Sheean; Department of Family and Community Services

[2000] AATA 398

DECISION AND REASONS FOR DECISION [2000] AATA 398

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No V2000/187

GENERAL ADMINISTRATIVE  DIVISION       )          
           Re      SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES        
  Applicant
           And    PHILLIP REX SHEEAN    
  Respondent

DECISION

Tribunal       Mr B.G. Gibbs, AM, Senior Member       

Date22 May 2000

PlaceMelbourne

Decision      The Tribunal sets aside the decision of the Social Security Appeals Tribunal dated 6 January 2000 and substitutes therefor the decision: (a) That the respondent is subject to compensation charges totalling $21,838.82; and (b) That no special circumstances exist under section 1184(1) of the Social Security Act 1991, to treat the whole or part of the compensation payment as not having been made.        

(Sgd.)    B.G. GIBBS
  Senior Member
CATCHWORDS
SOCIAL SECURITY – Compensation charges – whether special circumstances – decision set aside
Words and Phrases
Social Security Act 1991, s. 1184(1)
Re Beadle and the Director-General of Social Services (1984) 6 ALD 1
Beadle v Director-General of Social Services (1985) 60 ALR 225
Director-General of Social Services v Hales (1982) 47 ALR 281
Re Krzyak and Secretary, Department of Social Security (1998) 15 ALD 690
Re Secretary, Department of Social Security and Bolton (1989) 18 ALD 464

REASONS FOR DECISION

22 May 2000 Mr B.G. Gibbs, AM, Senior Member                   

Introduction

1. This is an application by the Secretary, Department of Family and Community Services, hereinafter referred to as "the Department", for review of the decision of the Social Security Appeals Tribunal, hereinafter referred to as "the SSAT", made on 6 January 2000.

2. The decision of the SSAT was to set aside the decision of a Centrelink officer made on 3 February 1999 to raise and recover a debt of $20,052.91 in respect of newstart allowance and disability support pension paid to Mr Sheean between 8 June 1995 and 21 November 1997.  The decision was affirmed by an authorised review officer on 29 July 1999.

3. In setting aside the decision of the Centrelink officer the SSAT further decided to send the matter back to the Department for reconsideration in accordance with directions that no debt exists as Mr Sheean's compensation lump sum should be disregarded.
   Representative

4. At the hearing before this Tribunal Mr Sheean was self-represented. Ms K. Cunningham, a departmental advocate, appeared for the Department.
   Material

5. At the hearing the Tribunal had before it documents ("the T documents") lodged by the Department pursuant to section 37 of the Administrative Appeals Tribunal Act 1975.  Other material, to some of which it shall be necessary to refer, was also received by the Tribunal during the hearing.
   Witnesses

6. During the hearing Mr Sheean gave evidence.  Evidence was also given by Mr Mark Meager, who is the Compensation Liaison Officer for Centrelink in Victoria and Tasmania.  Mr Meager was formerly Compensation Liaison Officer with the Department of Social Security before Centrelink was established.
   Background

7. Mr Sheean was injured at work on 14 August 1993.

8. He received weekly compensation payments for three periods:

   15 August 1993       -          7 October 1993
   27 April 1995           -          21 May 1995
   6 June 1995             -          7 June 1995

9. Mr Sheean received Newstart and Disability Support Pensions from 25 September 1995 – 21 November 1997, inclusive.

10. Mr Sheean received a compensation settlement of $111,559 in respect of his injury.  Settlement occurred on 29 January 1999.

11. As a consequence of the settlement Mr Sheean was precluded from payment of pension, benefit or allowance, for the period 8 June 1995 – 21 November 1997.
    Issue

12. In setting aside the decision of the delegate the SSAT decided that, due to special circumstances, no debt exists and that Mr Sheean's compensation lump sum should be disregarded.

13. The SSAT reviewed both the calculation of the preclusion period and the recovery of the compensation charge.  Centrelink agrees with the calculation of the preclusion period.

14. In the circumstances, therefore, the only issue for determination by the Tribunal is the recovery of the compensation charge.
    Relevant Legislation

15. Section 1184(1) of the Social Security Act 1991 ("the Act") states as follows:

    "1184(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."

Contentions

1. It was the Department's contention that no special circumstances exist in respect of this matter and therefore section 1184(1) is not applicable.
   Evidence

2. At the hearing Mr Sheean read out the contents of a handwritten statement, which he considered addressed the issue of "special circumstances".

3. It should also be recorded that on 26 April 2000, after the hearing had concluded, Mr Sheean lodged further material which he felt might be relevant.  That material was accepted and taken into account.

