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4.13.4.20 Factors to consider when determining special circumstance provisions

This topic

This topic contains information on the factors for the delegate to consider when determining special circumstances.

Summary

The discretionary nature of the special circumstances provisions makes it impossible to give a precise list of factors that should be taken into account when considering whether the provisions should be applied.

There is usually not one factor which makes a situation unusual, unforeseen or exceptional, but a combination of factors applying to each individual.

The following table, which is not exhaustive, gives examples of:

  • some of the factors that could be taken into consideration by the delegate when determining special circumstances
  • what to look for
  • what may be of relevance to this determination, and
  • some general principles for delegates to follow when deciding whether special circumstances should be found and/or to what extent the discretion contained in SSAct section 1184K could be exercised.
Factors to consider What to look for General Principles
Ill health
  • Ill health that has a major bearing on the individual's circumstances.

Example: Unforeseen and unexpected medical expenses for the person or immediate family member or dependant, which results in financial self-support plans being thwarted.
  • State of ill health should be more severe than the majority of DSP recipients.
  • Injury that a person received compensation for cannot generally be regarded as a special circumstance.
Emotional state
  • Has stress or some other personal circumstance influenced the person's emotional state to the point that it has become a significant factor in their behaviour, or on their health?

  • Has the person been the subject of family and domestic violence?
  • Where their emotional state is related to or resulted from the injury that the person received compensation for, it cannot generally be regarded as a special circumstance.
  • Where a person has been the subject of family and domestic violence affecting their emotional state, special circumstances may be granted.
Decision making capacity
  • Have poor education or limited life skills affected the person's capacity to make a rational decision?
  • Has the person's injury contributed to a loss in capacity to make rational decisions (such as behaviour common to those who have suffered a head injury)?
  • A bad decision in any particular circumstance is not necessarily an irrational decision.
Financial circumstances
  • Has the person deliberately deprived themselves of their means of support or recklessly or inappropriately spent their lump sum?
  • Did the person seek financial advice on the consequence of a particular course of action, and what was that advice?
  • Does the person have realisable asset/s that could be used to solve their current financial dilemma, i.e. to maintain them for the remainder of the preclusion period?
  • Does the realisation of the asset/s impact on other circumstances (e.g. medical evidence indicates that the loss of the asset/s would have an adverse impact on the person's health)?
  • Does the current state of the market mean that the person cannot readily sell the asset?
  • Is the person likely to face financial hardship in the near future?
  • Is the person (especially if they have dependent children) at risk of becoming homeless in the near future?
  • Has the person been financially deprived because of financial abuse and other forms of family and domestic violence?
  • Financial circumstances need to be severe and worse than the majority of social security recipients.
  • The value of all cash and realisable assets should be taken into account by comparing this with the fortnightly rate of pension.

Example: If a person has a car worth $20,000 and their JSP rate is $523.40 per fortnight, it could be seen that they have access to funds that would maintain them for the next 38 fortnights.

  • It needs to be shown that there are truly compelling reasons why a person should not realise their assets.

Example: The person has separated since compensation settlement and children are living with ex-partner in family home, which was purchased with compensation funds.

  • Where a person uses compensation proceeds to purchase a house or pay off the balance of a home loan, special circumstances would generally not be found.

Exception: The house has been substantially modified due to the person's disability and other similar suitable accommodation would be difficult to obtain.

  • If a person only has $4,000 and a further 12 months preclusion period to serve, then special circumstances may be granted commencing at a future date if financial hardship is imminent.
  • Generally, where people choose to wantonly/irresponsibly spend all of their compensation proceeds and do not set aside sufficient funds to meet their living costs during the preclusion period, decision makers should NOT find special circumstances exist unless there are truly compelling reasons to do so.
  • Where a person has been the subject of family and domestic violence and financial abuse resulting in financial deprivation/hardship, special circumstances may be granted.
Addictions
  • Is there evidence that the behaviour of the person was as the result of an addiction or mental health condition outside their control?
  • Is there an established pattern of compulsive behaviour over a significant period of time?
  • If the case involves gambling, does the person control their gambling spending or do they gamble compulsively to 'strike it lucky' to the exclusion of all other life needs?
  • If the case involves substance abuse, has the person been medically recognised as having a drug or alcohol problem?
  • Has the addiction occurred after the receipt of the compensation lump sum or is there an ongoing history of this abuse?
  • Has any help been sought regarding this addiction?
  • Has the circumstance that caused the hardship also contributed to the problem?

Example: Addiction as direct result of trying to manage their pain.

  
Incorrect or insufficient legal advice
  • Has the person had a telephone or face-to-face interview with Centrelink where the details of their preclusion period and the impacts their compensation payment will have on their income support payments or future entitlements to income support has been explained to them.
  • The delegate should also check whether the person has signed the acknowledgement letter confirming they understand the implications of their compensation preclusion period.
  • Is there documentary evidence that the person has received incorrect or insufficient legal advice?
  • Has the legal advice been sought on any action in regard to this?
  • Depending on the individual circumstances of a person's compensation case, the person's claim that they have received incorrect or insufficient advice may be weakened if the person has had an interview with Centrelink where they have acknowledged that they understand that they will be precluded from income support for the duration of the compensation preclusion period.
  • Generally, if a person has been badly advised by their legal representative they may seek remedy through the courts, however:
    • the person may not be, or is ever likely to be, in a financial position to take this action,
    • the error may not be actionable.
Unjust operation of legislative amendment
  • Any legislative amendment may produce a result, when it interacts with social security legislation, that is unforeseen and inequitable.

Note: The explanatory memorandum for the legislative amendment generally describes the purpose of the legislation.
  • The perceived fairness or otherwise of an intended consequence of the social security legislation, by itself, is not a special circumstance.
  • Where the only special circumstance is the perceived unfairness of the 50% rule, special circumstances should not be applied.
Changed circumstances
  • Have the circumstances of the person altered significantly since the preclusion period commenced due to circumstances wholly or partly outside of the person's control?

Examples:

  • The compensation recipient has divorced since the settlement and their personal assets have reduced due to the property settlement.
  • The compensation recipient has been successfully sued with the result that they must use part or all of their settlement to comply with the decision.
  • Natural disasters.
  • Sudden ill health of the person or member of their family.
  • Collapse or failure of a well considered investment/business which was meant to generate self-supporting income.
  • Documentation to support claims must be produced by the person.
Other
  • Has there been expenditure of compensation funds due to fraud by another person?
  • Has any legal action been taken to recover defrauded funds?
  • Is there an expected reduced life expectancy?
  • Excessive legal costs involved in the settling of a claim for compensation.
  • To what extent are the costs excessive? The delegate is to decide what excess cost (or part of) is to be treated as a special circumstance.

Act reference: SSAct section 1184K Secretary may disregard some payments

Policy reference: SS Guide 4.13.4.10 Overview of the Application of the Special Circumstance Provisions

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