Senna and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
[2008] AATA 240
•27 March 2008
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2008] AATA 240
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2007/4890
GENERAL ADMINISTRATIVE DIVISION ) Re ALDO SENNA Applicant
And
SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES & INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal Ms Robin Hunt, Senior Member Date27 March 2008
PlaceSydney
Decision The decision under review is set aside and substituted is the decision that, pursuant to subsection 1184K(1) of the Social Security Act 1991, so much of the compensation lump sum payment is taken as not having been made that permits reduction of the preclusion period to end on 13 December 2007. ..................[Sgd].....................
Ms Robin Hunt
Senior Member
CATCHWORDS
SOCIAL SECURITY – Preclusion period – lump sum compensation settlement – claim for compensation affected payment – respondent denied age pension – evidence of financial difficulties and ill health – finding of special circumstances – decision set aside.
Social Security Act 1991 ss 17, 23(5A), 43, 1169, 1170, 1184K(1)
Social Security Legislation Amendment (Further Budget and Other Measures) Act 1996
Workplace Injury Management and Workers Compensation Act 1998 (NSW)
Angelakos v Secretary, Department of Employment and Workplace Relations (2007) 44 AAR 436
Kirkbright v Secretary, Department of Family and Community Services (2000) 106 FCR 281
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Re Gulcan and Secretary, Department of Family & Community Services (2001) 4(11) SSR 129
Re Krzywak and Secretary, Department of Social Security (1988) 15 ALD 690
Re Secretary, Department of Family & Community Services and Kelava (2003) 76 ALD 239
Secretary, Department of Employment & Workplace Relations v Homewood(2006) 91 ALD 103
REASONS FOR DECISION
27 March 2008 Ms Robin Hunt, Senior Member summary
1. The applicant, Mr Senna, was approaching his seventy-second birthday at the time of the tribunal hearing of his application for review. He had sustained injuries over a lifetime in the workforce and was finding it difficult to perform work any longer. Mr Senna, in 2006, received three lump sum compensation payments for his injuries over the years. The last payment was for an injury to his knee in 2003. A Centrelink delegate calculated that Mr Senna was subject to a compensation lump sum preclusion period ending on 27 February 2010 and the Social Security Appeals Tribunal (SSAT) affirmed this decision. This meant that Mr Senna was not entitled to receive the age pension until 2010 when he would be seventy-four. Mr Senna asked that all or part of his lump sum be disregarded as special circumstances existed in his case, which would mean he could receive the age pension. After considering Mr Senna’s circumstances, I have decided to exercise discretion in his favour to disregard so much of the lump sum payment as permits payment to Mr Senna of the age pension from 14 December 2007. My reasons are set out below.
Reviewable Decision
2. The decision which Mr Senna has asked this tribunal to review is that of the SSAT dated 10 September 2007, which affirmed a decision made by a Centrelink Authorised Review Officer on 27 July 2007 to impose a compensation lump sum preclusion period from 3 September 2006 until 27 February 2010.
issue
3. The issue is whether special circumstances exist which warrant waiving part or all of the compensation preclusion period.
background and evidence
4. For the review, Mr Senna was self-represented. The background to this case is set out in the respondent’s statement of facts and contentions. Mr Senna was born in Italy in 1936 and came to Australia in 1956 when he was aged about 20. He became a citizen in 1972.
5. Mr Senna was injured at work on 2 June 2003 and accepted the offer of a lump sum compensation payment of $210,000 on 15 September 2006. Some of the money, $44,500, was paid to Mr Senna on 19 April 2006. Centrelink wrote to Mr Senna’s solicitors informing them that no preclusion period arose out of this payment but, if a further lump sum was paid, Centrelink would work out a new preclusion period. When the full payment totalling $210,000 was made, Centrelink decided to impose a preclusion period from 3 September 2006 until 27 February 2010.
6. When he last applied for the age pension in 2007, Mr Senna had spent most of his money. He had bought a car and paid various bills, as he told Centrelink and affirmed in oral evidence. In oral evidence he described additional reasons why his lump sum had been used up. He gave further oral evidence that he accepted the offer in 2006 because he had run out of money and could not pay for surgery needed on his knee.
7. Mr Senna has had five operations on his knee since the accident in 2003 and still needs further surgery. He gave evidence that his surgeon advised him that the pin in his knee had slipped and the cement had broken so he needed a replacement pin. Mr Senna’s general practitioner, Dr Peter Alexakis, wrote an undated letter explaining that Mr Senna developed an infection in the knee after surgery that required prolonged antibiotic use and subsequent knee replacement. Dr Alexakis also said that Mr Senna has chronic knee pain and heart disease. Mr Senna has already suffered a heart attack and two stenting procedures as the first stent blocked up. Dr Alexakis further wrote, “I can see no scope for Aldo to return to the workforce and he suffers daily from his physical disability”.
