Rose and Secretary, Department of Employment and Workplace Relations

[2006] AATA 642

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 642

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No  V2006/248

GENERAL ADMINISTRATIVE  DIVISION		)
Re		LYN ROSE

Applicant

And SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS  

Respondent

DECISION

Tribunal Mr John Handley, Senior Member

Date21 July 2006

PlaceMelbourne

Decision The decision under review is varied.  The sum of $4235.00 was incurred in special circumstances and should be treated as not having been made, being accommodation costs associated with treatment.  In all other respects, the decision under review is affirmed.

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Senior Member

SOCIAL SECURITY – preclusion period imposed after receipt of compensation lump sum – all monies expended before expiration of preclusion period – whether circumstances of expenditure were special – decision varied – costs of overnight accommodation associated with medical treatment were “unfair, unintended or unjust” – remainder of decision affirmed

Social Security Act 1991 (Cth) s 17(8) and s 1170 and s 1184K

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

Secretary, Department of Family and Community Services v Chamberlain (2002) 68 ALD 357

REASONS FOR DECISION

21 July 2006   Mr John Handley, Senior Member

1.      This is an application by Mrs Rose to review a decision made by the Social Security Appeals Tribunal (“SSAT”) on 9 March 2006.  The SSAT then decided to affirm a decision previously made by an officer of Centrelink to impose a compensation preclusion period between 11 November 2000 and 2 June 2006.

2.      The hearing was convened on 11 July 2006.  Mrs Rose appeared without representation and gave her evidence by telephone.  Ms Hume appeared on behalf of the Respondent.  A number of documents were referred to in evidence and will also be referred to in these reasons.

background

3.      Mrs Rose is presently 46 years of age.  She is a single mother with a 21 year old son.  She suffered severe spinal injuries on 8 September 1997 and has not subsequently worked.  Treatment has involved spinal fusion.  Weekly compensation was paid under the Workcare administration in Victoria until 10 November 2000 when proceedings previously instituted were settled in the sum of $325,000 plus party/party costs.  Solicitor/client costs were deducted from the settlement funds in the sum of $19,508.31 and Mrs Rose received $305,491.69 net.  A Release, ending the proceedings in consideration of payment of the settlement sum, was signed on the day that weekly compensation ended.  The preclusion period commenced on the following day.

4.      At the date of the hearing the preclusion period had expired and Mrs Rose was in receipt of disability support pension (“DSP”) and mobility allowance in the combined sum of $626.00 per fortnight.  Prior to the expiration of the preclusion period, all of the settlement funds had been expended.

5.      At the commencement of the preclusion period, Mrs Rose was living with her son in property owned by her father in Duke Street, Rosedale.  She and her son had previously lived elsewhere in rented accommodation but following the death of her mother and by reason of her father needing care, she and her son decided to live with him.  It was learnt from the evidence that the home in Duke Street was of eight squares only and it did not permit three persons living in it.  Mrs Rose, apparently in consideration of living in the property and by reason of her affection for her father, decided to meet payments of a personal loan taken out by her parents secured against the property.  Those payments were in the sum of approximately $300.00 per fortnight.  When the settlement funds were received, Mrs Rose decided to purchase and or constructed a “granny flat” in the backyard of the Duke Street property where her father then resided.  She also spent settlement funds on renovation of the property.  It became obvious that those domestic arrangements were unsatisfactory because of the failing health of her father and him becoming wheelchair dependent.  The property in Duke Street was eventually sold to Mrs Rose’s brother.  From the proceeds $40,000 was paid to Mrs Rose’s father being the value of the property prior to its renovation and the balance of funds were the equivalent of the monies expended by Mrs Rose on renovation and construction of the granny flat.  A net profit was not achieved.

6.      Mrs Rose purchased a larger home on five acres at Flynn’s Creek Road, Rosedale in the sum of $175,000.  She continues to reside in that property unencumbered.  She also purchased a Nissan Pathfinder motor vehicle in the sum of approximately $49,000, a motor bike and a motor car for her son and a ride on lawn mower.

