Fennell and Secretary, Department of Family and Community Service s [2003] AATA 1309 (19 December 2003)

Last Updated: 19 December 2003

DECISION AND REASONS FOR DECISION [2003] AATA 1309

ADMINISTRATIVE APPEALS TRIBUNAL )

) No S2003/433

GENERAL ADMINISTRATIVE DIVISION	)
	Re	PETER FENNELL

Applicant

And

SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal

Senior Member WJF Purcell

Date 19 December 2003

Place Adelaide

Decision

The Tribunal affirms the decision under review.

(Signed)

WJF PURCELL

(Senior Member)

CATCHWORDS

SOCIAL SECURITY - pensions, benefits and allowances - Disability Pension - lump sum payment of compensation - preclusion period - whether length of preclusion period can be reduced pursuant to s 1184K of the Act - special circumstances

Social Security Act 1991 s 1184K

Re Males and Secretary, Department of Family and Community Services (1999) 57 ALD 793

REASONS FOR DECISION

19 December 2003

Senior Member WJF Purcell

1. This is an application for review of a decision of the Social Security Appeals Tribunal (the SSAT) of 12 June 2003, which affirmed the decision of an Authorised Review Officer of 29 April 2003, to impose a compensation preclusion period for Disability Support Pension from 1 January 2000, to 26 August 2005.

2. The evidence before the Tribunal comprised the documents lodged pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (the T Documents), together with the exhibits tendered by the applicant, who was represented by Ms Clark, and gave oral evidence by way of video link-up. Ms Pugsley represented the respondent (the Department).

3. The applicant, who is 61 years of age, was one of nine children born in Penola, and his family lived in very poor circumstances. When he was 14, his family moved to Kalangadoo. The applicant left school and started work on a farm. His father went bankrupt when his milk carting business failed. The family then moved to Mt Burr where the applicant started work as a pine feller. He later obtained work at Mt Burr sawmill where he met his future wife, Gwendolyn. He was aged 18. His mother would keep his wages and when he told her that he needed money to take Gwendolyn out, she told him to leave the family home. He moved out to live with a sister in Mt Burr. He married Gwendolyn and moved into a Company home. They have three children, aged 41, 39 and 37, all of whom live in the south east of South Australia.

4. The applicant worked at Cellulose Pty Ltd for 10 years, and earned extra money by doing Housing Trust maintenance work, and serving at the petrol station. He became a boiler attendant at Apcel (now called Kimberly-Clark) in about 1979. He experienced constant exposure to sulphur dioxide. In September 1989 he worked for 16 hours in toxic fumes after a chlorine spill. As a result, he suffered industrial asthma, as did five other boiler operators. He has not worked since 1989. He said in the course of his evidence that he received a lump sum payment of $100,000 in 1994, for pain and suffering, as a result of his injury. He continued to receive weekly payments of compensation until he received a second lump sum payment on 29 December 1999.

5. The applicant said in evidence that he negotiated his own settlement with Kimberly-Clark. They sent him an acceptance form, which he signed and returned. He said in evidence that at the time that he accepted the offer he was not aware that he would be subject to a compensation preclusion period. At that time, he believed that he would receive a pension when his periodic compensation payments ceased. Kimberly-Clark told him subsequently, that he had to seek legal advice and consult a financial adviser, before the Company would pay the lump sum. He sought advice from the solicitor who had represented him at the time of the earlier payment, in 1994. He said in evidence that both the solicitor and financial adviser told him that there would be a compensation preclusion period. The financial adviser told him however, that if he had no money left, the Department would have to pay him Disability Support Pension.

6. A perusal of the applicant's bank accounts discloses that between 29 December 1999 (when he received the $225,000, and subsequently, in February 2000, he received $25,000 Health Insurance levy refund) and 1 March 2001, he withdrew $70,000 from the joint account held by him and his wife, through ATM cash withdrawals of $500 or $200, sometimes several withdrawals per day. By 1 March 2001, the bank balance was $308.61. The applicant's wife received a lump sum payment from the Department of Mature Age Allowance in the sum of $17,000 in May 2002. By the time of the SSAT Hearing on 12 June 2003, only $1,000 of this money remained. The applicant told the SSAT that with an income consisting only of the wife's Mature Age Allowance of $349.70 per fortnight, they had not worked out a budget when the $17,000 payment was received.

7. The applicant said in evidence that before he received the second lump sum in December 1999, he had bet only on special occasions, such as the Melbourne Cup or Adelaide Cup; but with the stress of his own illnesses and the illnesses of his parents-in-law, he took to making "place" bets only, at the TAB, or pub TAB, and listening to the races while waiting outside the Hospital for his wife to visit her parents. It gave him something to do, while waiting for her. He says that he does not have a problem with gambling now. He is not under the same stress, he has no money left and his wife asked him to give it up - which he did. He says that when the money ran out five months ago, he realised that he had a gambling problem. He has not had a bet for five months.

