Brown and Department of Family and Community Services [2002] AATA 47 (29 January 2002)

Last Updated: 4 February 2002

DECISION AND REASONS FOR DECISION [2002] AATA 47

ADMINISTRATIVE APPEALS TRIBUNAL )

) No Q2001/1025

GENERAL ADMINISTRATIVE DIVISION )

Re DARRYL SCOTT BROWN

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Mr IR Way, Member

Date 29 January 2002

Place Brisbane

Decision The Tribunal affirms the decision under review.

(Sgd) IR WAY

MEMBER

CATCHWORDS

SOCIAL SECURITY - parenting payment single - preclusion period - lump sum compensation payment - special circumstances.

Social Security Act 1991 ss 1165, 1184(1)

Re Venables and Secretary, Department of Social Securit6y (1988) 15 ALD 180

Re Ivocic and Director-General of Social Services (1981) 3 ALN N95

Lukic and Secretary, Department of Social Security (AAT 6944, 6 May 1991)

Secretary, Department of Family and Community Services and Szoke [2001] AATA 353

Secretary, Department of Social Security and Winterbotham (AAT 6499, 11 December 1990)

Secretary, Department of Society Security and Norman (AAT 13005, 22 June 1998)

Adams and Secretary, Department of Family and Community Services [2001] AATA 13

REASONS FOR DECISION

29 January 2002 Mr IR Way, Member

1. This is an application by Darryl Scott Brown (the applicant) for review of a decision of the Social Security Appeals Tribunal (the SSAT) dated 10 October 2001 affirming a decision made by Centrelink to refuse the applicant's claim dated 24 January 2001 for parenting payment single as he was subject to a compensation preclusion period from 19 May 1998 to 13 January 2003.

2. The Tribunal had before it the documents lodged pursuant to Section 37 of the Administrative Appeals Tribunal Act 1975 (T1-T20) and the following documentary evidence tendered at the hearing:

* Exhibit A1 Letter from the applicant to Advocacy and Administrative Law Team Brisbane (undated and received on 14.12.01)

* Exhibit R1 Bundle of Centrelink computer printouts

3. Mr P Kanowski, Advocacy and Administrative Law Team Brisbane, appeared for the respondent. The applicant was self-represented and gave evidence by telephone.

Agreed Facts

4. There is no dispute between the parties about the facts set out below and the Tribunal finds accordingly:

(a) The applicant was born on 19 June 1962.

(b) The applicant formed a defacto relationship with Ms Pollock in the mid-1980s and they had two sons, one born on 8 August 1989 and one on 11 May 1992.

(c) The applicant and Ms Pollock separated towards the end of 1992.

(d) The applicant suffered a work injury on 4 January 1994;

(e) On 8 May 1998 he settled his claim for compensation out of court for a lump sum of $200,000 which included a component for economic loss.

(f) Out of the proceeds he purchased a house and set up a business.

(g) On 24 January 2001 he claimed family tax benefit and parenting payment single, and was paid family tax benefit from 21 January 2001.

(h) He has no substantial debts.

(i) Pursuant to Section 1165 of the Social Security Act 1991 (the Act) the preclusion period from 8 May 1998 to 13 January 2003 has been correctly calculated.

Issues and Legislative Framework

5. The only issue before the Tribunal is whether or not all or part of the applicant's lump sum should be disregarded, pursuant to Section 1184(1) of the Act, thereby reducing the applicant's preclusion period.

6. Section 1184(1) relevantly provides as follows:

"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."

7. If the "special circumstances" discretion available under Section 1184 is not utilised, parenting payment single is not payable to the applicant during the preclusion period.

Applicant's evidence

8. The applicant told the Tribunal that he injured his left wrist whilst in the Merchant Navy and that prior to his injury he had spent some twenty years at sea, either in the Merchant Navy or on fishing boats. He said that after his injury and until the end of 1994 he had attempted to go back to sea but the pain from his injury was too much for him to continue at sea. It was the applicant's evidence that he also became concerned about his mental state, as he found he had become short-tempered, aggressive and unable to "work around people any more". He said he saw a psychiatrist, Dr Sheehan, who diagnosed him as suffering from PTSD and mentally unfit to join the workforce. Apart from the applicant's evidence about his health-related problems there is no medical evidence before the Tribunal.

