Abbas and Secretary, Department of Employment and Workplace Relations

[2007] AATA 1698

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 1698

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No S 200600240

GENERAL ADMINISTRATIVE DIVISION		)
Re		GHULAM ABBAS

Applicant

And SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Mr J G Short (Member)

Date27 August 2007

PlaceAdelaide

Decision

The Tribunal:

·   affirms the decision to raise a debt in the sum of $17,462.54 against compensation affected payments made to Mr Abbas and to his partner, Mrs Abbas;

· sets aside the decision to recover all of this sum and substitutes a new decision that, under s 1184K of the Social Security Act 1991, the Department is to treat the receipt by Mr Abbas of so much of the periodic payments of compensation made in the form of an arrears payment as not having been made so as to confine the debt/sum to be recovered by way of charge, to $7,937.29; and

·   affirms the decision to fix a preclusion period from 20 April 2006 until 5 July 2006.

..............................................

J G SHORT
  (Member)

CATCHWORDS

SOCIAL SECURITY – pensions, benefits and allowances – compensation affected payments – raise and recover debt – preclusion period – special circumstances – decision set aside

Social Security Act 1991 ss 1171(1), 1171(2), 1173, 1174, 1180, 1181, 1184K(1)

Secretary, Department of Social Security v Cunneen (1997) 78 FCR 576

REASONS FOR DECISION

27 August 2007   Mr J G Short (Member)

1.      The application is for a review of decisions affirmed by the Social Security Appeals Tribunal (SSAT) on 11 July 2006 to raise and recover a charge/debt in the sum of $17,462.54 and to impose a preclusion period from 20 April 2006 until 5 July 2006.

2.      The applicant was not represented.  The respondent (the Department) was represented by its advocate, Mr Christian Goldsworthy.

background

3.      Mr Abbas is a married man with two children.  He worked for a time as an interpreter at the Baxter Detention Centre.  Mr Abbas suffered a depression injury as a result of his duties at that centre and consequently was eventually paid arrears of weekly payments by WorkCover, together with a payment representing future economic loss.

4.      Mr Abbas agreed as accurate (save for matters referred to at the foot of this paragraph), the information recorded by the SSAT at paragraph 15 of its reasons for decision:

“15.  Mr Abbas spoke to the Tribunal and the following is a summary of the information provided:

·Mr Abbas suffered a depression injury while working as an interpreter at the Baxter Detention Centre;

·after a period on weekly payments of income maintenance in early 2005, WorkCover had asserted that the depression was no longer caused by the former employment and ceased payments;

·he and his wife then went onto Centrelink payments;

·his solicitor filed a Notice of Dispute in the SAWCT disputing the stopping of weekly payments;

·he had obtained a positive psychiatric report when he and his family returned to Adelaide;

·his claim was eventually accepted by WorkCover, and so arrears of income maintenance were payable;

·when his claim was nearing settlement both he and his lawyer contacted Centrelink on many occasions about the Centrelink consequences of a settlement;

·his understanding of what Centrelink were telling him was that he had two “options” as to how the settlement of his claim could be done.  One “option” would carry with it no future preclusion period and a debt to Centrelink of about $8,000; the other “option” would carry with it a debt to Centrelink of about $17,000 and a preclusion period;

·he and his solicitor had tried to structure the settlement so as to result in the first “option” – but Centrelink had decided on the second “option”;

·at this point of the hearing it became increasingly difficult to follow the information being provided by the applicant and the Tribunal adjourned briefly to seek further documentary evidence from the Centrelink database;

·the Tribunal obtained a copy of a letter from Centrelink dated 9 March 2006 which was Centrelink’s response to a written request dated 2 March 2006 from Mr Abbas’ solicitors to Centrelink for an estimate of the likely preclusion period;

·the remainder of the hearing revolved around the correctness or otherwise of that letter – see below under “Discussion of the evidence”;

·Mr Abbas’ grievance was, in essence, that he had relied upon the Centrelink letter of 9 March 2006 and had settled his claim on the basis that that letter gave correct advice as to how Centrelink would treat his settlement;

·Mr Abbas believes that Centrelink later treated his settlement in a different and less advantageous way to that indicated by the 9 March 2006 letter.”

