Lavin and Department of Family and Community Services [2000] AATA 558 (5 July 2000)

Last Updated: 21 July 2000

DECISION AND REASONS FOR DECISION [2000] AATA 558

ADMINISTRATIVE APPEALS TRIBUNAL )

) No V2000/305

GENERAL ADMINISTRATIVE DIVISION )

Re WAYNE LAVIN

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Miss E. A. Shanahan, Member

Date 5 July 2000

Place Melbourne

Decision The Tribunal affirms the decision under review.

.........(Sgd) E. A. Shanahan.........

Member

CATCHWORDS

SOCIAL SECURITY - disability support pension - Workers' Compensation payment - preclusion periods - section 1184 of the Social Security Act 1991 in relation to special circumstances - state of health

Social Security Act 1991 ss. 17, 17(2), 17(3), 1165, 1184

Beadle v Department of Social Security (1985) 60 ALR 225

Trimboli v Secretary, Department of Social Security (1989) 86 ALR 64

Re Green and Department of Social Security (1990) 21 ALD 772

Director-General of Social Security and Hales (1982) 47 ALR 281

Re Krzywak and Secretary, Department of Social Security (1988) 15 ALD 690

Re Secretary Department of Social Security and Bolton (1989) 18 ALD 464

Secretary, Department of Social Security v Griffin (1998) 49 ALD 662

REASONS FOR DECISION

5 July 2000 Miss E. A. Shanahan, Member

1. This is an application for review of a decision of the Social Security Appeals Tribunal ("the SSAT") dated 28 January 2000. The Tribunal affirmed the primary decision of a delegate of the Department to reject the applicant's claim for disability support pension ("DSP") on the grounds that a compensation preclusion period had been imposed. The primary decision of the delegate, dated 19 November 1999, had been affirmed by an Authorised Review Officer on 22 November 1999. This decision had rejected Mr Lavin's application for DSP on the grounds that a compensation preclusion period applied from 13 June 1997 until 22 May 2003.

2. At the hearing before this Tribunal on 25 May 2000 the applicant, Mr Wayne Lavin, was self-represented and the Department of Family and Community Services was represented by an advocate for Centrelink, Miss Karyn Cunningham.

3. The Tribunal had before it the section 37A Administrative Appeals Act 1975 ("the T documents") and in addition, the Department supplied to the Tribunal the records of family allowance payments to Mrs Donna Lavin between the period of 20 November 1997 and 15 December 1999. A brief medical report from the applicant's treating general practitioner, Dr James Smith, dated 9 May 2000 was received.

4. The applicant gave evidence before the Tribunal confirming the accuracy of the evidence he had given to the SSAT. He also confirmed that he had been separated from his wife since July 1998 and that he shared a bungalow in the back garden of his property, with a male friend whilst his estranged wife and two children occupied the house. Mr Lavin had received some legal advice from the Casey Cardinia Community Legal Service and whilst he had considered going into voluntary bankruptcy, he had now decided against such action. He informed the Tribunal that in further discussions with Centrelink, Centrelink had offered to reduce the preclusion period by 54 weeks. This however, did not solve his immediate problem. He stated that he had absolutely no money to live on. While his house is unencumbered he was reluctant to sell it as his wife and the children would have nowhere to live. In response to questions posed by the Tribunal, he advised that several surgeons had recommended that he undergo laminectomy for his L4/L5 disc prolapse but that planning for the operation had been postponed until such time as the acne on his back was cleared. He attends a dermatologist regularly but admitted that he had not informed his dermatologist of his current financial plight which could well be alleviated by the recommended surgery. He had tried to undertake retraining as arranged by Centrelink but it was necessary for him to go to either Cranbourne or Fountaingate to undertake such retraining and as he has lost his driving licence he is unable to get to either of those sites from Hampton Park.

5. The history of this application is obtained primarily from the SSAT decision of 28 January 2000. Mr Lavin had given evidence in person before the SSAT. The applicant had suffered a work-related injury on 17 November 1993 and has not worked since. Shortly after the injury he was diagnosed as having a prolapsed L4/5 disc. He received periodic worker's compensation payments until 12 June 1997, accepting a compensation payout of $250,000 on 30 July 1997. On 12 November 1997 Centrelink advised him of the preclusion period attracted by this lump sum compensation payment. This was based on the assessment that $125,000 had been awarded for economic loss. The preclusion period was set at 310 weeks based on average weekly earnings of $402.20. The preclusion period was stated to commence on 13 June 1997 and end on 22 May 2003.