9. On receipt of his lump sum in May 1998, the applicant told the Tribunal that he thought the wise thing for him to do would be to use part of his settlement to establish a home and a self-employed business. This he did and he purchased a home in Bundaberg and set up a fishing tackle business (Calibre Rods) in a shed on his property. He said the house cost him approximately $75,000 (including the cost of refurbishment), setting up the business cost approximately $4,000 - $5,000, he had spent a further $2,500 on painting a mural on the inside shed wall because the wall was too boring and he had spent approximately $10,000 on computer equipment and computer software.

10. He also told the Tribunal that he had spent money on the purchase of a car, restoration of a troop carrier vehicle given to him by Ms Pollock's father, repayments for his 4 wheel drive vehicle which he had lent to Ms Pollock and which she had smashed, purchase of a small boat, purchase of furniture and household effects and on what he described as "excessive travel" from Bundaberg to see his children who were living with their mother on the Sunshine Coast and to visit his parents on the Gold Coast.

11. In addition he said he incurred legal costs of approximately $5,000 resulting from mediation with Ms Pollock's Solicitors regarding access rights and questions of residency with respect to his two sons. He told the Tribunal that he had come to an agreement with Ms Pollock on these issues at about the time he received his compensation lump sum.

12. The applicant said his business had been established in early 2000 and now was self-sufficient, but that it was not profitable to the point where he could draw a wage from the business. He said he had started with a float of $1,000 and this was now $2,000 and that the business would be more profitable if he had more time to devote to it. The Tribunal notes that Statement of Receipts and Payments for Calibre Rods from the period 1 July 2000 to 31 December 2000 shows net receipts of $310.92 and that the business paid for 30% of phone bills, 50% of electricity costs and 10% of motor vehicle costs.

13. It was the applicant's evidence that he considered the break-down of his defacto relationship with Ms Pollock had led to financial difficulties to the point where he felt he had to protect his interests and to avoid losing his money to "greedy people". He said this meant he could not invest his money as wisely as he could have and that he now "had no choice but to withdraw all my money and hide it where it couldn't be attacked again" (T1/3).

14. He said that during 2000 he thought he was "doing alright" financially but when he had $9,000 taken from his account by the Child Support Agency in May of that year and when his wife "dumped" the children on him in December 2000 things took a turn for the worst with the extra cost of looking after his children. He said he had now exhausted all of his funds and that if it had not been for the $9,000 taken from him and the extra expenses he faced in having to provide for his two children, he would not be before the Tribunal seeking relief.

15. In cross-examination the applicant agreed that he had $40,000 in his Suncorp Metway bank account as at 24 January 2001 (Exhibit R1). With respect to the cost of raising his children he said that the expenses he had listed in August 2001 (T13/77) had increased with his monthly electricity, phone and gas bills increasing from $42 to $80, $80 to $100 and $30 to $50 respectively. He also said that his food bill had increased from $150 per fortnight to $200-$250 per fortnight. He said the other costs as listed were correct. However, he highlighted the additional expenses for school fees, school activities, clothing and entertainment.

16. The Tribunal notes that the increases in electricity, gas, phone and food bills which the applicant attributed to caring for his sons, amounted to approximately $68 per week and that the expenses listed by the applicant with respect to clothing, sport, school and entertainment amounted to approximately $44 per week. At Exhibit A1 the applicant estimated that the costs incurred as a result of his children attending school (for uniforms, books, shoes, hats, sport etc) were approximately $536.

