Soliman and Secretary, Department of Social Services (Social services second review)
[2019] AATA 4799
•19 November 2019
Soliman and Secretary, Department of Social Services (Social services second review) [2019] AATA 4799 (19 November 2019)
Division:GENERAL DIVISION
File Number(s): 2018/4289
Re:Maged Soliman
APPLICANT
Secretary, Department of Social ServicesAnd
RESPONDENT
Decision
Tribunal:Senior Member Linda Kirk
Date:19 November 2019
Place:Sydney
The decision under review is varied such that the preclusion period is for the period 9 April 2015 to 23 October 2019. The decision is otherwise unchanged.
...........................[SGD].............................................
Senior Member Linda Kirk
Catchwords
SOCIAL SECURITY – Applicant in receipt of lump sum compensation payment – whether Applicant precluded from receiving disability support pension due to compensation payment – preclusion period – income cut-out amount to be determined at the date the final payment of compensation was received – whether special circumstances warrant exercise of discretion to treat whole or part of the lump sum compensation amount as having not been made or not liable to be made – Applicant claimed special circumstances due to need to pay for private health insurance and children’s school fees and would otherwise face financial hardship – circumstances neither individually or in combination establish special circumstances – decision varied
Legislation
Workers Compensation Act 1987 (NSW) ss 66, 67
Social Security Act 1991 (Cth) ss 17, 1160, 1169, 1170, 1171, 1184K
Cases
Alver v Secretary, Department of Social Services [1992] AATA 333
Beadle and Director-General of Social Security (1984) AATA 176
Black v Secretary, Department of Social Security [1994] AATA 291
Davy and Secretary Department of Employment and Workplace Relations [2007] AATA 1114
Groom and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2008] AATA 339
Groth v Secretary, Department of Social Security [1995] 40 ALD 541
Re Griffiths and Secretary, Department of Social Security [1992] AATA 123
Re Secretary, Department of Family and Community Services and Szoke [2001] AATA 353
Riddell v Secretary, Department of Social Security (1993) 42 FCR 443
Sams v Secretary, Department of Social Services [2016] AATA 654
Secretary, Department of Employment and Workplace Relations v Homewood [2006] FCA 779
Secretary, Department of Social Security v Hales (1998) 82 FCR 154
Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs v Jones (2012) 89 ATR 267; [2012] FCA 639
Secretary, Department of Social Security v Hulls and Others (1991) 22 ALD 570
REASONS FOR DECISION
Senior Member Linda Kirk
19 November 2019
BACKGROUND TO REVIEW
On 11 May 2002, the Applicant sustained a work-related injury that was the subject of a workers’ compensation claim. The injury was described as ‘low back, neck, shock, exacerbation of psychological/psychiatric injuries.’[1]
[1] T6, p67.
The Applicant received weekly payments relating to this claim for the period from 7 September 2004 to 8 April 2015.[2]
[2] T23, p232-233 and ST4, p272.
On 5 February 2009, the Applicant made an agreement in respect of a lump sum payment in relation to this claim under ss 66 and 67 of the Workers Compensation Act 1987 (NSW) totalling $46,000.[3]
[3] T6, p58-59.
On 27 February 2015, the Applicant settled his claim for $400,000, which appears to have been endorsed by the Supreme Court of NSW on 4 March 2015.[4]
[4] T6, p64-65.
On 13 April 2015, the Department wrote to the Applicant and advised him that as a result of his entitlement to receive a lump sum preclusion payment of $400,000, he was subject to a preclusion period from 9 April 2015 to 30 October 2019. The letter advised that during this period the Applicant would not be able to receive income support from the Department.[5]
[5] T7, p81-83.
On 30 November 2017, the Applicant lodged a claim for disability support pension (‘DSP’). In this claim, the Applicant advised that he had $30,922 in an ANZ Term Deposit.[6]
[6] T8, p84-115 and T9, p134-135.
On 5 December 2017, the Department rejected the Applicant’s claim for DSP on the basis that he was not qualified for DSP and that he was subject to a compensation preclusion period.[7]
[7] T23, p237.
