Debnam and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 919 (18 November 2010)

Last Updated: 19 November 2010

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 919

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2010/3411

GENERAL ADMINISTRATIVE DIVISION		)
	Re		ROBIN DEBNAM

Applicant

And

SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal

Dr M Denovan, Member

Date 18 November 2010

Place Brisbane

Decision

The Tribunal affirms the decision under review.

....................[Sgd].................
Member

CATCHWORDS

SOCIAL SECURITY – Disability support pension – Application of preclusion period – Applicant’s circumstances do not amount to “special” in order to justify the whole or part of the compensation money being treated as not having been made – Decision under review affirmed.

Social Security Act 1991 (Cth) ss 17, 1169, 1170, 1184K

Social Security (Administration) Act 1999 (Cth)

Dranichnikov v Centrelink [2003] FCAFC 133; (2003) 75 ALD 134

Groth v Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541

Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Re Bus and Secretary, Department of Employment and Workplace Relations [2006] AATA 155

Re Colaiacolo and Secretary, Department of Social Security [1985] AATA 91 (24 April 1985)

Wolfgang Robert Hartstang and Secretary, Department of Social Security [1994] AATA 44

Re Ivovic and Director-General of Social Security (1981) 6 ALN N293
Secretary Department of Social Security and Winterbotham [1990] AATA 808
Re Zaccardi and Department of Social Security (1995) 40 ALD 760

Secretary, Department of Family and Community Services and Zugul [2005] AATA 425

REASONS FOR DECISION

18 November 2010

Dr M Denovan, Member

INTRODUCTION

1. Mr Robin Debnam (the applicant) injured his shoulder whilst working on 19 July 2007. He was paid periodic compensation by Workcover Queensland until 25 June 2008. Mr Debnam was granted disability support pension (“DSP”) with effect from 26 June 2008.
2. Mr Debnam’s compensation claim settled out of court on 15 February 2010, for $245,000. That settlement included a component for economic loss. Refunds to Medicare, Centrelink, and Workcover were made and, legal fees paid. Mr Debnam received a lump sum of $119,585.88 on 15 April 2010.
3. On 29 March 2010 Centrelink decided to cancel his DSP on the basis that he is subject to a lump sum preclusion period from 26 June 2008 to 27 April 2011.
4. On 5 July 2010 an Authorised Review Officer (“ARO”) varied the decision to the extent that the $10,000 that the applicant paid in satisfaction of the property settlement to his wife was taken into account, and the preclusion period was recalculated to end on 9 March 2011. On 21 July 2010 the Social Security Appeals Tribunal (“SSAT”) affirmed the decision, as varied by the ARO.

LEGISLATION

5. The relevant legislation is contained in the Social Security Act 1991 (Cth) (“the Act”). The effect of sections 17(1) and 1169(1) of the Act is that Mr Debnam’s compensation payment prevents DSP being paid to him for the duration of the lump sum preclusion period. The formula to calculate the length of the preclusion period is contained in s 1170(4) of the Act. There is no dispute that Mr Debnam’s DSP is subject to the preclusion period calculated by Centrelink.
6. The whole or part of a compensation payment may be disregarded in “special circumstances”[1].
7. I have checked the calculations of Centrelink and I am satisfied that the preclusion period has been correctly calculated. This means that Mr Debnam is precluded from receiving DSP for the entirety of that period unless the whole or part of his compensation payment is disregarded because of special circumstances.
8. Mr Debnam claims that his DSP should not have been cancelled because of his special circumstances, namely that he is in dire financial straits, that his medical condition has worsened and, that he has recently separated from his wife and he is responsible for the care of his dog.
9. Mr McQuinlan, for the respondent, submitted that the applicant’s circumstances are not unusual, uncommon or exceptional. Mr McQuinlan submitted that the manner in which Mr Debnam has chosen to spend his compensation payment precludes a finding that there are any special circumstances and, that the purchase of property in which to live should be treated no differently to cash in a bank account[2]. That asset could be realised and used for his living expenses.
10. In order to resolve the dispute in this case, I must decide whether special circumstances do exist that make it appropriate to treat the whole or part of the compensation paid to the applicant as not having been made.

