Snook and Secretary, Department of Family and Community Services

[2003] AATA 273

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2003] AATA 273

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No  W2001/373

GENERAL  ADMINISTRATIVE  DIVISION		)
Re		LYNETTE SNOOK

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal  Mr Murray Allen (Member)

Date 25 March 2003

Place Perth

Decision

 The Tribunal decides that:

1. The decision of the Social Security Appeals Tribunal dated 28 February 2002 be set aside.

2. In substitution therefore the Tribunal decides that pursuant to s1184(1) of the Social Security Act 1991 it is appropriate in the special circumstances of the case to treat as not having been made so much of the lump sum payment of compensation received by the applicant as would result in a  preclusion period that commences on 12 July 2000 and ends on 22 September 2000.

…...........(sgd M Allen).........................

Member

CATCHWORDS

SOCIAL SECURITY –– lump sum compensation payment – preclusion period – discretion to treat whole or part of compensation payment as not having been made  - whether special circumstances exist – whether incorrect departmental advice – applicant’s family, financial and health circumstances – benefits received during the preclusion period were not causally connected to the events giving rise to the compensation payments-                

Social Security Act 1991 S1184

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

Boscolo v S,DSS (1999) 53 ALD 277

Kertland v Secretary, Department of Family & Community Services [1999] FCA 1596

Haidar v Secretary, Department of Social Security [1998] 994 FCA

Commonwealth v Daniels (1994) 33 ALD 111

Secretary, Department of Family and Community Services v Edwards (2000) 105 FCR 220

REASONS FOR DECISION

1.   This is the application of Mrs Lynette Snook for a review of a decision made by the Social Security Appeals Tribunal (SSAT) on 9 October 2001.  On that day the SSAT decided to affirm a decision made on are about 21 May 2001 by a delegate of the Secretary to raise and recover an overpayment of partner allowance of $4715.32 during a preclusion period  of 23 September 2000 to 18 May 2001.

2.   At the hearing of the application on 18 November 2002 Mrs Snook was represented by Ms Belcher of the Welfare Rights & Advocacy Service and the Secretary was represented by Mr Ellis from Centrelink’s Advocacy and Administrative Law Team.   

3. The Tribunal received into evidence the documents (the T documents) lodged by the Secretary in accordance with s37 of the Administrative Appeals Tribunal Act 1975 (the AAT Act). Oral evidence was given by Mrs Snook by telephone from her home in Exmouth and the Tribunal also received into evidence the following documents:

Exhibit          Description

A1Medical report from Dr Francois Krige dated 9 August 2002 concerning Mr Peter Snook

A2Medical report from Dr Francois Krige dated 9 August 2002 concerning Mrs Snook

A3Letter from Disability Services Commission to Ms Belcher dated 8 August 2002

A4                  Report from Dr Oleh Kay dated 2 August 2002

A5                  Centrelink payment certificate dated 4 November 2002

A1                  Letter from Exmouth Recovery Committee to Mrs Snook undated

Background evidence

4.        Many of the facts of the case are not significantly in dispute.  They can be summarised as follows and I make the findings of fact set out below.  Other evidence adduced in the case is referred to later in these reasons.

(a)Mrs Snook was born in 1943 and was 51 years old when she was injured at work in February 1995 and 59 when the application was heard by the Tribunal.

(b)Mrs Snook was receiving Partner Allowance (PA) payments and weekly workers compensation payments in July 2000 when her damages claim against her former employer was settled for a payment of $50,000.  The Secretary was informed of the settlement at the time by the applicant but it was not until September 2000 that the Secretary sought and obtained details of the settlement from the employer’s insurer.

(c)On 28 September 2000 the Secretary wrote separate letters to Mrs Snook and her solicitor (T9 and T10) advising that a preclusion period would apply from 12 July 2000 to 22 May 2001, that the amount of social security payments to be repaid was $1410.71, and that the insurer had been asked to pay that amount to Centrelink before paying the settlement monies to Mrs Snook.  The letter to Mrs Snook informed her (wrongly) that her benefit payments were now cancelled because the preclusion period had not expired.  On the same day a letter to the insurer (T11) wrongly advised that the preclusion period was from 12 July 2000 to 22 September 2000 and sought recovery of the sum of $1410.71 (which was eventually received in the following year).

