of a decision of the Social Security Appeals Tribunal (“the SSAT”) dated 3 September 2003 which affirmed the decisions of an Authorised Review Officer (“ARO”) dated 28 July 2003 and a delegate of the Secretary, Department of Family and Community Services (“the Respondent”) dated 13 June 2002 to impose a lump sum preclusion period from 23 May 2002 to 4 April 2007.

2.      Mr Rooney represented himself and the Respondent was represented by Mr George Lozynsky.

3.      The issues before this Tribunal are:

(a)whether the decision to impose a lump sum preclusion period from 23 May 2002 to 4 May 2007 was correct and if so,

(b)whether there are special circumstances to warrant exercise of section 1184K of the Social Security Act 1991 (“the Act”) such that any part of the compensation paid to Mr Rooney might be disregarded, and the preclusion period reduced or not imposed.

4.      Mr Rooney initially disagreed that $350000 was the correct sum for the assessment.  In the Respondent’s Statement of Facts and Contentions it is stated that Mr Rooney had received $350000 in compensation, $50000 in relation to a compensation claim for an accident in 1997 and $3000000 for an accident in 1998. Centrelink on 4 June 2002 advised Mr Rooney that he was precluded from Centerlink payments for the period 26 June 1997 to April 1998 and that a charge was to be repaid by the Shoalhaven Council in the amount of $3658. The Respondent acceded that the sum of $50000 did not enter the equation as the repayments by Shoalhaven Council and the preclusion period from 26 June 1997 to 15 April 1998 accounted for the $50000, and thus the correct quantum for these proceedings was $300000.

5. The preclusion period was therefore determined on the basis of $300000. Under section 17(3) of the Act, 50% of the lump sum amount is assessed by the Respondent. Mr Rooney indicated that although his claim was settled for $300000, he only received $195000 and submitted that the preclusion period should be based on $195000 rather than $300000. Mr Rooney also apparently received an additional $10000 taking his receipt of payment to $205,0000. Mr Lozynsky submitted for the Respondent that the reason that 50% of the sum was assessed was to take into account those expenses already paid out to lawyers and others before the final payment was made to Mr Rooney.

6.      The Tribunal accepts the calculations of Centrelink that the preclusion period runs from 23 May 2002 to 4 April 2007.

7.      The central issue is whether the preclusion period should apply, which involves consideration of whether special circumstances exist. Mr Rooney’s evidence was that he had spent most of his settlement. This included $99000 to pay his mortgage (GE Finance), $76000 on renovations, $9657 to pay out a loan on his own car, $12500 to purchase a car for his partner and $7500 on a holiday to Tasmania. Mrs Rooney gave evidence that she had received a car and also a trip to Tasmania to which she was entitled. She considered the money spent on her should not be included in the calculation (ie it should be deducted from the $150000). Mr Rooney stated the house was to also accommodate two adult children and a grandchild. Mr Rooney had also incurred $7000 in legal costs in an effort to gain custody of his grandchild from parents who were drug addicts. Mr Rooney also emphasised the need to have a house with access for emergency personnel should he fall and be unable to get up because of injury. Later in cross examination Mr Rooney advised of a new loan of $50000 from the bank for extensions

8.      The current family income is made up of his wife’s wages of $900 per fortnight, $87.70 for his grandson’s medication and a family payment for the grandson.

9.      Mr Rooney said he is a reformed alcoholic/gambler and that he was fearful that if he had put the money in the bank he might have “blown it”

10.     Mr Rooney told the Tribunal that his special circumstances were that he his inability to work because of his back injury, his lack of education, and his injuries. He also said that he cannot apply for the Disability Support Pension (“DSP”) because of the preclusion period and that he feels that he has been “shafted” since he injured his back.

11.     Under cross examination by Mr Lozynsky Mr Rooney said that he was unable to get collaboration from Dr Ziltzer that he had a drinking and gambling problem, but that since 1979 he had ceased alcohol and only dabbled in gambling. He agreed that his legal advice had been to sell the property and not proceed with the renovations, but he had put his faith in bricks and mortar. He had been advised by his lawyers of the preclusion period but had thought it was until 2005. His two children have now moved out of his home and in fact, apart from occasional payments by his daughter, made no contribution to the family home. His wife works in a nursing home two blocks from their home. Pay slips were presented by Mrs Rooney indicating payment of $1121.55 a fortnight.

12. Mr Lozynsky submitted that a compensation pay out is intended to support a person and his family. He stated that the Act is designed so that the person not receive benefits for a reasonable period, referred to as a preclusion period, as it is intended that the person is able to live of the benefits of the compensation payment. There was no evidence to indicate that Mr Rooney had not been adequately informed about the preclusion period. There was no evidence of financial hardship; Mrs Rooney earning in excess of $1000 a fortnight, a family tax benefit of $208.60 a fortnight and $78 carer’s pension a fortnight. His two adult children no longer lived at home and do not incur any expense. The use of two cars is extravagant and the Tribunal noted that Mrs Rooney’s employ is only two blocks from the family home. Mr Rooney had gone against his own legal advice in not selling the home and it was his own responsibility that he had spent the money in the way that he had done.

