Secretary, Department of Families, Housing, Community Services and Indigenous Affairs and Pino Vecchi

[2012] AATA 346

[2012] AATA 346 

Division	GENERAL ADMINISTRATIVE DIVISION
File Number	2011/4119
Re	Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
APPLICANT
And	Pino Vecchi
RESPONDENT

DECISION

Tribunal	Mr S. Webb, Member
Date	8 June 2012
Place	Canberra

The decision under review is set aside. In the special circumstances of Mr Vecchi's case, it is appropriate to treat part of his compensation payment as not having been made with the effect of ending the lump sum compensation preclusion period on 15 August 2011.

..............................[sgd]...................................

Mr S. Webb, Member

SOCIAL SECURITY – compensation payment – lump sum preclusion period – issues of credit – effects of childhood abuse – special circumstances – appropriate to exercise discretion – nature of discretion – no discretion to temporarily suspend preclusion period – decision set aside

Social Security Act 1991 ss 17, 1169, 1170, 1184K

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

Re Secretary, Department of Social Security and Winterbotham [1990] AATA 6499

REASONS FOR DECISION

Mr S. Webb, Member

8 June 2012

1. Pino Vecchi was employed in the painting trade until he fell at work and injured his back. He claimed and was paid compensation. He used a substantial part of the lump sum he obtained to purchase a house, in which he resides. Mr Vecchi arranged for repairs and renovation work to be done and committed his remaining compensation monies to that purpose. The money is gone, but the work is not completed.

2. Two months after settling his compensation claim, Mr Vecchi applied for a Disability Support Pension (DSP). His claim was rejected as he is subject to a lump sum preclusion period during which DSP is not payable. Mr Vecchi asked for the preclusion period to be reduced. Initially, this request was rejected. On review, the Social Security Appeals Tribunal (SSAT) decided to suspend the preclusion period for the period of two years. The Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs has applied for review of this decision.

3. It is necessary, at this point, to note that a number of the documents in evidence contain Mr Vecchi’s personal information detailing bank account numbers and taxation information. During the hearing, under s 35 of the Administrative Appeals Tribunal Act 1975 (Cth), I ordered that this information is not to be published and access to it is to be confined to officers and representatives of the Applicant, to Mr Vecchi and his representatives, and to officers and members of the Tribunal for the purposes of these proceedings.

4. The matter arises under the Social Security Act 1991 (Cth). Many of the key facts are not in dispute. I have considered the evidence and make the following findings.

5. There is unchallenged evidence that Mr Vecchi was abused as a child. The psychological effects of the abuse are ongoing. His education suffered and he has significant difficulties with literacy, numeracy and comprehension. Prior to injury, Mr Vecchi managed the psychological effects of the abuse by engaging in physical activities, including work in the building industry and body-building activities.

6. On 4 February 2008, Mr Vecchi fell and injured his back while working as a painter. He was 35 years old. He required spinal fusion surgery. As a result, he suffers from chronic pain in his lower back and referred pain in his legs, primarily on the right. He has reduced range of motion in his spine. The medical evidence establishes that he has an incapacity for physical work and his previous occupation as a painter is not suitable employment for him.

7. Mr Vecchi claimed compensation and was paid periodic weekly payments of compensation until 14 December 2010[1]. Negotiations for a lump sum settlement of his compensation claim ensued. Estimates of the applicable lump sum preclusion period were provided to Mr Vecchi, through his solicitor, John McGuire of Slater and Gordon, on 28 August 2009[2] and 14 December 2010[3]. On 16 December 2010 his claim for lump sum compensation was settled in the amount of $498,500[4].

   [1] T9 folio 55.

   [2] T5 folio 43.

   [3] T7 folio 45.

   [4] T8 folio 49.

8. Applying s 1170(1), Mr Vecchi is subject to a ‘lump sum preclusion period’ that commenced on 15 December 2010.

9. On 15 December 2010 the ‘income cut-off’ amount was $789.10. Applying this amount and ss 17(3), 1170(4) and (5), the preclusion period end date is 27 December 2016.

10. On 24 December 2010, Centrelink sent notice of the preclusion period to Mr Vecchi at his nominated address in Yugura Street, Malua Bay[5]. The notice set out the start and end dates of the preclusion period and stated that “During this period you are not able to receive income support from Centrelink”. In this context Mr Vecchi was invited to contact Centrelink for further information about the preclusion period or to make an appointment with a Financial Information Service Officer and avail himself of Centrelink’s financial advice service. Mr Vecchi did not contact Centrelink in response to the notice.

    [5] T11 folio 57.

11. Notice of the preclusion period was also sent to Mr Vecchi’s solicitor[6]. Mr McGuire has stated that information concerning the preclusion period was provided to Mr Vecchi and that Mr Vecchi appeared to understand the implication of being precluded from Centrelink payments[7]. Mr Vecchi disputes this.

    [6] T12 folio 59.

    [7] ST6 folio 192.

12. On or about 18 January 2011, Mr Vecchi paid a deposit against the purchase of a house in Boondi Street, Malua Bay for $389,000. The purchase was settled on 15 February 2011[8].