(d)In fact, due to error by Centrelink, Mrs Snook’s benefit payments were not stopped at that time – and were not until 21 May 2001 when Centrelink finally realised its error..  Mrs Snook was advised by telephone on that day that she had been overpaid approximately $4715.  Then followed a process of internal review and the application for review by the SSAT, which affirmed the decision to raise and recover a debt of that amount.

The issues

5.  Mrs Snook does not dispute that the correct calculation of the preclusion period based on the terms of her settlement is from 12 July 2000 until 22 May 2001 or that she was overpaid $4715.32 during that period (after taking account of the $1410.71 paid to Centrelink by the insurer – which represented part of the preclusion period payments from 12 July until 22 September 2000).  The issues for determination in this proceeding are:

(a)Whether the discretion available under s1184(1) of the Social Security Act 1991 (the Act) to treat all or part of the compensation payment received by Mrs Snook as not having been made should be exercised. I note that neither the internal reviewers nor the SSAT considered this issue when reviewing Mrs Snook’s situation.

(b)If, after deciding issue (a), there remains any debt due by Mrs Snook, whether all or part of that debt should be recovered, waived or written off?

Consideration of the issues

Should the s1184(1) discretion be exercised?

6.        The discretion that is available is in the following terms:

“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.”

7.  What should be regarded as special circumstances is an issue that confronts this Tribunal regularly in a number of contexts.  Reference is frequently made, with approval, to the decision of the Tribunal in Re Beadle and Director–General of Social Security (1984) 6 ALD 1 at 3, that one should look for circumstances that are unusual, uncommon or exceptional. They need not be unique, but they must have a particular quality of unusualness that permits them to be described as special. In Boscolo v S,DSS French J described the core of the requirement as being that there be something unusual or different to take the matter out of the ordinary course, but without requiring that the case be extremely unusual, uncommon or exceptional (1999) 53 ALD 277 at 281, 282.

8.        The object of Part 3.14 of the Act, which deals with recovery of compensation amounts, has been described by Merkel J as follows:

1.         The Social Security Act 1991 (Cth) ("the Act") provides for the Secretary, Department of Family and Community Services, to reduce and, where appropriate, recover certain social security benefits payable under the Act to a person who receives personal injury compensation which includes payment for loss of earnings or earning capacity. The statutory scheme is designed to prevent a person from being entitled to receive social security benefits in respect of a period during which the person receives, or is entitled to receive, personal injury compensation for loss of earnings or earning capacity. The relevant provisions operate to prevent "double payment" by depriving a person of an entitlement to social security benefits payable under the Act during the relevant period ("the preclusion period"). Kertland v Secretary, Department of Family & Community Services [1999] FCA 1596 at para 1.

9.        Hill J in Haidar v Secretary, Department of Social Security [1998] 994 FCA described the position thus:

So, as von Doussa J observed in Secretary, Department of Social Security v Smith (1991) 30 FCR 56, in a passage quoted by Einfeld J in Secretary, Department of Social Security v Thompson (1994) 53 FCR 580 at 583-4, an attempt was made to balance on the one hand finite budgetary allocations against the interests of the recipient of the payment. Without putting too fine a point upon it, the purpose of the basic thrust of the legislation was to avoid a claimant being entitled both to social security benefits and benefits in the nature of income through lump sum payments.
However, the legislature was conscious of the possible harshness of a rule structured in an arbitrary way. Section 1184, therefore, provided the means whereby the Secretary or, in the event ultimately of an appeal to the Administrative Appeals Tribunal, that Tribunal, could alleviate the harshness of the statutory provision in an appropriate case but only where there were special circumstances. The question of what constitutes special circumstances has been the subject of a number of decisions of this Court. It suffices here to say no more than that something is required which would take the matter out of the usual ordinary case: Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545 per Kiefel J, Secretary Department of Social Security v Ellis (1997) 46 ALD 1 at 5 per Carr J.
As the Full Court of this Court said in Beadle v Director-General of Social Security (1985) 60 ALR 225 at 228, albeit in a slightly different context, special circumstances will be those matters which render circumstances unfair or inappropriate