8. Centrelink records show they wrote to Mr Senna on 21 September 2006 advising him that, based on his lump sum payment, he was not eligible to receive Centrelink payments until 27 February 2010. When shown a computer record of this letter, Mr Senna said he probably had seen it but did not think about it at the time because he thought his money would last a long time.
9. On 9 October 2006, Mr Senna’s solicitors sent him a cheque for $155,587.20, which was the amount remaining after deduction of legal costs and other expenses and disbursements incurred. Mr Senna banked the cheque and used the money gradually in various ways. He bought an expensive car but recently traded it in on a second hand car that cost about $5,000. He had received an additional amount of about $10,000 from the sale which he used to make a credit card payment and had put aside about $7,000 to meet next month’s rent and other expenses. Mr Senna produced bank records to show these events.
10. Mr Senna spent about $5,000 on a trip to Tasmania where he had been thinking of relocating. However, he said land was not as cheap as he expected. He does not own a house in Australia. He explained that he and his first wife had divorced, at which time he lost his house. He remarried and he and his wife pay rent. They have lived in the same house for several years and he maintains the place in return for a lower than market rent.
11. On 11 October 2006, Mr Senna withdrew a little over $46,000 and travelled to Indonesia. Mr Senna’s wife is originally from Indonesia and they travelled there to see her mother and purchased a block of land near where she lived. They had planned to build a house and live on the land they purchased so his wife could be near her mother. However, Mr Senna’s mother-in-law died. Mr Senna gave evidence that he paid for the funeral. Mr Senna’s sister-in-law also died and he and his wife travelled again to Indonesia and paid for this funeral as well.
12. When asked why he chose not to live in Indonesia as previously planned, Mr Senna gave evidence that it would have been difficult for him to get residency even though his wife was born there. He said they both would have had to pay $1,000 every year to be allowed to stay and there was a problem in accessing and paying for the medicines he required. When asked why he did not sell the land, Mr Senna said his mother-in-law had enquired about selling before she died but this had not happened. He gave further evidence he would get very little return as he had paid far too much for the land, about $22,000, and he would get about $3,000. This was to do with his being a foreigner in Indonesia and also to do with a fall in the Australian dollar as against the Indonesian rupiah.
13. Other expenditures Mr Senna mentioned in evidence included repayment of a debt of $35,000 to a neighbour who had helped him when he could not work after the accident and could not meet all his expenses. He also bought an exercise bike and a laptop.
14. Centrelink records show Mr Senna twice enquired about his age pension entitlements and told an officer he was broke. However, bank statements show he had $82,050.58 in a Westpac account on 15 February 2007, $32,948.59 on 30 March 2007 and $20,052.13 on 25 May 2007. Mr Senna could not recall exact amounts or dates but agreed he had made such enquiries. He produced a bank statement to show he now had $7,000 in the account and gave evidence that he had overdrawn his account until he deposited the money from the sale of the car. He did not expect this money to last long as he had rent of $1,000 per month to meet.
15. Mr Senna said that part of the reason for his dissipating his funds was that he had a gambling habit. He had enjoyed some gambling at clubs before he received the lump sum payment but, once he had a lot of time on his hands, he gambled much more. He had not admitted to himself that he had a problem until he had no money left. He said he no longer gambled but it had been difficult to stop in the same way that it had been difficult to stop smoking. He now had given up both habits.
16. Mr Senna gave further evidence that his wife has a job stuffing paper into handbags and earns $400 net per week. He recalled that he had received a payment from Centrelink of $500, which the solicitor for Centrelink described as a one-off pension bonus payment made on 26 June 2007. He also recalled receiving a seniors’ concession allowance which he said he thought was $107 last year and indexed to $109 this year and was paid every June and December. Mr Senna has a health card which means his medications cost him only $20 per month. However, he has no money to pay for the further knee surgery he needs and expects it to cost $30,000. He said he was too frightened to have the surgery when he had the money but now he knows he must have surgery, he has no money. Mr Senna had not made enquiries about whether he could have the surgery covered by Medicare. He thought that his surgeon, Dr Gordon, might not be able to carry out the surgery if he put his name on a waiting list under the public health system.
