Secretary, Department of Employment and Workplace Relations v Stephen Craig Lloyd
[2007] AATA 26
•18 January 2007
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2007] AATA 26
ADMINISTRATIVE APPEALS TRIBUNAL )
) No W2006/185
GENERAL ADMINISTRATIVE DIVISION ) Re SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS Applicant
And
STEPHEN CRAIG LLOYD
Respondent
DECISION
Tribunal Deputy President S D Hotop Date18 January 2007
PlacePerth
Decision The Tribunal affirms the decision under review
……...[Sgd S D Hotop]...........
Deputy President
CATCHWORDS
SOCIAL SECURITY – compensation – respondent received lump sum compensation payment – lump sum preclusion period imposed – respondent claimed disability support pension before expiration of preclusion period – special circumstances of respondent's case – appropriate to treat part of respondent's compensation as not having been made – decision under review affirmed
Social Security Act 1991 (Cth), s 1169(1), s 1170 and s 1184K(1)
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Haidar v Secretary, Department of Social Security (1998) 28 AAR 288
Re Ivovic and Director-General of Social Services (1981) 3 ALN No 61
Secretary, Department of Social Security v Smith (1991) 30 FCR 56
REASONS FOR DECISION
18 January 2007 Deputy President S D Hotop Introduction
1. On 1 April 1994 Stephen Craig Lloyd (“Mr Lloyd”), who was then aged 29 years, was injured in a motor vehicle accident and was thereby rendered a quadriplegic.
2. In February 1998 Mr Lloyd was awarded compensatory damages in the amount of $1,800,000.00 (including legal costs of $45,000.00 and an advance payment of $40,000.00). A Centrelink officer wrote to him on 5 March 1998 informing him that, because of his compensation payment, he would not be eligible to receive social security payments during the “preclusion period” from 13 January 1995 to 11 October 2035.
3. On 23 January 2006, however, Mr Lloyd applied for disability support pension (“DSP”), claiming that he was in severe financial hardship, but his application was rejected by a Centrelink officer on the ground that he was (as previously notified) not eligible to receive DSP until after 11 October 2035. The Centrelink officer’s decision was affirmed by an Authorised Review Officer (“ARO”) within Centrelink on 17 February 2006.
4. Mr Lloyd then appealed to the Social Security Appeals Tribunal (“SSAT”) and, on 31 May 2006, the SSAT set aside the decision of the Centrelink officer, as affirmed by the ARO, and instead decided that, in the special circumstances of Mr Lloyd’s case, it was appropriate to treat part of his compensation payment as not having been made to the extent that the “preclusion period” during which he was not eligible to receive DSP ended on 23 January 2006 (the date of his application for DSP).
5. The Secretary to the Department of Employment and Workplace Relations (“the Secretary”) has applied to this Tribunal for review of the SSAT’s decision.
The Issue and the Tribunal’s Determination
6. The only matter in dispute between the parties, and, therefore, the only issue for the Tribunal’s determination, is whether there are special circumstances in Mr Lloyd’s case and, if so, whether, in those circumstances, it is appropriate to treat the whole or part of his compensation payment as not having been made, thereby reducing the “preclusion period” during which he is not eligible to receive DSP.
7. For the reasons which follow, the Tribunal has determined that there are special circumstances in Mr Lloyd’s case and, in those circumstances, it is appropriate to treat so much of Mr Lloyd’s compensation payment as not having been made as would result in the “preclusion period” expiring on 23 January 2006 – that is, the date on which he applied for DSP.
The Relevant Legislation
8. Part 3.14 of the Social Security Act 1991 (Cth) (“the Act”) contains provisions regarding “compensation recovery”. Section 1169(1) provides that, in the event that a person receives a lump sum compensation payment, various forms of social security payments (including, relevantly, DSP) are not payable to that person in the “lump sum preclusion period”. The duration of that period is calculated in accordance with s 1170 of the Act.
9. There is no dispute in the present case that s 1169(1) of the Act applies and that, subject to the operation of s 1184K(1) of the Act, the “lump sum preclusion period”, calculated in accordance with s 1170 of the Act, is the period from 13 January 1995 to 11 October 2035.
10. Section 1184K(1) of the Act, however, authorises the decision maker to “treat the whole or part of a compensation payment as… not having been made” if the decision maker “thinks it is appropriate to do so in the special circumstances of the case”. The extent to which that discretionary power is exercised in a particular case will correspondingly affect the extent of the “lump sum preclusion period”, as calculated in accordance with s 1170 of the Act, in that case. A determination to treat the whole of a compensation payment as not having been made will result in there being no “lump sum preclusion period”, whereas a determination to treat part of a compensation payment as not having been made will result in the “lump sum preclusion period” being proportionately reduced.
The Evidence
11.The evidence before the Tribunal comprised:
·the “T Documents” (T1-T39) lodged by the Secretary in accordance with s 37 of the Administrative Appeals Tribunal Act 1975 (Cth);
·Exhibits A1-A5 tendered by the Secretary, and Exhibits R1-R9 tendered by Mr Lloyd; and
·the oral evidence of Mr Lloyd and Ms Carley Wicks.
The Secretary’s Case
12.The Secretary tendered in evidence:
·a bundle of documents comprising bank statements relating to various accounts in the name of Mr Lloyd (Exhibit A1);
·a bundle of documents including documents relating to investments, real estate transactions, and betting transactions entered into by Mr Lloyd, and hospital notes regarding Mr Lloyd (Exhibit A2);
·2 letters from a Certified Financial Planner to Mr Lloyd, dated 6 March 2001 and 10 August 2001 (Exhibit A3);
·table of aggregated TAB account transactions of Mr Lloyd in the period November 1997 – November 2006, prepared by the Secretary’s solicitors (Exhibit A4); and
·extract from ch 8 of the Disability Services Commission Annual Report 2005-2006 relating to the Commission’s Accommodation Support Service, Appendix 2 (Financial Statements) and Appendix 3 (Funding to External Service Providers) to the Disability Services Commission Annual Report 2005-2006, and extract from The State Housing Commission Annual Report 2005-2006 comprising Income Statements (Exhibit A5).