10.      The present case is one of those relatively unusual ones where the preclusion period had ended at the time that the original decision came to be reviewed by the SSAT or this Tribunal.  An issue therefore arises as to the relevance of circumstances that arose after the end of the preclusion period and, perhaps, were still present at the time of the review decision.  In Haidar Hill J expressed the following:

In the case such as the present where the preclusion period required by the statutory formula in the absence of discretion had finished, it cannot be said that events at the time of hearing would necessarily be irrelevant. It is clear enough that the Tribunal sitting on appeal from a decision maker, be it the Minister or another Tribunal, must take into account the facts as they exist at the time the matter is heard by the Administrative Appeals Tribunal, to the extent those facts are relevant to the decision. It is not limited to taking into account events which occurred at the time the original decision was made, nor for that matter facts as they were known at that time, notwithstanding that later knowledge would lead to a revision of the earlier factual assessment. However, the fact that the Tribunal can consider facts after the date the initial decision was made does not mean that every fact after that date is necessarily relevant. Where, between the end of the preclusion period and the time of the decision, a claimant's economic situation is good and that arose as a result of receipt of a lump sum compensation amount, clearly the decision maker or Tribunal in place of the decision maker could take into account the economic circumstances existing at the time of the decision. But that is because those economic circumstances bear some relationship to the matter under decision, namely the relevance of the lump sum payment and its impact upon the question whether a pension be paid notwithstanding the receipt of a lump sum.
Conversely, should it be the case, that some event which happened after the expiration of the preclusion period but before the Tribunal heard the matter, and which event was wholly unrelated to the relationship between the lump sum and pension, have any significance at all? It is hard to see how it could.

8. As noted above, the SSAT did not address the s1184(1) discretion. It did, however, consider whether there were special circumstances that would justify a waiver of the debt under s1237AAD of the Act and referred briefly to the health problems of Mr and Mrs Snook and the expenses they would incur because of the health problems and the aftermath of Cyclone Vance - but concluded that there were not (T2 para 25).

9.        It was argued on behalf of Mrs Snook that special circumstances did exist, including (a) the numerous administrative errors made by Centrelink; (b) the family circumstances of the applicant; (c) the impact of the medical conditions of Mr and Mrs Snook; and (d) the dire financial circumstances of the applicant and her husband.  On the other hand, Mr Ellis for the Secretary submitted that the purpose of the s1184 discretion is to alleviate the hardship of a preclusion period, namely the loss of income in the period, and one should look for financial difficulties that are substantially more than other beneficiaries – and the applicant is receiving her full entitlements and her situation is no different from other social security recipients in the town of Exmouth. 

Administrative errors

10.      Ms Belcher on behalf of the applicant identified three administrative failings by Centrelink, specifically the failure for several months to obtain the settlement details from the insurer after being told of the settlement by Mrs Snook, the incorrect calculation and advice of the preclusion period as notified to the insurer, and the failure to identify the error and cancel the benefit payments to the applicant until the preclusion period had effectively expired. It is not in dispute that administrative errors did occur and that the failure to identify them and stop the payments was responsible for the creation of the debt.  Mr Ellis conceded that Centrelink officers who spoke to Mrs Snook in the various telephone contacts during the preclusion period should have noticed that the computer entry showing the end of the preclusion period as September 2000 was incorrect and the unfortunate situation should have been identified much earlier.

11.       It is not clear, however, what the impact of those errors was on Mrs Snook – in particular whether they caused her to be under the misapprehension that no preclusion period applied at all, or that it ceased in September 2000 rather than May 2001, or whether, during the preclusion period, she would continue to receive some amount of benefit less than the normal amount or the amount that she had been receiving prior to the start of the period.  It is therefore necessary to examine in some detail the evidence about the events prior to and during the preclusion period. 

12.      The SSAT decision records that Mrs Snook gave evidence to the SSAT that she telephoned Centrelink in 1999 when her solicitor told her that a preclusion period would result from a settlement of her claim and she was told by Centrelink that a settlement of $100,000 would mean a preclusion period of about 2 years.  This was an amount greater than her solicitor had mentioned at that time but she proceeded on the basis that a lower amount would result in a shorter preclusion period.  However, Mrs Snook’s evidence to me was that it was her solicitor rather than she who made that call and that her understanding had been that the preclusion period would be for about one year.  A Centrelink computer record (T19) confirms the evidence given to the SSAT ie that the telephone contact was with Mrs Snook and that the advice given was that the preclusion period would be approximately two years for a payment of $100,000. 

