SUZANNE BARBARA O'RIORDAN and SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

[2009] AATA 208

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 208

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No   2008/6234

GENERAL ADMINISTRATIVE  DIVISION		)
Re		SUZANNE BARBARA  O'RIORDAN

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Mr John Handley, Senior Member

Date27 March 2009

PlaceMelbourne

Decision The decision under review in so far as it imposed a preclusion period should be affirmed, save that the duration of the preclusion period should be remitted to the respondent for recalculation in accordance with these Reasons.

(Sgd) John Handley
  Senior Member

SOCIAL SECURITY ‑  Applicant received two compensation lump sum payments – aggregate of both payments used to calculate period of preclusion from payment of disability support pension claimed two years after weekly compensation ceased – house mate of applicant had access to her bank account and expended some monies for personal items without permission – special circumstances – some of the compensation should be treated as not having been made – application remitted for recalculation of preclusion period

Social Security Act 1991 (Cth) s 17(1), (2) and (3), s 1169, s 1170, s 1171 and s 1184K

Accident Compensation Act 1985 (Vic) s 98A

Groth v Secretary, Department of Social Security (1995) 40 ALD 541

Secretary, Department of Family and Community Services v Chamberlain [2002] FCA 67

REASONS FOR DECISION

27 March 2009 Mr John Handley, Senior Member           

1.      Mrs O'Riordan the applicant in the proceedings has applied to challenge a decision made by the Social Security Appeals Tribunal on 10 December 2008.  It then affirmed a decision previously made by an officer of Centrelink to impose a compensation preclusion period.  By these proceedings she in effect, seeks to either eliminate or reduce the period of preclusion.

2.      The applicant is presently 63 years of age.  She suffered injuries when in the employ of VLine, a privatised public transport operator, on 1 July 2000.  But for an attempt to return to part time employment, the applicant has virtually been totally incapacitated subsequently and was paid weekly compensation until 29 December 2006.

3. The applicant was legally represented in proceedings instituted in the County Court of Victoria which resulted in a lump sum payment to her on 5 September 2006 of $119,120 pursuant to s 98A of the Accident Compensation Act 1985 (the Victorian Act). That was a payment with respect to the impairment suffered by her. On 22 January 2007 the applicant received another lump sum payment of $180,000 in settlement of her common law rights. A release signed by her recorded that those monies were, in part, a payment for past and future economic loss.

4.      Centrelink notified the applicant, her solicitors and the Victorian Work Cover Authority at or about the occasion of the second lump sum payment that a period of preclusion would be calculated and imposed in the event that a compensation affected payment was claimed.

5.      On 11 September 2008 the applicant claimed disability support pension (DSP).  The period of preclusion against which the applicant seeks relief by these proceedings was then calculated and imposed.  The legislative basis giving rise to the entitlement to impose a lump sum preclusion period and the manner of calculating the preclusion period is found within the combined provisions of s 17(1), (2) and (3), s 1169, s 1170 and s 1171 of the Social Security Act 1991 (the Act).

6.      Compensation as defined has one of a number of different meanings found within s 17(2) but is qualified as a payment that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury.  However, if a person receives two or more lump sum payments with respect to the same event which gave rise to the entitlement to compensation but only one of those payments is made wholly or partly in respect of lost earning capacity or lost earnings, the person is deemed to have received one lump sum compensation payment only.  In effect both payments are aggregated even if one of the payments is not made in respect of lost earnings or lost capacity to earn.  In the present case the first payment made to the applicant ($119,120) was a payment wholly with respect to her impairment and but for the second payment having been made, a preclusion period would not have been imposed (refer s 1171).

7.      The lump sum compensation payment (in the present case $299,120 being the aggregate of the above lump sum payments) is then identified as the amount over which the preclusion period is calculated.  By the provisions of s17(3), 50 percent of that amount is divisible by an income cut out amount which results in the number of weeks constituting the preclusion period.  The period commences on the day after the person last received periodic payments.  Accordingly the preclusion period in the present case commenced on 30 December 2006 and, having regard to the calculations referred to above, will expire on 7 January 2011. 

8.      The relief sought by the applicant in these proceedings is under s 1184K of the Act where she asserts that the whole or part of the compensation payment made to her should be treated as either not having been made or not liable to be made and that such a finding would be appropriate by reason of the special circumstances of her case.