The only matters with which Mr Abbas took exception included the reference at the 8^th dot point of the SSAT’s reasons for decision to a figure of $17,000.  Mr Abbas said that this specific figure was not mentioned, but rather an indication that some greater sum would be payable.  Mr Abbas also said that the suggestion in the 9^th dot point that he and his solicitor had tried to structure a settlement in any particular way was inaccurate.  He said that he and his solicitor simply wished to ensure that the Workers’ Compensation Tribunal’s record accurately recorded his suggestion of having received one settlement.

5.      Mr Abbas went on to summarise his position by saying that prior to agreeing to settle his claim for compensation, he had advised Centrelink officers that one settlement decision would be made to cover all of his entitlements.  He said that Centrelink advised him that so long as the settlement was recorded in one document, then it would be treated as one settlement and a preclusion period would be imposed and that any Centrelink monies paid to Mr Abbas during the preclusion period would be recoverable, in this case approximately $7,937.29.  Centrelink monies paid to Mrs Abbas’ wife, would not be recoverable.  Mr Abbas said that he relied on this advice and settled his claim.

6.      Mr Abbas said that he had been unaware that three orders or amended orders had been made by the Workers’ Compensation Tribunal.  In particular, he was unaware of the first order which made no reference to a redemption of future liability.  It simply recorded agreement in respect of payment of arrears of compensation (T8/85-87).

7.      Mr Abbas said that after Centrelink told him that it would treat his arrears payment and his s 42 redemption as separate payments and consequently recover a debt from the arrears payment representing not only the Centrelink monies paid to him but also those monies paid to his wife, Mr Abbas raised the issue with his lawyer.  His lawyer said that the agreement recorded at the Workers’ Compensation Tribunal would be amended to accurately reflect the settlement of both issues in the one document (T33/168-169).  The Tribunal notes at this stage that this standard form of order includes the following notation:

“IT IS NOTED BY THE PARTIES:

As part of the settlement of all disputes before the Workers Compensation Tribunal the parties have agreed to redeem the worker’s entitlement to future payments of income maintenance and medical expenses for a sum of $15,000.00 on the making of these Orders.”

Mr Abbas said that he had relied on Centrelink’s advice.  One document encompassed the entire settlement, and that consequently Centrelink should have confined the sum to be recovered from his arrears payment to approximately $7,937.29.

8.      Mr Abbas said that he had worked as an interpreter at Baxter Detention Centre.  After his depression injury, he thought that he could not work in that capacity for a time.  He hopes to again be able to work as an interpreter at some future time.

9.      Mr Abbas said that both he and his wife have generally been dependant upon Centrelink benefits.  He said that the family income derived from monthly Centrelink payments totalled approximately $2,200.  In addition, he usually receives about $220 a month from casual work taxi driving.  Mr Abbas said that all of the compensation monies he had received had now been spent.  He struggles to repay a mortgage at $1,380 each month.  From the remaining sum, approximately $1,040, Mr Abbas must pay credit card debts totalling about $6,000, debts to friends of about $2,000, and make car repayments.  He must also support his family of four, including two children aged 5 and 7.  Mr Abbas said that his only assets are a modestly valued car for himself and his wife and their home, purchased for about $200,000 and encumbered by a mortgage of about $180,000. 

10.     Mr Abbas said that he had to pay tax and legal fees from his compensation monies.  The debt of about $17,000 was directed to Centrelink.  He said that he used approximately $6,000 to make a payment on his vehicle.  He repaid approximately $10,000 in debts owed to friends.  Mr Abbas explained that at the time he purchased his home, he did not have enough for the deposit.  He borrowed most of the deposit on a credit card.  He then had to borrow from friends in order to satisfy the credit card lender.  Mr Abbas also said that shortly after receiving his compensation monies, his wife’s father became ill in Pakistan.  His wife and the children made the trip to Pakistan to be with him.  This cost was between $11,000 and $12,000.

11.     Mr Abbas said that at about the time he received his compensation monies, he commenced a training course in migration law.  The course extended over three months and he had to pay fees approximating $2,700.  He also had to pay about $1,200 to sit the exam.  Mr Abbas said that the effect of Centrelink treating his compensation payments in a way which required him to repay approximately $9,000 more than originally advised, compounded his problem with depression and delayed his recovery from that condition.  As a consequence, he failed the exam.  Course and exam fees approximating $4,000 were lost.  Mr Abbas said that he has also had to purchase a heater for his home at a cost of about $1,500 and that the remaining compensation money was consumed in living expenses.  Mr Abbas said that he still owes money on both vehicles totalling about $12,000 (the vehicles are worth about $15,000 in total).  He still owed friends $2,000 and approximately $6,000 on credit cards.

