Virgara and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs

[2010] AATA 1022

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 1022

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2010/3185

GENERAL ADMINISTRATIVE DIVISION		)
Re		MARTIN VIRGARA

Applicant

And Sec, Dept. of Families, Housing, Community Services & Indigenous Affairs

Respondent

DECISION

Tribunal M D Allen, Senior Member

Date17 December 2010

PlaceSydney

Decision The decision under review is AFFIRMED.  

……............[sgd].....................

M D Allen, Senior Member

CATCHWORDS

SOCIAL SECURITY:  Whether special circumstances existed so as to reduce preclusion period.  Award of damages dissipated due to poor financial decisions including an unsecured loan to former partner.  Decision under review affirmed.

LEGISLATION

Social Security Act 1991, Ss 1184K(1)

CASES

Secretary, Department of Social Security v Ellis (1996-7) 24 AAR 535

Dranichnikov v Centrelink (2004) 75 ALD 134  

REASONS FOR DECISION

17 December 2010 M D Allen, Senior Member            

1.      By application made 30 July 2010 the Applicant sought review of a decision of the Social Security Appeals Tribunal (“SSAT”) that on 15 June 2010 affirmed a prior determination not to abridge a preclusion period from 1 September 2007 to 4 October 2013.

2. In these proceedings no issue was taken with the decision of the Respondent to impose the preclusion period or its duration. The Applicant did however seek relief pursuant to Ss1184K Social Security Act 1991 (“SSA”) which subsection states inter alia:

“(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.
(2)  If:

(a)  a person or a person's partner receives or claims a compensation affected payment; and
(b)  the person receives compensation; and
(c)  the set of circumstances that gave rise to the claim for compensation is not related to the set of circumstances that gave rise to the person's or the person's partner's receipt of, or claim for, the compensation affected payment;

the fact that those 2 sets of circumstances are unrelated does not alone constitute special circumstances for the purposes of subsection (1).”

3.      The Applicant was injured in a work accident on 30 July 2033.  On 4 September 2007 his claim for damages against his employer was settled in the sum of $531,836.00 inclusive of costs and workers compensation payments made.  Of this sum the Applicant stated that he received an amount of $335,000.00 “in the hand”.

4.      Although in these proceedings the Applicant stated that he had not been told at the time he received his damages the duration of the preclusion period, he did state he had been informed that there would be a preclusion period.  In this regard I note Centrelink wrote to the Applicant on 14 September 2007 informing the Applicant of the imposition of a preclusion period and stating that it started on 1 September 2007 and would end on 4 October 2013.

5.      The Applicant’s evidence was that after receiving his monies he gave the bulk of it to his father as his father had more financial acumen than did the Applicant.  The Applicant’s father initially gave him $30,000.00 to live off and paid off the Applicant’s debts.  The Applicant’s father then invested the balance in the share market and transferred a half share in a residential unit to the Applicant.

6.      Of the $30,000.00 given to him by his father, the Applicant said that he virtually wasted it.  After going on a holiday he used the bulk of the money for entertainment and food.  By food he meant that he did not cook for himself but purchased meals.

7.      An explanation of the Applicant’s expenditure is more comprehensively stated in an affidavit he swore for the SSAT proceedings.  In that affidavit he states:

“I applied $30,000.00 of the compensation payment to pay off some of the debts I incurred whilst I was receiving half my wage.  To my best recollection I payed my mother back a sum of approximately $17,000.00 with the balance going to pay off the debts for my five eye operations.

I can not remember the exact timing, but recall that it was shortly after receiving the first $30,000.00 that I asked my father for and was giving another $30,000.00 out of the compensation payment monies.

I recall that the reason I asked for this second $30,000.00 payment was because the first $30,000.00 was quickly depleted on repayment of debts accrued whilst I was on workers compensation benefits (being half pay) and I had no where to live after I broke up with my partner.

To the best of my recollection I used the second $30,000.00 in part to pay out a motor vehicle finance loan of $12,000.00.  The motor vehicle finance loan was for a car I had bought my then ex partner.  In short she took the car and I had the debt.  At the time I was being given default notices, I presume on my ex partner ceasing to make repayments under the motor vehicle finance loan, and was being threatened with legal proceedings.  The remaining $17,000.00 I used on general expenditure, including spending money on building a race car.

