Rouda and Secretary, Department of Employment and Workplace Relations
[2006] AATA 59
•27 January 2006
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2006] AATA 59
ADMINISTRATIVE APPEALS TRIBUNAL Nº V2005/574
GENERAL ADMINISTRATIVE DIVISION
Re: MARY MAHA ROUDA
Applicant
And: SECRETARY,
DEPARTMENT OF EMPLOYMENT AND
WORKPLACE RELATIONS
Respondent
DECISION
Tribunal: G.D. Friedman, Senior Member
Date: 27 January 2006
Place: Melbourne
Decision:The Tribunal affirms the decision under review.
(sgd) G.D. Friedman
Senior Member
SOCIAL SECURITY ‑ lump sum compensation ‑ preclusion period - gifts and purchase of property ‑ whether special circumstances exist
Social Security Act 1991 ss 17(1), (2), (3), 1166, 1170(1), (4), (5), 1184K(1)
Director-General of Social Servicesv Hales (1983) 47 ALR 281
Groth v Secretary, Department of Social Security (1995) 40 ALD 541Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Re Secretary, Department of Social Security and Winterbotham
(AAT 6499, 11 December 1990)
REASONS FOR DECISION
27 January 2006 G.D.Friedman, Senior Member
1. This is an application by Mary Maha Rouda (the applicant) for review of a decision of the Social Security Appeals Tribunal (SSAT) dated 9 June 2005. The SSAT affirmed a decision of an authorised review officer of Centrelink dated 18 May 2005 to refuse a claim for disability support pension (DSP) because of the imposition of a compensation preclusion period from 20 November 2004 to 13 April 2007.
2. The Tribunal received into evidence the documents lodged under s 37 of the Administrative Appeals Tribunal Act 1975 (T1-T26), as well as three exhibits (Exhibits A1- A3) lodged by the applicant.
BACKGROUND
3. On 18 November 2004 the applicant received a lump sum payment of $165,000 after suffering a work-related injury. An employer termination payment of $99,054 was also received on 24 November 2004.
4. On 23 December 2004 the applicant purchased a house in Melton South for $173,000. Settlement took place on 16 February 2005. On 3 March 2005 she lodged a claim for DSP, and because of the application of the preclusion period Centrelink refused the claim. On 18 May 2005 an authorised review officer affirmed the decision.
5. On 24 May 2005 the applicant sought review by the SSAT, which affirmed Centrelink's decision. On 28 June 2005 the applicant applied to the Tribunal for review of the SSAT decision.
6. The issues before the Tribunal are whether a compensation preclusion period applies; and whether any part of the compensation lump sum should be disregarded for the calculation of the preclusion period due to special circumstances.
EVIDENCE
7. In oral evidence Mr Rouda-Elbelah, the applicant’s husband, told the Tribunal that the applicant did not receive any correspondence from Centrelink advising her of the preclusion period. He agreed that in December 2004 she received a letter dated 24 November 2004 from her solicitor, but said that the letter was not opened until she returned from an overseas trip in February 2005, which was after the settlement of the purchase of the property. He also agreed that he had been authorised by her to control her finances and to complete the purchase of the property. However, he said that he believed the letter was in relation to solicitor’s fees, so he waited until the applicant returned before opening it. He said that if he or the applicant had known about the preclusion period they would not have proceeded with the purchase. He denied the accuracy of a file note dated 23 December 2004 (T5, pages 47 and 48) by a Centrelink officer, that recorded a telephone conversation in which Mr Rouda-Elbelah was reminded of the applicant’s compensation preclusion period.
8. Mr Rouda-Elbelah produced medical reports confirming that he and the applicant have significant medical problems, and require ongoing treatment. He noted that their son is living in the Melton South property, and they live in his house in Dallas to be near their doctors and medical facilities. Their son is to be married shortly, so they will have to move into the Melton South property. In relation to the applicant’s financial position Mr Rouda-Elbelah stated that his wife receives $92 per fortnight in carer allowance, and he receives $420 per fortnight in age pension. He stated that they pay $40 per fortnight for electricity and $30 per fortnight for gas. He noted that repayments on loans of $14,500 (two mortgages on the property totalling $12,500 and a further $2000 loan) are $175 per fortnight. He estimated that he and the applicant spend at least $120 per fortnight on medicines.