9.      Although the applicant received almost $300,000 in compensation monies being the aggregate of the September 2006 and January 2007 payments, she said that she presently has $41.00 in her bank account.  All other monies have been expended.  Whilst a considerable amount of the combined settlement sum remains unaccounted, what is not in dispute is a repayment by the applicant to Centrelink in the sum of $109,948.37 from the compensation monies.  That repayment was made because subsequent to the conclusion of the compensation proceedings, Centrelink learnt that the applicant, from 1996 until January 2007, had been in receipt of Centrelink benefits, initially whilst she was working and later whilst she was in receipt of weekly compensation.  She received the benefits from Centrelink under a false name.  The applicant was eventually charged and appeared before a Magistrates' Court in Victoria.  The charges are not known but it is presumed that they relate either to the fraudulent receipt of Commonwealth monies and/or making false representations to Centrelink.  The applicant said that she wanted to repay all of those monies to Centrelink but was advised by an officer of the Victorian Legal Aid Commission that a payment of $40,000 only should be made and thereafter the balance be paid by instalments.  She was advised to make that offer and believed that she would be able to invest the balance of funds then held and have sufficient funds available to her until the expiration of the preclusion period.  The sum of $40,000 was paid to Centrelink on 1 May 2007 (T‑documents, p72).  However, it would appear that Centrelink rejected the offer of repayment of the balance outstanding and issued a garnishee notice against her bank account.  The Transcomm Credit Union which held all of the applicant's funds made a payment to Centrelink on 30 July 2007 in the sum of $69,948.37 being the balance of monies owing to Centrelink.  The applicant said that she did not know that the garnishee notice had been issued nor did she know that her credit union had made that payment.

10.     At 30 July 2007 the applicant had a credit balance in her investment account of $101,495.90.  She also had a credit balance in her savings account of $35,506.55.  It is presumed that Centrelink rejected the applicant's offer of repayment of instalments because it was satisfied that the credit balances held by the applicant were sufficient to permit her to repay the balance of public monies which were then owing.

11.     Before the payment of $40,000 was made to Centrelink, the applicant had purchased a new motor car at $30,500 and purchased a number of items of household items and electrical appliances.  She also repaid a loan to GE Credit on behalf of Richard Markowicz (refer later) arising out of a purchase by him of a plasma television.

12.     The applicant also incurred considerable costs to her solicitors being approximately $32,850 to the solicitors who represented her in the compensation proceedings and $11,000 to the solicitor who represented her in the criminal proceedings.  The applicant said that $5000.00 remained payable to her compensation lawyers and that she was attending to that sum by instalments.

13.     The applicant later realised that the new car that she had purchased caused her discomfort, having regard to the extent of her work related injuries, and did not have sufficient space to house her collapsible wheelchair which she said she used from time to time.  Accordingly she traded in that motor vehicle and purchased another new car.  Allowing for the negotiated trade in value and the price of the new car, the applicant incurred further expense of $24,000.

14.     The applicant also expended considerable sums of money on new furniture, clothing, bedding and relocating into rented accommodation.  The applicant said that her previous marriage ended some years prior to the work injuries.  She said that her husband took everything and thereafter she resorted to donations from charitable institutions of second hand clothing.  She said she purchased new household items because she wanted some comfort.  She was also of the belief that in the event that her offer to repay Centrelink would be accepted she could budget to maintain herself until 2011 despite the purchases that she had made and which she was continuing to make.

15.     The applicant spent a considerable amount of money on new clothing because having successfully undertaken gastric banding, she lost more than 60kgs in weight and the clothing that she previously held was of no use to her.  She said the banding procedure was undertaken on the advice of her orthopaedic surgeon, having regard to her knee and back injuries.  Whilst the Work Cover authority continues to be responsible for all medical and like expenses, it also assumed responsibility for the gastric banding procedure however the applicant was out of pocket in the sum of approximately $1500.00.

16.     An examination of the bank statements lodged by Centrelink of the two accounts held by the applicant revealed transfers of money from VicSuper.  The applicant's evidence with respect to these funds was unsatisfactory.  She initially indicated that she did not know that she was a member of a superannuation fund but later said that she had instructed her solicitors to make a TPI claim.  She said that she did not know the state of those proceedings.  She denied that she received a superannuation pension but said that the funds transferred into her savings account from VicSuper were to ensure that she had sufficient monies for day to day expenses.  The bank statements show that between 16 November 2006 and 30 May 2007 payments of $4000.00, $5000.00, $1000.00, $2000.00 and $3327.31 were paid into her savings account being a total of $15,327.31.