13. The Secretary relied on the following statement of facts, which was not disputed by Mr Lloyd, based on the T Documents and Exhibits A1-A4:
“…
3.2On 1 April 1994 Mr Lloyd was involved in a motor vehicle accident at Granny Smith Gold Mine, 15 kilometres south of Laverton. As a result of this accident Mr Lloyd suffered injuries resulting in quadriplegia.
3.3Following the accident and injury Mr Lloyd resided at the Quad Centre in Shenton Park, Perth until approximately February 1998.
3.4Between the time of his accident and the settlement of Mr Lloyd’s compensation claim Mr Lloyd received disability support pension (DSP) of $401.50 per fortnight.
3.5On 24 February 1998 Mr Lloyd settled his compensation claim for $1,800,000 inclusive of $45,000 legal costs and $40,000 of advanced compensation payments already received by him.
3.6On 5 March 1998 Centrelink made two decisions (T24, T25):
(a) to recover $31,111.10 representing DSP paid to Mr Lloyd… ; and
(b) to preclude Mr Lloyd from claiming a pension under the Act from 13 January 1995 until 11 October 2035.
3.7On 11 March 1998 Mr Lloyd deposited $809,676.61 into Town and Country Bank account number [X].
3.8On 11 March 1998 Mr Lloyd deposited $900,000 into Town and Country Bank account number [Y].
3.9An investment plan/proposal was prepared by [a Certified Financial Planner] dated 29 April 1998. Proposed investments for Lloyd Super Fund included:
$600,000 - Equity trust investments
$300,000 - Working capital
$900,000 - Total investment.
The investment plan/proposal estimated annual income from the investment to be $34,200 with an annual growth of $58,850. These figures represent 3.8% income and 5.7% growth.
3.10On 12 March 1998 Mr Lloyd withdrew $400,000 from Town and Country Bank account number [X].
3.11On 12 March 1998 Mr Lloyd invested $200,000 in Rothschild Australia Asset Management Limited…
3.12On 16 March 1998 Mr Lloyd invested $200,000 in Mercantile Mutual investor account number…
3.13 On 3 April 1998 Mr Lloyd signed a contract for the sale of land by offer and acceptance purchasing property at… Woodlands, for $260,000.
3.14On 20 April 1998 Mr Lloyd withdrew $258,000 from Town and Country Bank account number [X].
3.15Between 2 May 1998 and 6 May 1998 Mr Lloyd withdrew $600,000 from Town and Country Bank account number [Y].
3.16As at 30 June 1998 financial statements prepared for Lloyd Super Fund for the years 1998/1999 indicate members normal contribution $900,000 and a total asset position of $887,743.
3.17As of 30 June 1998 Mr Lloyd’s account balances were as follows:
$ 69,231.79 - Town and Country Bank account number [X]
$ 332,812.35 - Town and Country Bank account number [Y]
$402,044.14 - Total.
3.18Between 30 June 1998 and 23 August 1999 Mr Lloyd frequently withdrew large sums of money from investments within the Lloyd Super Fund portfolio.
3.19On 23 August 1999 [the Certified Financial Planner] wrote to Mr Lloyd detailing $251,500 of investment redemptions and commutations and expressed the concern that Mr Lloyd’s expenditure was not in accord with the expenditure planned when the investment was put together. [He] also expressed the view to Mr Lloyd that ‘if you do not slow down back to your original indicated expenditure of around $60,000 per annum, you will be in financial hardship before very long’.
3.20Between 11 November 2000 and 15 May 2002 entries were recorded in a Time and Wages book recording the provision of approximately 30 to 40 hours care per week, with payments amounts ranging from $450 to $650 (in some instances tax was taken from these amounts).
3.21Between 24 May 2002 and 10 July 2002 Mr Lloyd recorded in an Olympic Cash Receipt carbon book six separate payments of wages details as follows:
Receipt Notation
Date
Amount
2 weeks wages
24 May 2002
$1,111.00
Wages
1 May 2002
(25 May 02 + 1 June 02)
$930.00
Wages – Linda J
11 June 2002
$720.00
Wages
13 June 2002
$1,300.00
Wages – Linda J
27 June 2002
$1,240.00
Wages – Linda J
17 July 2002
$1,320.00
3.22Records prepared for Mr Lloyd for the financial year of 1999/2000 show expenditures from ANZ Bank account number… as
$136,642 - General expenditure
$ 78,485 - Cash withdrawals
$215,127 – Total.
3.23In a letter dated 10 August 2001 Mr Lloyd’s financial advisor… again wrote to him advising him in strong terms that his spending patterns would lead to financial hardship and that as such [he] could no longer continue as Mr Lloyd’s financial advisor.
3.24In September 2003 Mr Lloyd sold his property located at… Woodlands and after paying out the RAMS mortgage loan received $263,235.69 at settlement.
3.25On 8 September 2003 Mr Lloyd executed a lease for the property located at… Woodlands for a period of two years for a total rent payable of $23,767.
3.26On 17 December 2002 an officer from Centrelink visited Mr Lloyd at his home. During that visit Mr Lloyd explained to the officer that he had spent almost all of his settlement monies and had only approximately $80,000 remaining. The Centrelink officer told Mr Lloyd that he would arrange for a review of the decision with respect to Mr Lloyd’s preclusion period.
