"The Applicant" and Secretary, Department of Employment and Workplace Relations

[2007] AATA 1002

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 1002

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2006/396

GENERAL ADMINISTRATIVE DIVISION		)
Re		“THE APPLICANT”

Applicant

And SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Ms N Bell, Senior Member

Date4 January 2007  

PlaceSydney

Decision The decision under review is set aside and instead the Tribunal decides that so much of the Applicant’s compensation settlement monies be disregarded as to reduce the Applicant’s preclusion period so that it ends on the date of this decision.

..............................................

Ms N Bell  Senior Member  

COMPENSATION – Preclusion Period – Eligible for Social Security Payments – Waiver of Preclusion Period if There are Special Circumstances – Special Circumstances Found – Decision Under Review is Set Aside – Preclusion Period Ceases on the Date of Decision  

Secretary, Department of Social Security v Winterbottom, 1990 AATA 6419

Re Nikolov and Secretary, Department of Social Security, 1991 AATA 7452

Re Reardon and Secretary, Department of Family and Community Services, 2004 AATA 0090

Riddell v Secretary, Department of Social Security (1993) 42 FCR 443

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

Social Security Act 1991

REASONS FOR DECISION

Ms N Bell, Senior Member

1. After the Applicant settled her compensation claim in September 1998, for injuries she received in a motor vehicle accident, Centrelink imposed a preclusion period during which she would not be eligible to receive social security payments. The preclusion period was calculated by Centrelink to end in March 2008. The calculation of the period is not in dispute. In fact, Centrelink made an error in the Applicant’s favour when it made the calculation and discovered later that the period should have extended to September 2009. However, because this was Centrelink’s mistake, an authorised review officer decided to disregard the amount of the settlement that gave rise to this extra period of preclusion. The officer did this under section 1184K of the Social Security Act 1991 which allows for a part or the whole of a compensation payment to be disregarded for the purposes of the calculation of a preclusion period if it is appropriate to do so in the special circumstances of a case.

2.      The Applicant would like the exercise of this discretion to be extended so as to further shorten the preclusion period and enable her to receive a social security payment now.  Her reasons are, in brief, that all of the money she received from her settlement has been spent and, because she and her husband have now separated, she has no income and needs to establish her independence from her husband because of his abusive behaviour.  The Secretary opposes any further exercise of the discretion because the Applicant’s house, owned jointly with her estranged husband, is a substantial asset.

3.      On the basis of the Applicant’s evidence, I make the following findings of fact. 

compensation payment, assets and income

4.      Although the Applicant’s compensation payment was $540,000, she only received approximately $300,000 after refund of periodic compensation payments already made to her, payment of medical expenses and costs.  She spent some $245,000 on the purchase of the marital home and the balance on paying out loans, furniture, home maintenance and living expenses.  Some of these purchases were made by her husband.  The house, which the Applicant says is currently worth about $300,000, is unencumbered except for a mortgage of approximately $17,000, taken out in March 2005 to consolidate some credit card debts.  The house is in some disrepair and has not been well maintained.

5.      The couple separated in May 2005 and the Applicant’s husband meets the mortgage payments of $36 per week and payments for rates and insurance.  He also contributes to the payment of some household bills.  He makes no contribution to food and other living expenses.  The Applicant said she thinks she would get less money from him if she took formal action against him for maintenance.

6.      The Applicant lives in the house with her son, 20 years, and her daughter, 18 years.  Her son has some casual part time work and contributes $50 per week to the household.  Her daughter is receiving Youth Allowance of $180 per fortnight and makes irregular contributions to the household.  Much of her daughter’s Youth Allowance has had to be spent on materials necessary for her to complete subjects for her Higher School Certificate.  The Applicant sold her IAG shares early last year and that money has run out.  Family and friends have helped the Applicant with food, but now that help has ceased.

7.      The Applicant currently does clerical work for one day per month and earns $126.  She said she could, with her physical impairments, work two days per week but does not know who would employ her.  She was not able to point to any attempts she has made to find additional work.  She has a 1989 Commodore wagon and has considered selling it but says the money belongs to her son.

changed circumstances

8.      The Applicant and her husband separated in May 2005.  She finds he does not take the separation seriously and he comes to the house uninvited four or five times per week.  During these visits he has been physically and verbally abusive towards her.  During the marriage he was abusive and violent and, at the time of the marriage breakdown, broke her daughter’s foot when she tried to intervene in a physical fight.  The Applicant says her husband threatens to withdraw the limited financial support he gives.  She considers that if she had a social security payment, her own income, her husband would no longer have any power over her.

9.      At the time she bought the house with the proceeds of her settlement, the Applicant’s marriage was going well and she expected, on the basis of his assurances, to be supported by her husband.  She is loathe to sell her house but says her husband may co-operate in its sale because he is living with his father and he has said if she promises not to ask for any of his superannuation he would let her have the house or the proceeds of its sale.  However, she is concerned about his reaction when he finally realises that she is serious about ending the marriage and when she takes formal steps to do so.