17. In answer to questions from Mr Kanowski, the applicant said that with his two sons living in the house there were no spare rooms which he could rent out and it was not feasible to rent his home and find cheaper rental premises for himself and his two sons. He said he did not want to rent his house because it was 80 years old and had polished wooden floors and some heritage value and people renting most likely would not look after his asset. He also pointed out that his business shed was attached to the house by a pergola and it would be difficult to rent his house and continue with his backyard business. He said his two sons were currently staying with their mother for the holidays and that he did not know when they would return to live with him. With respect to undertaking other work, the applicant said his only options were driving a truck or going back to sea, both of which he would find difficult because of his injury and because these options would take him away from home and his children. He said that he was not on any medication preferring not to take medication and to deal with his health problems in his own way. The Tribunal notes that the applicant in his request for review by the Tribunal (T1/2) stated:

"All I would like is the chance to be around the kids and not have to go away for work, thus giving the kids back to her [Ms Pollock], she didn't want them anyway. I want to provide for the boys now. Security of me working from home gives the kids stability. I have been diagnosed with Post Traumatic Stress Disorder and I am classified as mentally unstable to join the workforce, that is why it's almost impossible to gain employment. If you're not registered with a job agency, basically you can't be employed, I've tried. Also, my injury is a liability for anyone to employ me."

18. The applicant explained that when he said he was hiding his money he meant that he had taken his money out of investments and put it into low interest bearing deposits because "the more he made out of investments the more they wanted". The applicant said he had no assets other than what he had already told the Tribunal and that he had no debts. In answer to questions from the Tribunal the applicant was unable to provide an explanation of any financial management steps he had taken or of any attempts he had made to curtail his discretionary spending to ensure that his available funds would meet his living costs throughout his preclusion period. He told the Tribunal that he was well aware of the extent of the preclusion period and the basis on which the preclusion period had been calculated.

Submissions

19. In his formal submissions the applicant said that when he received his lump sum compensation he intended to invest wisely, to buy a house and to set up a self-employed business. He said he had got into financial difficulties because "greedy people" took his money and that if the unforeseen payment of $9,000 to the Child Support Agency and the unforeseen need to care for his two sons had not occurred (through no fault of his own) he would have been able to cope financially for the entire preclusion period. He also submitted that he now had a chance to be a parent and to raise his children, that he very much wanted to do this and that getting away to do other work was "not on" because of the children and his health-related problems. He submitted that unless he was paid single parent payment the children would have to go back to their mother and he would be broke and that the Tribunal should exercise its discretion in this matter to ensure that this did not happen.

20. It was submitted for the respondent that the applicant's circumstances were not unusual, uncommon or exceptional so as to make the strict application of the compensation preclusion provisions unjust, unreasonable or otherwise inappropriate.

21. The respondent contended that the applicant had had sufficient funds, even with the acquisition of major assets and the care of his children to see him through the preclusion period. The respondent also contended that any claim by the applicant that he incurred additional expenses relating to the care of his children should be considered within the context of the applicant receiving a payment specifically intended to compensate him for such expenses, namely, family tax benefit currently being paid at $319.48 per fortnight, and that in any event the need to care for his children, either by way of child maintenance or directly, should not be classified as an unforeseeable or special circumstance.

22. Finally, the respondent submitted that the exercise of the discretion under Section 1184 of the Act in a case such as this would effectively condone a person bypassing the preclusion period by choosing to improve their asset position rather than meeting their living expenses and that this would frustrate the intended operation of the legislation.

23. With respect to cases relevant to the Tribunal's consideration of this matter the respondent referred the Tribunal to -

* Re Venables and Secretary, Department of Social Security (1988) 15 ALD 180

* Re Ivocic and Director-General of Social Services (1981) 3 ALN N95

* Lukic and Secretary, Department of Social Security (AAT 6944, 6 May 1991)

* Secretary, Department of Family and Community Services and Szoke [2001] AATA 353

* Secretary, Department of Social Security and Winterbotham (AAT 6499, 11 December 1990)

* Secretary, Department of Social Security and Norman (AAT 13005, 22 June 1998)

* Adams and Secretary, Department of Family and Community Services [2001] AATA 13

Consideration

24. In consideration of this matter the Tribunal notes that although special circumstances are not defined in the Act, the interpretation and the application of the discretionary provisions of the Act have been dealt with by the Tribunal and the Federal Court in numerous cases.