3.27On 18 October 2003 Macquarie Wrap Solutions sent correspondence to Mr Lloyd within which was included a statement of realised gains and losses, indicating $188,894.87 as net sale proceeds from the sale of securities between August 2002 and June 2003.
3.28Between 12 July 2002 and 1 February 2005 Mr Lloyd received correspondence from T.A.B. and Racing and Wagering WA about his account withdrawals and security code for the same.
3.29A variety of purchases and cash withdrawals from several bank accounts held in Mr Lloyd’s name was made between June 1998 and August 2006. An aggregation of significant transactions or frequent cash withdrawals has been produced in the following table:
Account
Number
Expenditure
Cash Out
WA T.A.B.
Davina Invest.
SkyGem
Golden West
TPI
Racing & Wagering WA
Share-Trade Withdrawals
…
40,800
900
5,430
10,030
7,680
7,042
…
35,109
900
2,880
550
950
…
22,075
300
2,880
…
170,450
950
19,550
31,120
18,720
9,244
…
149,340
1,940
9,410
600
1,650
…
18,420
…
69,150
23,989
4,430
…
31,281
…
*208,006
1,100
200
TOTALS
726,212
30,079
24,980
56,320
26,400
17,436
7,230
18,420
907,077
* card entry withdrawals
3.30On 20 April 2004 Centrelink affirmed the decision of 5 March 1998 that the preclusion period had been correctly calculated as had the amount of arrears of DSP payable (T32).
3.31On 14 December 2005 Mr Lloyd was taken by ambulance to Sir Charles Gairdner Hospital after taking an overdose of prescription drugs.
3.32On 17 December 2005 notes were made on Mr Lloyd’s [hospital] Emergency Department Continuation Notes as follows:
‘Why?: I am not going to ever commit suicide again I don’t want to do it again’.
‘Because of a girl.’
‘Helen … I was in love with her.’
‘Doesn’t want anything to do with me.’
‘I got depressed.’
‘Want: to go home.’
‘Helen and Stephen may have had a relationship … but as the money went so did the interest.’
3.33On 19 December 2005 notes were made on Mr Lloyd’s hospital Medical Social Work Notes to the effect that:
‘Patient states OD was impulsive in the context of a fight he had with his friend Helen a few days prior.’ … ‘Resentful about his OD and expressed relief that it was not successful. He states at the time he did not intend to die.’
3.34On 23 December 2005 an entry was made on Mr Lloyd’s [hospital] Inpatient Notes to the effect that:
‘Patient states that he is able to continue paying private carer and rent via private means, however, not forthcoming with details.’ … ‘Patient currently not expressing suicidal ideations but did express interest in having counselling follow up post discharge.’
3.35On 4 January 2006 an entry was made on Mr Lloyd’s [hospital] Inpatient Notes by a social worker to the effect that:
‘Discussed with patient about current mental state, patient is looking forward to going home and reports no suicidal thoughts’. …
‘Patient maintains that he is able to pay carers and rent until approximately September 06’.
3.36On 23 January 2006 Mr Lloyd completed a ‘Claim for Payments for people with disabilities, illnesses or injuries’ form received by Centrelink 23 January 2006. In that form (T33):
(a) at question 17 Mr Lloyd stated his rent for premises at $500 per fortnight;
(b) at question A5 Mr Lloyd indicated his bank account holdings as ANZ account number … balance $6;
(c) at question A9 Mr Lloyd’s shareholdings were listed as CHM 100,000 shares current market value .035 cents each (Approximate value $3,500.)”
Mr Lloyd’s Case
The evidence of Mr Lloyd
14. Mr Lloyd tendered in evidence a written statement dated 21 December 2006 (Exhibit R9) and, in his oral evidence, he confirmed that the contents of that statement are, to the best of his recollection and belief, true and correct. The contents of the statement are as follows:
"
1.I moved to my current address on 27 November 2006. Prior to that date I have been a patient at Sir Charles Gairdner Hospital since 16 March 2006.
2.I currently receive a disability support pension of $497.50 per fortnight. I rent the premises at Unit… from the organisation that provides my care, Nascha Inc, for $180 per fortnight. I believe that this is the same rent that Nascha pays to Homeswest and that it is the discounted rent charged by Homeswest to a tenant who is on a Centrelink pension or other benefit.
3.I am provided by (sic) care by Nascha Inc pursuant to and in accordance with a care plan provided by Nascha Inc to the Disability Services Commission (DSC) and for which funding has been approved and is paid by the DSC direct to Nascha Inc. The funding to Nascha Inc for my care is slightly in excess of $90,000 p.a.
4.Although my care is funded by the DSC and is provided by Nascha Inc, I am required to pay rent and otherwise fully support myself by arranging the purchase of food and other essential household items and the payment of the utilities to the Unit such as electricity, water use charges, telephone etc. I cannot shop on my own. I therefore need to ask a carer to shop for me and I provide the money to the carer for that purpose.
5.The Unit… has 2 bedrooms. I have a spare bedroom in case a carer has to stay overnight to care for me. However generally the intention is that I will live on my own and that I have a carer to visit and care for me at set times in the morning and evening for about 60 hours a week.
6.Of this total about 4 hours in the morning and 3 hours in the afternoon is allowed for the basic functions of living. Namely getting me up out of bed, toilet function, washing, dressing, feeding and being put back to bed. I need to have regular regime of sitting on the toilet until I defecate which of itself can take up to 2 hours, as I have no control over my motion. I wear a urine bag at all times and this needs to be changed twice daily. Once up and my daily toilet etc is completed, I spend my entire time in my motorised wheel chair, however it is not recommended that I spend more than about 4 to 5 hours a day in the chair as longer periods put me at risk of pressure sores.