Can part or all of the preclusion period be reduced due to special circumstances?

11. Whilst the expression “special circumstances” is not defined in the Act or the Social Security (Administration) Act 1999 (Cth), the approach to be taken in interpreting and applying discretionary provisions has been dealt with by the Tribunal and the Federal Court in numerous circumstances.
12. In Re Beadle and Director-General of Social Security[3] it was said that:

“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”.

13. In Dranichnikov v Centrelink[4] the Full Federal Court, when considering the meaning of “special circumstances”, observed:

“....what is required will be circumstances which distinguish the case in consideration from the usual case. There will be a requirement that the circumstances are such that takes the case out of the ordinary...”

14. The discretion in s 1184K(1) of the Act to treat the whole or part of a compensation payment as not having been made should be considered in the context of the scope and purpose of the compensation provisions of the Act. The discretion ought not to be exercised in a manner calculated to frustrate legislative intent[5]. Those who receive a lump sum compensation payment are expected to support themselves from their own available resources for a period before seeking support from the taxpayer. The question of whether there are special circumstances in this case must be asked with this in mind.
15. Mr Debnam admits that prior to agreeing to a compensation settlement, he was made aware that Centrelink would not pay DSP benefits during the preclusion period. He acknowledges that he was given an estimate of when that preclusion period would likely run until.
16. Prior to receiving the settlement money Mr Debnam lived with his wife and mother-in-law. Mrs Debnam is the carer of her mother, who suffers from significant health issues. Mr Debnam and his wife decided to spend the majority of the compensation payment on a motor home. They planned to live in the home with Mr Debnam’s mother-in-law. They decided that the Centrelink benefits of Mr Debnam’s wife and his mother-in-law, in addition to his remaining superannuation, would be sufficient for them to live on. Shortly after receiving the compensation payment on 15 April 2010, Mr Debnam paid $90,000 towards the balance of a motor home. He had earlier withdrawn almost the entire balance of his superannuation, $30,000, from which he paid the $20,000 deposit on the motor home. This left him with approximately $10,000 cash from the superannuation payout and, $29,000 from the compensation payment, a total of approximately $39,000.
17. Mr Debnam told me that he spent about $15,000 outfitting the motor home. This expenditure included the purchase of a solar panel and generator. He also paid for a holiday to SeaWorld for himself, his wife and mother-in-law. He bought new prescription glasses for himself and his wife.
18. After just two weeks of receiving the compensation money, on 2 May 2010, Mr Debnam and his wife separated. When he applied for a review of the decision to cancel his DSP on 10 May 2010, he stated that he had approximately $20,000 remaining in cash.
19. He now has no cash remaining. He borrowed $1000 from his paternal aunt, and $100 from his son. His only substantial asset is his motor home. In July 2010 Mr Debnam told the SSAT that the motor home’s total value would be about $80,000. He told me that the motor home has sustained structural damage to the rear and, requires a replacement gear box. He would now estimate its value to be $20,000 to $30,000. Mr Debnam says that he does not want to sell the motor home because it is a lifestyle choice and also a health decision. One day he hopes to travel around Australia, an ambition he has held since 1976.
20. Mr Debnam has attempted to sell some of his possessions to cash converters. He owns a watch which he believes is valued at $2000. He was offered $150, an unacceptable amount. He was similarly offered a token amount for the generator he recently purchased for $2089.
21. Financial hardship has been considered as a possible component of special circumstances in a number of decisions. It is well established that, by itself, such hardship is not enough[6], and that financial circumstances must not only be straitened but also exceptional[7].
22. The applicant's financial position is certainly difficult. He is living on borrowed money and parking his motor home at ‘free camping’ sites, which effectively means that he moves his motor home frequently enough to not attract a fine from local authorities. He has medical conditions that necessitate the need for psychological counselling and prescription medications.
23. I consider that Mr Debnam’s assets are worth more than he estimates. I do not accept that a motor home, purchased less than six months ago for a total cost of approximately $125,000 could now be worth only $20,000 to $30,000, even if it needs some structural repairs and a new gear box. If Mr Debnam had left the money in the bank, and not purchased a motor home he would have been required to use that money for the purpose for which it was received, that is to support himself. Whilst it is unfortunate that he may make a loss when he resells, I consider that there would be sufficient value in the motor home to provide for his expenses until the end of the preclusion period. Many, if not the majority of persons in receipt of DSP, have few if any assets. Mr Debnam’s current financial circumstances are not exceptional.
24. When considering whether special circumstances exist, the courts and the Tribunal have had regard to the reasonableness of the person’s expenditure of the lump sum. Fretting money away on non-necessities, and unsuccessful investments where returns were not guaranteed[8], have all been regarded as conduct militating against finding special circumstances.
25. Mr Debnam was unable to explain how he spent the $10,000 he had remaining after property settlement in the six months since May 2010. That equates to an average of $385 per week for a person not paying any rent and minimum costs in utilities such as gas, electricity and water. It is in excess of the amount that Mr Debnam would receive in DSP. It also seems excessive given that Mr Debnam knew that he was expected to make the money last until the end of the preclusion period, 9 March 2011. Mr Debnam has provided receipts for medications that amount to approximately $35 a month and, psychological counselling, totalling approximately $20 a month. These medical costs are not excessive when compared to most recipients of DSP, and do not explain the high average weekly expenditure since May 2010.