13.      On the other hand, Mrs Snook gave evidence to both the SSAT and to me that when, in July 2000, she settled her court action (because she was too stressed to continue with the litigation) for $50,000 she telephoned Centrelink from her mother’s house in Perth to clarify the preclusion arrangements because she wanted to be sure that she would be able to manage financially – specifically that she would be able to cover her rent payments to Homeswest that had been deducted from her Centrelink payments up to that time.  She knew at the time that a preclusion period meant that she would receive no payments from Centrelink and that she would therefore need to make arrangements for there to be enough funds in the bank account to meet the rent payments.  She could not say to whom she spoke (other than that it was a female) but she was advised that she would not be subject to a total preclusion.  Rather, she would continue to receive payments of about half what they had been and the Homeswest payments would continue to be made direct by Centrelink.

14.       Centrelink’s record of this contact confirms only that it occurred, that Mrs Snook advised of the $50,000 settlement and that weekly compensation payments had ceased, and that the officer advised that she would follow up with the insurer. No note has been made about what else (if anything) Mrs Snook was told by the Centrelink officer. The SSAT found that this contact occurred and that Mrs Snook advised Centrelink of the settlement, but made no finding about what she was or may have been told about future payments.  The SSAT did accept Mrs Snook’s evidence that she had proceeded on the basis that there would be a preclusion period of about one year because she was receiving about half of $100,000 – for which there was to have been a preclusion period of about two years.

15.      Ms Belcher suggested that Mrs Snook’s version of the conversation was unlikely to be correct and that she must have been confused by the explanation given to her about how the preclusion period is calculated, particularly the reference that was likely to have been made by the Centrelink officer to the fact that only 50% of the amount received in the settlement would be used to calculate the length of the period.  Ms Belcher suggested that possibility to Mrs Snook and that she may have been quite stressed at the time about the settlement.  Mrs Snook agreed that it might have been the case – but emphasised that she definitely thought at the time that she was being told that she would continue to receive about half the usual payments and she was very relieved that she did not have to make immediate arrangements about the rent payments, which she would have otherwise have had to do because she did not receive the settlement funds for some time after that.

16.      As regards Centrelink’s letter to her of 28 September 2000, Mrs Snook told both the SSAT and this tribunal that she did not receive it.  Had she done so she would have certainly telephoned Centrelink because she always telephoned on any matter that she did not understand or disagreed with.  Centrelink records (T19) record a telephone call from Mrs Snook on 6 October 2000, with the annotation that she was  “…distressed that precluded until May 01 and that ongoing conflict with [insurer] re legal costs.”  I note that the letter of 28 September to her correctly identified the start and finish dates of the preclusion period.  It is, of course, a matter of considerable regret that the Centrelink officer did not record what was said to Mrs Snook about the situation.

13.      Additional evidence is available from the Centrelink computer records that may help throw some light on the events and the reliability of Mrs Snook’s recollection of events:

·T19 contains a record made by a Centrelink officer in Perth of a telephone contact with Mrs Snook on 14 September 2000 as follows: “Pat … at Carnarvon rang to say client distressed as has [settlement] monies already and fears huge [overpayment]”. No record appears to have been made at all of the conversation by the person described as Pat.  Once again, a Centrelink record made at the time about what was said to Mrs Snook about the position and how to deal with the problem that she obviously perceived would be helpful in a review process of this kind.

·T13 records telephone contacts with Mrs Snook on 15 and 21 March 2001 concerning the account number of a term deposit that contained most of the funds received from the settlement and about a delay in a payment of benefits.

·T14 records a telephone contact on 6 April 2001about incorrect compensation income details and notes that Mrs Snook stated that she had received no compensation payments since July 2000.  The record notes a question whether the ongoing compensation payments coded on the computer records for Mrs Snook are correct and should be followed up.  It is only when that was done that the error was revealed.