9. In respect of the Melton South property Mr Rouda-Elbelah told the Tribunal that it is now worth about $130,000, and selling it is not a feasible option because of the cost of renting another property, and the waiting list of about five years for government housing. He said that they have two motor vehicles, and one is worth about $3000 and the other is worth about $2500. He acknowledged that the applicant gave gifts of about $9200 to various people after receiving her compensation payment, but emphasised that these were a contribution to the cost of her medical treatment and accommodation when she was in Lebanon. He stated that the applicant’s children are not in a position to offer financial assistance.
CONSIDERATION OF THE ISSUES
10. Section 17(1) of the Social Security Act 1991 (the Act) provides that compensation affected payment includes disability support pension. Section 17(2) of the Act provides:
17.(2)Subject to subsection (2B), for the purposes of this Act, “compensation” means:
(a)a payment of damages; or
(b)a payment under a scheme of insurance or compensation under a Commonwealth, State or Territory law, including a payment under a contract entered into under such a scheme; or
(c)a payment (with or without admission of liability) in settlement of a claim for damages or a claim under such an insurance scheme; or
(d)any other compensation or damages payment;
(whether the payment is in the form of a lump sum or in the form of a series of periodic payments and whether it is made within or outside Australia) that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury.
11. Under s 17(3) of the Act, 50 per cent of a lump sum settlement payment is considered to be the compensation part of the payment. Section 1170 of the Act sets out the method of calculating a compensation preclusion period, which commences on the day following the last day of periodic payments (s 1170(1)(a)). Section 1170(1)(b) provides that the end of the period is calculated according to a formula by which the compensation part of the lump sum payment is divided by the income cut-out amount (s 1170(4) and (5)).
12. In reaching its decision the Tribunal takes into account the oral evidence and written material, including the submissions made by the parties.
13. The Tribunal finds that the lump sum payment of $165,000 received by the applicant included an amount for loss of earnings or loss of earning capacity, so it falls within the definition of compensation in s 17(2) of the Act. Under s 17(3) of the Act, 50 per cent or $82,500 of the lump sum settlement is considered to be the compensation part of the payment.
14. Using the formula specified in s 1170 of the Act, the Tribunal finds that the preclusion period is from 20 November 2004 to 13 April 2007. During this period DSP is not payable to the applicant.
15. Section 1184K(1) of the Act gives the decision‑maker discretion to treat the whole or part of a compensation payment as not having been made or not liable to be made, if the decision-maker thinks it is appropriate to do so in the special circumstances of the case. However, in order for the decision-maker to use this discretion, there must be something to make the case stand out from the usual or the ordinary (Groth v Secretary, Department of Social Security (1995) 40 ALD 541). In Re Beadle and Director‑General of Social Security (1984) 6 ALD 1 the Tribunal held that special circumstances must be unusual, uncommon or exceptional.
16. The Tribunal takes into account the record of the telephone conversation noted by Centrelink on 23 December 2004, and Mr Rouda-Elbelah’s statement that he has no recollection of the matter. The Tribunal also takes into account Centrelink documentation that a letter giving details of the preclusion period was sent to the applicant on 24 November 2004, and that the applicant’s solicitor sent her a similar letter on 7 December 2004. On their own admission the applicant and Mr Rouda-Elbelah received the solicitor’s letter but chose not to open it. On all the material the Tribunal is satisfied that following the settlement of the compensation claim, Centrelink and the applicant’s solicitor informed her and Mr Rouda-Elbelah of the preclusion period and the consequences of exhausting the settlement money during this period.