7.My only income for the provision of my food and other basic living expenses is my Disability Support Pension of $497.50 per fortnight. I have no other income of any sort.
8.I have the following remaining personal possessions:
Item
Estimated purchase price
Estimated sale price
$
$
a) Motorised wheel chair -
7,000
0
b) Motorised bed
3,000
0
c) Hoist
4,000
0
d) TV (18 months old)
6,000
1,000
e) PDA (specialised for
me)
1,000
0
f) Stereo (5 years)
2,000
200
g) Computer (2 years)
3,000
500
h) Kitchen appliances,
including microwave
and modified special
plates, cups, etc
5,000
0
i) Washing machine (4
years old)
1,000
200
j) Table and chairs
1,000
200
k) Ornaments (I collected
dragons and I have 10
at a cost of
approximately $150
each
1,500
0
l) Clothing, bed linen, etc
unknown
0
Total
34,500
2,100.
9.Previously when I have been asked to put a value on my possessions I have given a general estimate based more on a recollection of their original purchase prices and without taking into account that I no longer have many of my possessions which I acquired following the purchase of my previous home in Woodlands. However, most important, I am now advised that my estimate of value should be primarily based on the current second hand sale price if I attempted to or was required to dispose of them. I realise that my previous estimates may have given a misleading impression and I have therefore attempted in the above table to give a more detailed breakdown of each of my remaining items and both the purchase price and my estimate of what I might get if I was forced to attempt to sell the items. I have put a nil value against my wheel chair, bed and hoist, as I don’t believe that these can be sold whilst I am alive and in need of care. Equally, I have put a nil value against my kitchen appliances, as these have been modified for my use. I do not believe that my dragons or other personal ornaments have any resale value. I believe that it would be very difficult for me to give up any of the other items that may have some resale value and that I need all the items either for myself or for my carers’ use.
10.I do not have money in the bank, any shares of saleable value, any real property or any other assets of any other type other than the personal possessions listed above.
11.I have the following debts:
Creditor
Amount
$
a) Visa card FF
30,000
b) ANZ Gold Card
40,000
c) American Express card
20,000
d) Morgan and Ludlow (sic) Estate Agents - Rental arrears
6,000
Total
96,000.
12.My only family is in NZ. I haven’t had any contact with them since I have been in hospital. It is difficult for me to telephone them in the hospital and they have relied on me to remain in contact with them. My father is retired; he was a small contractor. My sister is married with 2 kids and is a housewife. There is no prospect of financial support from my family. I do not have any friends who visit me in hospital or who would be prepared to provide me with any financial support.
13.I accept that I did not treat my damages settlement as wisely as I could have. However, I had no experience or training in handling large sums of money.
14.Before my accident I was working in the mine at Laverton. I was working long hours and earning quite good money. I earned $1,600 per week ($80,000 pa) and I spent it all on myself. I had no dependants and no commitments. At the time of my accident, I had no savings of any significance.
15.After an initial period in the Rehabilitation Hospital, I lived in the Quad Centre until my damages claim was settled. I received the disability support pension throughout this period and the majority of the pension was taken by the Quad Centre for my board. The pension paid between 1995 and 1998 was repaid in full when I received my damages settlement. When the Quad Centre learned that I had a damages claim they demanded additional payment towards the cost of my care and I received 2 payments in advance of my settlement of $20,000 each and these payments substantially went to the Quad Centre as a contribution towards my care. I found living at the Quad Centre very unpleasant and depressing and I was involved in some conflict whilst I was there. When I applied to return to the Centre following my admission to Sir Charles Gairdner Hospital in March 2006, the Quad Centre initially sought confirmation that I was in receipt of a disability support pension so that I had funds to pay the basic board charges from the pension payments and later, even when my pension was restored by the SSAT, my request to go to the Quad Centre was refused. I would in any event prefer to live on my own in the community.
16.I no longer have details of my damages settlement. However the loss of earnings component was from memory an amount of $400,000 which is less than one quarter of the total. The largest amount was for future care which was $900,000. I also received a substantial sum, comprising most of the balance, for pain and suffering and loss of amenities. I believe that I received the statutory maximum for this head of damages. It seemed very little for becoming a quadriplegic. The settlement included the amount paid to my solicitors for their costs, which was deducted from the settlement. I believe this was $45,000. I also repaid Centrelink the whole the pension that I had been paid over the previous 4 years.
17.When I received my damages settlement, it initially seemed a lot of money. I made some unwise loans to friends at the time as I had money and they were in need. I have been repaid all money lent by me except loans to a friend, Zack Ray, of $50,000 and a loan to a friend, Rick May, of $25,000. Both Zack Ray and Rick May have committed suicide. There is no prospect of recovery of these loans.
18.After my initial relief at having settled my claim and being able to live with some independence provided by the money awarded to me and after I had bought a house and had changes made to it, I realised that the money that I had received wasn’t going very far. My investment adviser advised that I would get an income of only $35,000 on the investment made of $900,000. I was spending I believe between $80,000 and $100,000 a year on my care and also obviously further amounts on my ordinary living expenses. My share portfolio run by the adviser seemed to be going down rather than up in value and his recommended share investments were not successful. I then tried to improve my returns by doing share trading, however this was not a success and I made substantial losses. I bought a farm at one stage for $300,000 because I was told by a friend that it was going for a bargain price and was a good investment. I sold the farm for the same price that I bought it. The farm was a potentially a good investment, probably my best investment, if I had had the funds to hold on to it. If I owned it now it would probably be worth 3 times what I paid for it. I do not have any specific recollection for much of the expenditure.