4. In his statement Mr Sheean addressed a chronology of events and circumstances which may be summarised as follows:

• In 1985 he and his family were devastated financially by bushfires;

• At about the same time his youngest daughter Jodie was diagnosed with renal failure, resulting in the need for home dialysis and kidney transplant;

• After the bushfires he and his wife invested their life savings of $35,000 toward the purchase of another home, borrowing the remainder of the finance from a bank;

• About 12 months later Jodie again experienced renal failure;

• Because of the need to look after Jodie his work attendance suffered and he became retrenched;

• Repayments on the family home increased to 18.5 per cent with Council rates increasing from $700 per annum to $1,400 per annum;

• At this time Mr Sheean became bankrupt;

• Mr Sheean then moved to Queensland where he obtained employment with James Hardy and Company.  He gained advancement in his employment;

• In 1993, when he was injured at work, his wife left him, leaving him to care for their three children.  His wife took the family car and half of the household contents;

• At this time Mr Sheean was receiving compensation.  He stated that he felt devastated and although he had his children he nevertheless felt alone, with no immediate friends to provide help;

• His daughter Jodie again experienced chronic renal failure and rejection of a kidney transplant.  This added to his financial difficulties, causing him to return to work with James Hardy and Company before he had fully recovered from his injury;

• He believed that litigation over his injury prevented him from day-shift work and promotion.  His absence from home at night caused his children to become frightened;

• Jodie developed total renal failure, removal of her kidneys, a return to home dialysis and considerable time in hospital;

• His wife then instituted divorce proceedings, which upset him although he endeavoured to remain focused on his children's well-being;

• Mr Sheean stated that at this time his eldest daughter Kylie began to exhibit behavioural problems and left home.  She later began using drugs.  Although he endeavoured to get her to return home he was not successful.  Shortly afterwards Kylie was raped;

• Mr Sheean stated that the process of litigation in respect of his injury was at this time still ongoing, causing him added stress and mental confusion;

• In May 1997, he received advice from Counsel concerning assessment of damages (quantum) should he proceed to trial in respect of his injury.  In late 1998 he received further advice which included all relevant factors, the estimate being in excess of $250,000;

• Mr Sheean said he eventually settled for $100,000.  He did so because of the length of time he had already been under extreme stress in respect of himself and his family.  At the time of settlement he was also visiting Jodie in hospital on almost a daily basis.  Sometimes he slept at the hospital in order to save travel costs.  He also stated that he needed to purchase a car.  He said that he accepted settlement for $100,000 against legal advice, because he was "just so sick of it all".  In making his decision he was aware that he would have solicitor costs of about $6,000, and that eventually he would have to meet costs associated with his divorce.

1. Mr Sheean concluded his written statement with the following observations:

   "You see by this I am not greedy but tired.  Tired of the whole issue but I cannot in all concious (sic) let $22000 go when I believe (sic) so firmly I am right.  I feel C/link are stealing it on a tehnicality (sic) without any attention to emotion, feelings or what is conciounably (sic) right.  Whatever happened to duty of care, produce the information requested not examples, not tehnicalities (sic) or examples of other cases which as I said earlier, some win, some lose.  Judge the case on its merits, check my bank balance, check what I have.  I have now a nice car, but no bed, no white goods no furniture no job and probably little future job prospects.  Although I have tried.
   Through all this my children have all gone to hell & back and are all in their own way successful although Jodie will always till she dies be sick.  She is very well adjusted and settled.  Aaron has been successful in his work and is a top footballer 2nd best in his league in 99.  And Kylie is to be married this year and her partner also Aaron have given me two beautiful grandsons, Jimmy and Jack but even so they do have areas they cannot control and some problems which they want me to help with.  Aaron wants me to move in with him to help financially and Jodie & Kylie just simply want dad home for moral support I guess and importantly I want to be there, I've tried it here rightly or wrongly I need to be with my "kids".
   Lastly but not leastly I cannot live or save on D.S.P. even A.C.O.S. have declared to the govt that D.S.P. for e-g is below the poverty line.  For all these reasons and many more I need what I consider to be rightfully mine, to help me get affordable assistance back into the workforce (hopefully eventually and because I believe the advocacy and admin law team have erred at law in their administration of duties in conjunction with C/link prior to and since my court settlement."