26. A holiday to SeaWorld was also unreasonable expenditure of money received for the purpose of compensation for loss of earning. That being said, Mr Debnam seems to have spent the majority of his money on the motor home and its fit out. Mr Debnam described his wife as having alcohol and gambling problems. He argues that had the money not been spent on the motor home, it would have likely been frittered away on alcohol and gambling. That seems a somewhat unlikely scenario to me, given that the couple separated about two weeks after the money was received by Mr Debnam and, presumably Mrs Debnam had limited access to the money after that point in time. However, even if he is correct, that in itself is not unusual or exceptional. Alcohol and gambling problems are common and, do not take the circumstances into the exceptional arena. Further, there was no reason why Mr Debnam could not have put the money in an account that only he could access.
27. I accept that the decision to purchase the motor home at the time of its purchase seemed to Mr Debnam to be a viable plan. For that plan to be effected, Mr Debnam relied on the income of Mrs Debnam and her mother. Unfortunately, separation and divorce are not exceptional circumstances. The separation rate of couples in our society is very high and, Mr and Mrs Debnam had been separated twice previously during their five years of marriage. Separation and divorce often necessitates the sale of previously loved and valued assets, including homes and dogs. This of course causes much anguish and sorrow and, no doubt does little for the emotional or mental health of most people affected, at least in the short term. Whilst I can sympathise with Mr Debnam’s reluctance to sell his motor home, ultimately it must be remembered that he purchased that asset out of the money that he was given to be used to support himself.
28. Mr Debnam presumably could have minimised his capital losses on the motor home by selling it earlier, when he and his wife separated.
    At that time he knew that to live in the motor home until the preclusion period expired he needed the income of his wife and his mother-in-law for daily living expenses, income that was no longer accessible to him. His decision to keep the motor home at that point in time was not a realistic financial decision, given his circumstances. Much of the applicant’s expenditure cannot be regarded as essential. Mr Debnam admits that. However, he claims that the decision to keep the motor home is about his lifestyle and the potential to actualise long held ambitions of travel around Australia one day in the future.
29. The purpose of compensation is not to enrich the lifestyle or asset base of those whom receive it, or to assist in making dreams or aspirations easier to obtain than they would have otherwise been, but for the injury that has been sustained. Compensation by its nature compensates likely earnings, restoring the person’s financial position to the same as it would have been, had the injury not occurred. Had Mr Debnam not been injured he would not have a motor home that he is now required to sell. Mr Debnam has used the money that he was given in lieu of income that he would have earned from work had he not been injured. It is inequitable that he use those funds contrary to the stated purpose for which they were received and then rely on the taxpayer to provide for expenses that he has already received income in relation to.
30. Mr Debnam claims that as part of his property settlement, he gave his wife $10,000 in cash, his car, a 1998 Toyota Camry Conquest and, his household furniture. He told me that he made this payment by way of two bank transfers in June 2010[9]. He told me that whilst there had been no property settlements on the previous occasions when he and his wife had separated, on this occasion she demanded money because the joint asset pool was now considerably larger, thanks to the compensation payment just received.
31. Marital breakdown and property settlement have been considered as contributing to special circumstances in matters of compensation payments received in some cases[10]. The amount of $10,000 given to his wife has already been disregarded. Mr Debnam has given his wife a car and furniture that she would otherwise not have been given had he not received the compensation payment. These items were owned by Mr Debnam prior to receiving the compensation payment and were not purchased out of the compensation funds. The items therefore do not represent money given for compensation that is no longer available.
32. Had Mr Debnam not been in receipt of the compensation payment, following separation it is likely that the sum total of his assets would have been at the most his car and his home furniture. That is what he told me that he was left with after the couple separated on each previous occasion. He is still therefore in a better position financially than he was when he separated previously from his wife.
33. Mr Debnam has a number of medical conditions. He told me that in addition to his shoulder injury, he suffers from psoriasis, depression, tinnitus, hearing loss, gastritis and a kidney cyst. He has a history of alcohol abuse. He requires yearly scans to monitor the kidney cyst. Mr Debnam has seen a psychologist on five occasions in relation to depression[11]. Mr Debnam’s poor health currently prevents him from working. Ill health suffered by DSP recipients must be special or unusual when compared with other people receiving DSP, and not compared simply with the majority of persons of the same age and sex.
34. Poor health alone can constitute special circumstances however the condition for which compensation was received is not usually a factor which can be considered as relevant for the purposes of establishing special circumstances. Mr Debnam requires only one regular prescription medication per month. He is self sufficient with respect to activities of daily living.[12]. In context, Mr Debnam’s health problems are certainly not exceptional or unusual.
35. When the relevant circumstances of the applicant are looked at in their entirety, they cannot be fairly described as unusual, uncommon or exceptional, so as to be “special” in the sense that the legislature intended that term.
36. The application of s 1184K (1) of the Act in these circumstances would be inappropriate, as it would frustrate the purpose of the legislation.