7.      By these proceedings, Mrs Rose contends that her circumstances have been special and the period of preclusion should be reduced.

the legislation

8. Section 17(2) of the Social Security Act 1991 (“the Act”) provides that the monies received by Mrs Rose by way of lump sum constitute a “compensation payment”.  DSP is a “compensation affected payment” and where a person has received a “compensation payment” that person is not permitted to receive a “compensation affected payment” (in this case DSP) during a period of preclusion. A preclusion period is calculated under a formula found within s 1170 of the Act where 50 per cent of the compensation lump sum ($325,000) is divided in half and that sum is then divided by a “income cut-out amount” calculated under s 17(8) of the Act. In the present case that sum has been calculated at $552.63. That resulted in a period of preclusion of 294 weeks which expired on 30 June 2006.

9. Subsequent to that decision, Mrs Rose notified an officer of Centrelink that she incurred costs associated with her father’s death and his burial. The officer decided that those circumstances were special and also decided that the costs incurred in those circumstances should be brought into account and the preclusion period was reduced. The officer then applied, as is required to be applied in this review, s 1184K which provides that if special circumstances are found, the whole or part of the compensation payment can be treated as either not having been made or not liable to be made. The effect of this decision was to reduce the preclusion period from 30 June 2006 to 2 June 2006.

conclusion and reasons for decision

10.     Applications for review of decisions imposing a preclusion period often involve considerable emotion and financial insecurity.  In the present case, Mrs Rose is a single mother who suffered severe spinal injuries which resulted in a surgical fusion.  She is totally incapacitated and regrettably it would appear that that condition will remain indefinitely.  She continues to have treatment which requires frequent travel to Melbourne to see specialists.  The cost of treatment and some travel expenses continue to be met by Workcover.  She continues to consume considerable pain killing and other medication.

11. On the other hand, decisions imposing preclusion periods require a comprehension of applicable legislation and the reminder, inherent by the legislation, that the policy intent has been that persons who receive lump sum compensation payments are not permitted to receive Commonwealth pensions for a period of time calculated by a formula within the Act. That policy intent apparently reflects an intention to preserve or protect the public purse upon claims made by persons who have received compensation from an employer’s insurer.

12.     On occasions, there are persons who incur expenses or costs which allegedly occur in “special circumstances” and for which the preclusion period should be eliminated or reduced.  Accordingly, enquiry needs to be made of those circumstances to determine whether they are “special”.

13.     Her Honour, Kiefel J in the Federal Court decision of Groth v Secretary, Department of Social Security (1995) 40 ALD 541 (“Groth”) at 545, discussed (paragraph 12) the concept of “special circumstances” and decided:

. . . for present purposes 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 of course 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.

14.     Her Honour also considered the concept of “special circumstances” in a later decision of Secretary, Department of Family and Community Services v Chamberlain (2002) 68 ALD 357 where she adopted her conclusions from “Groth” and also considered whether application of the applicable legislation might result in “inappropriateness”.

15.     Accordingly in this review, I will consider whether the expenditure by Mrs Rose arose out of circumstances which were either “unfair, unintended or unjust” and whether application of the legislation would be “inappropriate”.

mother’s headstone

16.     It was learnt at the hearing that Mrs Rose expended the sum of $4943.78 on construction and installation of a headstone over her mother’s grave subsequent to receipt of settlement funds.  Mrs Rose’s mother died on 13 July 1999 being approximately 18 months prior to the settlement of the compensation proceedings.  Mrs Rose said that she did not have funds at that time to provide a headstone but did so when funds became available.  It was contended that those costs were similar in nature to the costs incurred by her in the burial of her father which had been regarded by an officer of Centrelink as being a special circumstance.