17. The pension “will be my salvation”, Mr Senna said. He was worried he had nothing to offer his wife, not even a roof over their heads if the owner puts up their rent to the market rent. He had recently learned that he had some entitlement to assistance from the Italian government. Centrelink produced a copy of a letter showing that they had forwarded a claim on Mr Senna’s behalf. Mr Senna was not certain of the amount of assistance that he would receive. His sister had thought he might receive some arrears of pension but he thought this was not correct as it had something to do with an invalid pension which he thought did not apply to him. He expressed the view that it was inappropriate to depend on assistance from Italy when all his working life had been spent in Australia.
18. Mr Senna admitted he had been at fault in spending all his compensation money but argued that he should be entitled to something as he was well above the qualifying age for age pension. He thought it was unfair that he should be penalised for so long when he had no money to live on and could not work.
Consideration
19. Section 1169 of the Social Security Act 1991 (the Act) provides that a ‘compensation affected payment’ is not payable to a person during a lump sum preclusion period. An age pension is a ‘compensation affected payment’ pursuant to subsection 17(1). The term ‘compensation’ is also defined under subsection 17(2). Mr Senna’s lump sum compensation payment is within these provisions and, as the age pension is one of those compensation affected payments included in that term, this means he cannot receive this or any other compensation affected payment for a period calculated in accordance with further provisions under the Act.
20. Section 1170 sets out rules for calculating the number of weeks that a compensation lump sum preclusion period applies, in other words, the length of time over which a person who receives a lump sum compensation payment is restricted from receiving a compensation affected payment. Mr Senna has not disputed the correctness of the calculation of the preclusion period. Mr Senna has drawn attention to his unfortunate circumstances. He asked for a reduction in the period or that part of his lump sum be disregarded to this end because he believes that special circumstances exist in his case.
Discretion to disregard part of the lump sum
21. There are provisions under the Act which permit relief from the strict application of the compensation preclusion period where there are special circumstances. Subsection 1184K(1) of the Act reads:
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.
22. The phrase ‘special circumstances’ is not defined in the Act, however, it has been considered on a number of occasions by the Federal Court and by the tribunal in the context of the compensation preclusion period as well as in other situations. In order to be special, the circumstances must be out of the ordinary and different from the circumstances in which other persons who apply for social security assistance are placed. The Macquarie dictionary gives several meanings of “special”, beginning with “of a distinct or particular character” and including “different from what is usual or ordinary”. It also gives as meanings, “extraordinary” and ”exceptional”.
23. Along these lines, the tribunal case of Re Beadle and Director-General of Social Security (1984) 6 ALD 1, Toohey J presiding, is often mentioned with approval and the passage below followed:
…. it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they have a particular quality of unusualness that permits them to be described as special.
24. Besanko J, in Angelakos v Secretary, Department of Employment and Workplace Relations (2007) 44 AAR 436, expressed the view there is a danger that the test of “special circumstances” will be overstated if the word “exceptional” is emphasised. There is less risk of overstatement if the words “unusual” or “uncommon” are emphasised.
25. In Secretary, Department of Employment & Workplace Relations v Homewood(2006) 91 ALD 103 at [34], French J explained how best to exercise the special circumstances discretion contained in section 1184K of the Act. He recommended three steps. Firstly, identify circumstances of the case which are ‘special’ and the reasons for arriving at that finding. Secondly, explain why it is appropriate to treat the whole or part of the compensation payment as not having been made. Then, explain the selection of the particular amount disregarded under the section. In accordance with this judgment, I have first considered whether Mr Senna’s circumstances are special before further considering the discretion available to me.
26. In identifying any circumstances that are special, I note Mr Senna attained pension age in 2001, when he turned 65 but that he continued to work until his accident in 2003. I accept that Mr Senna now has almost no funds left from his compensation award and has expenses he cannot meet. He requires further surgery and can no longer work at more than the occasional casual job. His doctor says he cannot expect to work any more due to his health problems, which include his heart condition as well as the after effects of his physical injuries. He gave evidence that he was sacked from his last job just a few weeks ago because he had trouble climbing onto a truck. His injured shoulders and knee make working on a truck difficult but this is the sort of work in which he is experienced. Mr Senna also has no prospect of paying rent after he uses up the $7,000 he had in the bank at the date of the hearing. His rent is presently $1,000 per month but he fears it may soon rise as a property nearby attracts about $350 per week.
27. On the other hand, he owns land in Indonesia but believes he can receive little return for his investment should he locate a buyer. He may soon have a small Italian pension and his wife earns a small income.
28. I have analysed his main contentions below in relation to his adverse financial circumstances and ill health. Each of these circumstances might be sufficiently special to warrant exercise of the discretion especially when taken together.