    [8] T13 folios 61-62; T 19 folios 114-115 refer.

13. On 14 February 2011 Mr Vecchi contacted Centrelink in order to claim a DSP. On 23 February 2011, he signed a DSP claim form, but this was not formally lodged until 2 March 2011[9]. The claimed was rejected[10].

    [9] T14 and T15.

    [10] T18 folio 111.

14. On 14 March 2011 Mr Vecchi wrote a letter to Centrelink “to appeal the decision of the Preclusion Period”, asserting that “[a]t the time of the [compensation] settlement I was never informed of a ‘Compensation Preclusion Period’”[11]. Among other documents, Mr Vecchi provided Centrelink with copies of bank statements for an ANZ Access Advantage Account in his name covering the period from 27 January 2011 to 15 March 2011[12]. He did not provide bank statements for an ANZ Online Saver Account he held at this time[13].

    [11] T19 folio 113.

    [12] T19 folios 116-130; also see ST9.

    [13] ST8.

15. On 18 March 2011 a Centrelink officer found no special circumstances and affirmed the decision to impose a preclusion period ending on 27 December 2016[14]. Mr Vecchi asked for the matter to be referred to an Authorised Review Officer (ARO)[15]. The ARO heard Mr Vecchi’s concerns, but found no special circumstances and affirmed the decision[16].

    [14] T20, T21 and T23.

    [15] T22.

    [16] T24 and T25.

16. The matter progressed to the SSAT. On 15 August 2011, the SSAT set aside the decision and decided to suspend the preclusion period for two years[17].  Mr Vecchi was paid DSP from 14 October 2011. This is presently ongoing.

    [17] T2.

17. On 26 September 2011 the Secretary applied for review of the SSAT decision.

18. There are two issues. The first is whether there is discretion under Part 3.14 of the Social Security Act to temporarily suspend a lump sum preclusion period. The second is whether there are special circumstances that make it appropriate to treat all or part of Mr Vecchi’s compensation payment as not having been made and, thereby, to reduce the duration of the preclusion period.

    Temporary suspension

19. At the outset of the hearing I was informed of the parties’ agreement that the SSAT made an error of law and, for this reason, the decision under review cannot stand.

20. For present purposes it is beside the point whether the SSAT made an error or not. I must consider the matter afresh.

21. The decision under review is in the following terms –

    On 15 August 2011 the [Social Security Appeals] Tribunal decided to set aside the decision under review and substitute a new decision that, on the basis of his special circumstances, Mr Vecchi is not subject to a compensation preclusion period for a period of two years from the date of this decision. The remainder of the preclusion period stands.[18]

    [18] T2 folio 2.

22. As can be seen, by this decision the end date of Mr Vecchi’s lump sum preclusion period, 27 December 2016, remains unchanged; but the preclusion period would not operate from 15 August 2011 to 14 August 2013.

23. The discretion conferred by s 1184K of the Act permits the Secretary to treat the whole or part of a compensation payment as not having been made if it is appropriate to do so in the special circumstances of the case. The effect of treating part of a compensation payment in this manner is to reduce the number of weeks in the lump sum preclusion period calculated under s 1170 of the Act. By this method, if the special circumstances of the case render it appropriate to do so, a determination may be made to treat part of the compensation payment as not having been made and, thus, end the preclusion period at an earlier date by strict application of the formulation set out in s 1170(1), (4) and (5).

24. The s 1184K discretion does not permit the Secretary to temporarily suspend a lump sum preclusion period or, otherwise, to interfere with the statutory formulation for determining the start date and the end date of the preclusion period. The discretion simply permits all or part of a compensation payment to be excluded when determining the start and end dates of a preclusion period by applying the statutory formulation.

25. Thus, while a determination may be made to treat part of Mr Vecchi’s compensation payment as not having been made and, thereby, to reduce the preclusion period end date by two years, there is no statutory mechanism to suspend the preclusion period (and permit compensation affected payments to be made to Mr Vecchi) for two years and then resume it again, thereafter.

26. For this reason, the decision under review must be set aside.

27. Nevertheless, it is quite clear in a case such as this that encouraging and supporting an injured person to return to suitable employment at the earliest opportunity is a desirable objective. Flexibility to temporarily suspend a lump sum preclusion period may, in the special circumstances of some cases, enable support to be provided for that purpose. The present statutory arrangements do not allow this to occur, however.

    Issues of credit

28. At this point, it is appropriate to address issues of Mr Vecchi’s credit. There are some troubling aspects to his evidence. He says that he cannot work as a painter, but it appears that he did just that in the employment of Kayair Constructions Pty Ltd in the latter part of 2011 – Mr Vecchi was paid $11,792 on 12 August 2011[19], $7,524 on 8 December 2011[20] and $7,524 on 22 December 2011[21]. These amounts were deposited into an ANZ Access Advantage account in Mr Vecchi’s name.

    [19] ST9 folio 264.

    [20] ST9 folio 276.

    [21] ST9 folio 279.