8. On the applicant's evidence there is none of the lump sum left. They live on the wife's spousal pension of $349.70 per fortnight, and their expenses are $685.64 per fortnight, a deficit of $335.94. The applicant maintains that his circumstances are so special and unusual that the discretion provided in s 1184K of the Social Security Act 1991 (the Act) should be exercised in his favour. Section 1184K provides:

"(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)."

9. The applicant submits that if a global view is taken of his circumstances, there is an adequate basis to find that there are special circumstances. While each particular circumstance may not constitute a special circumstance by itself, taken in combination with all of the relevant factors, there are special circumstances in this matter. These factors include his upbringing in poor and harsh circumstances, and need to commence work at 14 years of age. He lives in modest accommodation, which is reasonable in the circumstances, with no capacity to mortgage his home, and with his and his wife's medical conditions, he needs a car, the expenses of which have been reasonable and necessary. He had extraordinary expenses involved in travel to and from Adelaide in relation to his own illness, and to Adelaide and Millicent in relation to the illnesses of his parents-in-law. These expenses are combined with the ongoing expense of treating his lung condition and his bowel cancer. Centrelink's delay in paying the wife's entitlement added further stress. In addition the preclusion period was calculated using a divisor of $422.90, whereas six months later, on 1 July 2000, the divisor increased to $543.63, and the preclusion period would have been substantially shorter.

10. In relation to the applicant's gambling habit, he submits that he had a gambling problem which he could not control, but which is now under control, and if the Tribunal finds in his favour, the funds will not be expended in gambling. He relies on the Tribunal decision in Re Males and Secretary, Department of Family and Community Services (1999) 57 ALD 793 wherein the Tribunal said at p 795:

"...

28. On the one hand it might be said that the applicant's circumstances are the result of his own folly and his failure to recognise his addiction to gambling or to seek any help or relief from it. Some might say - in my view uncharitably - that he was the architect of his own misfortune and the hardship in which he now finds himself should not entitle him to financial relief from the public purse.

29. An attitude of that type in my view would be harsh, uncaring and heartless. Mr Males now endures perilous economic circumstances by reason of the dissipation of funds due to gambling and payment of other debts. Yet this cannot be looked at in isolation from his personal circumstances being his age, domicile, incapacity, injury, limited education, limited job opportunities and social status. He has virtually no assets capable of realisation and would not qualify for borrowed funds. ..."

11. The Department acknowledges that the illnesses and the death of a parent is a stressful and emotional time under any circumstances, but contends that it is not of itself a special circumstance. The Department maintains also that the division applicable to the compensation part of the lump sum changes every six months by force of the legislation, and the applicant's situation is akin to all other compensation recipients.

12. The Department contends that the applicant had been advised before he received the lump sum, that a preclusion period would be imposed. He made a lifestyle choice to expend the bulk of the moneys on items and activities such as upgrading homes, cars and furniture; the payments for which were well within his control. He asserts that the balance of the moneys, apart from living expenses, has been gambled away; but in contrast to the situation in the matter of Re Males where Mr Males' gambling addiction had left him with no income and no assets, the applicant has a freehold home, two motor vehicles, new furniture, and the family has the wife's fortnightly Centrelink payment of Mature Age Allowance. The Department submits that the applicant's financial circumstances are not such that the discretion available pursuant to s 1184K of the Act should be exercised in his favour.

13. The applicant said in evidence that he and his family had lived in Housing Trust accommodation until he received the first lump sum of $100,000 in 1994. He and his wife purchased a 4-bedroom home for $121,000, and their son, Michael, took over the Housing Trust home with the existing furniture. The applicant and his wife purchased new furniture, a second hand car, and had new fences and a carport erected. By the time he received the second lump sum in December 1999, he was in arrears with his mortgage payments to the extent of $3,000, when he paid out the mortgage of $73,460.67. They decided that the home was too large, and in 2001 it was sold for $148,000, and they purchased a 2-bedroom unit for $123,000, new furniture for $17,000, a caravan, a new Nissan Patrol for $30,000 (after allowance of $22,695.00 trade-in). In 2002 the Nissan Patrol was traded in on a Nissan Pulsar, and the applicant received about $600. The applicant had been involved in a motor vehicle accident in early 2000, which cost $4,836 for car repairs, and $4,782 for repairs to the fence with which he had collided. Whilst the Nissan Pulsar was being repaired, he purchased a Subaru motor car for $1,200, which he retains.