17. The Tribunal accepts that expenditure of the settlement money on the purchase of a house, motor vehicles and gifts, as well as living expenses, has caused the applicant to live in straitened circumstances. However, financial hardship must go beyond straitened circumstances to constitute special circumstances (Director-General of Social Servicesv Hales (1983) 47 ALR 281).
18. The Tribunal accepts that the applicant is reluctant to consider selling the house. In Re Secretary, Department of Social Security and Winterbotham (AAT 6499, 11 December 1990) the Tribunal stated:
24. The respondent contended that he was perfectly entitled to have expended his settlement moneys in providing his family with a home and no‑one, least of all this Tribunal, would dispute that. However, that is not the issue ‑ it is the fact that the respondent, having disposed of his settlement moneys, now seeks support from the community. The emotional attachment of the respondent and his wife to the family home was obvious and their reluctance even to think of selling it understandable. However, the Tribunal must take that home into account in deciding whether the respondent is in a position of exceptional financial hardship. While the respondent has assets of such value he can never be so regarded.
25. As to the submission that the respondent should not be forced to sell his house, the Tribunal would compare his position with that of another recipient of a compensation award who chooses to expend his compensation moneys on investments. Should there be any difference between one who invests his money in stocks and shares and one who invests in real estate? Neither should expect the tax‑payer to support him while he holds on to assets he could well realise and use to support himself. This is not to say that the Tribunal seeks to force the respondent to sell his house; or even recommends that course of action. It is not the Tribunal's role to do that. At the same time, the Tribunal cannot ignore the view that the selling of the house is one way by which the applicant could resolve his present difficulties. It is an evident cause of action, although not by any means the only one.
19. The Tribunal notes that the applicant and Mr Rouda-Elbelah have debts and are suffering from medical problems. The applicant is largely dependent on her husband’s social security benefits for the remaining 14 months of the preclusion period. The Tribunal does not necessarily accept Mr Rouda-Elbelah’s valuation of the property at $130,000 only 12 months after its purchase. Similarly Mr Rouda-Elbelah told the SSAT in June 2005 that the motor vehicles were valued at $8000 and $7000 respectively, so his estimate of the current valuation of the vehicles is probably too low. Even if the value of the house has fallen to about $160,000 and the combined value of the vehicles is now about $10,000 the applicant and Mr Rouda-Elbelah have realisable assets of at least $170,000.
20. There is no material before the Tribunal to suggest that other arrangements have been attempted to enable the applicant to manage financially until the end of the preclusion period. Such options might include continuing to live in her son’s home while renting out the Melton South property. Mr Rouda-Elbelah indicated that he and the applicant do not often leave their home, yet no effort has been made to sell at least one of the vehicles.
21. The Tribunal acknowledges that the applicant and Mr Rouda-Elbelah have ongoing medical needs. However the applicant did not make a reasonable effort to keep sufficient funds in reserve for living and other expenses, including medical expenses, during the preclusion period. Centrelink and the applicant’s solicitor gave clear advice to the applicant and Mr Rouda-Elbelah about the consequences of the preclusion period. After considering all relevant matters, including the combined income of $512 per fortnight, and viewing the applicant’s case in its entirety, the Tribunal is not satisfied that the matters raised by her, including her financial and medical state and those of Mr Rouda-Elbelah, are such as to make her circumstances unusual, uncommon or exceptional. Her circumstances, while difficult, are not special circumstances. Therefore, it is not appropriate for the Tribunal to exercise the discretion under s 1184K(1) of the Act, to disregard the compensation received in whole or in part.
DECISION
22. The Tribunal affirms the decision under review.
I certify that the twenty-two [22] preceding paragraphs are a true copy of the reasons for the decision of:
G.D.Friedman, Senior Member
(sgd) Lydia Zozula
Associate
Date of hearing: 17 January 2006
Date of decision: 27 January 2006
Advocate for applicant: Mr G. Rouda-ElbelahAdvocate for respondent: Ms K. Paul, Centrelink
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