VYTAUTAS LOMSARGIS and SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS
[2006] AATA 570
•30 June 2006
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2006] AAT 570
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q2005/809
GENERAL ADMINISTRATIVE DIVISION ) Re VYTAUTAS LOMSARGIS Applicant
And
SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS
Respondent
DECISION
Tribunal Senior Member B J McCabe Date30 June 2006
PlaceBrisbane
Decision The decision under review is affirmed. ................[Sgd]..............................
B J McCABE
SENIOR MEMBER
CATCHWORDS
SOCIAL SECURITY – pensions, benefits and allowances – disability support pension – applicant injured in motor vehicle accident – compensation affected payment – preclusion period – no special circumstances exist to exercise discretion to disregard some of the settlement monies
Social Security Act 1991 s 1170, 1184K
Director-General of Social Services v Hales (1982) 47 ALR 281
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Maloney and Secretary, Department of Family and Community Services [2002] AATA 320
Thomas and Secretary, Department of Family and Community Services [2003] AATA 842
REASONS FOR DECISION
30 June 2006
introduction
Senior Member B J McCabe 1. The applicant in this case asked the Tribunal to shorten the lump sum preclusion period. The preclusion period is the period during which the applicant is ineligible to receive a range of welfare benefits after receiving compensation for economic loss as part of the lump sum settlement of a personal injuries case. The length of the preclusion period is determined by the application of a formula pursuant to s 1170 of the Social Security Act 1991 (the Act). Mr Vytautas Lomsargis says the Tribunal should exercise the discretion in s 1184K of the Act to treat part of the payment as if it had never been made (effectively shortening the preclusion period) because of the special circumstances in which he finds himself.
2. The discretion under s 1184K should not be exercised in favour of the applicant in this case. It follows the decision under review should be affirmed. I explain my reasons below.
the material before the tribunal
3. The Tribunal was provided with documents required under s 37 of the Administrative Appeals Tribunal Act 1975. The respondent also tendered a settlement statement generated by a solicitor recording the details of a conveyance of a Mooloolaba property formerly owned by Mr Lomsargis and a letter from a psychiatrist.
4. The applicant appeared on his own behalf and gave evidence. The respondent was represented by Ms Heffner, a Centrelink advocate.
the facts
5. Mr Vytautas Lomsargis was involved in a motor vehicle accident in 2001. His personal injuries claim was settled on 5 September 2003 when he was paid a lump sum of $320,000. The settlement included a component in respect of economic loss: see document T13 at 81. Centerlink applied the formula set out in s 1170 of the Act to determine that the lump sum preclusion period ran from 7 March 2001 until 21 February 2006. The applicant had applied for the disability support pension (DSP) in the meantime. He was paid DSP between 6 June 2003 and 24 September 2003. Centrelink informed the applicant of the preclusion period and raised and recovered a debt known as a compensation charge in respect of the DSP payments that had been made during the preclusion period: see document T 15 at 91-93.
6. The applicant asked Centrelink to review the calculation of the preclusion period and the compensation charge on 18 May 2004. Centrelink affirmed its earlier decision. The Social Security Appeals Tribunal (the SSAT) agreed.
7. Mr Lomsargis appeared to accept at the hearing that the preclusion period had been calculated correctly. I have not detected any error in the calculations, and I must therefore affirm them. The hearing focused instead on the question of special circumstances although the applicant insisted that he thought it was outrageous that the preclusion period was calculated on the gross amount he received by way of settlement. He pointed out he was required to pay a substantial amount to his lawyers out of the settlement in respect of their fees. Mr Lomsargis says the legislation should be amended so that only the net amount of the settlement is used to calculate the preclusion period. That is a matter for the parliament, not the Tribunal.
8. The applicant has a wife and two children. His daughter suffers from a serious medical problem. She has been hospitalised on a number of occasions and requires ongoing care. The applicant says his wife is also in poor health. The family has broken up: Mr Lomsargis says he is now living in a caravan park in a tent while his wife remains in the family home. He understands his wife has commenced a new relationship.
9. Mr Lomsargis says he ran a successful business prior to his accident in 2001. His family was accustomed to a good standard of living in a comfortable home. After the accident, the applicant became unable to work. The family survived on his wife’s salary. She worked as an administrator at a private school. Mr Lomsargis said the family did not moderate its spending during that period. He and his wife ran up large debts on credit cards.
10. The credit card debts were paid out when the settlement money was received. The SSAT found the credit card debt amounted to $120,000. There was no challenge to that figure. Mr Lomsargis also used settlement monies to purchase cars for himself, his wife and his son, and a camper trailer. (I understand the trailer has since been sold.) The expenditure is set out in the decision of the Authorised Review Officer at document T 21 at 118.