·T21 records a telephone contact with Mrs Snook on 21 May 2001  as follows: “Telephoned customer and discussed the …preclusion – [she] advised me she was not aware of the preclusion period and had in fact spoken to [Centrelink] staff on [many] occasions [but] no-one had mentioned the preclusion – I advised [her] that a letter had been sent to her on 28.9.00 advising precluded from payments from 12.7.00 to 22.5.01 – [she] stated she had not seen this letter…”

14.      In giving her evidence to me Mrs Snook was not a good historian.  She was clearly confused at times and did not have a clear recollection of many of the events.  I make that observation without in any way wishing to imply that she was not doing her best to give her honest recollection of what happened.  For reasons that will emerge later in these reasons Mrs Snook’s physical and psychological health at the time of the settlement (and thereafter) was, in my opinion, such that she would have been unable to a considerable degree to handle the many problems that she had to deal with – and the stress of the litigation would have been a very considerable additional and unusual strain. In my opinion she had difficulty recalling events but was trying to be as honest as possible.  I note, in this context that Mr Ellis was at pains to acknowledge that the Secretary does not assert that Mrs Snook has at any time acted in any way to defraud or to gain any improper benefit or to knowingly give untrue evidence.  Mr Ellis was prepared to concede that as at the date of the hearing Mrs Snook did genuinely believe that she had been told at the time of the settlement that she would continue to receive half her normal benefits, but he was not prepared to concede that she would have genuinely believed that, or had any reasonable basis to hold such a belief in the middle of 2000.

15.      In the circumstances I find that Mrs Snook was aware at the time of her settlement that there would be a preclusion period of something less than two years; that, normally, this meant that no benefit payments would be received; that and that she knew that it would run until May 2001 by early October 2000 when she received the letter of 28 September (which I find she did receive) and contacted Centrelink.. 

16.      However, the question of whether Mrs Snook was told in the telephone contact in July 2000 or at some later date that she would continue to receive about half the prior payments is more difficult.  I am not satisfied on the balance of probabilities that she was so informed – but I am satisfied on balance that somehow she did gain that impression and that, at least for some time, she remained under that misapprehension.  I accept Mrs Snook’s evidence that she is the sort of person who immediately telephones to query anything she is not sure about.  It was not in dispute that when Mrs Snook did telephone at various times she would have been referred to the Carnarvon Centrelink office and that the officers there were not compensation experts  - which is acknowledged as a difficult field.  Mrs Snook gave evidence that she made many calls to the Carnarvon office and that at one stage the manager there gave her the number of his personal mobile phone so that she could more easily contact him.  What is apparent is that in all the phone calls after July 2000 and before May 2001 no-one at Centrelink realised that the date shown on the computer as being the end of the preclusion period (22 September 2000) was incorrect.  It was this failure that meant none of the officers she spoke to raised the issue of whether Mrs Snook should have been receiving any payments during the preclusion period – and presumably would have dealt with her on the basis that the preclusion period had finished in September 2000.

17.      The question of whether the amount of fortnightly payments Mrs Snook received during the preclusion period were significantly different from those she had received prior to the settlement was the subject of discussion at the hearing.  It was not in dispute that prior to the settlement Mrs Snook’s gross benefit was reduced by the amount of the periodic compensation payments she received (approximately $113 per fortnight) but it was not clear whether the rental payments to Homeswest were being made direct by Centrelink (ie before payment to Mrs Snook) or were being paid to her bank account and then being paid by the bank to Homeswest by direct debit to the account.  After the settlement Mrs Snook expected that the periodic compensation payments would cease going into her bank account but that Centrelink would cease reducing her benefit by that amount.  It was suggested by Ms Belcher that, at about the same time, a change occurred regarding how the rent payments were to be made – that they were to be now paid directly to Homeswest by Centrelink.  It was suggested that these changes were such that the end result for Mrs Snook was that the total going into her bank account during the preclusion period was indeed approximately 50% of what had gone in before the settlement and that this would support the contention that Mrs Snook did believe initially, and had no reason to doubt later, that she would continue to receive about half of her pre-settlement payments during the preclusion period.  The T documents and the evidence given at the hearing did not contain sufficient information about the payments to test those propositions so I sought from Centrelink details of the how the payments were made up before and after the settlement.