CONCLUSION

37. I consider that there is no injustice or unfairness in Mr Debnam serving the entire lump sum preclusion period. No special circumstances exist that could justify the whole or part of the compensation money being treated as not having been made.

DECISION

38. The Tribunal affirms the decision under review.
    

I certify that the 38 preceding paragraphs are a true copy of the reasons for the decision herein of Dr M Denovan, Member.

Signed: .....................[Sgd]..................................................

Lee Cross, District Registrar

Date of Hearing 1 November 2010

Date of Decision 18 November 2010

Applicant was self-represented

For the Respondent Mr R McQuinlan, Departmental advocate

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[1] Social Security Act 1991 (Cth), s 1184K(1).
[2] Secretary Department of Social Security and Winterbotham [1990] AATA 808
[3] (1984) 6 ALD 1 at 3.
[4] (2003) 75 ALD 134.
[5] Re Ivovic and Director-General of Social Security (1981) 6 ALN N293.
[6] Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 4.
[7] Re Colaiacolo and Secretary, Department of Social Security [1985] AATA 91 (24 April 1985); Groth v Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541; Re Zaccardi and Department of Social Security (1995) 40 ALD 760.
[8] William Robert Hartstang and Secretary, Department of Social Security [1994] AATA 44.

[9] Mr Debnam cites Exhibit 1, T15/90 as evidence of payment to his wife.
[10] Re Bus and Secretary, Department of Employment and Workplace Relations [2006] AATA 155.
[11] Exhibit 2.
[12] Secretary, Department of Family and Community Services and Zugul [2005] AATA 425.