29. Mr Vecchi explained that he was struggling to make ends meet and he was offered the opportunity to paint two houses for a friend who owns Kayair Constructions. He says that he accepted the work, even though there was no contract of employment and doing so was contrary to medical advice. He informed me that he could not recall precisely when he had undertaken the work. Mr Vecchi’s assertion that he did the work slowly and caused costly delays for Kayair Constructions is not supported by other evidence; but his evidence on this point was not challenged.

30. The evidence suggests that he was engaged to paint the first house in or about June or July 2011, with payment on 12 August 2011 recorded as “Kayair Inv 52 Painting PY” in Mr Vecchi’s bank records. Two further payments were made in December 2011. These are recorded as “Painting Longbeach Kayair” on 8 December and “Blairs Painting Kayair” on 22 December 2011. Mr Vecchi’s assertion that these relate to painting work he undertook on one house is not supported by corroborative evidence. Even though the payments are for equal amounts, the bank records suggest that the payments may relate to two different painting jobs.

31. In any event, Mr Vecchi omitted to inform Centrelink about this work and the income he obtained. He also omitted to inform the SSAT of the painting work and the payment of $11,792 he received on 12 August 2011. This has a sharp point, as the payment was made only three days before the SSAT hearing on 15 August 2011. Furthermore, it appears that Mr Vecchi failed or omitted to inform Anita Black, a consultant clinical and forensic psychologist, of this work: on 2 March 2012 Ms Black reported that “Mr Vecchi has not worked since the date of his injury in 2008”[22]. This is plainly incorrect.

    [22] Exhibit R2, page 6.

32. It appears, therefore, that Mr Vecchi has not been entirely frank about work he has undertaken and about his financial circumstances.

33. Mr Vecchi gave evidence in chief that he has only one bank account, but he admitted under cross-examination that there are two accounts – a high interest Online Saver account and an Access Advantage account. Mr Vecchi omitted to inform Centrelink about his Online Saver account in his DSP claim form[23]. He asserted that money in the Access Advantage account was his, whereas money in the Online Saver account was already committed or owing, for renovation works on his house for example, and the money in that account was not his. When questioned about this, Mr Vecchi admitted that all of the money in the bank accounts was under his control and it was his, even though he may have amounts committed or owing.

    [23] T15 folio 92.

34. Examination of the bank account records reveals that Mr Vecchi frequently transferred money from one account to the other. For example, soon after depositing his earnings from Kayair Constructions in August and December 2011, Mr Vecchi transferred a proportion of the money to his Online Saver account. It appears that Mr Vecchi uses a computer to effect transactions of this kind. When questioned about this, Mr Vecchi admitted that he did so to maximise the amount of interest. To my mind, this suggests that Mr Vecchi had little difficulty understanding, arranging and managing his financial affairs for his own advantage at this level. Furthermore, Mr Vecchi’s use of a computer in these activities suggests that he has sufficient literacy, numeracy and comprehension skills for that purpose.

35. There is conflicted evidence concerning Mr Vecchi’s relationship with his parents: on the one hand, Mr Vecchi told me that he has very serious problems with his father that precluded him from staying with or calling upon his parents for assistance; but, on the other hand, Mr Vecchi informed the SSAT that “after the accident he lived with his parents in Lyons Canberra in between his hospital stays… he had no choice about staying with them then because he was very unwell and needed their help to take him to and from hospital and specialist appointments”[24]. Mr Vecchi denied this under cross-examination.

    [24] T2 folio 6.

36. Furthermore, Mr Vecchi’s residential address prior to moving into the house he purchased at Boondi Street, was a property owned by his parents at Yugura Street. This address appears on his ANZ Bank statements and on his NSW drivers licence, and it is the address he provided Centrelink[25]. Mr Vecchi told me that he stayed in this apartment from time to time, but he moved around a lot and he resided with friends in a number of locations prior to purchasing the Boondi Street house. It appears that he told the SSAT that “he had stayed there for a short while before he bought his home. He had no choice. There was nowhere else to go. However, his parents would never let him stay there long term”[26].

    [25] See T4 and T11, for example.

    [26] T2 folio 6.

37. It appears that the property at Yugura Street is divided into two apartments. Mr Vecchi gave evidence that his former partner and mother of his three children resides in the upper level apartment, whereas he has a key to the lower level apartment. He told the SSAT that his former partner resides in the ground floor apartment. No explanation has been provided for this inconsistency.

38. Mr Vecchi suggested that he may not have received relevant letters from Centrelink if these were sent to his address at Yugura Street, as he relied on an uncle to collect his mail from that address. Mr Vecchi appears to have had no difficulty receiving bank statements and other correspondence that was sent to him at the Yugura Street address[27], however.

    [27] See T19 folios 114 to 132, for example.

39. It is not necessary to proceed further specifying the numerous inconsistencies in Mr Vecchi’s case. It appears to me that his evidence in respect of relevant matters is not reliable and should be treated with caution in the absence of reliable corroboration. Mr Vecchi was legally represented, but no probative, corroborative evidence in respect of his residential or familial arrangements and his employment in 2011 was adduced.

    Special circumstances

40. The Secretary asserts that there are no special circumstances in Mr Vecchi’s case that render it appropriate to reduce the duration of the lump sum preclusion period.