On 6 June 2018, an authorised review officer (‘ARO’) affirmed the decision to reject the Applicant’s claim for DSP. The ARO found that the Applicant was medically qualified for DSP but the claim was correctly rejected as the Applicant was subject to a preclusion period from 9 April 2015 to 30 October 2019. The ARO found the preclusion period had been correctly calculated and that there were no special circumstances to justify a reduction of the preclusion period.[8]
[8] T20, p199-204.
On 18 July 2018, the Social Services and Child Support Division of the Administrative Appeals Tribunal (‘AAT1’) affirmed the ARO’s decision to reject the Applicant’s DSP claim as he was subject to a preclusion period from 9 April 2015 to 30 October 2019. AAT1 noted that at this time, the Applicant had $21,000 available.[9]
[9] T2, p3-7.
On 29 July 2018, the Applicant applied to the Administrative Appeals Tribunal (‘the Tribunal’) for review.[10]
[10] T1, p1-2.
ISSUES FOR DETERMINATION
This application raises two issues for determination:
(a)is the Applicant precluded from 9 April 2015 to 30 October 2019 from receiving DSP under the provisions of the Social Security Act 1991 (Cth) (‘the Act’) because he received a lump sum compensation payment; and
(b)if so, are there any ‘special circumstances’ which would warrant the express provisions of the Act being disregarded in whole or in part?
LEGISLATIVE FRAMEWORK
Part 3.14 of the Act headed ‘Compensation Recovery’ outlines a scheme whereby a person is precluded from receiving ‘affected payments’ for a specified period of time (the ‘preclusion period’) if a person is in receipt of certain compensation payments.
The preclusion period is determined in accordance with s 1170 of the Act:
1170 Lump sum preclusion period
(1) Subject to subsection (2), if a person receives both periodic compensation payments and a lump sum compensation payment, the lump sum preclusion period is the period that:
(a) begins on the day following the last day of the periodic payments period or, where there is more than one periodic payments period, the day following the last day of the last periodic payments period; and
(b) ends at the end of the number of weeks worked out under subsections (4) and (5).
(2) If a person chooses to receive part of an entitlement to periodic compensation payments in the form of a lump sum, the lump sum preclusion period is the period that:
(a) begins on the first day on which the person’s periodic compensation payment is a reduced payment because of that choice; and
(b) ends at the end of the number of weeks worked out under subsections (4) and (5).
(3) If neither of subsections (1) and (2) applies, the lump sum preclusion period is the period that:
(a) begins on the day on which the loss of earnings or loss of capacity to earn began; and
(b) ends at the end of the number of weeks worked out under subsections (4) and (5).
(4) The number of weeks in the lump sum preclusion period in relation to a person is the number worked out using the formula
(5) If the number worked out under subsection (4) is not a whole number, the number is to be rounded down to the nearest whole number.
A ‘compensation affected payment’ includes a social security benefit: s 17(1) of the Act.
Sections 1160 and 1169 set out the manner in which the Part operates on ‘compensation affected payments’ and the general rules applying to the preclusion period respectively.
1160 General effect of Part
1This Part operates in certain specified circumstances to do one or more of the following:
(a)reduce a person’s compensation affected payment;
(b)render a person’s compensation affected payment not payable;
(c)require the repayment of some or all of a person’s compensation affected payment;
because of the receipt of compensation by the person or the person’s partner.
2This Part applies whether or not there is any connection between the circumstances that give rise to the person’s qualification for the compensation affected payment and the circumstances that give rise to the receipt of compensation by the person or the person’s partner.
1169 Compensation affected payment not payable during lump sum preclusion period
1If:
(a)a person receives or claims a compensation affected payment; and
(b)the person receives a lump sum compensation payment;
the compensation affected payment is not payable to the person in relation to any day or days in the lump sum preclusion period.
2In this section:
“lump sum compensation payment” does not include a lump sum payment:
(a)to which section 1164 applies; or
(b)that relates only to arrears of periodic compensation payments.
