Waddell and Secretary, Department of Employment and Workplace Relations
[2007] AATA 1140
•16 March 2007
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2007] AATA 1140
ADMINISTRATIVE APPEALS TRIBUNAL )
) N° V 200601055
GENERAL ADMINISTRATIVE DIVISION ) Re
MARGARET WADDELL
Applicant
And
SECRETARY,
DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS
Respondent
DECISION
Tribunal Mr C. Ermert, Member Date16 March 2007
PlaceMelbourne
Decision The Tribunal affirms the decision under review.
(sgd) C. Ermert
Member
SOCIAL SECURITY – lump sum compensation payment – application of preclusion period – whether special circumstances apply – financial hardship ‑ gambling – psychological condition
Administrative Appeals Tribunal Act 1975
Social Security Act 1991
Groth v Department of Social Security (1995) 40 ALD 541
Secretary, Department of Social Security v Ellis (1997) 46 ALD 1
Re Secretary, Department of Social Security and Winterbotham (AAT 6499, 11 December 1990)
REASONS FOR DECISION
16 March 2007 Mr C. Ermert, Member
INTRODUCTION
1. The applicant, Mrs Waddell, suffered a workplace injury for which she sought compensation. She was paid weekly compensation up to 15 January 2006. On 3 February 2006 her claim for compensation was settled for a lump-sum amount of $160,000 including legal costs. Centrelink, which acts as the service delivery agency for the Department of Employment and Workplace Relations, advised Mrs Waddell and her solicitor that, as a result of the lump sum payment, she would be subject to a preclusion period starting on 16 January 2006 and ending on 20 April 2008, during which she would not be receiving social security benefits. Some time after receiving the lump sum payment Mrs Waddell suffered another fall which resulted in further injuries requiring ongoing treatment.
2. From her lump sum payment Mrs Waddell has spent significant amounts on solicitors’ fees, the repayment of loans to family and friends, the payment of arrears in rental, gas and electricity accounts, the purchase of a new car and expenses involved with undertaking courses in further education. Mrs Waddell’s living expenses include considerable sums for the many medications she has been taking, and also payments to friends and carers who assist her in seeing her doctors. At the time of the hearing Mrs Waddell had only $20,000 remaining from the lump sum payment. As there is now little money left from the payment Mrs Waddell is seeking a reduction in the duration of the preclusion period.
3. On 22 March 2006 Mrs Waddell asked for a review of the decision to impose the preclusion period until 20 April 2008. The decision was subsequently affirmed by an Authorised Review Officer. Mrs Waddell then sought a review by the Social Security Appeals Tribunal (SSAT). On 3 October 2006 the SSAT again affirmed the decision. This hearing is a review of the SSAT decision.
THE HEARING
4. At the hearing Mrs Waddell was represented by a friend, Mr Stephen Beaton. The respondent was represented by Ms Kayren Paul, a Centrelink advocate. I had before me the documents lodged by the respondent pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (the T‑documents). I accepted into evidence a bundle of documents, numbering 60 pages, comprising a summary of a submission by Mr Beaton with copies of various supporting documents (Exhibit A1) and a copy of a further submission by Mr Beaton in response to the receipt of the respondent’s Statement of Facts and Contentions (Exhibit A2).
5. I heard evidence from Mrs Waddell, Ms Sonja England, a carer for Mrs Waddell, and Mr Angus Waddell, Mrs Waddell’s son. There were no witnesses for the respondent.
THE ISSUES
6. There is no dispute that, on 3 February 2006, Mrs Waddell settled a compensation claim for a lump sum payment of $160,000, which included an amount for loss of earnings or lost capacity to earn. This payment therefore falls within the definition of compensation as defined in section 17(2) of the Social Security Act 1991 (the Act). There is also no dispute that $80,000 of the lump sum payment is to be assessed as the portion relating to lost earnings, in accordance with section 17(3) of the Act. The relevant provisions for calculating a lump sum preclusion period are contained in section 1170 of the Act. Finally, there is no dispute that the preclusion period has been correctly calculated and applied for the period starting on 16 January 2006 and ending on 20 April 2008.
7. In this case Mrs Waddell is seeking a reduction or cessation of the preclusion period on the basis that special circumstances apply. The only issue to be determined is whether there are special circumstances that would allow the Secretary to treat the whole or part of the compensation payment as not having been made.
Are there special circumstances in this case?
8. Section 1184K(1) of the Act states:
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.