18.      The information about these matters showed that both before and during the preclusion period Centrelink deducted the Homeswest rent before paying a net amount to Mrs Snook’s bank account.  When added to the $113 per fortnight from the compensation payments the approximate total amounts going into Mrs Snook’s bank account each fortnight was as follows:
May 1998 to May 1999   $220
May 1999 to March 2000  $186
March 2000 to June 2000  $196
June 2000 to preclusion period start        $230   (increase due to reduction of rent of

$34.60 per fortnight)

July 2000 to Sept 2000  $129
Sept 2000 to Jan 2001  $134
Jan 2001 to March 2001  $124
March 2001 to May 2001  $141

19.      I am satisfied that Mrs Snook was never entirely clear how her benefits were calculated and the impact on them of the compensation payments and I note that there had been an overpayment in 1998 (T18).  Mrs Snook was a person of limited education and under stress at the time.  In addition, at the time of the preclusion period she knew what the approximate amount of a full DSP payment was, ie about $360 per fortnight, because that was the amount her husband was receiving at the time.  I consider that it was possible that Mrs Snook may have interpreted the payment history set out above as that she was receiving half the maximum benefit, which may well have confirmed the (admittedly mistaken) impression she had got from her contact with Centrelink about her benefits being about half the normal rate.

The applicant’s family situation and medical conditions

20.      Mrs Snook lives with her husband (now aged 64 years) in Exmouth in the north of Western Australia.  They have three adult children – a son who also lives in Exmouth with his family and who is in employment, and a daughter in Perth.  A second daughter (Tanya), now aged 32 years, also lives in Exmouth.  Tanya has an intellectual disability and has been in receipt of a disability support pension for many years.  Although Tanya has lived independently for some time, Mrs Snook provides her with daily support, which is a major commitment of her time.  I accept Mrs Snook’s evidence that Tanya requires a great deal of support and that it is a difficult role to perform.  She tries to help Tanya to be a member of the community generally, to manage money, and to be involved in sport and other community activities.  Importantly, an issue of great concern to Mrs Snook is that Tanya wants to marry and have children and Mrs Snook fears that she may be taken advantage of.  Tanya is often depressed.  I accept Mrs Snook’s evidence that her caring role for Tanya is a major commitment of her time and emotional energy – and one that adds considerably to her stressed state.

21.      Prior to 1996 Mr Snook was in regular employment as a manager but since that time has been diagnosed with a number of serious medical conditions..  Document A1 refers to eight medical problems and states that Mr Snook is currently on multiple medications and has attended his medical practitioner on numerous occasions in recent years in respect of his conditions.  Mrs Snook said that he takes chemotherapy tablets every day as well as many other drugs.  He is not able to do any form of physical activity at all.  He has been waiting to see an ear, nose and throat specialist for some time, failing which he may have to go to Perth for attention – which will involve considerable expense even after allowing for the limited financial assistance that may come from government assistance scheme for patients from remote areas to travel for medical attention.  It is not necessary to state explicitly all the various conditions from which Mr Snook suffers, but I accept Mrs Snook’s evidence that she believes him to be very seriously ill.   I am satisfied that since well before mid 2000 Mr Snook’s health has been very poor, that he suffers from a number of very serious conditions and that he is in continuous need of medical attention and medication.  I also accept that Mr Snook’s only income is from a disability support pension (DSP) of $361 per fortnight because of his medical conditions.

22.      Mrs Snook’s health is also very poor.  Document A2 refers to ten medical problems and expresses the view that, although not life threatening, the problems are certainly quite debilitating.  Most are under control but they fluctuate and flare unpredictably.  Mrs Snook’s depression and anxiety may at times have some impact on her ability to comprehend, but generally she has good cognitive functions.  She is also on multiple medications.  Mrs Snook gave evidence that she has trouble sleeping, has had nightmares, suffers from panic attacks (which she described as being similar to an asthma attack) and feels sick all the time.  She has considerable mood swings, although she has not been a moody person in the past.  A report from her psychiatrist (document A4) confirmed the depression and panic disorder and that Mrs Snook has been incapacitated for work because of her psychiatric and orthopaedic disorders since 1999 and she is effectively incapable of working.  A report from the same psychiatrist (dated 29 September 2001) that was referred to by the SSAT was to the same effect - but also referred to chronic pain, poor memory and concentration and that she suffers from severe anxiety when put under any pressure.  The report noted that Mrs Snook was finding it very difficult to cope and had suffered an increase in anxiety and panic attacks due to the pressure that she was put under by Centrelink in relation to their claim for overpayment.  I am satisfied that Mrs Snook has also, since before the time of her settlement, suffered from a number of serious and debilitating medical conditions that require regular medical attention and medication, including a depressive disorder with panic attacks that has been exacerbated by the stress associated with the claim for recovery of the overpayment during the preclusion period. 