41. Mr Vecchi says that he is in very difficult financial circumstances and he has health and other problems. He has no money left from the compensation payment and he has no source of income other than the DSP. He is not able to undertake physical labouring work, or his previous employment as a painter, and he is not able to obtain alternative employment because of his literacy and numeracy difficulties.

42. In his submission, if the DSP is ceased, he will have no option but to sell the house at Boondi Street. This, he says, is not right or fair and, apart from anything else, the house is not in a fit state to sell or rent – it requires substantial repairs, which are partly completed, but he does not have the money to complete the work. Furthermore, he requires the house for his psychological health.

43. The term ‘special circumstances’ as it appears in s 1184K is not given any special meaning. Clearly enough, to be special, the circumstances must be out of the ordinary or unusual. For that to be ascertained it is necessary to consider the context in which the particular circumstances occur, having regard to the entirety of the circumstances of the claimant[28]. It is not necessary to refer in detail to the numerous cases cited by the parties, although, of course, I have carefully considered them.

    [28] Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 3 and 6.

44. The context in which Mr Vecchi’s circumstances must be considered is Part 3.14 of the Social Security Act. The Secretary says that the discretion conferred by s 1184K should not be exercised in a manner calculated to frustrate the legislative intent. Plainly, that is correct. But the legislative intent and the objects and purposes of the section, and the Part in which it lies, must be carefully considered and properly understood.

45. The objects and purposes of Part 3.14 are, relevantly, to preclude a person who obtains income support in the form of a compensation payment from also obtaining income support in the form of a ‘compensation affected payment’[29] under the social security scheme[30]. Section 1169 is a clear expression of this purpose. Nevertheless, the preclusion is not absolute in all cases and provision is made in s 1184K for some flexibility to respond to special circumstances in a particular case. The discretion to treat all or part of a compensation payment as not having been made is subject two tests: the determination of special circumstances in the particular case, and the formation of an opinion (‘…if the Secretary thinks…”) that it is appropriate to exercise the discretion in those circumstances. Approaching the discretion in this way does not frustrate but squarely addresses and promotes the intentions and purposes of the legislation.

    [29] Section 17(1), Social Security Act 1991.

    [30] Re Secretary, Department of Social Security and Winterbotham [1990] AATA 6499 at [19].

    Financial circumstances

1. I have considered Mr Vecchi’s financial circumstances and I have had regard to the evidence concerning his ANZ Bank accounts, his assets and his liabilities, including quotations or invoices for renovation works to his house at Boondi Street. On the present evidence, I am satisfied that Mr Vecchi has but little cash in reserve and he relies on the regular payment of DSP to cover his weekly living expenses. Nevertheless, he obtained income from working in 2011 and this assisted his financial circumstances, at least for a time; I note that Mr Vecchi appears to have used some of his earnings to pay bills[31].

   [31] See ST9 folio 277, for example.

2. I accept that Mr Vecchi is in straitened financial circumstances that would be more difficult if he was not receiving DSP payments. But Mr Vecchi owns a significant unencumbered asset in the form of his house at Boondi Street, as well as a motor vehicle and a boat. Furthermore, he informed me that he owns an iPhone and an iPad computer, also without encumbrance. Thus, it appears that Mr Vecchi has a number of tradeable assets.

3. Whether Mr Vecchi might be able to improve his financial circumstances by selling or renting out his house, or by renting a room in the house to a boarder, is moot. He maintains that the physical state of the house is such that it would not be attractive to a buyer and it is in no fit state to rent out. Certainly, the photographs of the house in Exhibit R1 reveal that substantial remedial work is required. There is a very striking difference between these photographs and the photographs of the property prior to sale at ST7. Mr Vecchi asserts that it was necessary to completely re-wire, re-plumb and re-fit substantial parts of the house, including the kitchen and bathrooms, to make it safe to inhabit; but there is no evidence to corroborate this. It appears to me that the upper storey of the house may be in a sufficient state to offer for rent to a boarder or a tenant. But, on Ms Black’s evidence, as will appear, this is not a realistic option when Mr Vecchi’s health issues are taken into account.

4. Nonetheless, when Mr Vecchi’s financial circumstances are considered in the context of Part 3.14 of the Act, I am not persuaded that they are special circumstances. Straitened financial circumstances are not uncommon among those who seek support under the social security system, and this is not sufficient to set Mr Vecchi’s case apart. Perhaps what should be noted is that, unlike many others, Mr Vecchi used his lump sum compensation payment to acquire a substantial unencumbered asset that he selected, by his own account, with an eye to investment and capital gain. In doing so, he did not set aside any money to cover his ongoing living and medical expenses. It was open for Mr Vecchi to make an adequate provision and to select a cheaper property, possibly a unit or a smaller house in a different location, but he chose not to as the property was his ‘security’.

   Compensation settlement circumstances

5. The Secretary asserts that Mr Vecchi understood that he would be precluded from obtaining social security payments if he accepted a lump sum in settlement of his compensation claim. Furthermore, the Secretary does not accept that Mr Vecchi was unable to understand or to seek clarification of the lump sum preclusion period.