‘Compensation’ is defined, relevantly, in section 17(2) of the Act to mean:
(a)a payment of damages; or
(b)a payment under a scheme of insurance or compensation under a Commonwealth, State or Territory law, including a payment under a contract entered into under such a scheme; or
(c)a payment (with or without admission of liability) in settlement of a claim for damages or a claim under such an insurance scheme; or
(d)any other compensation or damages payment;
(whether the payment is in the form of a lump sum or in the form of a series of periodic payments and whether it is made within or outside Australia) that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury.
Section 17(3)(a) of the Act provides relevantly that the ‘compensation part of a lump sum compensation payment’ is:
3Subject to subsection (4), for the purposes of this Act, the compensation part of a lump sum compensation payment is:
(a)50% of the payment if the following circumstances apply:
(i) the payment is made (either with or without admission of liability) in settlement of a claim that is, in whole or in part, related to a disease, injury or condition; and
(ii) the claim was settled, either by consent judgment being entered in respect of the settlement or otherwise; or
(ab) 50% of the payment if the following circumstances apply:
(i) the payment represents that part of a person’s entitlement to periodic compensation payments that the person has chosen to receive in the form of a lump sum; and
(ii) the entitlement to periodic compensation payments arose from the settlement (either with or without admission of liability) of a claim that is, in whole or in part, related to a disease, injury or condition; and
(iii) the claim was settled, either by consent judgment being entered in respect of the settlement or otherwise; or
(b)if those circumstances do not apply—so much of the payment as is, in the Secretary’s opinion, in respect of lost earnings or lost capacity to earn, or both.
(a) Is the Applicant precluded from 9 April 2015 to 30 October 2019 from receiving DSP under the provisions of the Act because he received a lump sum compensation payment?
It is not in dispute that the Applicant received a lump sum compensation payment as defined by s 17(2) of the Act.
As a consequence the Applicant is not entitled to receive a compensation affected payment (i.e. DSP) during a preclusion period unless special circumstances apply.
Calculation of the preclusion period
The Respondent submits that the ARO and AAT1 incorrectly calculated the preclusion period and that it expires on 23 October 2019, not 30 October 2019.
The Respondent contends that of the two lump sum compensation payments the Applicant received, the payment of $400,000 was partly in respect of the Applicant’s lost earnings or lost capacity to earn. This is not disputed by the Applicant.[11]
[11] Respondent’s SFIC [25].
The Respondent contends that as one of the payments included a component for lost earnings or lost capacity to earn, both payments are taken to have been received as a single lump sum of $446,000 in accordance with s 1171 of the Act.[12] As per s 1171(1)(d)(i) of the Act, the payment is taken to be received on the day the final payment was received, being 8 April 2015.[13]
[12] Respondent’s SFIC [26].
[13] T23, p233.
As the final payment was made pursuant to a settlement of the Applicant’s workers’ compensation claim, s 17(3)(a) applies to deem 50% of the total sum as the compensation part of the lump sum. That is, $223,000.
The Respondent points out that the ARO and AAT1 used the income cut-out amount of $934.30 as was in force at 27 February 2015, the date of settlement.[14] The Secretary contends that as per the definition contained in s 17(1) of the Act, the income cut-out amount as was in force at the date the compensation was received should be used.[15] The income cut-out amount on 8 April 2015 (the date the final payment of compensation was received) was $940.20.[16]
[14] Respondent’s SFIC [28].
[15] Respondent’s SFIC [28].
[16] ST5, p273.
Accordingly, the Respondent contends the preclusion period should be recalculated using the (higher) divisor in force as at 8 April 2015 which will result in a shorter preclusion period.[17] Applying the formula in s 1170(4) of the Act yields a preclusion period of 237.18 weeks. This is rounded down to 237 weeks in accordance with s 1170(5) of the Act.
[17] Respondent’s SFIC [29].
The Applicant was in receipt of periodic compensation prior to the receipt of the lump sum payment with his weekly payments being paid until 8 April 2015.[18] Therefore, s 1170(1) of the Act applies so that the lump sum preclusion period commences on 9 April 2015 and runs for 237 weeks, ending on 23 October 2019.[19]
[18] T23, p233; Respondent’s SFIC [31].