2. It is noted that at the hearing of his appeal by the SSAT, Mr Sheean asserted that he could not recall receiving a letter from Centrelink about a preclusion period applying, nor did his solicitor receive such a letter.  Mr Sheean further asserted that his solicitor had informed him that he had spoken with a Centrelink officer some two weeks prior to the settlement in January 1999, and that the solicitor was told there was no debt to be paid out of the settlement. Mr Sheean stated that the Centrelink officer also said that if Mr Sheean had only had payments for pain management clinics, etc, then there would not be any effect on his Centrelink payments.  Mr Sheean stated that he had himself been to Centrelink and was informed that his lump sum settlement would only affect a pension in terms of income and assets tests.

3. Mr Sheean told the SSAT that he felt he did not have adequate information to make the right enquiries with Centrelink prior to his settlement, and that he could not even ask about a preclusion period at that stage, as he knew nothing about such a period.  He was not aware that it was going to affect him and felt that both he and his solicitor had attempted to seek advice from Centrelink about anything that might affect his payments in relation to his settlement.  He asserted that when he asked a Centrelink officer if he would have to pay back past payments he was informed by the officer that he did not know about this and that anything to do with compensation was handled by Coffs Harbour.  After settlement he was told by Centrelink, Coffs Harbour, that he had a $22,000 charge.

4. At his appeal hearing before the SSAT Mr Sheean also provided the following information:

• At the time of settlement he was surviving on Centrelink's payments.  His youngest daughter was still on dialysis five times a day and very sick at the time awaiting transplant.  She had a transplant in April 1999.  His wife took him to court following the settlement in relation to a pending property settlement and he settled with her for $22,000.  Up until this settlement with his wife, money paid to him from his accident was in a trust account at the solicitors and he did not receive anything until the third or fourth month of 1999.  He was so desperate financially at this time, and felt that things were going so wrong for him, that he felt suicidal at times.  His eldest daughter had her rape case heard in late 1998 or early 1999 and one of the offenders was sent to jail and one absconded and was unable to be found.

• Following his youngest daughter's transplant he considered moving to Melbourne.  Up until this time he had been caring for and living with his daughter, his eldest two children having moved out of home.  He stayed with his daughter until she was able to care for herself and she then decided she would like to try it on her own for a while.  He moved to Melbourne to live with a friend about five or six months ago.  He has been living with his friend in Victoria and sleeping on the floor in the lounge since that time.  His friend has now asked him to leave.

• He has no assets, at the time of settlement he paid debts of approximately $2,000, loaned his brother approximately $3,000 and bought white-goods for his daughter Jodie. He gave each child $1,000 and made an investment of Olympic gold coins for which he paid $900 and which he is wanting to sell closer to the Olympics.  He has little of his settlement money left.

• He still has problems with his foot and has now developed quite severe back problems due to the way he has to weight bear.  He has been in five hospitals in the last couple of months and the Alfred are now reviewing him on a month to month basis.  He is taking morphine tablets, diazapan, panadeine forte and sleeping tablets.  He has also had a number of anti depressants over the last few years.  He feels extremely stressed, anxious and depressed because of his physical conditions and financial circumstances.  He has attempted to obtain retraining and began a course but then his back became a significant problem and he could not continue.

1. Mr Meager, who as earlier indicated is the Compensation Liaison officer, Centrelink, in Victoria and Tasmania, said that he is familiar with office procedures for the recovery of compensation charges and the imposition of compensation preclusion periods.  He further stated that he is familiar with the compensation procedures as they were in 1995.

2. During his evidence Mr Meager identified document T178 page 49 as a printout of a screen showing the automatic issue of letters in September 1995 to Mr Sheean, his legal representative and the insurer.  The letters warn the addressees that if the addressee is receiving weekly payments of compensation or a lump sum compensation payment, some or all of the social security payment paid may have to be repaid.  The letters further state that any compensation received may result in the cessation of social security payments in the future.

3. The letters further state:

   "This means that before you agree to settle your compensation claim, you should contact this office to find out if you will have to pay back any money you get from us. We will also be able to tell you if you (or your partner) are able to get any of the payments listed above in the future."

Finding

1. It is quite clear, particularly from his oral evidence, that Mr Sheean's personal life has been extremely difficult for him over a number of years. However, while this is so I find that special circumstances do not exist which would make it appropriate to treat the whole or part of his compensation payment in the manner provided for in section 1184(1) of the Act.

2. As was correctly observed by Ms Cunningham in these proceedings, there are several authorities which serve to provide guidance on the often vexed and difficult question of what circumstances may properly be treated as special, within the context of social security legislation.

3. In Re Beadle and Director-General of Social Services (1984) 6 ALD 1, the Tribunal described "special circumstances" as an expression which is:

   "… by its very nature incapable of precise or exhaustive definition.  The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional.  Whether circumstances answer any of these descriptions must depend on the context in which they occur."