9. According to Mr Beaton, Mrs Waddell’s submissions on the issue of special circumstances are contained in the responses to Questions 2 and 3 on the form headed “Compensation Recovery Team – Statement of Expenditure & Circumstances” contained in Exhibit A1. In the relevant passages Mrs Waddell contends that, after she received her settlement payment she had a large amount to repay and also had to make large payouts for medication. Mrs Waddell also had a bad fall, injuring her right shoulder and left foot and submits that she is no longer employable due to her age and her injuries. Mrs Waddell submits further that her conditions of depression and anxiety, her inability to trust her own judgement and her fear of flight are special circumstances that should be taken into account in deciding her case.
10. On the issue of her financial situation, Mrs Waddell gave evidence of the considerable expenses incurred as a result of her injuries. She attends a number of doctors, both in Melbourne and Ballarat and takes a large variety of medications. Mrs Waddell has difficulty looking after herself and is assisted by a carer every second day. Ms England gave evidence of the extent of the care she provides to Mrs Waddell on each of her visits. Mrs Waddell also gave evidence regarding the loans that she has received from family and friends over the previous few years. The evidence provided detail in support of that contained in Exhibit A1 and confirmed the level of expenses shown in those documents.
11. In regard to her psychological condition, Mrs Waddell relied on the report by Mr Jeffrey Wilkinson dated 15 January 2007 and contained in Exhibit A1. In her evidence she stated that she sees Mr Wilkinson on a monthly basis and that she takes medication for her depression.
12. On the issue of special circumstances, the respondent submitted that Mrs Waddell’s circumstances are not special in comparison to other social security recipients. Other social security recipients also have disabilities and also have the extra costs of medication. There is nothing that makes her circumstances more uncommon than that of other social security recipients. In addition, the respondent noted that Mrs Waddell had given evidence that she still has some money invested. The respondent contended that she should draw on the funds from the compensation settlement before she asks the taxpayer to supplement her income and reduce the preclusion period.
Consideration of special circumstances
13. Mrs Waddell’s contentions in regard to her large financial outgoings and her inability to work can be considered together as her financial situation. From the information provided by Mrs Waddell in Exhibit A1, and confirmed in her evidence at the hearing, it is evident that, after receiving her lump-sum payment of $160,000 Mrs Waddell paid out about $50,000 for legal fees, loans, outstanding and overdue bills and a new car. This should have left her with approximately $110,000 to last for the preclusion period of 2 years and 1 month. Also based on her own figures, Mrs Waddell’s living expenses amount to approximately $30,000 per year. At that rate of spending Mrs Waddell’s lump sum payment should have lasted comfortably for the preclusion period with at least around $40,000 remaining. Even taking into account her high levels of expenditure for medical treatment and medications, and the lack of any other source of income, Mrs Waddell should not be in the financial position in which she finds herself.
14. On the basis of living expenses of approximately $30,000 per year, at the time of the hearing Mrs Waddell could have been expected to have about $80,000 of her lump sum remaining. Instead her evidence was that only $20,000 remained. When asked about the discrepancy of $60,000, Mrs Waddell said that about $20,000 would have been spent on gambling but she could not account for the other $40,000. I note that even the $20,000 known to have been spent on gambling would have provided Mrs Waddell sufficient money to last her over the full preclusion period. The additional $40,000, for which Mrs Waddell cannot account, would have provided a degree of comfort to her life over the same period.
15. In considering Mrs Waddell’s financial circumstances I had regard to the Tribunal’s decision in Re Secretary, Department of Social Security and Winterbotham (AAT 6499, 11 December 1990). In that case Mr Winterbotham suffered an injury to his back in the course of his employment for which he received periodic compensation payments and then a lump sum payment. He used a significant portion of the payment on his home and a motor vehicle. Later, when Mr Winterbotham applied for a special benefit it was refused, as a preclusion period had been applied. In finding against Mr Winterbotham the Tribunal said:
23. Evidence was given as to the financial hardship suffered by the respondent [Mr Winterbotham]. Financial hardship alone does not amount to special circumstances (Re Beadle supra) and for financial circumstances to be considered special, the hardship must be exceptional (Re Colaiacolo & Secretary, Department of Social Security, Decision 2109, 24 April 1985). The respondent is certainly in straitened financial circumstances: he has a dependent wife and family, with all the attendant expenses and financial liabilities, a personal loan of $10,000 to repay, a common-law claim against him of some $4,000 and no income or savings. He also has assets of at least $130,000.00. His situation cannot be compared with that of the applicant in Re Krzywak where financial circumstances were considered to be special. Mrs Krzywak had no income or savings, but unlike the present respondent she had no means of providing for her own support.