[19] Respondent’s SFIC [31].
The Applicant does not dispute the Respondent’s recalculation of the preclusion period.
The Tribunal agrees with the Respondent that the Reviewable Decision should be varied and finds that the ARO and AAT1 calculated the preclusion period incorrectly and that the number of the weeks in the preclusion period is 237 weeks commencing on 9 April 2015 and ending on 23 October 2019.
Accordingly, the Tribunal is satisfied that the Applicant is precluded from 19 April 2015 to 23 October 2019 from receiving DSP under the Act because he received a lump sum compensation payment.
(b) Are there any ‘special circumstances’ which would warrant the express provisions of the Act being disregarded in whole or in part?
The Applicant’s arguments in support of his claim of ‘special circumstances’ are that he:
(a)requires private medical insurance in order to undertake recommended surgery;
(b)paid for care centre fees for his autistic children; and
(c)is/will be in financial and medical hardship if the preclusion period is not shortened.
Expenditure of settlement proceeds
The Applicant told the Tribunal that from his settlement of $400,000, he received $225,000 after paying $175,000 in legal fees.[20] He confirmed that he received the letter from the Department dated 13 April 2015 which advised him that he was subject to a preclusion period until 30 October 2019.[21]
[20] T2, p6; Transcript p12-13.
[21] Transcript p14.
The Applicant did not provide detailed bank statements accounting for the expenditure of his compensation proceeds. He told the Tribunal that he did not keep any receipts.[22]
[22] Transcript p15.
On 10 May 2018, the Applicant provided a statement detailing how the compensation proceeds were spent:[23]
[23] T17, p184.
·$30,000 on rent;
·$40,000 on shopping;
·$20,000 on family expenses;
·$20,000 on medical costs;
·$10,000 on legal expenses;
·$10,000 on clothing;
·$20,000 on car/transport;
·$20,000 on recreation/holiday; and
·$10,000 on children’s school fees.
Total: $180,000
During cross-examination, the Applicant was questioned about the expenditure detailed in this statement.
The Applicant told the Tribunal he pays $150 per week in rent which over three and a half years amounts to $30,000 including the deposit he paid.[24] He confirmed that he spent $40,000 on grocery shopping.[25] The $20,000 spent on family expenses related to payments for school excursions for his children and clothing for them.[26] The $10,000 in legal expenses was for expert reports for a matter unrelated to his workplace injury.[27] He confirmed he spent $10,000 on clothing for himself.[28] The $20,000 spent on holiday/recreation was a trip he made to Egypt to see his family for a period of six months. He explained that he suffers from depression and spending time with his family helped with this condition.[29]
[24] Transcript p16-17.
[25] Transcript p17-18.
[26] Transcript p19.
[27] Transcript p19-20.
[28] Transcript p20.
[29] Transcript p20-21.
Requirement for private health insurance
The Applicant claims he requires private health insurance in order to have back surgery that is only available in the private system. He provided the following evidence to support this claim:
·on 15 September 2015, Mr Tamer Kahil (consultant orthopaedic surgeon) noted that he advised the Applicant to buy private insurance as he will need removal of hardware (pedicle screw fixation at L4/5) and possible anterior interbody fusion at L4/5. He also noted that prior to this, the Applicant would need a 3 level discogram;[30]
·on 7 October 2015, Dr Ashish Diwan (Chief of the Spine Service in the Department of Orthopaedic Surgery at St George Hospital) reported that there were numerous challenges in the Applicant’s management, one of them being the restriction on performing long spinal column adult reconstruction in the public system. Dr Diwan noted that one solution was to buy hospital cover but noted that the outcomes for revision spinal surgery were ‘not fantastic for numerous reasons’. Dr Diwan reported the Applicant’s likelihood of success appears to be less given that his pain remained the same before and after the initial operation. He noted that at this time the Applicant wished to pursue non- operative management and pursue a referral to the chronic pain management team;[31] and
·on 12 December 2018, Dr Tim Ho (pain and rehabilitation specialist) reported that he had been seeing the Applicant since late 2017. He recommended the Applicant have diagnostic block of SIJ and L5/S1 facet joint, followed by radiofrequency treatment given ‘his adversary (sic) to medication’. He noted the Applicant is required to have private medical insurance for this treatment as this service is not available in the public service as far as Dr Ho is aware. He reported that the Applicant would benefit from getting private health insurance to cover the procedure, and if further surgery is needed.[32]
[30] T13, p157.