10.     She saw a solicitor when she attended a course about domestic violence and she plans to return and commence proceedings for divorce as soon as she has helped her daughter through her Higher School Certificate, which has been delayed because of events surrounding the marriage breakdown.

health

11.     The Applicant is in physical pain because of her injuries from the accident.  She is also suffering from depression and has been treated by a psychiatrist for over ten years.  She has been on anti-depressant medication since June 2006.  Her Psychiatrist, Dr Robinson, reported ongoing spousal abuse and financial difficulty as stressors which aggravate her condition.  I accept that evidence.

12.     Dr Boustead, General Practitioner, reported that the Applicant’s daughter is receiving counselling and medication because of violence in her parents’ relationship and the stress of the breakdown of her parents’ marriage.  The report noted the effect of this on her schoolwork and also noted that, because of her mother’s dire financial circumstances, she has been forced to obtain intermittent, part time work.   I accept that evidence.   She has been unable to finish her Higher School Certificate.

13.     The Applicant’s and her children’s distress has been added to by the recent deaths of both grandmothers.

appropriateness of waiver

14.     The circumstances which may have made it acceptable, or even sensible, for the Applicant to expend the bulk of her settlement monies on the purchase of a home have now deteriorated.  She had an expectation that, having contributed to her marriage in this way, she would receive financial support from her husband.  That has now become untenable and she must seek her own, independent means of support.  That is clear from the Applicant’s own evidence and from the opinion of her treating Psychiatrist, Dr Robinson.

15.     The Applicant has said she could manage work for two days per week.  Given her physical impairments and her current psychiatric condition, it is unclear whether she would be successful in obtaining and sustaining such work.  However, it is to her credit that she considers it a possibility.

16.     The Applicant has a substantial asset in her house.  She has said she expects her husband would co-operate in its sale.  Even if her husband made a claim on a portion of the proceeds of sale she would still have substantial funds available to her.  Ms Sharma for the Secretary referred me to the Tribunal’s decision in Secretary, Department of Social Security v Winterbottom, 1990 AATA 6419, in which the Tribunal found that a house purchased with settlement monies should be sold rather than a preclusion period be reduced. There are many other decisions of the Tribunal to similar effect. There are, however, many decisions of the Tribunal in which the existence of a modest house, purchased with settlement monies, has not been regarded by the Tribunal as a bar to the exercise of the discretion in section 1184K or its predecessors. See, for example, Re Nikolov and Secretary, Department of Social Security, 1991 AATA 7452, and, more recently, Re Reardon and Secretary, Department of Family and Community Services, 2004 AATA 0090, which took into account the difficulties associated with separation and Family Law proceedings.

17.     In Riddell v Secretary, Department of Social Security (1993) 42 FCR 443, the Full Court of the Federal Court, dealing with a similar “special circumstances” provision, said at page 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.”

18. I am conscious of the sound policy behind the legislative imposition of preclusion periods; a person should not have the benefit of both compensation settlement monies and social security payments; a person should not “double dip”. However, I am also mindful that the existence of section 1184K and its predecessors is legislative recognition that life does not always proceed as planned and circumstances may arise that make even the soundest of policies harsh and inappropriate, when applied to some special circumstances.

19.     The resolution of property matters associated with divorce proceedings does not happen instantaneously, even where there is co-operation between the parties.  The sale of property does not conclude in under a few months, even where there is a ready purchaser.  It is quite conceivable that, even if the Applicant commenced property proceedings immediately and promptly placed the house on the market, she would not have the benefit of the proceeds of sale, or her share of them, before the preclusion period is over.  The Applicant needs money for food and other expenses now and, for all the reasons our society frowns on domestic violence and abuse, she needs to become independent of her husband as soon as possible.

20.     I consider the Applicant’s circumstances to be special and in this regard I am mindful of the decision of the Federal Court in Groth v Secretary, Department of Social Security (1995) 40 ALD 541, where, at page 545, Keifel J, said that special circumstances:

“would require something to distinguish Mr Groth's case from others, to take it out of the usual or ordinary case …. It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.”   

21.     The combination of continued abuse by her spouse and the associated breakdown of the marriage, the Applicant’s lack of funds for basic living expenses for herself and at least one dependent child, the Applicant’s physical impairment and psychiatric illness and the threat of such illness for her daughter, and the time consuming uncertainties of Family Law and the sale of property make the imposition of the full preclusion period, and even the currently modified one, unfair, unintended and unjust.  This, in my view, constitutes special circumstances which, in this case, make it appropriate to disregard so much of the Applicant’s compensation settlement monies as to further reduce the preclusion period so that it ends on the date of this decision.

decision

22.     The decision under review is set aside and instead the Tribunal decides that so much of the Applicant’s compensation settlement monies be disregarded as to reduce the Applicant’s preclusion period so that it ends on the date of this decision.

I certify that the 22 preceding paragraphs are a true copy of the reasons for the decision herein of Ms N Bell, Senior Member

Signed:  ......... [Sanjiv Shah] ............
   Associate

Date of Hearing  16 November 2006
Date of Decision  4 January 2007
Solicitor for the Applicant          Pankaj Sharma