6. Mr Vecchi maintains that the concept of a lump sum preclusion period was not explained to him at the time.

7. Mr McGuire’s evidence is that it was explained to him, and that Mr Vecchi understood the advice he was given. Mr McGuire was not called to give evidence so this aspect of his evidence could not be tested. I note in passing that in these proceedings Mr Vecchi was legally represented, but not by his former solicitor.

8. Mr Vecchi asserts that he was given two days’ notice of the mediation in December 2010 that resulted in settlement of his compensation claim. He asserted that he attended, but he had no prior conference with his legal representatives, and he did not understand what was going on. Mr Vecchi informed me that he was surprised by the mediation process and he was confused on the day – even though he was represented by a barrister, he did not know who the barrister was. He followed the advice he was given: he was advised to settle, so he did. Mr Vecchi asserted that if he had known then what he now understands about the effect of the lump sum payment, he would never have agreed to the terms of settlement. This stands contrary to the (very brief) evidence of Mr McGuire. These are matters that cannot be determined on the present evidence.

9. As to Mr Vecchi’s literacy, numeracy and comprehension, Ms Black administered Weschler Individual Achievement tests (WIAT-II tests) in order to assess his reading, mathematics, written language skills and oral language skills. She reported that Mr Vecchi’s scores are in the extremely low range – “None of Mr Vecchi’s sub-test scores are above primary school level, with most being in the Grade 1 (6 year old equivalent) to Grade 3 (8 year old equivalent) range”[32].

   [32] Exhibit R2, page 2.

10. Mr Vecchi acknowledged that he has difficulties with reading and understanding. This was plainly demonstrated during the hearing when he was asked whether he understood the term ‘compensation preclusion period’ and why his claim for DSP had been rejected – he said that he did. But when he was asked to explain the meaning of the word ‘precluded’, he was unable to do so. This is consistent with Ms Black’s oral evidence that Mr Vecchi has some cognitive capacity to understand legal processes and requirements, and the meaning of ‘compensation preclusion period’, but he has the reading comprehension of a 6 year old and the listening comprehension skills of a 7 year old.

11. Thus, on the present evidence, it is probable that Mr Vecchi’s language comprehension difficulties would have impeded his ability to engage in fast-paced settlement negotiations. In all likelihood, the task of explaining the implications of accepting a lump sum payment of compensation in settlement of his claim, and the concept of a lump sum preclusion period, would not have been an easy one, or one that could have been accomplished quickly. To my mind, on Ms Black’s evidence, it is probable that the difficulty of the task (and the importance of undertaking it) may have been increased by Mr Vecchi’s vulnerable mental condition at the time.

12. On Ms Black’s evidence, Mr Vecchi’s mental health deteriorated following removal of the activities he undertook to manage the distress of childhood trauma and abuse. Whether this feature of his case was known to those representing him is not apparent. There are many reasons why matters of this kind may be difficult to raise, especially if the person concerned has not obtained treatment. In any event, on the present evidence, it appears likely that Mr Vecchi was confused and he may not have understood the full implications of accepting a lump sum in settlement of his claim.

13. In any event, even if there were failings in the settlement process and Mr Vecchi did not fully understand the preclusionary implications, if he was not properly advised by his legal representatives for example, and I make no such finding, that is a matter between him and his former legal representatives. It does not give rise to special circumstances for present purposes.

    Health circumstances

14. Mr Vecchi complained that he suffers from lower back pain that radiates into his legs, primarily the right, from time to time. Having considered the medical evidence of Dr Pik[33], Dr Davies[34], Dr Bentivoglio[35] and Dr Roberts-Thomson[36], it appears that this is correct and that Mr Vecchi has lost some range of motion in his lumbar spine, having undergone spinal fusion surgery. These impairments and symptoms are the result of injury, for which Mr Vecchi has received compensation.

    [33] ST1.

    [34] ST2.

    [35] ST3.

    [36] ST4; T2 folios 6-7 refer.

15. Impairments and symptoms that are attributable to an injury in respect of which compensation has been paid would not, generally, constitute ‘special circumstances’ for the purposes of Part 3.14 of the Act. The important point of principal is that a person who is deemed to have obtained compensation-based income support consequent to injury, should not be permitted to obtain income support from the public purse unless there are special circumstances. If something unforeseen occurs after an award of compensation has been made that changes a person’s circumstances to the extent that his or her requirement for income support increases, then special circumstances may arise that render exercise of the discretion conferred by s 1184K appropriate.

16. Mr Vecchi informed me that he suffered nerve damage as a result of his injury and that this affects his sexual function and causes incontinence, primary urinary, but occasionally faecal, mostly at night. He asserts that he has discussed this with Dr Pik, a neurosurgeon. But Dr Pik was not called to give oral evidence and this could not be verified. I note that Dr Roberts-Thompson, Mr Vecchi’s treating general practitioner, made no reference to these complaints in the materials that are before the Tribunal and informed the SSAT that Mr Vecchi had not raised incontinence with him, but “it would not be a surprise”[37]. I note that Mr Vecchi made no reference to sexual dysfunction in his evidence to the SSAT. There is no evidence that this condition has been medically assessed. It is not clear whether these aspects of Mr Vecchi’s presentation were considered and addressed in the context of his compensation settlement.