[31] T12, p158.
[32] ST2, p268.
The Applicant told the Tribunal that he is able to access Medicare and the public hospital system for his general health problems but not for his back or neck condition or his psychiatric problem.[33]
[33] Transcript p21.
The Applicant explained to the Tribunal that the radiofrequency treatment and the surgery was not covered by Medicare.[34] He was asked why he did not purchase private health insurance when he was advised to do so by Dr Kahil in September 2015, and he said it was because he could not afford it.[35] When he did his calculations of the money he had available he realised he would not have enough money to pay for private health insurance and this is why he went to Centrelink to ask for assistance.[36] He confirmed that he lodged his claim in November 2017.[37]
[34] Transcript p22.
[35] Transcript p23.
[36] Transcript p23.
[37] Transcript p24.
The Applicant was asked about the report from Dr Diwan in which he described the outcomes of performing a long spinal column adult reconstruction as ‘not fantastic for numerous reasons’.[38] He said that the doctor told him he cannot guarantee any results but sooner or later he will need it.[39] The Applicant explained that he lives in pain 24 hours a day and has done so for 17 years. He has to take very strong medication to be able to sit down, including during the hearing.[40]
[38] T13, p158-159.
[39] Transcript p24-25.
[40] Transcript p25.
Children’s school fees
The Applicant claims that he had to pay his children’s school fees of $10,000. He provided a report from Dr Lavendy dated 12 December 2018 that states that his son (born 1994) and daughter (born 1995) both suffer from Autism Spectrum Disorder and they attend a special school for children with special needs.[41]
[41] ST2, p267.
The Applicant told the Tribunal that his children are both still attending the school but he is not currently paying any fees because he told the manager of the school about his financial hardship. He is currently only paying for some of his children’s expenses.[42]
[42] Transcript p27.
Other expenditure and savings
The Applicant explained that he is currently undergoing radiation treatment for rectal cancer. His specialist did not require him to pay his fee and the treatment itself is covered by Medicare.[43]
[43] Transcript p28.
He told the Tribunal that he currently has $1,200 in savings and he does not have any superannuation. He does not receive any support from family or friends.[44]
[44] Transcript p28.
Do ‘special circumstances’ exist?
The Secretary may, at its discretion, treat whole or part of the lump sum compensation payment as having not been made or not liable to be made if the Secretary thinks it is appropriate to do so in the special circumstances of the case: s 1184K of the Act.
1184K Secretary may disregard some payments
1For 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.
If the Tribunal finds that ‘special circumstances’ exist for the purpose of s 1184K of the Act, French J (as he then was) said, in Secretary, Department of Employment and Workplace Relations v Homewood [2006] FCA 779 at [34], that the Tribunal is expected to:
1Identify the circumstances of the case which it found to be ‘special’ and the reasons for which it arrived at that finding.
2Explain why, in the special circumstances so found, it thought it appropriate to treat the whole or part of the compensation payment as not having been made.
3Explain why it selected the particular quantum (i.e. the whole or part) of the compensation payment as not having been made.
Respondent’s contentions
The Respondent submitted that the exercise of the discretion contained in s 1184K of the Act is not warranted in circumstances relating to the Applicant’s above expenditure, particularly when the Applicant was aware of the preclusion period and the need to support himself until October 2019. The Respondent considered that the Applicant’s present position appears to have arisen as a result of his unwise spending and his disregard for the need to support himself until October 2019, as was advised by the Department. To exercise the discretion in the current case would be unfair to other compensation recipients who have prudently managed their finances in using their compensation to support themselves during a preclusion period, as is intended by the Act. While the Applicant presently finds himself in difficult financial circumstances, the evidence suggests that this situation is of his own making.