19.I spent money on girls for company and I would buy drinks for others if I was in a pub. I was very lonely and depressed at my condition and this was the only way I knew to have friends. I also spent money on gambling on the horses etc. I had always been a regular small time gambler before my accident and I continued this partly for something to do and always with the hope that I would strike lucky. However the money I knowingly spent on gambling, or girls, or drinks was very small compared with the money needed for my care and the losses that I suffered on share investments.
20.By late 2002 I realised that I was running out of money. I made enquiries to go back on the pension. I was told I could not. I had no choice and I continued to spend the rest of my ready money on care and living expenses. When that was about to run out, I sold my home and rented it back for 2 years and spent the balance of the proceeds of the sale on my care and living expenses. Eventually by February 2006 I had no more money left to pay for care. I had used all my funds and I had nothing left to sell. I could not obtain care from the DSC unless I was on a pension and my application for a pension was refused by Centrelink. As I would have died without care, I was taken into Sir Charles Gairdner Hospital in March 2006.
21.I am quite unable to account for all my expenditure and losses that occurred over the 8 year period from the beginning of 1998 when I settled my claim until I finally ran completely out of money in 2006. I am unable to go through my records myself; I have handed over my complete records to Centrelink and their solicitors at their request.
22.I have made a previous suicide attempt. This occurred when I was living at… Woodlands in Dec 2005. I had an argument with ex girlfriend; she told me the relationship was over. It was clear that the end of the relationship was in part because I had no more money. I was very upset and depressed and felt that my life was not worth living. I overdosed on oxycontin and diazepam. I realised this was a mistake almost immediately. I have had no further intention of again attempting suicide.
23.I remain depressed at my situation and I continue to take anti-depressants.
24.Since I was admitted to Hospital in March 2006, I have had very considerable assistance from Ms Carley Wicks the Hospital Social Worker. She has been liaising with the DSC and with Nascha Inc for a care plan and for funding for such care for me to live in the community. It has been dependant on my disability support pension being restored as, whilst now that I have expended all my own funds the DSC will fund my care providing there is a formal care plan in place, there is no provision in the budget for the cost of maintaining myself. I understand that this is the responsibility of the Commonwealth and accordingly the DSC will not provide funding for care unless there is an entitlement to a disability support pension.”
15. In cross-examination, Mr Lloyd:
·acknowledged that in March 2001 he informed his financial adviser that he wished to manage his investments himself without any further investment advice from him, and that he then assumed control of $700,000 worth of investments which he dissipated over the following 5 years;
· said that from 1998 he spent over $100,000 per year on carers;
·acknowledged that in the period from 1998 to 2006 he spent at least $100,000 on prostitutes;
·acknowledged that in the period from 1998 to 2006 he lost about $120,000 on gambling (including the sum of $50,000 which an accountant lost in betting on his behalf);
·acknowledged that when he was previously residing at the Quadriplegic Centre there had been trouble over his use of drugs and prostitutes;
·initially did not accept that his spending of his compensation moneys had been wasteful or reckless but he ultimately acknowledged that “in hindsight it was reckless”.
The evidence of Carley Wicks
16. Ms Wicks confirmed that she had signed a written statement dated 6 December 2006 and that its contents are, to the best of her knowledge and recollection, true and correct. The contents of Ms Wicks’ statement, which was tendered in evidence (Exhibit R6), are as follows:
1.
I am a duly qualified social worker and I have been employed in that position by the WA Department of Health for approximately two years. I have been employed at Sir Charles Gairdner Hospital since April 2006.
"
2.Stephen Lloyd was a patient at Sir Charles Gairdner Hospital from 16 March 2006 to 27 November 2006. During Mr Lloyd’s stay in Hospital from March 2006, I assisted him as his social worker with the particular view of finding him suitable alternative accommodation and care.
3.Mr Lloyd is a quadriplegic; he has no function in his lower limbs and only the most basic movement without strength in his upper limbs. It is immediately apparent that he cannot survive without carer support for his most basic needs.
4.Mr Lloyd was admitted to Sir Charles Gairdner Hospital with deep pressure area sores. Upon admission it became apparent that Mr Lloyd no longer had carer support or the means to pay for them. At that point he was anticipating admission to the Shenton Park Spinal Unit.
5.Mr Lloyd cannot move from or onto his bed, and he is only mobile at all when in his motorised wheel chair. However it is inappropriate for him to be placed in his wheel chair for more than a few hours a day because, if he spends longer periods in the chair, he is at risk of developing pressure sores.
6.Mr Lloyd needs to be placed on a toilet in order to defecate as an essential daily routine and he needs to have his urine bags regularly changed.
7.Mr Lloyd also needs carer support both for the provision of food and water and for the cooking of meals.
8.Care at Sir Charles Gairdner Hospital is only suitable for emergency and life saving care; it is not suitable for long term care particularly because of the cost.
9.Whilst Mr Lloyd was in Hospital he informed me that he had been evicted from his previous rented accommodation, and had arranged to put his personal items into storage. I have been heavily involved in attempting to obtain suitable accommodation for Mr Lloyd rather than to remain at Sir Charles Gairdner Hospital. My enquiries included the possibility of admission to the Shenton Park Spinal Unit and the Shenton Park Quad Centre as well as living in the community with suitable support. Mr Lloyd was assessed as unsuitable for admission to the Shenton Park Spinal Unit and was subsequently refused admission to the Shenton Park Quad Centre. Mr Lloyd had lived at the Quad Centre prior to the settlement of his damages claim and I understand that there had been some history of conflict. In any event, the most suitable alternative is for Mr Lloyd to be cared for in the community.