17.     The bank statements also reveal multiple and frequent debits from her savings account for reasons which the applicant said she was unable to explain.  She said that there were occasions when she was heavily influenced by prescribed medication and had given her card and her pin number to her housemate, Richard Markowicz.  It would appear that Mr Markowicz withdrew monies for his own personal use, being purchase of motor car spare parts, tools and equipment and for recreation and social purposes.

18.     The bank statements reveal withdrawal of large sums, often exceeding $1000.00 sometimes on succeeding days from a number of banks.  There is also documented references to frequent Eftpos withdrawals from the Deer Park Club.  It was learnt later from Mr Markowicz that he had withdrawn multiple sums, often on the same day and from the same place in order to feed poker machines.

19.     As the applicant's savings account became depleted, she transferred monies from her investment account.  It therefore followed that the funds within her investment account also rapidly became depleted.

20.     Centrelink submitted that the applicant was largely unable to explain the rapid erosion of her funds after the garnisheed payment was made in July 2007.  Whilst some of those monies would have been spent on the trade in and acquisition of a new motor car, it would appear that the personal household items acquired by the applicant, the payment by her of her legal costs and the relatively unrestrained access to the applicant's bank account by Mr Markowicz and his dispersal of her funds would in large part explain the applicant having a current net credit balance of approximately $40.00.

21.     At present the applicant receives a carer's allowance of $105.00 per fortnight.  That sum is paid to her with respect to her attending Mr Markowicz as his carer.  He receives DSP and his pension is largely used for the payment of rent and groceries and other domestic accounts.

22.     The applicant said her only assets were her household items and her motor car.

23.     Mr Markowicz said in evidence that he had been caring for the applicant since 2000 despite him suffering from chronic depression and other physical injuries.  He has been in receipt of a DSP for many years.  He said that he would frequently go to the pokies to get away while she was out to it – to keep my sanity.  He admitted that by using her savings account card and having access to her pin number he acquired, for his personal use, power tools and car parts and also withdrew items of cash to use at the Deer Park Club where he used poker machines.

24.     Mr Markowicz said he also used the applicant's monies, by withdrawing cash from her account, to purchase domestic items, food and groceries and paying domestic accounts.  He said that her bank card was kept in his wallet and he used it as (he) wanted.  From time to time he would discuss with the applicant his expenditure of monies but on other occasions he just went and took the monies out and bought tools etcetera.

25.     In cross examination Mr Markowicz said he purchased the plasma television by a loan that he obtained from GE Credit.  He said the applicant paid off his loan.  He estimated that the power tools purchased by him would have a current value of between $2000.00 and $3000.00.  He was unable to estimate the value of the car parts purchased but he said that he was restoring an American sports car and said that the parts were expensive.  He said the car has not been restored and more than $5000.00 had been spent to date on it.  He said that he should not be regarded as being in a married like relationship with the applicant and said that he and the applicant live together for convenience only in order to share costs.  He said that she had previously looked after him and currently looks after him when she is able.  He described the applicant as having been doped up since 2000 and was now starting to come off medication.

26.     If the compensation payments in whole or part are treated as not having been made or not liable to be made, the preclusion period can be eliminated or reduced if it is appropriate in the special circumstances of this case (refer s 1184K).

27.     As may be seen by the section above, quite apart from whether the applicant can demonstrate special circumstances, consideration needs to be given to whether it would be appropriate to treat the whole or part of the compensation payments as not having been made or not liable to be made.

28.     The expression special circumstances has been the subject of many decisions of the Tribunal and the Federal Court notably Kiefel J (when Her Honour was a member of the Federal Court) in Groth v Secretary, Department of Social Security (1995) 40 ALD 541 and in Secretary, Department of Family and Community Services v Chamberlain [2002] FCA 67. Her Honour decided, having reviewed a number of earlier decisions, that special circumstances

would require something to distinguish Mr Groth's case from others, to take it out of the usual or ordinary case.  That was, I consider, the only enquiry to be undertaken in this case.  It would of course follow that if one were to conclude the something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.  (Refer Groth).

29.     Apart from the refunded monies to Centrelink the other greatest expense incurred by the applicant was the combined sum of legal costs.  The applicant did not raise any complaint as to quantum and there is nothing from copies of the accounts found within the T‑documents which would indicate, without further evidence, that the amounts claimed were excessive.  If the applicant is unhappy with the amounts that she was charged in solicitor client costs (and which she has paid) she is entitled to lodge a complaint with the Law Institute and/or request a Bill of Costs be taxed.  In concluding this part there is nothing unusual or unjust in clients of lawyers being required to pay legal costs.  It is, in fact usual for clients to pay the professional charges of their lawyers.  That is a circumstance which is not special.

