Editors --- "Compensation: whether one or two lump sums; meaning of 'in relation to the same event'; start date of preclusion perio" [2005] SocSecRpr 26; (2005) 7 Social Security Reporter, Article 26

• CRAWLEY and SECRETARY TO THE DFaCS
• Background
• The law
• The issue
• The decision
• Formal decision

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Assets test: successful claim under financial hardship; whether arrears payable; special circumstance

CRAWLEY and SECRETARY TO THE DFaCS

(2005/325)

Decided: 18th March 2005 by M.J. Carstairs

Background

Mr and Mrs Crawley sought review of a decision to refuse payment of disability support pension (DSP) to Mr Crawley for the period 8 March 2004 to 4 May 2004, and to refuse payment of parenting payment partnered (PPP) to Mrs Crawley for the period 10 March 2004to 4 May 2004.

In early 2004 following a revaluation of their five rental properties by the Australian Valuation Office, Centrelink determined that neither applicant was eligible to continue to receive their respective payments because their assets had increased in value above the limits allowed under the Social Security Act 1991 (the Act).

On 5 May 2004, immediately after being advised for the first time by Centrelink that the option was available to them, Mr and Mrs Crawley lodged claims for consideration under the hardship provisions in the Act. They requested that some of their assets be disregarded as unrealisable assets. On 25 May 2004 the Crawleys were told that their claims under the hardship provisions had been successful and that they would be paid with effect from 5 May 2004 being the date the claims were lodged. The Crawleys then requested that they be paid under the hardship provisions with effect from 8 March 2004 rather than from 5 May 2004. Their claim for back payment to 8 March 2004 was refused.

The law

Section 1129 of the Act enables the value of an asset to be disregarded for pension assets test purposes, if the asset is unrealisable and the person would otherwise suffer financial hardship. The section requires that a claim be lodged before such a determination can be made and goes on to provide for the date on which such a determination can take effect:

1129(2) A decision under subsection (1) takes effect:

(a) on the day on which the request under paragraph (1)(d) was lodged with the Department; or

(b) if the Secretary so decides in the special circumstances of the case-on a day not more than 6 months before the day referred to in paragraph(a).

Section 1131 is the equivalent section for benefits.

The issue

The AAT had to consider the meaning and application of the expression “special circumstances” as used unders.1129 (2).

The decision

The AAT adopted the approach to “special circumstances” in Beadle and Director-General of Social Security (1984) 6 ALD 1. The AAT found on the facts that special circumstances existed to enliven the discretion.

Unique and unusual circumstances existed in that the Crawleys lost their income support payments without effective notice being given to them and despite repeated requests for help in answering requests from Centrelink for financial information. Letters notified them of the immediate cancellation of their payments and thus left them with no time in which they might re-arrange their financial circumstances. Consequently, they were placed in unnecessary and severe financial hardship between March and May 2004. The letters failed to advise of appeal rights, cited incorrect provisions of the Act and were thus ineffective as notices of decision. Following the cancellation, they were not given the relevant information about the hardship provisions in the Act, despite repeated contact with Centrelink about their circumstances, until May2004.

It was argued by DFaCS that the AAT should take into account the subsequent successful sales of some of the relevant properties. However, the AAT concluded:

that the relevant time for considering special circumstances was at the time of Centrelink’s decision to pay them under the financial hardship provisions. ...Clearly the exercise of this discretion relates to past events. It is a provision for backdating a payment. It is not relevant that the applicants survived this difficult period and, because of subsequent sales, are in a better financial position. The exercise of this discretion for special circumstances must be considered at or about May 2004. (Reasons, para. 25)

Formal decision

The Tribunal set aside the decision under review and substituted the decision that DSP be paid under the financial hardship provisions pursuant to s.1129 from the date of cancellation of Mr Crawley’s DSP on 8 March 2004, and under s.1131 (3) in respect of Mrs Crawley’s PPP, with effect from 10 March 2004.

[I.T.]