10.Accordingly, my major efforts have been directed at arranging the necessary care and funding for Mr Lloyd to live in the community. Disability Services Commission (DSC) Local Area Coordinator (LAC), Clare Cheney, assisted Mr Lloyd to apply for Accommodation Support and Alternatives to Employment funding through the DSC. This was approved in July 2006. As his selected service provider, Nascha Inc then prepared a Support Plan for the provision of the minimum essential care. Nascha Inc is an organisation which provides this type of care for individuals with severe physical disabilities such as Mr Lloyd in the community. The Support Plan has been approved by the WA DSC…
11.It can be seen from the Plan that the total costing is just over $90,000 p.a. The funding from the DSC is paid directly to Nascha Inc. Nascha is a non government organisation…
12.However the Accommodation Support funding from the DSC is only for care. The Alternatives to Employment (ATE) funding is a separate programme funded by the DSC. It provides opportunities for people with significant disabilities to access the local community and participate in social and skills based activities, as an alternative to paid employment. ATE funding would similarly be paid direct to an approved service provider and does not cover ordinary living expenses. It is necessary for Mr Lloyd to have his own funds to be able to rent the premises in which he would live and also to have the funds to pay for his basic necessities of food, payment of utilities etc.
13.It was only after Mr Lloyd had his disability pension restored that Nascha Inc was able to secure suitable premises from Homeswest, have them modified for Mr Lloyd’s special needs and then sub-let them to Mr Lloyd. These premises have now been acquired and made ready for Mr Lloyd at Unit…. Mr Lloyd then moved to these premises on 27 November 2006. Nascha Inc requires $180 a fortnight from Mr Lloyd for rent. Mr Lloyd’s disabilities prevent him from shopping directly for food, but he needs to provide his carers with the funds to shop for him and to buy his food and any other household items and household services such as electricity.
14.If the preclusion period is restored and Mr Lloyd no longer qualifies for a disability support pension then he will not have funds to pay his rent and buy food. That is likely to provoke a crisis which in turn is likely to require Mr Lloyd’s readmission to Sir Charles Gairdner Hospital in order for him to stay alive.
15.Centrelink has contended that Mr Lloyd continued to be wasteful of his money even after he should have realised that his own funds were running short. I am not in a position to comment on Mr Lloyd’s total spending of his damages award; however I do wish to point out that Mr Lloyd’s essential spending is far in excess of an able-bodied person. Without the support of close and willing family members, and without assistance from Government or a government assisted specialised agency, expenditure of $100,000 p.a. on the provision of carers is in my experience quite normal and necessary, and on top of that amount Mr Lloyd had to provide for his own essential needs. Furthermore, many quadriplegics can suffer from depression because of their condition and the significant change of lifestyle, as Mr Lloyd did. This can easily lead to what may be seen as otherwise unwise expenditure.
16.I am aware that Mr Lloyd was admitted to Sir Charles Gairdner Hospital in December 2005, as a result of a suicide attempt. On the basis of his statements since then and our discussions whilst he was in hospital, I do not believe that he has any present intention of attempting suicide. However, Mr Lloyd is on anti-depressant medication and there is a danger he could again see his life as without hope, particularly if he is left without funds to be able to maintain himself in the community. He would therefore be at risk mentally as well as physically if his disability support pension was terminated.
17.I have been provided with a list of what I understand to be Mr Lloyd’s only current possessions as follows:
a) Motorised Wheel Chair
b) Motorised Bed
c) Hoist
d) TV - 18 months old
e) PDA specialised for his use
f) Stereo - 5 years old
g) Computer - 2 years old
h) Kitchen appliances, micro wave, modified special plates, cups etc
i) Washing machine - 4 years old
j) Table and chairs
k) Ornaments.
18.The wheel chair and bed and hoist are all essential items, which he cannot live without. Given Mr Lloyd’s circumstances, that he is largely housebound, he is unable to partake in ordinary activities, it is difficult to expect him to live on his own in the community without a TV, PDA, stereo and computer, which for others might be regarded as discretionary items. The kitchen appliances and the specialised plate and cup, so that he can to some extent feed himself, the washing machine and the table and chairs are all essential for his carers and for any other visitors. Of all the items on the above list, only the ornaments would I regard as non-essential and, from Mr Lloyd’s description of them, they do not appear to have a commercial value.
19.In my dealings with Mr Lloyd over the last 9 months I am aware that he has only very limited contact with his family in New Zealand and that they do not appear to be in any position to assist him financially or emotionally, and I am not aware of any friends in Western Australia who are willing to provide any support for him.”
17. In her oral evidence-in-chief Ms Wicks confirmed that, as regards accommodation options for Mr Lloyd, he had previously been found to be unsuitable for admission to the Shenton Park Spinal Unit and his application for readmission to the Quadriplegic Centre had been refused in July 2006. She said that she did not regard accommodation at Sir Charles Gairdner Hospital as an option for Mr Lloyd unless there was a crisis and he was brought to the Emergency Department. She added that she had been informed by the Chief Social Worker at the Hospital that the estimated hospital “bed day cost” for Mr Lloyd was $1,000 per day. An e-mail dated 6 December 2006 from the Chief Social Worker to Ms Wicks, which contained that information, was tendered in evidence (Exhibit R7).
18. Ms Wicks also confirmed that the DSC had approved an application by Mr Lloyd for Accommodation Support Funding and Alternatives to Employment Funding, subject to the provision of a detailed support plan developed by his chosen service provider. A letter from the DSC to Mr Lloyd, dated 30 June 2006, informing him of that approval, was tendered in evidence (Exhibit R1). Ms Wicks also confirmed that Nascha Inc, Mr Lloyd’s chosen service provider, had then prepared a Roster of Support Workers for the period 24 July - 20 August 2006 and an Accommodation Support Funding Plan dated October 2006 in respect of Mr Lloyd for the purpose of obtaining funding from the DSC for Mr Lloyd. Copies of those documents were tendered in evidence (Exhibits R2 and R3).