11. Mr Lomsargis has commenced proceedings against AXA, an insurer, in the meantime. The proceedings are being conducted in the Supreme Court. Mr Lomsargis did not go into details about the nature of the claim, but he insisted he had good reason to expect a successful outcome – which meant a large payout that would transform his financial situation. The case appears to be costing little because his lawyers are working on a contingency basis.
12. Mr Lomsargis has sold investment property (although he says he made little on the sale) since the personal injuries claim was settled. He broke up with his wife in 2003 but she continues to hold credit cards in his name upon which she regularly draws. He says he now owes around $100,000 on the cards. He says his wife in particular was unwilling to restrain her spending. He has taken out a $500,000 mortgage on the family home to fund the family’s lifestyle: he says it is worth approximately $750,000, leaving $250,000 in equity. He also admitted to a gambling problem. Apparently he has taken to buying lotto tickets on a systems basis. He said he spends up to $3000 on some Lotto draws.
13. The applicant has some legitimate ongoing expenses. In particular, he says he funds his daughter’s treatment for medical problems. The treatment includes in-patient treatment at a private hospital. He has also paid expensive university fees for her in the recent past.
14. Mr Lomsargis says he finds the litigation against AXA, his daughter’s health problems, his tenuous relationship with his wife and the practice of living on credit to be very stressful. These stresses add to the difficulties he experiences as a result of his injuries.
15. The applicant agreed that he had spent around $400,000 since 2003 on maintaining his family’s lifestyle, although it may be that a substantial portion of that amount has been frittered away as a result of gambling. That suggests breathtaking profligacy. Mr Lomsargis agreed the gambling was irrational. He agreed it would make more sense to sell the family home and then use the proceeds to pay out debt and end the financial relationship with his wife. But he continues to insist the AXA litigation will be his salvation. He appears reluctant to confront his wife.
the legislation
16. Section 1184K of the Act permits the Secretary (and on review, the Tribunal) to treat some or all of the settlement monies received by the applicant as if they had not been paid. The discretion may only be exercised if the decision-maker thinks it is appropriate to do so in the special circumstances of the case. The practical effect of the discretion when exercised is to reduce the length of the preclusion period.
17. The Tribunal and the courts have considered the meaning of the expression special circumstances in a number of cases. Kiefel J explained in Groth v Secretary, Department of Social Security (1995) 40 ALD 541 (at 545) that the exercise of the discretion should be limited to cases where the applicant's position can be distinguished from the cases of others. Her Honour said there must be something about the applicant's case that sets it apart from the usual or ordinary case. The authorities suggest that financial difficulty on its own is not normally enough, since it is presumably not uncommon for welfare recipients to find themselves in straitened circumstances: see Director-General of Social Services v Hales (1982) 47 ALR 281 at 321 per Sheppard J. There must be something in the totality of the applicant’s circumstances that makes his or her burden unusual.
18. The Tribunal has considered giving relief to applicants in a range of situations. Relevantly, it has offered relief where the applicant is affected by the illness of a relative or dependent: see, for example, Maloney and Secretary, Department of Family and Community Services [2002] AATA 320. The Tribunal has even reduced the preclusion period when the applicant was simply inept: see Thomas and Secretary, Department of Family and Community Services [2003] AATA 842. But the cases all emphasise the discretion is not to be exercised lightly. In each case it will be necessary for the Tribunal to form the view that the circumstances before it are special, and that the exercise of the discretion is warranted. The Tribunal is much less likely to reach that conclusion if the applicant has financial resources at his or her disposal, or can otherwise do something to preserve or remedy his or her own position.
19. In this case, I accept the applicant is stressed about the litigation against AXA. He is ill and his family has broken apart. His daughter’s illness is a particular source of stress and worry. But I am not satisfied all these matters justify an exercise of the discretion. Many applicants are involved in litigation and experience family problems, and many of them contend with a sick relative. I note in this case the daughter in question does not reside with the applicant. If he bore the day to day burden of caring for his daughter, the situation might be different.
20. I accept the applicant is experiencing financial hardship, but it is largely of his own making. He is gambling. He has also failed to moderate the family’s expenditure. It is not clear why the applicant continues to fund his wife’s spending (assuming that his stories of her spending patterns are accurate) now they have broken up and she has re-partnered. The family has assets that could be used to settle the debts they owe on credit cards. Mr and Mrs Lomsargis have the option of selling the family home and reaching an agreement over further expenditure.
21. Mr Lomsargis clings to the hope that the litigation against AXA will yield a financial return. He may be right: I express no view on that point. But he is acting irresponsibly if he fails to take simple and obvious steps to manage his finances in the meantime. It is inappropriate to expect the taxpayer to help him when he is able to help himself but refuses to do so.
conclusion
22. The decision under review is affirmed.
I certify that the 22 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member B J McCabe.
Signed: .....................................................................................
Associate Adam RyanDate of Hearing 2 June 2006
Date of Decision 30 June 2006
The applicant represented himself.The respondent was represented by Ms Heffner, a departmental advocate.
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