25. In considering whether "special circumstances" prevail, the Tribunal is mindful that in accordance with the authorities cited below, there is a need to consider all of the particular circumstances of this matter in order to ascertain whether there are circumstances which are unusual, uncommon or exceptional so as to make the strict application of a compensation preclusion period unjust, unreasonable or otherwise inappropriate. The Tribunal is also mindful that there is a need to evaluate whether exercising the discretion available under Section 1184 would achieve or frustrate ends or objects which are conformable with the scope and purpose of the Act. In Re Ivocic and Director-General of Social Services (supra) it was said:

"Whilst it would be unwise, if not impossible, to attempt to lay down any precise delineation of what may amount to 'special circumstances' .... the use of the word 'special' is, we think, intended to allow the decision-maker the fullest opportunity to consider the particular circumstances of each case......The reference to special circumstances 'by reason of which' a person liable 'should be released' requires, in our view, that there must exist in the circumstances of the case, a factor or factors which justify the making of an exception in whole or in part to the principle of liability which the Act otherwise establishes. In the exercise of the discretion which s 115(4A) confers, the decision-maker must have regard to whether, by exercising the discretion in a particular case, he will be achieving or frustrating ends or objects which are conformable with the scope and purpose of the Social Services Act 1947....Thus whilst keeping the dominant principle of s 115 in mind, he must nevertheless be prepared to respond to the special circumstances of any particular case by reason of which strict enforcement of the liability created by the section would be unjust, unreasonable or otherwise inappropriate."

26. In Re Beadle and Director-General of Social Security (1984) 6 ALD 1 it was 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 must depend 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 they must have a particular quality of unusualness that permits them to be described as special."

27. This decision was generally affirmed on appeal by the Full Court of the Federal Court of Australia in Beadle v Director-General of Social Security (1985) 7 ALD 670 where it was said that "the phrase 'special circumstances', although lacking precision, is sufficiently understood in our view not to require judicial gloss".

28. The first question before the Tribunal is whether or not the applicant failed to financially manage that portion of his lump sum available to meet normal living expenses during the preclusion period. After meeting costs on expenditures of a capital nature, and after meeting living expenses for the first 2½ years of his 4½ year preclusion period, the applicant had $40,000 available in his Suncorp Metway bank account on January 2001 and on his own evidence these funds were exhausted during 2001. The Tribunal does not accept his explanation that the unforeseen caring for his two sons during this period was partly responsible for his financial difficulties. On application, he was granted family tax benefit from 21 January 2001 (currently $319.48 per fortnight) for the care of his children and the Tribunal is satisfied on examination of the financial expenditures provided by the applicant, and referred to in paragraphs 15 and 16 above, that this benefit was more than adequate to meet the additional costs that he said he had incurred because of the children.

29. The Tribunal also has considerable difficulty in accepting his contention that the unforeseen $9,000 he was required to pay to the Child Support Agency provides a reasonable explanation for his current financial difficulties. It was his evidence that this amount was taken out of his accounts in May 2000 and, as such, has no bearing on the expenditure of $40,000 in 2001. In any event, the applicant clearly had a paternal responsibility for his children and he should not expect not to be responsible for either child maintenance if the children continue to live with their mother, or directly if they continue to live with him.

30. The Tribunal is unable to find any circumstances which would be regarded as "special" as a result of the expenses incurred by the applicant in caring and providing for his children. Furthermore, the Tribunal is satisfied, and finds accordingly, that the applicant's lack of funds to meet living expenses for the remainder of the preclusion period is a result of his failure to adequately manage his available funds, that the applicant's current parlous financial position cannot be attributed to some misfortune, some unforeseen event or some circumstance not envisaged by the legislation and that he has deliberately spent his funds with no regard to the consequences.

31. The next issues to be addressed are whether or not the applicant is in a position of exceptional financial hardship and whether the exercise of the "special circumstances" discretion in this matter would effectively condone a person bypassing the preclusion period by choosing to improve their asset position rather than meeting their living expenses. The Tribunal is of the view that the applicant's plan to spend less than half of his lump sum on establishing a home and a backyard business could not be seen as unreasonable given the circumstances of his injury and his related health problems. His expenditure on refurbishing motor vehicles, painting murals, excessive travel and computer hardware/software, however, would seem to be questionable, and on the figures given in evidence his expenditure on these items has significantly limited the funds available for living expenses.