30.     The two principle issues agitated by the applicant which she asserted amount to her circumstances as being special were:

(i)        the payment to Centrelink by her credit union of the sum of $69,948.37 pursuant to a garnishee direction.  The applicant said that she understood that Centrelink would allow her to pay the majority of the monies to be refunded by instalments over a period of time thereby giving her the opportunity to budget with the remaining funds for the duration of the preclusion period; and

(ii)       the erosion of her funds by the expenditure of Mr Markowicz.

31.     The applicant said in evidence that she would have preferred to have paid the monies owing to Centrelink ($109,948.37) as a single payment but was advised by an officer of the Victorian Legal Aid Commission to initially pay $40,000 (which she did) and negotiate repayment of the balance by instalments.  She believed that Centrelink would accept that proposition but later learnt that a garnishee direction had been made to her credit union and the sum of $69,948.37 was paid to Centrelink.

32.     The T‑documents indicate (page 60) that there were discussions with the applicant on 23 April 2007 concerning a method of repayment initially, of $40,000 on 11 May 2007 and thereafter payments of $100.00 per fortnight until the totality of the debt was eliminated.  The T‑documents at T17 and T19 indicate Centrelink was aware only of the compensation payment of $180,000.  It appears that the repayment method was initially acceptable to Centrelink (page 62) however enquiries made of the applicant's bank indicated a combined balance of $159,668.02 at 4 May 2007.  Centrelink was then not satisfied that the applicant had provided correct information concerning her capacity to repay the debt in full and it was decided to issue a garnishee direction against the bank.  After that direction was issued and the sum of $69,948.37 was paid to Centrelink, a memorandum of discussions at page 63 of the T‑documents indicate that the applicant spoke with Centrelink and recorded her unhappiness that the recovery of the balance of the debt had been made.  However the same memorandum also indicates that the applicant confirmed that she had received two compensation payments and had not previously disclosed that she had received the payment of $119,000.  The memorandum records that the applicant advised that she had forgotten to mention the two payments and she is on medication and she often forgets things.

33.     I am not satisfied that the recovery of monies by garnishee or the consequent diminution of her bank balance amounts to a special circumstance.  The applicant obtained $109,948.37 of public monies over a long period of time by deception.  Centrelink, as a Commonwealth entity, is entitled – and should – recover monies and re-credit the public purse where there is a capacity to do so, (and no less in circumstances where the applicant knowingly never had any entitlement to those monies).  The applicant clearly did have the capacity to repay the monies and in my view Centrelink acted properly in recovering those monies.  There is nothing unfair or unjust (refer Groth) about the circumstances following the recovery by garnishee of a reduced bank balance when the applicant did have a capacity to repay and after the payment, a significant credit balance remained.

34.     The other principle contention of the applicant was the elimination of her funds by the expenditure of Mr Markowicz.  On the one hand the applicant allowed Mr Markowicz to have access to her bank cards and gave him her account PIN numbers.  She said that she did so in order to allow domestic accounts to be paid and because she trusted him.  She learnt later that monies were spent on items personal to him namely car parts, tools, cigarettes and alcohol.  She apparently became aware that those types of items were being purchased from her accounts and she didn't push him because he is a manic depressive and I didn't want a backlash.

35.     Mr Markowicz said that he would from time to time discuss with the applicant where monies were being spent and on other occasions he just went and took the monies out and bought tools.

36.     The applicant was alerted during the hearing to a number of Eftpos withdrawals and other payments related to the Deer Park Club as described in the bank statements contained within the T‑documents.   She expressed surprise.  I interpret that reaction as her not having knowledge that monies were withdrawn for the purpose of expenditure at the Deer Park Club which, on the evidence of Mr Markowicz, was used and paid by him into poker machines.

37.     The applicant's circumstances with respect to the use by Mr Markowicz of her bank cards and his access to her accounts might be something that she could have resisted or prevented or indeed withdrawn the permission that she gave.  She said there were periods of time that she was physically and/or emotionally incapable of exercising appropriate management of her accounts because of her injuries and because of the medication that she had been consuming.  She understood that Mr Markowicz was withdrawing monies for household expenses and later learnt that other monies were withdrawn for other purposes personal to him.