17.     Whilst I readily acknowledge the emotion associated with such costs, the monies expended on Mrs Rose’s mother’s headstone may be distinguished from the monies expended on her father’s funeral.  Mrs Rose’s father died after settlement funds were received and his death and the associated expenses were certainly unintended.  Those expenses could also be described as being unforeseen or unexpected.  The headstone cost associated with Mrs Rose’s mother is, in my view, in the nature of choice made by her.  Mrs Rose said that she did not seek to have her father meet those costs, despite his offer to do so, because she was of the view that when her mother died her father “lost his will to live” and she did not want him to incur those expenses.  It was learnt at the hearing that Mrs Rose does have a number of brothers and sisters and the cost of the headstone could, in the circumstance, have been met in whole, or part, by one or some of the other siblings.

18.     On balance, I am not of the view that those expenses constitute a “special circumstance”.

motor vehicle

19.     Prior to receipt of settlement funds, Mrs Rose owned a Fairlane motor vehicle but it was unsatisfactory because, having regard to the nature of her injury and her spinal fusion, she was required to bend and stoop to get into it and was also uncomfortable to drive.  A Nissan Pathfinder motor vehicle was purchased in the sum of approximately $49,000.  It is a “mid range” four wheel drive vehicle but significantly, Mrs Rose does not need to bend or stoop to take up a seated position as the driver.  Mrs Rose said that she did inspect other vehicles before deciding to purchase the Nissan Pathfinder but was deterred because of advice concerning the reliability of some vehicles.  Other vehicles did not have sufficient height from roadway to accommodate her injuries and/or were not of sufficient size to permit transportation by her of herself, her son, her father and her dogs.

20.     It is to be noted that Mrs Rose does live in rural Victoria without access to public transport.  A motor vehicle is a necessity, no less because of the frequency of her having to travel to Melbourne for medical treatment.  In this regard she said that the motor vehicle purchased offered her a degree of comfort she did not enjoy from her former vehicle.  Purchase of a vehicle in that sum, particularly when the settlement sum would have taken into account the vicissitudes of life, could not be regarded as a “special circumstance” because such a purchase would not be “unjust” nor would strict application of the legislation be regarded as being “inappropriate”.

purchase of motor bike and motor car for aaron

21.     Mrs Rose spent monies on purchase of a motor bike for her son and a motor car, the latter of which cost $7000.00.  The motor bike was expressed by her as a gift in acknowledgement of Aaron caring for both herself and her father in his lifetime.  That purchase and the consequent expenditure of funds could not be regarded as being a “special circumstance”.

22.     The purchase of the motor car was to permit Aaron to travel to work consequent upon him obtaining an apprenticeship as a boilermaker in Maffra which is 40 minutes from the home at Flynn’s Creek Road.  Aaron apparently is also required to attend work sites at Yarram, also being a considerable distance from home.  There is an absence of public transport and he can not attend work or visit work sites other than by his own private vehicle.

23.     Parents do have obligations to their children extending of course to provision of food and clothing, accommodation, education, medical and sporting type expenses to name a few.  None of those expenses could be regarded as being “special”.  Could provision of a motor car, in the circumstances in which Mrs Rose and her son found themselves, be regarded as being “special”.  On balance and after some deliberation I have concluded that that expenditure could not be regarded as a circumstance characterised as being “special”.

24.     On the one hand the relative isolation of the home where Mrs Rose and Aaron live and the absence of public transport, dictate that the provision of a motor vehicle is a necessity.  Additionally, the distance required to travel to the workplace to engage in the apprenticeship (which will ultimately produce a tradesman’s certificate) also dictates that private motor vehicle transport is a necessity.  Aaron, as a teenager, would not have had the capacity to borrow and it was acknowledged by Mrs Rose that part of her sentiment in provision of the motor car was associated with his care for her and her father in his lifetime.  On balance it could not be said that the expenditure of $7000.00 on the motor car was something which was “unfair” or “unjust” so as to permit part of the settlement sum as being regarded as not “having been made”.  Additionally, I think the need for a motor car was a “special circumstance” of Aaron, not of Mrs Rose.