Having no where to live I entered into an agreement with my father that I would purchase half of a unit with him which I would live in and pay rent for.

A few months after receiving the second $30,000.00 I again asked my father for and was giving $40,000.00 as I run out of money.  I recall that I used $10,000.00 to purchase a vehicle.

In about late 2008 early 2009 my father informed me the stock market had crashed and I had lost money.  Consequently a feud erupted with my father, which continues to this day, and I asked for my money back. The financial wash up as I understand it is that my father liquidated all holdings of shares in my name and terminated my interest in the unit in return for which I received $207,000.00.

Shortly after the feud with my father, in or about mid 2009, I entered into a relationship that was going well.  We needed a place to live so I agreed to lend my partner money to fund the purchase of a house.  I lent my partner $150,000.00 of $207,000.00 which I then had just sitting in the back.  I understood that the $150,000.00 would be used for a deposit on a property and that I was to be payed back the $150,000.00 over time.  I also purchased furniture and electrical goods for the home.

I am currently residing at the address without paying rent as payment for the loan.  I am not otherwise receiving any repayment on the $150,000.00 or in relation to the furniture and electrical items I purchased.  I have no interest in the property purchased with the deposit I lent my then partner.  I have sort legal advice to recover this money but can’t afford to start legal proceedings.”

8.      In evidence in these proceedings the Applicant stated that the relationship between him and his partner, Ms Heather Yule, has ceased.  He is still living in the property he helped finance and his former partner is still receiving carer allowance on the basis that she is his carer.  He says he is allowed to live in the property rent free whilst Ms Yule continues to receive carer allowance but the Applicant has to provide his own food.

9.      Although Ms Yule has acknowledged in a document signed by her that the Applicant did contribute the sum of $150,000.00 to the purchase of the property the Applicant says that she is refusing to pay back that sum and although he has taken legal advice he does not have the funds to take legal action to recover it.  Allegedly Ms Yule has stated to the Applicant even if he is successful in obtaining a judgement against her she will repay the sum of $150,000.00 at the rate of $1.00 per week.

10.     On 25 January 2007 Centrelink determined that the Applicant was qualified for the payment of Disability Support Pension (“DSP”) as he met the criteria for permanent blindness.

11.     Currently the Applicant has some $158.00 in his bank accounts.  Although Vision Australia has attempted to place the Applicant in employment he has been unable to retain employment due predominantly to his lack of vision causing an inability to operate cash registers or computers.  The Applicant is still estranged from his parents and is forced to rely upon the charity of his sister.

12.     Notwithstanding the Applicant’s evidence that he handed part of his damages payment to his father for investment on 11 December 2007, the Applicant telephoned Centrelink and stated that he had received a settlement of $325,000.00 two months ago but now had only $25,000.00 left and was in hardship.  The Applicant again telephoned Centrelink on 4 January 2008 stating that he had purchased a half share in a unit as he needed to move out of home and so had only $25,000.00 left so could not support himself during the preclusion period.

13.     Although the Applicant denied making these statements, I accept the records as notes made at the time and do not doubt their accuracy.

14.     Following the rejection of the Applicant’s claim for DSP, on the basis that a preclusion period existed, his case was reassessed by an Authorised Review Officer (“ARO”).  On 26 February 2009 the ARO spoke to the Applicant’s father who informed him that approximately $150,000.00 to $170,000.00 of the Applicant’s settlement monies had been invested in the stock market but that due to the crash of the stock market they were now worth $30,000.00 to $40,000.00.

15.     The estimate of the value of the Applicant’s shares was totally inaccurate.  Document ST2 at page 270 would indicate that the Applicant received the total sum of $177,411.70 when his shares were liquidated.

16.     In evidence the Applicant said that when his father returned the management of his financial affairs to him he received the total sum of $201,000.00.  This sum has then been expended by providing to Ms Heather Yule the sum of $150,000.00 towards the purchase of a house and the rest was spent on repairs to the house and the purchase of furniture.