The Respondent contends that the Applicant’s circumstances are not ‘special’, so as to justify the exercise of the discretion in s 1184K of the Act. There is insufficient evidence regarding the expenditure of the Applicant’s compensation proceeds and, in such circumstances, the exercise of the discretion contained in s 1184K is not warranted.
The meaning of ‘special circumstances’
The Act does not define what constitutes ‘special circumstances’.
There has been considerable judicial consideration of the phrase in the context of other social security legislation, for example:
·French J (as he then was) said in Secretary, Department of Social Security v Hales (1998) 82 FCR 154 at 162:
The concept of special circumstances is broad. A constellation of factors, including financial circumstances, may fall within it. … It is inappropriate to constrain that flexibility by imposing a narrow or artificial construction upon the words... It may be that there are few cases in which having found special circumstances to exist, the Secretary would exercise the discretion to waive in the absence of financial hardship. But to anticipate the limits of the categories of possible cases by imposing on the language of the section a fetter upon its application which is not mandated by its words, is to erode its useful purpose.
·The Full Court of the Federal Court in Riddell v Secretary, Department of Social Security (1993) 42 FCR 443 held, at 450:
Each particular case must be considered on its merits. It is the essential nature of the provision to create a broad discretion to meet the great variety of circumstances which must occur, raising considerations of individual hardship, need, fairness, reasonableness, and whatever else may move an administrator, keeping in mind the scope and purposes of the Act, to make a decision one way or the other.
·Jacobson J in Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs v Jones (2012) 89 ATR 267; [2012] FCA 639 explained the effect of the authorities as follows [emphasis added]:
[51] ...the phrase “special circumstances”, although lacking in precision, is sufficiently understood as including events or things that render the operation of the statue in a particular case as unfair, unintended or unjust. What is required is something that takes the case out of the ordinary, and unfairness or unintended consequences may show that this exists. Moreover, the circumstances of the case are not confined to matters that are external to the operation of the statutory scheme: see Smith per von Doussa J at 60, 61–62; Groth per Kiefel J at 545, Kertland v Secretary, Dept of Family and Community Services (1999) 95 FCR 64 per Merkel J at 71, 73; Kirkbright v Secretary, Dept of Family and Community Services (2000) 106 FCR 281 per Mansfield J at [22], [26]–[27] and [31]–[32]; see also Secretary to the Department of Family and Community Services v Allan (2001) 116 FCR 1 per Heerey J at [17].
The Tribunal considered the phrase in Beadle and Director-General of Social Security (1984) AATA 176 at [12] (‘Beadle’). It stated:
[12] An expression such as "special circumstances" 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 upon the context in which they occur. For 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 must have a particular quality of unusualness that permits them to be described as special.
Beadle was referred to by Kiefel J (as her Honour then was) in Groth in the following terms:
The phrase “special circumstances”, it has been said, although imprecise is sufficiently understood not to require judicial gloss …. And for present purposes it is sufficient to observe that it would require something to distinguish Mr Groth’s case from others, to take it out of the usual or ordinary case.[45]
[45] Groth v Secretary, Department of Social Security [1995] 40 ALD 541 at [545].
These authorities recognise that the term is ‘by its very nature incapable of precise or exhaustive definition’,[46] but it requires something to distinguish it from other cases in a way ‘to take it out of the usual or ordinary case’.[47]
[46] Beadle and Director-General of Social Security [1984] AATA 176 at [12].
[47] Groth v Secretary, Department of Social Security [1995] 40 ALD 541 at [545].
Furthermore, ‘each particular case must be considered in its merits.’[48] This may be to such an extent that ‘the particular facts of a case might make them – or the amount of them – a special circumstance.’[49] The decision-maker must show there was ‘a consideration of the person’s individual circumstances but also a consideration of the general administration of the social security system.’[50]
[48] Riddell v Secretary, Department of Social Security [1993] 114 ALR 340 at [347].