13. Under section 1184K(1) of the Act whole or part of a compensation payment is treated as not having been made if it is appropriate to do so in the special circumstances of the case. The term “special circumstances” is not defined in the Act. In Re Beadle and Director General of Social Security (1985) 7 ALD 670 it was said that there must be circumstances that would distinguish a case from others, that is circumstances that are unusual, uncommon or exceptional. In Groth v Secretary Department of Social Security (1995) 23 ALD 141, “it would take something to distinguish Mr Groth’s case from others, to take it out of the usual or ordinary case… it would ofcourse follow that if one was to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary…”

14. I am satisfied that the calculation of the preclusion period 22 May 2002 to 15 April 2007 is correct. The settlement of $50000 for the 1997 is not included in the calculation as the preclusion period for this accident has already passed. The calculation is based on 50% of $300000 ie $150000. I am unable to agree with Mr Rooney’s submission that the calculation should be 50% of $205000, as there is no provision in the Act to base the calculation on the actual money received by the Applicant. The 50% provision is in the Act to allow for expenses incurred. Similarly I am unable to agree to Mrs Rooney’s request that monies spent on her car and the holiday be deducted, as they were owed to her.

15.     My task was then to examine if there were any circumstances that were “special”, that would allow whole or part of the compensation payment to Mr Rooney to be disregarded for the purposes of determining the applicable preclusion period. I will use Krzywak and Secretary, Department of Social Security (1998) 15 ALD 690 as a guideline for the exercise of discretion to consider “special circumstances”. The factors to be considered include financial hardship, legislative changes, incorrect legal advice and ill health.

Financial hardship

16.     I do not consider Mr Rooney to be suffering financial hardship. It is inequitable for the Mr Rooney to claim financial hardship when he and his wife own a house and two motor cars. His wife is working and bringing in excess of $1000 a fortnight. The fact that two adult children have lived in the house, although not at this time, and provided little financial contribution is of no concern to the Tribunal. However with the children gone, this will mean a lesser expense to maintain the home. Mr Rooney may have spent all or most of his settlement but with his current assets and wife’s income, his circumstances are not “exceptional” and certainly insufficient to justify special circumstances.

Legislative changes

17.     The legislation has not changed and is not a consideration.

Incorrect legal advice

18.     The evidence before me was that two solicitors had advised Mr Rooney to sell his property and not spend his payment on renovations. Mr Rooney did not take this advice and dismissed his solicitor. Mr Rooney’s reason for extending the house to provide better family accomodation is commendable, but the consequence, as I would believe anticipated by the solicitors, is that he was unable to reasonably afford the extensions. This decision was Mr Rooney’s alone and contrary to professional advice and I can find no incorrect legal advice on this matter.

19.     Concerning Mr Rooney’s knowledge of the preclusion period Mr Lozynsky submitted that written notice had been given on two occasions by Centrelink concerning the preclusion period. (T8, T11). Both letters were addressed to Mr Keith Rooney at his correct address. In particular Mr Rooney did not recall seeing or receiving the letter of 13 June 2002 outlining the details of the preclusion period. Mr Lozynsky submitted that the Solicitors Carol and O’Dea would have advised Mr Rooney of the preclusion period on the day of settlement. Mr Rooney thought 2005 was the end of the preclusion period. Mr Rooney’s account of the information made available to him was unsatisfactory and there is nothing before me to indicate that Mr Rooney was not properly advised and hence did not know of the preclusion period.

Ill Health

20.     It would appear that Mr Rooney’s health has remained unchanged since his settlement. He himself says that he continues to be unable to work because of the injuries caused by the accident for which he received this compensation. Centrelink then imposed a preclusion period to take into account the monies received, for the reason that equated to income. This was the correct procedure and also precludes Mr Rooney from a DSP for the preclusion period.

21.     Mr Rooney expended a considerable sum in a short period of time without giving thought to budgeting for income support. This does not, of itself, warrant access to social security benefits as he has already received compensation, at least part of it, referable to lost earning capacity.

22. I am unable to find any “special circumstances” in Mr Rooney’s case that warrant exercise of section 1184K of the Act such that any part of the compensation paid to Mr Rooney might be disregarded for the purposes of the preclusion period 23 May 2002 to 4 May 2007.

23.     The decision under review is affirmed.

I certify that the 23 preceding paragraphs are a true copy of the reasons for the decision herein of Dr M E C Thorpe, Member

Signed:         A. Krilis
  Associate

Date/s of Hearing  12 January 2004
Date of Decision  19 February 2004
Representative for the Applicant    Self
Solicitor for the Respondent          Mr George Lozynsky