Upon appeal the Federal Court expressed broad agreement with this approach.  (Beadle v Director-General of Social Services (1985) 60 ALR 225)

1. Although Mr Sheean asserted that in late 1998 he was provided with further advice as to quantum, the material before the Tribunal demonstrates that he received a settlement of his claim that was above the maximum assessed by Counsel in a Memorandum of Advice on Quantum dated 12 May 1997.  In excess of 50 per cent of the estimate was for economic loss.

2. In Director-General of Social Services v Hales (1982) 47 ALR 281, a decision of the Full Court of the Federal Court, it was noted (Sheppard J) that:

   "… the legislation provides for the payment of a variety of benefits to different classes of people who will usually have one thing in common:  they will be impecunious and in straitened circumstances."

His Honour also stated that the financial hardship experienced by people from whom the Commonwealth recovers money must be balanced by consideration that the person has, for whatever reasons, received public money to which they are not entitled.

1. At a stay hearing conducted on 21 February 2000, Mr Sheean provided details of expenditure as follows:

   Workcover  11,000
   Solicitor  6,000
   Car  23,500
   Olympic Coins  900
   Property settlement  22,000
   Gifts to Children  5,000
   Centrelink Debt  22,000
   Trip Qld – Melb  1,000
   Bills  2,000
   Loan to brother (Bill
   In Townsville)  2,000
   Loan to brother in law (Peter)                  1,000
   Loan to brother (Rodney)  1,800
   Trip to Adelaide (submarine)                   1,500
   Baby items  500
   Car insurance  500
   Television  500
   Telephone  300
   Mattress  600
   Binoculars, Household
   Goods, clothes  1,000
   Fines  700

   Total  103,800

2. As Ms Cunningham noted, financial hardship was defined in Re Krzywak and Secretary, Department of Social Security (1988) 15 ALD 690.

3. Mrs Krzywak had no income or savings.  She was not in receipt of an income support payment and "… did not have the means to provide for her own food except by borrowing from a friend or by obtaining a food voucher from a social worker".

4. Mr Sheean's circumstances are distinguished from these in that, as observed by Ms Cunningham, he has been continuously in receipt of income support payments since 16 September 1996.  Initially, he was paid Job Search Allowance and, since 21 November 1997, Disability Support Pension.  His current rate of DSP is $372 per fortnight plus $44.65 Rent Assistance and $5.40 Pharmaceutical Allowance, giving a total of $422.05 per fortnight.  As indicated in paragraph 32 above, he has an investment of $900 in Olympic coins and is owed a total of $4,800 by family members.

5. In Re Secretary, Department of Social Security and Bolton (1989) 18 ALD 464, the Tribunal noted that the fact that a person's state of health is such that he may be medically qualified to receive DSP is not, of itself, sufficient to constitute "special circumstances" within the meaning of section 1184(1) of the Act.

6. The Department's submission that the matters that have led to Mr Sheean's present financial difficulties, including his debt to Centrelink, were all matters within his control and could have been foreseen at the time of the settlement, is agreed.  As indicated, in September 1995 Mr Sheean and his legal representatives were advised about the possibility of having to repay some or all of the social security payments paid to him.

1. In the total circumstances of this matter, recovery of the compensation charge did not create undue financial hardship.  As stated by Ms Cunningham, the compensation charge was repaid in full on 3 February 1999, over twelve months ago and Mr Sheean is not facing a preclusion period where he will be without funds for a length of time.  He is presently in receipt of income support payments and has been since 16 September 1996.

2. Following settlement $72,162 remained at Mr Sheean's disposal ($111,559 less $11,559 to Workcover; $6,000 legal costs and $21,838 to Centrelink).  This amount has been expended in the manner indicated and at Mr Sheean's discretion.
   Decision

3. The decision of the SSAT will be set aside and a decision substituted therefor that Mr Sheean is subject to compensation charges totalling $21,838.82, and that no special circumstances exist under section 1184(1) of the Act to treat the whole or part of the compensation payment as not having been made.

   I certify that the 40 preceding paragraphs are a true copy of the reasons for the decision herein of:

   Mr B.G. Gibbs, AM, Senior Member

   Signed:.....................................................................................
     Personal Assistant

   Date/s of Hearing  13/4/2000
   Date of Decision  22/5/2000
   Counsel for the Applicant        Ms K. Cunningham
   Solicitor for the Applicant         Centrelink Administrative Law Section
   Counsel for the Respondent    Self-represented
   Solicitor for the Respondent    -