    [37] T2 folio 7.

17. On the present evidence, I am not able to determine whether Mr Vecchi’s asserted incontinence and sexual dysfunction change his circumstances in any material degree that would affect his requirement for income support, although that appears unlikely. There is no medical evidence from Mr Vecchi’s treating doctors to establish that these conditions exist and, even if they are real, there is no evidence of any additional treatments that would be required or additional costs that Mr Vecchi may bear as a result. Thus, presently, even if I accept that the conditions are real, there are difficulties determining whether these circumstances are special.

18. On Ms Black’s evidence, Mr Vecchi suffers from a number of psychological disorders, including Major Depressive Disorder and Panic Disorder, but with no pre-morbid history of mental illness. When questioned about issues of diagnosis, Ms Black gave evidence that, in her opinion, Mr Vecchi demonstrates features of complex post-traumatic stress disorder as a result of his childhood experiences, but a proper diagnosis of this condition was not possible in the time allotted for the psychological assessment. She took a detailed history from Mr Vecchi and reported –

    While he experienced very significant sexual, physical and emotional abuse throughout his childhood and adolescence, he reported that he managed his distress in adolescence and adulthood through working hard, body-building and exercise, and maintaining a close paternal-type relationship with his friend Raphael.

19. This evidence and the history on which it was based were not challenged or disputed.

20. I note in passing that Dr Davies, a neurosurgeon, reported that Mr Vecchi had seen a psychiatrist for “aggression problems” and a psychologist for “depression problems” after the injury[38]. It appears that the psychologist concerned was Peter Erskine. Mr Vecchi told me that the insurer paid for several consultations with Mr Erskine, but the consultations ceased when funding was no longer available. Mr Erskine was not called to give evidence.

    [38] ST2 folio 168.

21. There is no evidence that Mr Vecchi obtained psychological or psychiatric treatment prior to his back injury. I accept Ms Black’s evidence that Mr Vecchi’s accident was the “sole trigger” for his mental health deteriorating to pathological levels. It is important to understand Ms Black’s evidence on this point.

22. Ms Black gave compelling evidence, which was not challenged, concerning the effects of the injury on Mr Vecchi’s mental health. As I understand her evidence, there are two key aspects. The physical impairment, chronic pain and depression he suffers as a direct result of injury is one thing; the loss of his ability to manage the psychological distress that is attributable to childhood abuse and trauma is another.

23. The unchallenged evidence is that, as a result of his injury, Mr Vecchi is restricted in physical activities he can safely undertake. Dr Davies reported that Mr Vecchi is not suited to return to work professionally as a painter. Mr Vecchi asserts that he can no longer participate in body-building activities and competitions. This may be true, although I note that he regularly attends a gym. On Ms Black’s evidence, these were activities that Mr Vecchi relied upon to manage the enduring and untreated psychological distress that resulted from chronic childhood trauma and abuse, and without these activities, Mr Vecchi’s mental health deteriorated to a pathological level.

24. Even though Dr Davies referred to “depression problems” in his reported dated 10 May 2010, there is no evidence before me that Mr Vecchi’s psychiatric disorders or his psychological distress was assessed in the frame of his claim for compensation in respect of his back injury. The present evidence does not suggest that the deterioration of Mr Vecchi’s mental health to a pathological level was foreseen when his compensation claim was settled. Furthermore, I have seen no evidence that Mr Vecchi’s history of childhood abuse was raised or considered in that context.

25. Ms Black reported that –

    Mr Vecchi is very emotionally vulnerable. He is managing to function in many tasks of the day (including, inter alia, personal care, cooking, and pain-management) due in part to having a stable place to live. Ownership of his property is important to him, as he feels he has lost everything else as a result of the accident, most particularly his ability to actively parent his children. From a childhood trauma perspective, it also provides him with a place of safety and continuity. I would expect Mr Vecchi’s mental health and well-being to deteriorate further (from an already low base) should he be required to sell the property in order to meet the basic costs of living.

    …

    While Mr Vecchi has stated that he is not intending to suicide even if he is forced to sell his house, I fear any further deterioration in his mental health could, in fact, lead him to take his own life.

    …

    The impact of the [childhood abuse] has had a profound effect on his life. It is most likely that his failure to acquire even basic literacy and numeracy skills at school… was due to paediatric psychological phenomena associated with sexual, physical and emotional abuse. Mr Vecchi should not be forced into a position where he must again become reliant on his parents. It would be highly detrimental to his mental health and well-being.[39]

    [39] Exhibit R2, page 3.

26. To my mind, this evidence raises difficult and important issues about Mr Vecchi’s state of mind and his behaviour that were not foreseen when Mr Vecchi’s compensation claim was settled, and that may not have been taken into account in the context of his claim for a DSP and a reduction in the lump sum preclusion period. 