19. In cross-examination Ms Wicks acknowledged that, despite the rejection of Mr Lloyd’s application for readmission to the Quadriplegic Centre in July 2006, it would be open to him to make a further application. She confirmed that, if Mr Lloyd obtained accommodation at the Quadriplegic Centre, the DSC Accommodation Support Funding which is presently provided to Nascha Inc could be redirected to the Quadriplegic Centre.
Analysis and Findings
20. The “special circumstances” discretionary power conferred by s 1184K(1) of the Act and its statutory predecessors has been considered in numerous decisions of the Federal Court and of the Tribunal. The tenor of those decisions is that, before it may become appropriate to exercise that discretionary power, the circumstances of the particular case must be special, in the sense of unusual, uncommon or exceptional, such that the application of the relevant “compensation recovery” provisions in Pt 3.14 of the Act will produce a result that is, in relation to the person concerned, unjust, unfair, unreasonable or otherwise inappropriate, having regard to the purpose or object of Pt 3.14 of the Act, namely, generally to preclude a person who has received compensation for incapacity from also receiving social security payments for a certain period of time: see, for example Re Ivovic and Director-General of Social Services (1981) 3 ALN No 61 at pp N96-N97; Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 3; Secretary, Department of Social Security v Smith (1991) 30 FCR 56 at 58-63; Haidar v Secretary, Department of Social Security (1998) 28 AAR 288 at 296-297.
Are there “special circumstances”, for the purposes of s 1184K(1) of the Act, in Mr Lloyd’s case?
21. The circumstances of Mr Lloyd’s case which, arguably, may constitute “special circumstances” for the purposes of s 1184K(1) of the Act chiefly relate to the state of his physical and mental health, and to his financial situation.
22. As regards the state of Mr Lloyd’s health, it is common ground that he was rendered a quadriplegic in 1994. According to the most recent medical evidence before the Tribunal – namely, the treating doctor’s report by Dr M Franklyn dated 9 January 2006 which accompanied Mr Lloyd’s application for DSP on 23 January 2006 (T33, pp 170-176) – Mr Lloyd has suffered from tetraplegia (quadriplegia) and depression since 1994, and he suffers from chronic pressure sores. The Tribunal accepts the evidence of Ms Wicks that, because Mr Lloyd “has no function in his lower limbs and only the most basic movement without strength in his upper limbs”, he “cannot survive without carer support for his most basic needs”. The Tribunal accepts Mr Lloyd’s evidence, as confirmed by the Accommodation Support Funding Plan prepared by Nascha Inc (Exhibit R3), that he requires carer support for about 60 hours per week. The Tribunal also accepts the evidence of Mr Lloyd and Ms Wicks regarding the nature of the carer support required by Mr Lloyd.
23. As regards Mr Lloyd’s present financial circumstances, the Tribunal accepts his evidence – which, the Tribunal notes, was not contradicted by the Secretary – that:
·the whole of his compensation moneys have been spent and he is now without funds;
·he has no possessions other than those listed in para 8 of his statement of 21 December 2006 (set out in paragraph 14 above);
·his only income is DSP (which has been paid to him following the decision of the SSAT on 31 May 2006);
·he has no prospect of receiving financial assistance from family members or friends;
·he has existing debts, comprising credit card debts and rental arrears, totalling $96,000, and he has no means of discharging those debts.
In the Tribunal’s opinion, absent the payment of DSP, Mr Lloyd’s financial circumstances are hopeless and he is clearly in a position of severe financial hardship.
24. The Tribunal is satisfied, and finds, that Mr Lloyd’s very unfortunate health circumstances, in particular his condition of quadriplegia and its devastating effect on his capacity to function, together with his very dire financial circumstances, are exceptionally adverse circumstances and constitute “special circumstances” for the purposes of s 1184K(1) of the Act.
Is it appropriate, in the “special circumstances” of Mr Lloyd’s case, to treat the whole, or part, of his compensation payment as not having been made?
25. The Secretary’s submission that the discretionary power conferred by s 1184K(1) of the Act should not be exercised in Mr Lloyd’s case centred on the manner in which Mr Lloyd dissipated his compensation moneys in the period 1998 - 2006, and the object of Pt 3.14 of the Act. The Secretary submitted that Mr Lloyd’s continued expenditure of his compensation moneys over the abovementioned period was “reckless and irresponsible”, and that his present financial circumstances are wholly of his own making, and that, in those circumstances, having regard to the object of Pt 3.14 of the Act – namely, to prevent “double-dipping” by ensuring that a person does not receive social security payments when that person has received payment from another source in respect of the same period of time – a favourable exercise of the discretionary power conferred by s 1184K(1) of the Act would not be appropriate in his case.
26. The Tribunal accepts – and, indeed, Mr Lloyd himself ultimately acknowledged in his oral evidence – that Mr Lloyd’s continued expenditure of his compensation moneys from 1998 – including the expenditure of large amounts thereof on prostitutes and gambling – resulting in the total exhaustion of those moneys by 2006, was “reckless”. The Tribunal also accepts that the “reckless” manner in which Mr Lloyd dissipated those moneys is a relevant factor to be considered for the purpose of determining whether it is appropriate to exercise the discretionary power conferred by s 1184K(1) of the Act in his case, although the Tribunal accepts Mr Lloyd’s submission that that factor does not of itself necessarily preclude the exercise of that discretionary power in his favour.
