Seears and Secretary, Department of Social Services (Social services second review)
[2015] AATA 656
•31 August 2015
Seears and Secretary, Department of Social Services (Social services second review) [2015] AATA 656 (31 August 2015)
Division GENERAL DIVISION File Number(s)
2015/0763
Re
Terry SEEARS
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Dr Gordon Hughes
Date 31 August 2015 Place Melbourne The Tribunal affirms the decision under review.
..........................[sgd]..............................................
Dr Gordon Hughes, Member
Catchwords
Lump sum compensation payment – lump sum preclusion period – whether lump sum preclusion period can be reduced due to "special circumstances" – nothing unusual, uncommon or exceptional about applicant's circumstances in the context of the legislation – home ownership taken into account
Legislation
Social Security Act 1991 Section 1184K
Cases
Ahmic and Secretary, Department of Employment and Workplace Relations [2007] AATA 74
Re Rosemarie Beadle and Director-General of Social Security [1984] AATA 176
Re Domenico Colaiacolo v Secretary To the Department of Social Security [1985] AATA 91
Re Predrag (Peter) Ivovic and Director-General of Social Services [1981] AATA 57
Re Barbara Maria Krzywak and Secretary To the Department of Social Security [1988] AATA 270
Manafikhi and Secretary, Department of Employment and Workplace Relations [2007] AATA 1529
Rendell and Secretary, Department of Family and Community Services [2004] AATA 207
Secretary, Department of Families, Housing, Community Services and Indigenous Affairs and Waters [2011] AATA 666
Secretary, Department of Social Security and David Norman [1998] AATA 444
Secretary, Department of Social Security and Winterbotham [1990] AATA 808
REASONS FOR DECISION
Dr Gordon Hughes, Member
27 August 2015
Background
The applicant applied to Centrelink for disability support pension (DSP) and newstart allowance (NA). On 20 August 2014 Centrelink decided that NA could not be paid because of a compensation preclusion period. On 29 August Centrelink decided that DSP could not be paid because of a compensation preclusion period. The applicant sought a review of these decisions by a Centrelink Authorised Review Officer (ARO). On 11 November 2014 the ARO affirmed both decisions. The applicant sought a review of the ARO’s decision by the Social Security Appeals Tribunal (SSAT). On 12 January 2015 the SSAT affirmed the decision of the ARO. The applicant applied to this Tribunal for a review of the SSAT decision. The applicant was injured at work on 14 October 2009, and had received a total lump sum settlement of $550,000 by 26 November 2013. He received periodic payments until 6 April 2012. Centrelink advised the applicant’s solicitors that a lump sum preclusion period would apply from 7 April 2012 to 20 April 2018 and that during this time he would be ineligible to receive income support. Centrelink also advised that it would seek to recover $21,654.18 from CGU for payments received by the applicant between 28 June 2012 and 26 November 2013.
It was not in dispute that the lump sum preclusion period applied from 7 April 2012 to 20 April 2018. The only issue to be considered by the Tribunal, therefore, was whether the lump sum preclusion period could be reduced owing to special circumstances.
Legislation
Section 1184K of the Social Security Act 1991 (the Act) provides:
(1)For the purposes of this Part, the Secretary may treat the whole or part of a compensation payment as:
(a) not having been made; or
(b) not liable to be made;
if the Secretary thinks it is appropriate to do so in the special circumstances of the case.
Discussion
The Act does not define the term special circumstances as it appears in Section 1184K of the Act.
The term has, however, been considered by the Tribunal on numerous occasions.
The Tribunal has previously ruled that the term should be considered according to the particular circumstances of each case: Re Predrag (Peter) Ivovic and Director-General of Social Services [1981] AATA 57. It describes circumstances which are unusual, uncommon or exceptional in the context in which they occur: Re Rosemarie Beadle and Director-General of Social Security [1984] AATA 176.
The applicant's claim for special circumstances is based on financial hardship which, he explained, was in turn affecting his entire family. He explained that the money ran out in June 2014. He had tried to work but was unable to do so.
The applicant described how he had invested the proceeds of his settlement. It would appear that he was circumspect and sensible in handling the money. He sought financial advice and was told that the lump sum would not generate sufficient income to live off. He accordingly invested in a home at a cost of $310,000 plus stamp duty and relatively minor incidentals. His legal costs amounted to $105,000, leaving little in reserve.