Financial Hardship
29. I accept that Mr Senna is suffering financial hardship and he has provided some documentary confirmation of his claims. Mr Senna accepts that he is at fault in carelessly spending a substantial amount that would have taken care of his and his wife’s future for some time to come.
30. As the Secretary has pointed out in the written contentions, in order to qualify as special circumstances, financial hardship must be beyond ‘straitened’ circumstances and be truly exceptional. For example, see Re Krzywak and Secretary, Department of Social Security (1988) 15 ALD 690. The financial strain must be out of the ordinary or exceptional as I have already explained in relation to the concept of special circumstances in general.
31. Mr Senna’s financial circumstances alone may not be so unusual as to warrant the exercise in his favour of the discretion pursuant to section 1184K of the Act. However, there are other difficulties facing Mr Senna as well.
Ill Health
32. Mr Senna also is in very poor health. He has had three accidents during his working life and these have all left him with permanent restrictions. He continues to experience pain. He has limited ability to continue in his usual occupation which requires him to climb onto a truck and to load and unload. He cannot perform this task because of his unstable knee and shoulder problems. While his compensation award should have taken care of Mr Senna’s medical needs associated with the accident, the money has not turned out to be adequate partly because of unforeseen complications. His GP has explained that he has experienced an infection necessitating further surgery and Mr Senna also gave oral evidence about deterioration of the last surgery. While he did not produce a report about this, I accept his evidence as I formed the impression that Mr Senna was a truthful witness. He told the tribunal about his failings as well as making representations about his difficulties and needs. There is no doubt Mr Senna requires further knee surgery, which he cannot presently afford.
33. Some of his problems were to be expected after his accidents and this is why he received an amount of compensation. Poor heath alone is not enough to constitute a special circumstance. However, Mr Senna’s present health is of particular concern because of his age. He has developed permanent problems that will not improve because he is now in his seventies. His doctor does not expect him to make a full recovery although surgery for his knee may improve that problem. In addition, Mr Senna gave evidence that he is starting to experience what may be kidney problems as a result of having taken panadol over several years to control pain from his injuries. He was awaiting the result of a medical investigation of symptoms in regard to his kidneys.
34. There is no expectation that Mr Senna’s health may improve as time goes by. His doctor believes he will be unable to work again and that it is unrealistic to expect he will recover sufficiently to keep on working as he used to. Therefore, I consider Mr Senna’s health is a circumstance out of the ordinary when it is borne in mind that he is just short of 72 years of age.
Other factors-
35. The object of the preclusion period provisions is sometimes referred to as being in place to avoid double dipping. In the Second Reading Speech introducing amendments in 1996 (the Social Security Legislation Amendment (Further Budget and Other Measures) Act), the Minister said to the Parliament:
The rationale for the provision is that a person who receives a lump sum compensation that contains an amount for economic loss, should use part of the payment to provide for himself or herself for a period before turning to the Australian taxpayer, through the Social Security system for additional support.
36. On the other hand, the Act recognises that retirement at 65 years is the usual expectation and provides for payment of the age pension to males of that age provided they meet other tests such as the income and assets tests. There is no suggestion that Mr Senna does not meet these tests. The age pension provisions apply from the age of 65 years for males. See the definition at subsection 23(5A). The community expectation of male retirement at 65 years is entrenched in the legislation.
37. For the applicant to receive age pension payments from his 65th birthday may be double dipping to some extent but his continuing to work past age 65 is not a given expectation of the community. Also, while the legislative presumption of 50% for economic loss applying to a settlement cannot be altered, the terms of the settlement deed to which Mr Senna agreed refer to a comprehensive list of injuries compensated, including “injuries to his head, neck, back, whole of spine, shoulders, arms, elbows, wrists, hands, fingers, hips, pelvis, legs, knees, ankles, feet, toes, chest and abdomen together with psychiatric injury (the work accident)”. This wide description may indicate caution on the part of the insurer or it may indicate that Mr Senna was not actually compensated for economic loss. Double dipping is not indicated by reference to Mr Senna’s settlement agreement.
38. Common sense dictates that a person of Mr Senna’s age will not have an expectation of a long working life at this stage of his career. I agree with the reasoning of the tribunal in cases such as Re Secretary, Department of Family & Community Services and Kelava (2003) 76 ALD 239 and Re Gulcan and Secretary, Department of Family & Community Services (2001) 4(11) SSR 129 that to shut out some older persons , such as Mr Senna, from receiving the age pension is manifestly unjust.