real estate at duke street and flynn’s creek road

25.     Monies were spent by Mrs Rose over the Duke Street property being repayment of a personal loan incurred by her parents, renovation of the home and the cost of construction of a granny flat.  That property was transferred to Mrs Rose on 14 September 2000 (T‑documents, page 116) and was eventually sold by her to one of her brothers.  In evidence, Mrs Rose said that the purchase price was the equivalent of the sum paid by her to her father as purchase price ($40,000) and the costs of renovation and construction of the granny flat.  That is to say, there was no net profit.  She said that she sold it to her brother at that price (despite her belief that a greater price could have been achieved on the selling market) in order to restore or improve her relationship with him.  Sadly that has not occurred.  However the expenditure over that property has not incurred a loss.  Although a profit was not achieved, Mrs Rose did choose to sell it at a price lower than market value.  The absence therefore of profit over the property is not a “special circumstance”.

26.     Equally, I am not satisfied that the purchase of the home at Flynn’s Creek Road can be regarded as a “special circumstance”.  It would appear that the property in Duke Street was far too small to adequately house and accommodate Mrs Rose and her son, it being of eight squares only.  Indeed there was evidence that Mrs Rose and her son occupied the same bedroom, such was the limited nature of the accommodation.  Additionally, access to the house was denied to her father, when he became dependant upon a wheelchair, unless other persons were available to lift him into the home.

27.     The property at Flynn’s Creek Road is described as being adequate for her present needs and because of the five acres of land attached to it, Mrs Rose is able to agist two horses owned by her.  The property is unencumbered and has increased in value.  It was said by Mrs Rose that the land is largely unproductive and income could not be earned from it.

28.     Mrs Rose said that she decided to purchase a property, rather than rent ,because that would have resulted in depletion of her capital funds.  It would appear that the purchase has been a wise investment because of its increased value, despite the selling market currently being depressed.  However there is no present intention of selling the property and moving elsewhere with the intention of achieving a profit.

29.     It could also be argued that purchase, during the preclusion period with its consequent depletion of a large proportion of the settlement funds, was imprudent.  Renting would have allowed compensation funds to be retained.

30.     In all of the circumstances, the choice to purchase that property and the consequent depletion of settlement funds could not be regarded as being something “unfair, unintended or unjust”.  Accordingly, the circumstances associated with the purchase of that property could not be regarded as “special”.

legal costs

31.     The Workcover proceedings were settled in the sum of $325,000 plus costs.  At page 101 of the T‑documents is a copy of a statement from Mrs Rose’s solicitors which records that $19,508.31 was deducted from settlement funds and retained by the solicitor as solicitor/client costs.  The statement specifically records that that sum has been deducted by the solicitor in addition to the party/party costs recovered from the Defendant.  Mrs Rose said that she regarded the sum deducted in solicitor/client costs as being excessive, but did not challenge that sum.  There is no evidence in these proceedings that that sum was (as a matter of law) excessive.  Mrs Rose has, or had rights, to challenge the sum withheld by the solicitor as solicitor/client costs but did not exercise those rights.

32.     In the absence of such a challenge, I could not regard that sum as a “special circumstance”.  If there was a challenge and the amount of costs could be justified, the costs would be an amount associated with the litigation and would not be “unfair or unjust”.  Alternatively, if the amount withheld was found to be excessive, Mrs Rose would be entitled to a refund.

33.     On balance therefore, I am unable to find that the amount of solicitor/client cost is a “special circumstance”.

knowledge of preclusion period

34.     Mrs Rose said in evidence that she did not know that she was precluded from receiving DSP until August 2002 when she received a letter from Centrelink (T14) and had discussions with an officer of Centrelink (T13).  At that time she queried her entitlements to a pension or other benefit because she learnt of another person who had received a compensation lump sum and had not been precluded from receipt of benefits.