32. In considering "special circumstances" the Tribunal must take into account the applicant's assets in deciding whether the applicant is in a position of exceptional financial hardship.

33. In Secretary, Department of Social Security and Winterbotham (supra) the Tribunal at paragraphs 24 and 25 said:

"24. .... 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.

25. As to the submission that the respondent should not be forced to sell his house, the Tribunal would compare his position with that of another recipient of a compensation award who chooses to expend his compensation moneys on investments. Should there be any difference between one who invests his money in stocks and shares and one who invests in real estate? Neither should expect the tax-payer to support him while he holds on to assets he could well realise and use to support himself. This is not to say that the Tribunal seeks to force the respondent to sell his house; or even recommends that course of action. It is not the Tribunal's role to do that. At the same time, the Tribunal cannot ignore the view that the selling of the house is one way by which the applicant could resolve his present difficulties. It is an evident cause of action, although not by any means the only one."

34. In Secretary, Department of Social Security and Norman (supra) the Tribunal said at paragraph 18:

"18. It is not an unusual circumstance that a person to whom a preclusion period is applied spends their funds in a way which is unwise. That is frequently the impetus for them seeking relief through sec. 1184. Financial hardship alone will not of itself constitute special circumstances under this section (see Director-General of Social Services v Hales (1993) 47 ALR 281). The provisions in the Act are there to ensure that money received in place of income as part of the Worker's Compensation system is not also paid by way of Social Security benefits. (See, for example, Re Groth and Secretary, Department of Social Security (1995) 37 ALD 797 at 798.) This prevention of double dipping reflects the idea that the money is there to provide a person with income, not capital for investment."

35. Further, in Lukic and Secretary, Department of Social Security (supra) the Tribunal said at paragraph 18:

"18. ...The assumptions behind Part XVII are that a recipient of a lump sum payment of compensation will use a proportion, defined by statute, of that lump sum for normal living expenses, at a weekly rate equal to average male weekly earnings; and that, if it is spent in that manner, it will provide for the person's living expenses until the expiry of the preclusion period. Once the settlement money had been paid to Mr Lukic it was his to use as he chose. He chose to spend it principally on a house and a car. He still has those assets. It is not the intention of the legislature that a recipient of compensation for incapacity to work should use that compensation to acquire assets and then also continue to receive a pension at public expense in respect of that incapacity for work."

36. In this case the applicant owns a home and other capital assets of considerable value and, adopting the reasoning in the authorities as quoted above, the Tribunal finds that the applicant is not in a position of exceptional financial hardship.

37. In arriving at this conclusion, the Tribunal has also taken into account the equivocal evidence of the applicant about his capacity to undertake paid work, the possibility of short-term caring support for the children from the children's mother and the possibility of receiving child care benefits.

38. The Tribunal is satisfied that the exercise of the "special circumstances" discretion in this matter would effectively condone the applicant bypassing the preclusion period by choosing to improve his asset position rather than meeting his living expenses and, as such, the exercise of the discretion would frustrate the intended operation of the scheme.

39. Insofar as any other "special circumstances" which could lead to the exercise of the discretion, the Tribunal is satisfied, after careful consideration of all of the material before it and the submissions of both parties, that there are no such circumstances.

40. For the reasons given above the Tribunal finds that in all of the circumstances of this case it is not appropriate to exercise the discretion contained in Section 1184 to treat some or all of the compensation payments as not having been made. The Tribunal affirms the decision under review.

I certify that the 40 preceding paragraphs are a true copy of the reasons for the decision herein of Mr IR Way, Member

Signed: Robert Hayes

Associate

Date/s of Hearing 19 December 2001

Date of Decision 29 January 2002

Rep. for the Applicant Self-represented by telephone

Solicitor for the Respondent Mr P Kanowski, Departmental Advocate