23.      Mr and Mrs Snook live in a house they rent from Homeswest.  The house was extensively damaged and all the contents (including clothing) lost in Cyclone Vance in 1998.  The house had been flooded twice.  They had no building or contents insurance.  Although Homeswest undertook all the necessary repairs to the house that took quite some time and aspects of the repairs had to be done again –which involved moving all belongings in and out of the house several times. Mr and Mrs Snook had to pay for the cost of replacing a pergola structure.  All their furniture and household equipment was lost and had to be replaced.  They received some minor items of furniture from charities (that have since had to be replaced) and a cash payment of $3000 from a cyclone relief fund, but otherwise they were left to their own resources to replace all that was lost.  Because of their poor health they receive help from a local community group for household work and the Silver Chain calls regularly to give Mr Snook his injections.  They found the cyclone and the flooding, and the aftermath of trying to put the house back into a liveable state a very stressful period.

24.      The only incomes received by Mr and Mrs Snook are their social security benefits.  As noted above Mr Snook receives a DSP of $361 per fortnight net and Mrs Snook receives a gross fortnightly DSP benefit of $380, from which is deducted a payment to Homeswest of $213 and an instalment of $58 as repayment of the debt due to Centrelink – leaving a net of approximately $129 per fortnight, or approximately $490 per fortnight when the income of Mr and Mrs Snook is combined to meet all other living expenses.  Medical and medication expenses are a major item of expenditure, with some drugs being particularly expensive.  Over the past few years they have had to go to Perth or Carnarvon (800 kilometres return) for medical attention.  The cost of living in the remote north of Western Australia is high, and Mrs Snook gave evidence of water bills of about $500 each quarter, $16 per fortnight for household assistance, electricity of $120 to $130 each two months and up to $200 in summer months.  Overall, Mrs Snook’s evidence was to the effect that they cannot cope with their current level of income.  They have some debts, the main ones being about $400 for telephone and $100 for the household assistance.  Mrs Snook said that she had to borrow about $50 most fortnights from her son to make ends meet from one payment period to the next.  She is supposed to be on a special diet to lose weight but she cannot now afford the cost of the special food supplements involved.

25.      Mrs Snook gave evidence that both her parents are still alive and in their late 80’s.  Her mother lives in Perth and requires a wheelchair because of a disability.  Her father lives in a town in the south west of Western Australia. Mrs Snook tries to visit her mother at least once a year, but travel to Perth is very expensive.

26.      Relevant to any examination of the financial circumstances of the family is the question of what has been done with the money received from the settlement – which was about $43,000 after costs.  Mrs Snook told the SSAT (in October 2001) that she had paid off some debts and at that time had $30,000 of the money left.  By the time of the hearing in this Tribunal (approximately one year later) all that money had been spent and, as noted above, the family had some minor debts.  Mrs Snook gave evidence that the money had been spent on buying replacement household furniture, floor coverings and equipment, a visit to Perth for medical and dental reasons and to purchase clothes (which, because of Mrs Snook’s size, were not available in Exmouth), repairs to her daughter’s car, to pay some further debts and on general living expenses..  Mr Ellis informed me that the Secretary did not wish to contend that this money had been frittered away or that there was anything untoward about the expenditure given that it was not a particularly large amount of money and that it is well known that living costs in the remote north are high – particularly for such things as whitegoods and furniture. In all the circumstances I accept that prior to, during and after the preclusion period Mr and Mrs Snook were in the position, because of the impact of the cyclone and flooding, that they had to expend a considerable amount of money to make their home liveable and to restore their personal belongings (such as clothes) and the money received from the settlement was always likely to be substantially committed for those purposes.