27. Presently, it is Mr Vecchi’s actions after the settlement was agreed that are most salient. Within a matter of weeks, Mr Vecchi placed a deposit on a house and entered a contract to complete the purchase within 28 days. The two-storey house had large cracks through the brick walls at either end. Mr Vecchi told me that he was given an engineering report by the real estate salesman, which he accepted without obtaining any further advice. This report is not in evidence. Mr Vecchi said that he obtained a standard building report prior to completing the purchase, but this did not suggest any problems with the house. This report, too, is not in evidence. His evidence is that he consulted his brother, who advised him to buy a house; and that is what he did.

28. Mr Vecchi had worked in the building industry in and around Batemans Bay and Malua Bay for a number of years. He had a number of friends in that industry, including builders. But he did not seek advice from any of these people about the house he was set on buying, even though there were large cracks in its walls.

29. Mr Vecchi appears to have acted with surprising haste. When this was put to him, he said that he had lost everything else as a result of his injury and buying a house would provide him with security.

30. Mr Vecchi’s evidence is that soon after moving into the house, he discovered that the house required very extensive repairs to make it safe to inhabit. This account is not corroborated by reliable evidence. Nevertheless, Mr Vecchi promptly proceeded to expend large sums of money, including the remaining part of his compensation payment, on renovation works, even though the scope of the renovations clearly exceeded his financial resources at the time. It is possible, as he asserts, that he expected to be paid a DSP. But even if that is correct, it would not be sufficient to cover the cost of the renovation works Mr Vecchi commenced. By his own account, he was struggling financially and he undertook paid employment as a painter, contrary to medical advice.

31. To my mind, Mr Vecchi’s behaviour is indicative of the psychological symptoms and distress Ms Black identified when she examined him on 17 February 2012. Ms Black reported that Mr Vecchi had a variety of symptoms, including “pervasive difficulties concentrating and making decisions” and “psychomotor agitation”[40]. His rapid expenditure of the compensation payment suggests a profound lack of budgeting skills, consistent with the numeracy difficulties she identified. Furthermore, Dr Davies’ evidence suggests that in May 2010 Mr Vecchi was taking opioid analgesic medications (20mg of Oxycontin twice daily[41]) and other medications, including Lyrica, Temazepam and Endone PRN, that may have impaired his judgement.

    [40] Exhibit R2, page 8.

    [41] ST2 folio 168; Exhibit R2, page 7 refers.

32. On Ms Black’s evidence, Mr Vecchi’s injury rendered him unable to continue with activities he had hitherto employed to manage the psychological distress resulting from childhood trauma and abuse. His regime of self-management faltered and came to an end, leaving him prey to the vicissitudes of psychological symptoms that were beyond his ability to control. I accept Ms Black’s evidence on this point. I also accept her evidence concerning the vulnerability of Mr Vecchi’s emotional state and the risk that his mental health may deteriorate further if he is forced to sell his house in order to live.

33. The evidence of childhood abuse and the adverse effects of this on Mr Vecchi’s mental health and education are, in all likelihood, circumstances that were unforeseen when Mr Vecchi settled his compensation claim. To my mind, these circumstances are highly unusual and are distinguished from the usual run of cases.

34. In sum, when determining whether special circumstances exist, it is necessary to consider the entirety of Mr Vecchi’s circumstances, including his failure to properly inform Centrelink of his financial details and of his earnings in 2011, when determining whether there are special circumstances in his case. Mr Vecchi’s difficult financial circumstances and the circumstances of his compensation settlement do not constitute special circumstances. He has been compensated for the injury and the impairments and incapacity resulting from the injury do not give rise to special circumstances.

35. But that is not the end of the matter. Mr Vecchi has a traumatic background of severe and chronic childhood sexual, physical and emotional abuse. On the medical evidence, he has an incapacity for work involving physical labour and he is not able to effectively self-manage the psychological effects of his childhood experiences. He has very low levels of literacy and numeracy and, as Kim George, a Job Capacity Assessor, noted, Mr Vecchi “requires assistance to address literacy issues” as these are a barrier to him obtaining suitable post-injury work[42]. The extent to which Mr Vecchi understood the implications of settling his compensation claim is not clear; he was not psychologically well at the time and his difficulties with written and aural comprehension were an impediment to understanding. Mr Vecchi’s house is not in a fit state to rent out, and he does not have the financial resources to change this. On Ms Black’s evidence, renting a room to a boarder is not an option as this is not consistent with Mr Vecchi’s present state of health. Ms Black maintains that it would be “highly detrimental to his mental health and well-being” for him to be forced into reliance upon his parents[43]. The only other option open on the present evidence is for Mr Vecchi to sell his house; but on Ms Black’s evidence, this would be likely to cause his mental health to deteriorate with potentially dire consequences for Mr Vecchi that should be avoided. To my mind, these are special circumstances.

    [42] ST5 folio 188.

    [43] Exhibit R2, page 3.

1. Thus, in consideration of all Mr Vecchi’s circumstances, I am reasonably satisfied that Mr Vecchi’s case is attended by special circumstances for the purposes of s 1184K and Part 3.14 of the Act. I so find.