14. The expenditure of portion of the moneys can be summarised as follows:

Mortgage $76,460.00

Household furniture, white goods, etc. 16,969.00

Cars - Nissan and Subaru 23,895.00

Repairs from car accident 11,578.00

General car repairs 1,507.50

Caravan 27,000.00

Repayment of loans from family 14,000.00

Loans to family 12,400.00

($7,000 later repaid by son Michael)

Travel expenses related to Mrs Fennell's parents 13,178.00

Nebulisers 1,094.00

Total $198,081.50

15. The applicant said in evidence that apart from living expenses of $685.64 per fortnight, the balance of the moneys, and the $17,000 arrears payment received by his wife, has been gambled away, because of the stresses he was suffering as a result of his illness and attending to his in-laws' illnesses and deaths.

16. The applicant said in evidence that had he realised that he would face a preclusion period, he would not have signed the agreement with the Company. It is clear on the documentary evidence however, that on 22 November 1999 the Department provided his legal representative, Mr Ryan, with an estimate of the preclusion period [T4/13]; and later in the course of his evidence, the applicant stated that he had seen Mr Ryan at about that time and been advised of the preclusion period. I am satisfied on the evidence, and find as a fact, that the applicant was provided with advice of the preclusion period prior to payment of the lump sum on 29 December 1999.

17. The applicant paid off the mortgage on his house, and subsequently sold it, and purchased a unit, and spent about $17,000 on furniture and white goods. He says that they bought the new furniture because this would be the last opportunity they would have to do so; but in the course of his oral evidence, the applicant disclosed that he had received the earlier lump sum payment of $100,000 in 1994. He had purchased then a new home (subject to mortgage), new furniture, and motor car. On his evidence, by December 1999, he was in arrears with his mortgage payments, the $100,000 by implication had been expended; and he had been advised that he would be precluded from benefit from 1 January 2000 to 26 August 2005. He proceeded then to expend the moneys in the manner outlined in the earlier paragraphs of these Reasons. In my view, he made the conscious decision to sell a home purchased less than five years earlier, replace furniture purchased less than five years earlier, and purchase a new motor car and caravan. These are lifestyle decisions not forced upon him by circumstances, but decisions made in the light of the knowledge of preclusion from benefits for nearly five years - reckless in the extreme, one might think, but not so unusual or exceptional, in my view, that they could be regarded as exceptional circumstances for the purposes of the Act.

18. The applicant's mother-in-law became ill in March 2000, and the applicant says that he incurred travel and accommodation expenses to Adelaide of $3,380, and trips to Millicent costing approximately $1,400 - a total of $4,538, prior to her death in April 2000. A further $8,640 was expended over a three year period visiting the applicant's father-in-law in Adelaide, Millicent and Kingston. On the evidence, the applicant outlaid a total of approximately $13,178 over a three-year period. This was of course a trying and distressing period for the applicant and his wife; but I do not consider that these expenses are of such an unusual nature as to be regarded as special circumstances for the purposes of the legislation.

19. In relation to the applicant's alleged gambling habit, and loss of moneys at the TAB, one might speculate as to why a middle aged man, who had bet only on the Melbourne and Adelaide Cups, would almost overnight, commence regular withdrawals amounting to $70,000 over a 15-month period, from the joint account, without any protest from his wife, until all the money had been expended he maintains, on "place" bets. He said in evidence that he never bet "each way", or for a "win". One might wonder whether the applicant relied on the advice of the financial adviser that the Department would have to pay pension if he ran out of money. In any event, speculation is not proof, and he relies upon this gambling habit which he has overcome now without professional intervention or treatment, as a "special circumstance", in accordance with the decision of Re Males.

20. In the matter of Re Males, Mr Males had gambled away all of his settlement money on poker machines. The Tribunal took into account that he had virtually no assets, and would not qualify for borrowed funds. In the matter under review, the applicant has a freehold home, cars, furniture, loans outstanding from family members, and his wife's regular Centrelink payment. I do not consider that the gambling away of a portion of the settlement moneys is an exceptional circumstance for the purposes of the Act.

21. I have taken into account the whole of the evidence, and the parties' submissions; and despite Ms Clark's carefully researched written submissions and her earnest oral submissions, I do not consider, on the whole of the evidence, that any of the circumstances relied upon by the applicant can be considered of such an unusual and exceptional nature, that the discretion provided in s 1184K of the Act should be exercised in his favour.

22. For these reasons the Tribunal affirms the decision under review.

I certify that the 22 preceding paragraphs are a true copy of the reasons for the decision herein of senior Member WJF Purcell

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

Associate

Date of Hearing 29 September 2003

Date of Decision 19 December 2003

Counsel for the Applicant Ms S Clark

Solicitor for the Applicant South East Community Legal Service

Counsel for the Respondent Ms A Pugsley

Solicitor for the Respondent Service Recovery Team