The applicant told the Tribunal that when he purchased the house, his principal concern was to ensure his children had a roof over their heads. He did not want to move too far from where they had been living, so as to minimise the disruption to his children's lives. There were no realistic alternatives to the home that he purchased.
The house is unencumbered. The applicant explained that there was no incentive to apply for a mortgage because he would not be granted one. The applicant’s wife, Jasmine Seears, also gave evidence. Like the applicant, she presented as an intelligent, articulate, honest and sincere witness.
Mrs Seears explained that she was a qualified nurse. She had enjoyed a good income when employed, and she continued to work and support the applicant and their children financially for two years after he suffered his injury. Eventually, however, she felt she should cease work in order to care for the family as her husband, the applicant, was suffering depression and having difficulty in coping. She has maintained her nursing registration, and completed higher qualifications, with a view to resuming work when domestic circumstances permit, assuming work is available.
The Tribunal has previously held that financial hardship can constitute special circumstances, but only if accompanied by additional factors: see, for example, Re Barbara Maria Krzywak and Secretary To the Department of Social Security [1988] AATA 270; Rendell and Secretary, Department of Family and Community Services [2004] AATA 207; Re Domenico Colaiacolo and Secretary To the Department of Social Security [1985] AATA 91. The financial hardship itself must not be the usual type of situation but must be unusual, exceptional or uncommon in a way that sets the individual apart from others who have received lump sum payments: Manafikhi and Secretary, Department of Employment and Workplace Relations [2007] AATA 1529.
The Tribunal has also made a distinction in the past between financial difficulties and financial hardship. When an individual has a realisable asset such as a home, financial hardship has not been recognised: Secretary, Department of Families, Housing, Community Services and Indigenous Affairs and Waters [2011] AATA 666.
It is important, to remain aware that the provisions of the Act are there to ensure that money received in place of income is not also paid by way of social security income support: Secretary, Department of Social Security and David Norman [1998] AATA 444.
In the past, the Tribunal has been confronted with cases where the recipients of significant settlement sums have invested unwisely and subsequently sought to plead, unsuccessfully, special circumstances on the basis of financial hardship: for example, Secretary, Department of Social Security and David Norman [1998] AATA 444. This is not such a case. It would appear the applicant has acted responsibly at all times, seeking financial advice, investing in a home for his family, and avoiding any unnecessary expenditure.
Unfortunately for the applicant, however, his home ownership taints his claim of financial hardship. This was a scenario considered by the Tribunal in Secretary, Department of Social Security and Winterbotham [1990] AATA 808. In that case, the Tribunal acknowledged the right of the respondent to invest his settlement moneys in a home, but nevertheless it must take that home into account in deciding whether the respondent is in a position of exceptional financial hardship.
In short, the Tribunal has come to the conclusion that while the applicant may well be confronting financial difficulties, this does not amount to financial hardship or special circumstances of an unusual, uncommon or exceptional nature. His situation is unfortunate but his circumstances do not set him apart from others in a similar situation and are not special in a way that would distinguish his difficulties from those confronting others in comparable circumstances. As difficult as life has become for the applicant, his position is better than that of many others because he has an unencumbered home, and he has a supportive wife who is willing to return to work, assuming appropriate work can be found.
While the Tribunal has sympathy for the predicament in which the applicant finds himself, his application cannot succeed under the legislation as it currently stands.
Finally, the applicant stated that he had not been informed by his legal advisors as to the imposition and effect of a lump sum preclusion period. He said that had he known about it, he would not have accepted the settlement offered to him. He believed at the time that he stood to recover more than $550,000 in the event he allowed his claim to proceed to trial. The Tribunal is not in a positon to make any finding on this point, nor is it relevant to the determination of this claim, mindful in particular that generally the sins or omissions of a solicitor should not be weighed against the taxpayer: Ahmic and Secretary, Department of Employment and Workplace Relations [2007] AATA 74. The applicant would be well advised to explore the available avenues for pursuing a claim against his advisors if he maintains that he accepted the settlement figure in ignorance of the lump sum preclusion period.
Decision
For the above reasons, the Tribunal affirms the decision under review.
I certify that the preceding 20 (twenty) paragraphs are a true copy of the reasons for the decision of Dr Gordon Hughes. .................[sgd]........................
Associate
Dated 31 August 2015
Date of hearing 27 July 2015 Applicant In person Advocate for the Respondent Ms V Chan Solicitors for the Respondent Department of Social Services
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