38.     The applicant's evidence on this issue I thought was unsatisfactory.  I accept that she was chronically ill and consuming considerable quantities of medication.  But the medical reports within the T‑documents do not point to her having any incapacity from exercising effective control or management of her bank accounts, nonetheless I am inclined to treat some of the compensation payments as not having been made to the extent of those payments which the bank accounts clearly identify as either having been expended at the Deer Park Club or having been withdrawn at an Automatic Teller Machine at the Deer Park Club.

39.     The T‑documents and documents appended to the respondent's Statement of Facts and Contentions contain bank statements from the Transcomm Credit Union for the period 4 October 2006 to 31 July 2008.  In that period there were 26 Eftpos withdrawals of monies from the Deer Park Club.  25 of the withdrawals were in the sum of $200.00.  One withdrawal was in the sum of $500.00.  A total therefore of $5500.00 was withdrawn.

40.     The bank accounts also show frequent withdrawals of large sums of money from ATM machines.  The frequency of the withdrawals and the amounts withdrawn cause me to have some suspicion that the monies were used for purposes not authorised or not known by the applicant but it is impossible to know whether they were used for purposes associated with personal items acquired by Mr Markowicz or indeed withdrawals made by or on behalf of the applicant.  Mr Markowicz said in evidence that he did use the applicant's funds to purchase tools and car parts.  The bank statements do not record any Eftpos purchases from identifiable automotive type retailers.  It may be, for example, that cash monies were withdrawn and the cash was then used to purchase such items.  There was no evidence Mrs O'Riordan authorised those payments or gave him permission to purchase.  Those circumstances are special to the extent they were unintended and certainly unjust (especially by using monies which were not his and when the bank balance was rapidly diminishing). 

41.     For reasons similar to the withdrawal of monies spent at the Deer Park Club, these circumstances were also out of the ordinary because they were used to purchase items personal to Mr Markowicz and over which the applicant derived no benefit.  The amounts withdrawn associated with purchases of tools and car parts (refer paragraph 25 earlier) were estimates.  In the absence of greater certainty of the amounts withdrawn a modest allowance should be made.  I find that $2000.00 only should be regarded as the aggregate of the withdrawals for purchase of personal items for Mr Markowicz and that sum should also be regarded as not having been made.

42.     I am not satisfied that the remainder of the applicant's circumstances are special.

43.     The applicant said that her age, her past medical history and her injuries have precluded her from obtaining employment.  Regrettably there are many people in the Australian community who are in a similar position.  It is well known, especially in recent months, that unemployment throughout Australia is unfortunately increasing in number and there is much to suggest that the numbers of persons unemployed will grow.  Younger persons who are fit and healthy are losing their jobs.  The applicant's employment prospects whilst bleak are not a circumstance that is special within the meaning of the above decisions.

44.     The applicant has approximately $40.00 remaining from the $300,000 (in round terms) recovered in the compensation proceedings.  Her only income is carer's allowance of $105.00 per fortnight.  The quantum of her social security benefits is very modest but she is supported from the DSP received by Mr Markowicz.

45.     The applicant continues to remain unwell and undertake treatment for her work related injuries but all medical expenses associated with treatment continue to remain the responsibility of the Victorian Work Cover Authority.

46.     The applicant does own a relatively new motor vehicle and has other domestic assets. 

47.     All things considered I could not conclude that the applicant's circumstances, except the monies expended for the purposes of recreation by Mr Markowicz at the Deer Park Club and his purchase of car parts are unfair, unintended or unjust nor could I find features of the applicant's circumstances which are out of the ordinary.  At July 2007 after the payment under the garnishee direction was made the applicant had a bank balance of $67,054.  (The respondent submitted that she had a balance of $89,719).  Nonetheless at September 2008 when she applied for DSP the bank statement shows a balance of $4425.00.  Save for the amounts allowed earlier it is impossible in the absence of any satisfactory explanation for the diminution of the bank balances to find that any other expenditure was for circumstances which can be found to be special.

48.     The decision under review in so far as it imposed a preclusion period is affirmed.  But, for the reasons given earlier it would be appropriate to find that the sum of $7500.00 should be treated as not having been paid because of some special circumstances (refer paragraphs 39 and 40).  The decision in so far as it determined the duration of the preclusion period is remitted to the respondent for recalculation.

I certify that the 48 preceding paragraphs are a true copy of the reasons for the decision herein of Mr John Handley, Senior Member

Signed:  Grace Carney Personal Assistant

Date of Hearing  11 March 2009
Date of Decision  27 March 2009
Solicitor for the Applicant          Applicant self represented
Departmental Advocate            Mr D Perdon