[49] Secretary, Department of Social Security v Hulls and Others (1991) 22 ALD 570 at [580].
[50] Davy and Secretary Department of Employment and Workplace Relations [2007] AATA 1114 at [80].
In relation to the expenditure by the Applicant of his compensation payment, the Tribunal makes the following observations. Taking into account the $20,000 in savings the Applicant had in July 2018 and the expenditure of $180,000 detailed above in paragraph 33, the Applicant has accounted for the expenditure of $200,000 of the $225,000 final lump sum compensation payment he received. There is $25,000 for which no account has been provided. This does not include the $46,000 received by the Applicant in 2009.[51]
[51] T6, p58-59
At the time of his DSP claim on 30 November 2017, the Applicant reported having $30,922 in a term deposit.[52] The Applicant later reported on 13 July 2018 that he had $20,000 remaining, meaning the Applicant spent approximately $11,000 in seven months (approximately $1,571 per month). In July 2019, the Applicant reported having $1,200 in savings meaning he spent $18,800 in twelve months (approximately $1,566 per month). This indicates that the Applicant was able to prudently manage his expenses during the past two years.
[52] T9, p134.
By contrast, the Applicant spent approximately $180,000 in the period April 2015 to May 2018 (approximately $4,900 per month) which excludes the $71,000 for which he has not accounted. When compared to his expenditure in the last two years, it is apparent that the Applicant did not prudently manage his finances between April 2015 and May 2018 in circumstances where the Applicant was aware of the need to support himself with the compensation proceeds until October 2019.
For the reasons which follow, the Tribunal is not satisfied that there are special circumstances under s 1184K to warrant reducing the length of the preclusion period.
In relation to the Applicant’s claimed need for private health insurance to undergo necessary medical treatment, the Tribunal notes that Instruction 4.13.4.20 of the Guide provides that an injury for which a person received compensation cannot generally be regarded as a special circumstance.[53] This is because the medical expenses relating to this condition are not unexpected or unforeseen and are factored into the compensation settlement amount. The evidence before the Tribunal is that the private health insurance expenses the Applicant claims he must incur to undergo radiotherapy treatment and surgery are for the lower back condition for which he received the compensation payment. Accordingly, the Tribunal finds that this treatment cannot be regarded as a special circumstance, particularly where there is no evidence to suggest which part of the procedure suggested by the treating doctor Dr Ho is not covered by the public healthcare system, when there is no apparent urgency for the procedure to be performed, and when the treating doctor has advised there is not a high likelihood of success.
[53] T3, p35.
In relation to the Applicant’s responsibility to meet the fees for his children’s attendance at their special school, the Tribunal notes that the expenditure on these fees between the period April 2015 and May 2018 of $10,000 indicates that the fees are approximately $270 per month. When these fees are compared to the total amount of compensation the Applicant received ($225,000), they cannot be said to be so excessive that their payment would have led to an inability of the Applicant to support himself until October 2019. Furthermore, the Applicant’s evidence is that he is currently exempted from paying the fees following an arrangement made between him and the school. Accordingly, the Tribunal finds that the payment of these school fees cannot be regarded as a special circumstance.
In relation to the Applicant’s claim he will be in financial and medical hardship if the preclusion period is not shortened, the evidence before it is that the Applicant spent approximately $5,000 per month between the period April 2015 and May 2018. The Tribunal finds that the Applicant’s expenditure was imprudent, if not reckless, when he was aware that he needed to support himself with the compensation proceeds until October 2019. Had the Applicant exercised greater prudence in relation to his expenditure and the management of his finances he would be unlikely to be in the financial circumstances in which he now finds himself.
In Black v Secretary, Department of Social Security,[54] the Tribunal noted that:
[49] The Tribunal has consistently considered the reasonableness of the person’s expenditure of compensation payments in determining special circumstances. In particular substantial loans to family members, monies spent on travel and cars, general extravagance have been considered to mitigate against special circumstances.