35.     However, the T‑documents contain (at page 44), a copy of a letter forwarded to Mrs Rose on 15 November 2000, five days after settlement, advising of cancellation of parenting payment that was then being received and pension not being available until 30 June 2006.  On the same day Centrelink wrote to Mrs Rose’s solicitors specifically notifying of the preclusion period, the method of calculation of it and the duration of it.

36.     Mrs Rose said that she had no recollection of the letter to her from Centrelink of 15 November 2000 and had no recollection of being advised by her solicitors of the preclusion period either before or after settlement.  Additionally, she said she had no recollection of the solicitors forwarding the letter that had been sent to them on 15 November 2000, although, she did say, consistent with her unhappiness at the amount of solicitor/client costs deducted from her settlement funds, that she rang her solicitors and demanded that her file be given to her.  Mrs Rose said that the file was duplicated and provided to her shortly after settlement.  The file would have contained both letters of 15 November 2000.  Perusal of the file would have given notice or awareness of the preclusion period.

37.     I would acknowledge that memory of events of November 2000 would now be imprecise.  Additionally, Mrs Rose said that she settled against the advice of her solicitors who were of the opinion that a greater sum could be obtained.  Mrs Rose said that she firmly held the belief at that time that she would be able to return to the work force and earn income within 12 months.  Because of that belief and her wish to end the proceedings, she settled without negotiation.

38.     In all of the circumstances, I am satisfied that in November 2000, Mrs Rose was informed of the preclusion period.  Whether she comprehended it and its economic significance, I am unable to say.  Additionally, I am unable to say whether, even if she did comprehend the effect of the preclusion period, that it would have made any difference to the expenditure by her of the settlement funds.  It would not be unreasonable to assume that being denied Commonwealth benefits until June 2006 had little significance at November 2000 when there was a belief of being able to return to the work force within 12 months.

medical, travel and accommodation costs

39.     Subsequent to the day of settlement, Mrs Rose has remained entitled to the costs of treatment and most travel costs to Melbourne.  Despite almost nine years having passed since the date of injury, Mrs Rose does frequently travel to Melbourne for treatment which, on occasions, has required adjustment of devices used for nerve stimulation or pain relief.  On some occasions medication is administered which prevents her from returning home on the same day of travel.  On those occasions, Mrs Rose has remained in Melbourne overnight which has incurred cost.  The Workcover insurer will not pay those costs unless there is an overnight hospital admission.

40.     Accordingly, I am of the view that some of those costs should be regarded as arising out of “special circumstances”.  That is to say, incurring costs associated with accommodation (and th inability to recover them) involved expenditure of settlement funds which was “unfair” and “unintended” and “unjust”.  They are costs arising in circumstances “which distinguishes Mrs Rose’s case from others”.  If Mrs Rose lived in Melbourne or the Insurer did not deny liability for those costs, she would not have incurred them.

41.     These matters arose towards the end of the hearing where estimates only of the costs were provided.  Mrs Rose did not have documentation.  She said that on the occasions that she stayed overnight it was at a motel in Hawthorn which charged approximately $110.00 per night and the number of occasions where she would stay overnight would be between six and eight occasions per annum.

42. I am therefore satisfied and find that the sum of $4235.00 should be regarded under s 1184K of the Act as not having been made, being calculated at an average of seven occasions per year where accommodation costs has been incurred at an average of $110.00 per night in the five and a half years between November 2000 and June 2006.

43.     In all other respects the decision under review should be affirmed.

I certify that the 43 preceding paragraphs are a true copy of the reasons for the decision herein of:
Mr John Handley, Senior Member

Signed:         .....................................................................................
  Personal Assistant

Date of Hearing  11 July 2006
Date of Decision  21 July 2006
Solicitor for the Applicant          Self Represented
Departmental Advocate            Ms J Hume