27. As regards the dissipation by Mr Lloyd of his compensation moneys over the period 1998 - 2006, the Tribunal notes, and accepts, Mr Lloyd’s evidence that:
·immediately before the motor vehicle accident in 1994 which rendered him a quadriplegic, he was working at a mine site earning $1,600 per week, and, because he had no dependents and no commitments, he was accustomed to spending the whole of his wages on himself and he did not have any significant savings;
·when he received his lump sum compensation payment of $1,715,000 (net) in March 1998, he had had no experience or training in handling large sums of money;
·although he obtained investment advice from a Certified Financial Planner shortly after receiving his lump sum compensation payment, and invested a substantial part of his payment in accordance with that advice, he found that the income of $35,000 pa produced by those investments was falling far short of the amount he was required to pay for carers (about $100,000 pa), and he then engaged in share trading with a view to increasing his investment income but he thereby incurred substantial losses;
·he was very depressed by reason of his physical condition, he felt very lonely, and he spent large amounts on prostitutes for company, lent large amounts to friends, and lost large amounts on gambling;
In the Tribunal’s opinion, the abovementioned considerations provide a not unreasonable explanation for Mr Lloyd’s reckless expenditure of, at least, a substantial part of his compensation moneys in the period 1998 - 2006, although they by no means provide an acceptable excuse for it. In the Tribunal’s assessment, however, those considerations mitigate the severity of the criticism that may reasonably be made of Mr Lloyd’s conduct in dissipating the whole of his compensation moneys in the period 1998 - 2006 and, accordingly, detract somewhat from the strength of the case militating against an exercise of the discretionary power conferred by s 1184K(1) of the Act in this matter.
28. Although strong criticism of Mr Lloyd’s conduct in dissipating the whole of his compensation moneys in the period 1998 - 2006 may, nevertheless, reasonably be made, the fact remains that, by 2006, Mr Lloyd was in dire financial circumstances in that he had no income, no substantial assets, and substantial liabilities which he had no means of discharging. Furthermore, because of his quadriplegia, he continued to require very substantial carer support on a daily basis for even the most basic activities of daily living, but he had no means of funding that support.
29. Having regard to the abovementioned considerations, including the object of Pt 3.14 of the Act, the Tribunal is of the opinion that, in the special circumstances of Mr Lloyd’s case (as discussed in paragraphs 21-24 above), it is appropriate to treat at least part of his compensation payment as not having been made, thereby effectively reducing the “lump sum preclusion period” (calculated in accordance with s 1170 of the Act) in his case.
What amount of Mr Lloyd’s compensation payment is it appropriate to treat as not having been made?
30. The Tribunal notes that, in Mr Lloyd’s case, the “lump sum preclusion period” commenced on 13 January 1995 and, as calculated in accordance with s 1170 of the Act , is due to expire on 11 October 2035.
31. The Tribunal accepts, on the basis of the evidence before it, that under the present arrangement, whereby Mr Lloyd is living in the community in a rented home unit with carer support provided by Nascha Inc and funded by the DSC, it is necessary for Mr Lloyd himself to provide funds for the purpose of paying for his rented accommodation, utilities, food and the other necessities of life. Mr Lloyd has been able to provide the necessary funds by reason of his receiving DSP, pursuant to the decision of the SSAT on 31 May 2006, with effect from 23 January 2006.
32. According to the evidence before the Tribunal, Mr Lloyd has been living in a home unit in the community under the abovementioned arrangement since 27 November 2006. From 16 March 2006 to 27 November 2006, Mr Lloyd was an inpatient at Sir Charles Gairdner Hospital. Prior to 16 March 2006 Mr Lloyd was living in rented accommodation from which (the Tribunal understands) he was subsequently evicted by reason of non-payment of rent.
33. The Tribunal notes that in his claim for DSP, which was lodged on 23 January 2006, Mr Lloyd indicated that, apart from household contents, his only assets were a bank account with a credit balance of $6.00 and 100,000 shares whose total market value was $3,500.00. The Tribunal also notes that, in the ARO’s Decision Statement dated 17 February 2006 (T37, pp 192-196), it is stated that the ARO had been informed by Mr Lloyd that his current liabilities comprised rent arrears of $4,000 and credit card debts totalling $57,000.
34. On the basis of the information regarding Mr Lloyd’s financial circumstances as at 23 January 2006 referred to in paragraph 33 above – which, the Tribunal notes, was not contradicted or disputed by the Secretary – it appears that Mr Lloyd was destitute as at that date. According to Mr Lloyd’s evidence – which also was not contradicted or disputed by the Secretary – his financial circumstances have subsequently deteriorated further in that, as at December 2006, his debt comprising unpaid rent in respect of his former rented accommodation had increased to $6,000 and his credit card debts had increased to a total of $90,000.
35. On the basis that, as at 23 January 2006 when he claimed DSP, Mr Lloyd was destitute and had no means of funding his essential living expenses and the substantial daily carer support which he required by reason of his quadriplegia, and, furthermore, had no prospects of improving his financial circumstances in the future, the Tribunal regards it as appropriate, in the special circumstances of Mr Lloyd’s case, to treat so much of his compensation payment as not having been made as would result in the “lump sum preclusion period” expiring on 23 January 2006 – that is, the date on which he claimed DSP.
Decision
36. For the above reasons, the Tribunal affirms the decision under review.
I certify that the 36 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President S D Hotop
Signed: ........[Sgd Y Maker].......................
AssociateDate/s of Hearing 21, 22 December 2006
Date of Decision 18 January 2007Counsel for the Applicant Mr B Dubé
Solicitor for the Applicant Sparke Helmore
Solicitor for the Respondent Mr H Christie
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