[50] The Tribunal acknowledges that the applicants are in a difficult financial situation. However, the circumstances leading to such hardship ae not irrelevant. In considering the entirety of the applicant’s circumstances, the tribunal is mindful of the nature of the expenditure, and the context in which that expenditure occurred.
[54] Black v Secretary, Department of Social Security [1994] AATA 291.
In Alver v Secretary, Department of Social Services (‘Alver’),[55] the Tribunal stated:
49. It is also relevant that I should look at the cause behind the applicant's financial difficulties. Previous decisions of the Tribunal (see Re Ivovic and Director-General of Social Services (above), Re Latour and Secretary, Department of Social Security (1988) 16 ALD 279; Re Secretary, Department of Social Security and Rodgers (Decision No. 7911; 23 April 1992) have tended to take a hard line where someone has, through extravagance or thoughtlessness, brought about their own dilemma.
50. I do consider, however, that some of the payments made by the applicant in December 1990 were unnecessary and perhaps extravagant. As such they could well have been saved and devoted to maintaining his family during the ensuing preclusion period. I include in this group three items. The first is the purchase of a motor car for $8,500.
[55] Alver v Secretary, Department of Social Services [1992] AATA 333.
Alver was cited by Deputy President Constance in his decision in Sams v Secretary, Department of Social Services,[56] in declining to reduce a preclusion period:
[40] Although I do not suggest that Mrs Sams dwindled the money on extravagant purchases, I am satisfied that had she been more careful in managing her finances then Mrs Sam’s present financial hardship could have been prevented.
[56] Sams v Secretary, Department of Social Services [2016] AATA 654.
In Groom and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs, the Tribunal examined a catalogue of large-scale discretionary expenditure by the Applicant which, the Tribunal found, had led to his being in financial hardship through ‘circumstances (which) are entirely of his own making and occurred despite him having received legal advice of the preclusion period and its consequences.’[57]
[57] Groom and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2008] AATA 339.
Significant discretionary expenditure on items such as overseas travel have been highlighted in Tribunal decisions, including in Re Griffiths and Secretary, Department of Social Security.[58] In Re Secretary, Department of Family and Community Servicesand Szoke[59] the Tribunal was particularly forthright in relation to the applicant’s failure to have regard to the consequences of her behaviour:
28. In the ultimate the Respondent's case is that she is now impoverished by her failure to make financial provision for the lump sum preclusion period. That was, on her own case, clearly the result of voluntary actions by the Respondent to dissipate the money received by her in settlement of her compensation claim. She did not experience misfortune, nor did she experience circumstances not envisaged by the legislation.
29. We are satisfied that the Respondent deliberately spent the money without regard to the consequences of her action. Her behaviour in relation to the money was reckless with no regard to the consequences.
[58] Re Griffiths and Secretary, Department of Social Security [1992] AATA 123.
[59] Re Secretary, Department of Family and Community Servicesand Szoke [2001] AATA 353.
The Applicant expended 80% of the $225,000 compensation payment in the three years following its receipt. He was aware that the compensation payment was to be his sole source of income for the duration of the preclusion period: that is until October 2019. Accordingly it was incumbent on him to manage his finances carefully and spend the compensation payment prudently. The evidence before the Tribunal is that he did not do so.
After due consideration, the Tribunal cannot find that any of the circumstances claimed by the Applicant, either individually or in combination, meet the threshold of being ‘special circumstances’ for the purposes of the Act. Accordingly, the Tribunal is not satisfied there is a reason to exercise the discretion in s 1184K of the Act to reduce the length of the lump sum preclusion period.
DECISION
The decision under review is varied such that the preclusion period is for the period 9 April 2015 to 23 October 2019. The decision is otherwise unchanged.
I certify that the preceding 68 (sixty-eight) paragraphs are a true copy of the reasons for the decision herein of Senior Member Linda Kirk
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Dated: 19 November 2019
Date(s) of hearing: 1 July 2019 Applicant: In person Solicitors for the Respondent: E Ulrick, Department of Human Services
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