17.     The Applicant now seeks to have the preclusion period reduced on the grounds of special circumstances.

18.     What might constitute “Special Circumstances” has been discussed in many decisions both of the Administrative Appeals Tribunal and the Federal Court.  In Secretary, Department of Social Security v Ellis (1996-7) 24 AAR 535 at 539, Carr J said:

“In Beadle the Director-General of Social Security (1985) 7 ALD 670, a Full Court of this court had to consider whether the Administrative Appeals Tribunal had erred in its interpretation of s 102(1)(a) A Act which provided for an extension of time in which to claim a family allowance ‘… in special circumstances…’. At 673-674 the Full Court said:

‘Presumably in this context special circumstances must include events which would render the six months unfair or inappropriate… It would depend upon the circumstances of the particular case whether these constituted special circumstances.  We do not think it is possible to lay down precise limits or precise rules.  The matter is one for the Director-General bearing in mind the purpose for which the power is given.  The phrase ‘special circumstance’, although lacking precision, is sufficiently understood in our view not to require judicial gloss’.”

In Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545, Kiefel J, after referring to Beadle said:

‘…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.  That was, I consider, the only inquiry to be undertaken in this 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.  The inquiry I have referred to would involve considering what would be the effect, if the provision in question or the principle of liability it creates is applied.’

Later (on the same page) Keifel J expressly approved the Tribunal’s reasoning in holding that Mr Groth’s circumstances were not out of the ordinary when Pt 3.14 of the Act (in which SS1168 and 1184 are to be found) had the same effect on him as it did on other persons qualified to receive a disability support pension.  Her Honour added:

‘It [the Tribunal] went on to find that his circumstances and those of his family, although difficult, did not constitute hardship and they could not be said to be different from other pension recipients’.”

In Dranichnikov v Centrelink (2004) 75 ALD 134, Hill J (with whom Kiefel and Hely JJ agreed), said at paragraph 148:

“…other cases which have considered analogous words such as ‘special reasons’ has tended to conclude, albeit in different context, that what is required will be circumstances which distinguish the case in consideration from the usual case.  There will be a requirement that the circumstances are such that takes the case out of the ordinary: Jess v Scott (1986) 12 FCR 187; 70 ALR 185 and the cases in various contexts in the decision which Lockhart, Shepherd and Burchett JJ discussed”.

19.     There can be no doubt that the Applicant has dissipated his monies and now seeks to fall back on the social security system for his support.

20.     Although the Applicant states that any relationship between him and Ms Heather Yule has now ceased, Ms Yule as late as July 2010 still stated for Centrelink purposes that she was in a defacto relationship (with the Applicant).

21.     Ms Yule was not called in these proceedings so it is only the Applicant’s evidence that any relationship between them has ceased.

22.     As early as 11 December 2007 the Applicant had stated to Centrelink that he had only $25,000.00 of his settlement monies left and was in hardship.  This statement was patently incorrect as his father had at that time invested at least $150,000.00 in shares on his behalf and there is also evidence from his father that the Applicant had at that time spent money on a “drag car”.

23.     Again on 4 June 2008 the Applicant made claims of hardship to Centrelink, while still in the possession of a share portfolio.

24.     I am not totally convinced that the Applicant is in the straightened circumstances he states.  In any event even if he is I do not regard his present circumstances, of which he is the author, as being so unintended, unfair or unjust as to constitute special circumstances.

25.     The decision to provide $150,000.00 to Ms Yule without security was a deliberate decision by the Applicant and although it is a fair inference to draw that Ms Yule took full advantage of the Applicant’s naivety it was a decision deliberately made and made with knowledge of the preclusion period.

26. Pursuant to section 43 of the Administrative Appeals Tribunal Act 1975, the decision under review is affirmed.

I certify that the 26 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member M D Allen.

Signed:         ............[sgd]................................
  K. Lynch, Associate

Date of Hearing                   13 December 2010
Date of Decision                   17 December 2010
Representative for the Applicant               Mr M Virgara (self)
Representative for the Respondent          Centrelink Legal Services