6. On 7 October 1999 the applicant submitted an application for a DSP. This was rejected on 19 November 1999 by an officer of Centrelink on the grounds that the compensation preclusion period applied until 22 May 2003. In his application for the DSP, Mr Lavin declared he was separated from his wife and had been separated since 29 June 1999, that he was not paying any accommodation charge and that he did not have any dependant children in his care. It was presumably on this basis that the preclusion period had been estimated on the average weekly single person earnings. The treating doctor's report that accompanied this application stated that he would not be able to resume his usual job as a truck driver in less than two years but that the applicant was able to return to part-time work at the date of completion of the form. The type of work suggested was security work. It was recommended that he may benefit from vocational training or rehabilitation. The treating doctor was Dr James C. Smith of Endeavour Hills.

7. Mr Lavin told the SSAT that he had married in 1991 and he and his wife had two daughters aged 12 and 10 years. He and his wife had separated on a number of occasions but on receipt of the compensation payment, they had reconciled and he had purchased a home for the sum of $138,000. It was his intention that he would look after the children and his wife would work to support the family. His wife left him in July 1998, initially going to live with her mother but she then returned to the house with the two children. She still occupies the house whilst the applicant lives in a bungalow at the back of the property.

8. On 16 January 1999 the applicant was involved in a motor vehicle accident and his car, purchased for $30,000 was totally written off. As his blood alcohol level was 0.175 his insurance company was not required to pay for the damages to the applicant's vehicle or to the other car. The applicant had to pay the sum of $6,053 in costs of repair of the other car, a fine and legal fees. His licence was cancelled for a period of two years. Shortly after the accident he purchased another vehicle for $10,000 which his wife currently drives. The applicant outlined the spending of his compensation payment with $10,000 on legal fees, the cost of the house - $138,000, the car - $30,000 and costs of the motor vehicle accident - $6,053. The replacement vehicle cost $10,000 and there was also expenditure on furniture and a computer. The remainder of the funds was spent on living expenses over the past two years.

9. At the time of his appearance before the SSAT he declared his current income to be $80 per week representing rent he received from the friend who lives with him in the bungalow behind his house. He has had to borrow money from his mother and has sold personal items for about $5,000. He has also incurred debts on his credit cards which, on 28 January 2000, totalled $464.24. Household costs are shared with his wife but he buys his own food and cooks in the house.

10. The applicant had joined Commonwealth Rehabilitation Program but he told the SSAT he could not work at present because of his back pain.

11. Since the motor vehicle accident he has greatly reduced his drinking and now believes he no longer has an alcohol abuse problem. He informed the SSAT that there had been a significant problem with gambling and he had lost $2,000 at the Casino but this problem likewise no longer exists.

12. His estranged wife had been employed up until December of 1999 at which time she was made redundant. She no longer works but is in receipt of family allowance payments which, on 15 December 1999, were of the order of $243.50 per fortnight.

13. On the basis of Mr Lavin's evidence the SSAT determined that the calculation of the preclusion period by Centrelink was correct. They had then considered whether there were any special circumstances in existence which may enable the treatment of whole of part of the compensation payment as not having been made.

The Relevant Legislation

14. The term "compensation" is defined in the Act as follows:

17(2) For the purposes of this Act, compensation means:

(a) a payment of damages; or

(b) a payment under a scheme of insurance or compensation under a Commonwealth, State or Territory law, including a payment under a contract entered into under such a scheme; or

(c) a payment (with or without admission of liability) in settlement of a claim for damages or a claim under such an insurance scheme; or

(d) any other compensation or damages payment;

(whether the payment is in the form of a lump sum or in the form of a series of periodic payments) that is:

(e) made wholly or partly in respect of lost earnings or lost capacity to earn; and

(f) made either within or outside Australia.

Note: Under section 1163B, a person may be treated as having received compensation that the person would have received but for the effect of a State or Territory law.

Compensation part of a lump sum is also defined:

17(3) For the purposes of this Act, the compensation part of a lump sum compensation payment is:

(a) 50% of the payment if the following circumstances apply:

(i) the payment is made (either with or without admission of liability) in settlement of a claim that is, in whole or in part, related to a disease, injury or condition; and

(ii) the claim was settled, either by consent judgment being entered in respect of the settlement or otherwise, on or after 9 February 1988; or

(ab) 50% of the payment if the following circumstances apply:

(i) the payment represents that part of a person's entitlement to periodic compensation payments that the person has chosen to receive in the form of a lump sum; and

(ii) the entitlement to periodic compensation payments arose from the settlement (either with or without admission of liability) of a claim that is, in whole or in part, related to a disease, injury or condition; and

(iii) the claim was settled, either by consent judgment being entered in respect of the settlement or otherwise, on or after 9 February 1988; or

(b) if those circumstances do not apply - so much of the payment as is, in the Secretary's opinion, in respect of lost earnings or lost capacity to earn.