39. However, I am aware that Lindgren J in Clark v Secretary, Department of Employment and Workplace Relations (2007) 161 FCR 451 at [75] found:
The expression “special circumstances” in s 1184K does not embrace the circumstance that the 50% rule will yield a preclusion period beginning on a certain date that will or may be excessive, even grossly excessive, having regard to the component included in a lump sum settlement for loss of earnings or of earning capacity, to the age of the injured person, and perhaps to other circumstances.
40. I am bound by Lindgren J’s view that “even a grossly excessive preclusion period” is not embraced in the expression “special circumstances”. Therefore, I am unable to find that Mr Senna’s advanced age is a special circumstance. I am disregarding his age in finding special circumstances exist. Nevertheless, Mr Senna’s age, of 72 on 29 March 2008, aggravates his special circumstances which are his poor health and poor financial situation.
41. I further note that Lindgren J’s view, that unfairness in the application of the Act cannot be a special circumstance, is not universally held or was not so held in 2000. Having read the judgment of Lindgren J, I note that he has referred to previous decided cases but not to Kirkbright v Secretary, Department of Family and Community Services (2000) 106 FCR 281.
42. The Federal Court found, in the case of Kirkbright, that the tribunal had fallen into error when it held, as a matter of law, that unfairness in the application of the Act in the particular circumstances of the applicant could not comprise “special circumstances”. Mansfield J rejected this argument. Mansfield J further noted that this submission was not supported by authorities and cited several cases that supported his opinion. His Honour considered strict application of a rule similar to the present concerning earning capacity and the effect on sole parent pension payments, failed to have regard to the role of the former section 1184 in the Act and to its plain words. Mansfield J added:
It is but another way of putting the proposition that injustice or unfairness by the strict application of the Act can not of itself amount to a special circumstance for the purposes of s 1184. That is a proposition which, as I have noted, has been rejected by a number of decisions of the Court as far back as Smith and Beadle. It has also been rejected more recently by R D Nicholson J in Martinez v Secretary, Department of Family and Community Services [2000] FCA 1090.
conclusion
43. I have heard about Mr Senna’s interest in real estate, noting that this is very modest and located in Indonesia, where its usefulness to him is limited. I take into account this land and his other assets, consisting of little more than a second hand car, and his occasional income from other sources, which is his wife’s meagre earnings and his own occasional casual work, which may have come to an end permanently. However, it is only a part of the evidence in the present case. Mr Senna has no immediate prospect of being able to continue to pay rent to his landlord. I have heard no evidence to suggest any alternative is available to Mr Senna. No evidence is before me as to the likely date of commencement of assistance from the Italian government or the amount that may be forthcoming.
44. In all the circumstances, taking account of Mr Senna’s deteriorating health and financial considerations, I find there are special circumstances pursuant to subsection 1184K(1) of the Act. This means that all or part of Mr Senna’s payment should be disregarded in calculating the preclusion period.
45. In deciding what proportion should be disregarded, I take note that Mr Senna was managing reasonably well until 25 May 2007 when Centrelink recorded that his bank statement showed his funds had diminished to $20,052.13. Further bank statements show that his funds diminished rapidly during 2007 until he had a balance of $11,766.45 on 12 June 2007. Mr Senna told me at the hearing that he had overdrawn his account before he traded in his car on a cheaper model recently and made a small deposit. He had approximately $7,000 on hand by the date of the hearing on 25 February 2008 and that was because he had sold the car. His compensation money had all gone. He produced some records confirming this state of affairs. When asked about some other small deposits, Mr Senna gave evidence he had a casual job for a few weeks but got the sack before Christmas because his knee did not permit him to climb onto a truck easily.
46. In view of the financial deterioration in 2007 and Mr Senna’s current expenses, I find that pursuant to section 1184K, I am satisfied that so much of the compensation that has been paid which would otherwise permit a preclusion period beyond 14 December 2007 should be disregarded and from that date Mr Senna be paid age pension, presuming he meets other requirements. I believe this strikes a fair balance between the objects of the legislation to prevent an undue burden on the Australian taxpayer and Mr Senna’s unfortunate situation.
decision
47. The decision under review is set aside and substituted is the decision that, pursuant to subsection 1184K(1) of the Social Security Act 1991, so much of the compensation lump sum payment is taken as not having been made that permits reduction of the preclusion period to end on 13 December 2007.
I certify that the 47 preceding paragraphs are a true copy of the reasons for the decision herein of Ms Robin Hunt, Senior Member
Signed: ........................[Sgd].............................
Jennifer Wong, AssociateDate of Hearing: 25 February 2008
Date of Decision: 27 March 2008
Solicitor for the Applicant: Self-representedSolicitor for the Respondent: Ms Raewyn Harlock, Centrelink Legal Services Branch
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