24. The respondent contended that he was perfectly entitled to have expended his settlement moneys in providing his family with a home and no-one, least of all this Tribunal, would dispute that. However, that is not the issue – it is the fact that the respondent, having disposed of his settlement moneys, now seeks support from the community. The emotional attachment of the respondent and his wife to the family home was obvious and their reluctance even to think of selling it understandable. However, the Tribunal must take that home into account in deciding whether the respondent is in a position of exceptional financial hardship. While the respondent has assets of such value he can never be so regarded.
16. In Secretary, Department of Social Security v Ellis (1997) 46 ALD 1 Mrs Ellis was found to be suffering extreme financial hardship. She had four children, all under the age of ten and had been receiving no maintenance or other support, financial or otherwise, from her husband or from any other source. Mrs Ellis had a mortgage on the family home and credit card debts and she suffered from workplace injuries that precluded her from working. She had virtually no assets except some equity in her house. The Administrative Appeals Tribunal decided that special circumstances applied to Mrs Ellis. In the Federal Court, Carr J found that the Tribunal had not fallen into error of law in finding that the circumstances were out of the ordinary.
17. In contrast to Mrs Ellis’s circumstances, Mrs Waddell has no dependent children, no mortgage and no credit card payments or loans that have not been taken into account. She also has $20,000 of her lump sum remaining, which, according to her own evidence, should be sufficient to last for the majority of the remainder of her preclusion period. I consider Mrs Waddell’s circumstances to be more akin to those of Mr Winterbotham where, having disposed of a considerable portion of her settlement moneys, Mrs Waddell now seeks help from the community in the form of a reduction in the preclusion period. As a consequence, I am unable to find that Mrs Waddell’s financial circumstances are sufficiently special that they should be treated as special circumstances.
18. The other special circumstances advanced by Mrs Waddell is her psychological condition. In his report dated 15 January 2007 (part of Exhibit A1), Mr Wilkinson said:
I believe the apparent inadequacy of the compensation as far as Ms Waddell is concerned, and her prior depression has exacerbated other secondary developments over some years. These have been the use of gambling as an outlet for stress and depression which has developed much more extensively since the payout itself. Of course in practical terms Ms Waddell also had the financial means to pursue this avenue. Although it is now stopped I believed Ms Waddell has spent a considerable portion of her payout in stress and depression related gambling.
19. Mr Wilkinson also states that Mrs Waddell suffers from chronic pain from her back injury as well as her new shoulder and arm injury, significant depression, and insomnia as a depressive symptom and she remains angry with the Work Cover compensation system.
20. In considering the opinions of Mr Wilkinson I note that he attributes much of Mrs Waddell’s condition to the apparent inadequacy of her compensation. As I noted above, Mrs Waddell’s payout was sufficient for her to meet her repayment and major expenditure liabilities and maintain her living expenses for the duration of the preclusion period with a comfortable amount to spare. Because of the disparity between the basis of Mr Wilkinson’s opinion and the facts of the compensation I am persuaded to give less weight to his report. Further, Mrs Waddell’s monthly visits to Mr Wilkinson and medication appear to be under control and the costs are included in her living expenses. Finally, it is not unusual for someone receiving social security benefits to suffer from the conditions from which Mrs Waddell is suffering. As a result I cannot find that Mrs Waddell’s psychological condition is sufficiently unusual or out of the ordinary to be considered a special circumstance.
21. Before concluding on this issue I considered the decision of the Federal Court in Groth v Department of Social Security (1995) 40 ALD 541, where, at 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.
22. In this case I cannot conclude that the loss of the money occurred as a result of something unfair or unjust. Mrs Waddell may not have intended to lose the money, however the loss was nevertheless a consequence of her own making and I do not consider it unintended in the way Keifel J means it.
23. As a result of my considerations I find that Mrs Waddell’s circumstances are not sufficiently special to be considered special circumstances as provided for in s 1184K(1) of the Act.
CONCLUSION
24. I have found that Mrs Waddell’s circumstances are not special circumstances. As a result the preclusion period remains unchanged and Mrs Waddell’s appeal is not successful.
DECISION
26.The Tribunal affirms the decision under review.
I certify that the twenty-six [26] preceding paragraphs are a true copy of the reasons for the decision herein of:
Mr C. Ermert, Member
(sgd) Olympia Sarrinikolaou
ClerkDate of Hearing: 12 February 2007
Date of Decision: 16 March 2007
Advocate for the applicant: Mr Stephen Beaton
Advocate for the respondent: Ms Kayren Paul, Centrelink Legal Services
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