As the applicant's lump sum payment was received after 20 March 1997, section 1165 subsections (5), (6), (7) and (9) apply to the calculation of the preclusion period.

"Special circumstances"

Section 1184 subsection (1) of the Act provides as follows:

1184 Secretary may disregard some payments

(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 receives or claims a compensation affected payment; and

(b) the person's partner receives compensation; and

(c) the set of circumstances giving rise to the compensation are not related to the set of circumstances that give rise to the person's receipt of or claim for the compensation affected payment;

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

Note: Subsection (2) is in response to comments made in the decision of the Administrative Appeals Tribunal in Re Secretary, Department of Social Security and Lee (S92/155) to the effect that the Social Security Act is aimed at reducing pensions in situations where a social security recipient's entitlement is somehow connected with the fact that the recipient's partner is in receipt of compensation payments and not wages.

Application of the Legislation to the Facts before the Tribunal

15. The primary delegate's calculation of the preclusion period relating to Mr Lavin was calculated in accordance with the legislation and has been correctly estimated at 310 weeks. The preclusion period is thus from 13 June 1997 until 22 May 2003.

16. This preclusion period can only be shortened or totally negated if there exist special circumstances attracting the exercise of section 1184 subsection (1) of the Act. In Beadle v Director-General of Social Security (1984) 6 ALD 1 the Federal Court said:

An expression such as 'special circumstances' is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions depends upon the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but that they must have a particular quality of unusualness that permit them to be described as special.

17. Before the SSAT the applicant stated that his solicitor had not informed him of the preclusion period attracted by the lump sum compensation damages award. While this may well be the case he was advised by Centrelink on 12 November 1997 some two years prior to lodgement of his claim for DSP.

18. In light of the history of frequent separations from his wife, Donna Lavin, the applicant's claim that he could not foresee the separation that occurred in 1998 and that this would lead to a change in their plan that he would remain at home minding the children while she worked full-time, is not well-founded.

19. Mr Lavin had given evidence of a drinking and gambling problem but did not provide any medical evidence to support the claim and in addition, at the time of the SSAT hearing, stated there was no continuing problem with alcohol abuse or gambling. The SSAT had considered and distinguished the finding in Re SDSS and Thompson (1993).

20. The ill health of an applicant by itself has not been found by the Tribunal or the Courts to amount to a special circumstance. Medical evidence before the Tribunal suggests that the applicant's treating specialist anticipates that a lumbar laminectomy would be successful in controlling the applicant's ongoing back pain. A delay in proceeding to surgery has been attributed to the presence of acne at the proposed operation site. The ill health of the applicant is, probably reversible and if surgery were performed he may return to full-time employment.

21. The applicant's major argument has been that he has no money and is in debt. This is due predominantly to his purchase of a house for $138,000 four months after receiving his compensation payment, expenditure of $30,000 on a car which was subsequently written off in a motor vehicle accident, the costs incurred in this accident as he was driving the vehicle with a blood alcohol level greater than 0.05 and the costs of replacing the written off vehicle with another automobile which he is unable to drive as he has lost his licence. It would appear that the assets, namely the house and the car, are unencumbered. In Re Krzywak and Secretary, Department of Social Security (1988) 15 ALD 690 the Tribunal held that straitened financial circumstances are not of themselves sufficient to constitute special circumstances.

22. While the applicant states he has no money to meet his daily living needs he does have unencumbered assets, namely his house and his car. Either or both of these could be liquidated to provide everyday living expenses (Secretary, Department of Social Security and Bolton (1989) 18 ALD 464). None of Mr Lavin's contentions regarding special circumstances can be regarded as unusual, uncommon or exceptional, either singly or in combination. This Tribunal therefore affirms the decision of the SSAT dated 28 January 2000, that there are no special circumstances and the preclusion period is to run from 13 June 1997 until 22 May 2003.

I certify that the twenty-two (22) preceding paragraphs are a true copy of the reasons for the decision herein of

Miss E. A. Shanahan, Member

Signed: .....................................................................................

Personal Assistant

Date/s of Hearing 25 May 2000

Date of Decision 5 July 2000

The Applicant Self-represented

Solicitor for the Respondent Miss K. Cunningham, Centrelink