27.      As Mr Ellis also conceded, this is a family that has absolutely no current resources apart from their benefit payments and no assets that can be called up to meet their commitments or unforeseen expenses.  In all the circumstances I consider their overall financial position to be extremely poor and with no foreseeable likelihood that it will improve. 

Other factors relevant to the s1184 discretion

28.      Although not raised by the parties, it seems to me that there is one other aspect of the case that may be relevant to the possible exercise of the s1184 discretion, namely that prior to and throughout the preclusion period Mrs Snook was in receipt of a PA under Part 2.15A of the Act.  Such an allowance is payable only to those persons who are the spouse of a person who is receiving one of a number of specified benefits, who are over a specified age and who have little or no recent labour market experience.  Mrs Snook’s entitlement to a PA obviously reflected the fact that her husband was in receipt of one of the specified benefits. 

29.      The significance of this is that the benefits received by Mrs Snook during the preclusion period were not in any way causally connected to the events giving rise to the compensation payments that she received and which eventually gave rise to the preclusion period.  In this sense the “double dipping” that Part 3.15A is designed to address cannot be said to be present in this case – and this is a relevant factor to be taken into account when considering s1184: see Commonwealth v Daniels (1994) 33 ALD 111, per Neaves J at 120; Secretary, Department of Family and Community Services v Edwards (2000) 105 FCR 220 per Drummond J at 229.

Conclusion regarding s1184

30.      It is appropriate to look at the totality of the circumstances as they affect the applicant rather than to examine each factor separately to see whether in isolation it can be said to be sufficiently special.  My examination of the factors set out above leads me to the conclusion that, taken together, it can fairly be said that the applicant and her husband are, and were at the time of the preclusion period, in circumstances that can truly be described as sufficiently out of the ordinary to be special.  The debt arose because of a failure of Centrelink officers to identify an error for virtually the whole of the preclusion period even though it is conceded that it should have been apparent;    both the applicant and her husband are in extremely straitened financial circumstances; and they are both in very poor health – which has an obvious and substantial impact on their ability to do anything about improving their financial situation as well as placing them under stress and requiring extensive medication; and the applicant’s life is significantly  committed to assisting her disabled daughter.  They have had to endure an extremely difficult period of years starting with the applicant’s work injury and the diagnosis of her husband’s medical conditions and inability to work, and continuing on to the physical and emotional stresses of a major cyclone that left them completely without household and personal effects.  Finally, there is no causal link between the social security benefits received in the preclusion period and the event that lead to the receipt of the lump sum compensation.

31.      In my opinion it is therefore appropriate to exercise the discretion in favour of the applicant.  As to whether the whole or only part of the compensation payment should be disregarded, it must be remembered that the respondent has already recovered (from the insurer) for a part of the preclusion period ie from 12 July 2000 to 22 September 2000.  It was with effect from the end of September that the Centrelink error was made and in my opinion there should be no further recovery after that time.  In my opinion an appropriate exercise of the s1184 discretion would be to disregard so much of the lump sum as would result in a preclusion period commencing on 12 July 2000 and ending on 22 September 2000.

Other issues

32.      Because of the view I have taken regarding the s1184 discretion there is no need to consider the second issue identified in para 5 of these reasons ie whether it would be appropriate to waive or write off any debt that may exist to the Commonweath.  I would observe, however, that had it been necessary for me to consider that issue I would have concluded that the circumstances I considered to be special for the purpose of s1184 would have equally satisfied the requirement of s1237AAD(b) of the Act.  Mr Ellis conceded that the requirements of s1237AAD(a) were satisfied and, in my opinion, s1237AAD(c) would have also been satisfied.  Had it been necessary, therefore, I would have waived any debt pursuant to the discretion to do so in that section of the Act.

Decision

33.      For the reasons set out my decision is that the decision under review should be set aside and that in substitution therefore the discretion contained in s1184 should be exercised in favour of the applicant in the way set out in para 31 above.

I certify that the 33 preceding paragraphs are a true copy of the reasons for the decision herein of Mr M Allen (Member)

Signed:         ..........(sgd V Wong)......................................
  Associate

Date/s of Hearing  18 November 2002
Date of Decision        25 March 2003
Counsel for the Applicant              Ms C Belcher
Counsel for the Respondent           Mr S Ellis

Solicitor for the Respondent           Advocacy & Administrative Law Team, Centrelink