   Appropriateness of exercising the discretion

2. When considering whether it is appropriate to exercise the discretion in the special circumstances of this case, it is necessary to have regard to all relevant matters, including the fact that Mr Vecchi failed or omitted to properly inform Centrelink of his financial details and his earnings in employment in 2011. Furthermore, the public policy expectation that he would provide for himself from the compensation payment he received, must be weighed in the balance.

3. To my mind, Ms Black’s evidence, concerning the untreated effects of chronic childhood abuse and the risk that Mr Vecchi’s psychological condition may deteriorate unless relief is granted, weighs heavily in the balance. While the history on which Ms Black’s assessment is based has not been corroborated, it was not challenged and no contrary medical evidence was adduced. The Tribunal must rule on the evidence before it.   

4. The general rule that a compensation recipient must cover their own living and other expenses for a statutory period is very clear without having to trawl authoritative cases for points of principle. Like any general rule, the proving is in the exceptions; presently, under s 1184K.

5. Mr Vecchi’s case is exceptional for the simple reason that the circumstances of his abuse as a child and the afflictions he presently suffers as a result, which may well have affected his understanding of legal processes and the implications of his actions in that context, are well outside circumstances that might be considered usual, or commonplace when dealing with compensation paid in respect of a back injury in the context of Part 3.14 of the Act.

6. Even though there are some troubling aspects to Mr Vecchi’s case, I am reasonably satisfied that it is appropriate to exercise the discretion conferred by s 1184K to the extent that a part of Mr Vecchi’s lump sum compensation payment should be treated as not having been made: that part is the amount necessary to reduce the period of the lump sum preclusion period by application of the formulae set out in s 1170(4) and bring it to an end on 15 August 2011, being the date of the SSAT decision.

7. I do not accept the proposition that this may be characterised as a windfall to Mr Vecchi, although clearly enough he will be in a better position than if the discretion was not exercised in his favour. This case is not decided on the basis of Mr Vecchi’s financial circumstances and it should not be viewed through a financial lens, alone. The circumstances that set it apart from the ordinary course relate primarily to the psychological condition, emotional vulnerability and educational deficits Mr Vecchi suffers as a result of his childhood experiences, and only incidentally to his financial circumstances.

8. Nor do I accept the proposition that Mr Vecchi is so lacking in credibility and is such an unreliable witness that he should not be granted relief. No challenge was brought against the evidence concerning Mr Vecchi’s abuse as a child; nor was any attack made on the history he provided Ms Black. The Secretary did not obtain any evidence to contradict Ms Black’s evidence or to contra-indicate the conclusions she drew. Certainly there are many inconsistencies in the evidence, including in Mr Vecchi’s accounts over time. But there may be a number of explanations for this.

9. One possibility is that Mr Vecchi is a liar and a villain, who spent his compensation payment quickly or conspired to obtain a benefit at the expense of the taxpayer; but this is not consistent with Ms Black’s evidence and it was not squarely put. It is so starkly inconsistent with Ms Black’s evidence and my assessment of Mr Vecchi’s evidence that it is implausible. It suggests that Mr Vecchi has the mental capability to orchestrate arrangements and the emotional fortitude to sustain a deceit in order to obtain a benefit. While the capacity for deceit should not be under-estimated, I have the benefit of having heard oral evidence from Mr Vecchi and from Ms Black. No attack was made on Ms Black’s evidence or her impartiality, or her clinical judgement. To my mind she gave compelling and cogent evidence that I have no difficulty accepting. Whereas the inconsistencies in Mr Vecchi’s evidence indicate that he is not able to orchestrate and maintain a lie, even in relation to simple details. .  

10. Another possibility is that Mr Vecchi genuinely did not understand the effects of his compensation settlement and the detailed arrangement of his financial affairs. But, to my mind, it is more likely that he had some understanding of these matters, for Mr Vecchi is not an imbecile or a fool without any capacity to understand arrangements of this kind. Even so, the psychiatric disorders and the educational deficits he suffers as a result of childhood trauma are likely to have affected his cognitive capabilities to concentrate and to make decisions, and may have clouded his memory and his judgement. This is consistent with Ms Black’s assessment[44] and it supports a conclusion that Mr Vecchi’s behaviour is more likely to be predicated on psychological distress and poor mental health than an intention to deceive or to improperly obtain a benefit.

    [44] Exhibit R23, pages 8 to 11.

    Conclusion

11. The decision under review must be set aside. Nevertheless, there are special circumstances in Mr Vecchi’s case; namely, the on-going effects of childhood abuse, including psychiatric disorders, educational deficits and emotional vulnerabilities that were not foreseen when his compensation claim was settled. It is appropriate to exercise the discretion to treat part of his compensation payment as not having been made in these circumstances. The amount of compensation to be treated in this manner is the amount necessary to end the preclusion period on 15 August 2011.

I certify that the preceding 91 (ninety-one) paragraphs are a true copy of the reasons for the decision herein of MR S. WEBB, MEMBER.

..........................[sgd]................................
Associate
Dated 8 June 2012

Date of hearing        28 May 2012
Date of Decision        8 June 2012
Advocate for the Applicant        Ms Vanessa Faulder, Welfare Rights and
  Legal Centre
Counsel for the Respondent  Ms Jennifer Maclean