12.     Mr Abbas said that he does not wish to sell the vehicles because he hopes at some stage, to obtain his driver instructors licence to improve his employment prospects. 

13.     Mr Abbas summarised his evidence by saying that he had always been honest with Centrelink.  He made his decision to settle his claim in the light of his understanding of the information provided by Centrelink.  He understood that advice to have been that if he received his compensation monies in one payment, or if the settlement was recorded in one agreement, then he would only have to repay Centrelink the benefits he had received, not the benefits his wife received.

consideration of the law

14. The Department’s representative said that the Department had raised the debt in the sum of $17,462.54 against Mr Abbas and recovered that amount from his arrears payment in accordance with ss 1173 and 1174 of the Social Security Act 1991 (the Act) , the latter section relating to Centrelink payments made to Mrs Abbas. These sections combine with ss 1180 and 1181 of the Act to create a debt, recoverable by charge, equal to all of the Centrelink benefits paid to Mr and/or Mrs Abbas during the period reflected by the arrears payment. These sections read as follows:

“1180(1)If:

(a)      a person receives periodic compensation payments; and

(b)the person was not, at the time of the event that gave rise to the entitlement of the person to the compensation, qualified for, and receiving, a compensation affected payment; and

(c)the person receives payments of a compensation affected payment in relation to a day or days in the periodic payments period; and

(d)the payments referred to in paragraph (c) have not been reduced to nil as a result of the operation of section 1173;

the Secretary may, by written notice to the person, determine that the person is liable to pay to the Commonwealth the amount specified in the notice.

(2)The amount to be specified in a notice for the purpose of subsection (1) is the recoverable amount under section 1181.

1181(1)Subject to subsection (2), the recoverable amount under this section is equal to the smaller of the following amounts:

(a)      the sum of the periodic compensation payments;

(b)      the difference between:

(i)the sum of the compensation affected payments made to the person in relation to a day or days in the periodic payments period; and

(ii)the sum of the compensation affected payments that would have been made to the person in relation to any such day or days had those payments been made at the rate to which the payments were reduced as a result of the operation of section 1173.

(2)      If:

(a)      a person is a member of a couple; and

(b)the person’s partner receives a compensation affected payment in relation to a day or days in the periodic payments period;

the recoverable amount under this section is equal to the smaller of the following amounts:

(c)      the sum of the periodic compensation payments;

(d)      the difference between:

(i)the sum of the compensation affected payments made to the person and the person’s partner in relation to a day or days in the periodic payments period; and

(ii)the sum of the compensation affected payments that would have been made to the person and the person’s partner in relation to any such day or days had those payments been made at the rates to which the payments were reduced as a result of the operation of sections 1173 and 1174.”

Section 1171(1) of the Act reads:

“1171(1)If:

(a)a person receives 2 or more lump sum payments in relation to the same event that gave rise to an entitlement of the person to compensation (the multiple payments); and

(b)at least one of the multiple payments is made wholly or partly in respect of lost earnings or lost capacity to earn;

the following paragraphs have effect for the purposes of this Act and the Administration Act:

(c)the person is taken to have received one lump sum compensation payment (the single payment) of an amount equal to the sum of the multiple payments;

(d)      the single payment is taken to have been received by the person:

(i)on the day on which he or she received the last of the multiple payments; or

(ii)if the multiple payments were all received on the same day, on that day.”

Under s 1171, if two or more lump sum payments of compensation are received, then they are added together to form one lump sum payment of compensation and from this lump sum, a preclusion period is calculated and Centrelink would, as a result of amending legislation (20 March 1997) only be entitled to recover compensation affected payments made to Mr Abbas during the preclusion period. 

15.     Centrelink appears to have provided advice to Mr Abbas in reflection of an understanding that Mr Abbas would receive one payment of about $72,000.  At this point I will record my observations of Mr Abbas as a man who attempted to provide accurate and complete evidence as to his understanding of advice received from Centrelink.

16.     The Department called Ms Katerina Farmassonis to provide evidence.  She is an experienced delegate of the Secretary.  Ms Farmassonis referred to a record of a telephone conversation between Mr Abbas and a Centrelink officer, recorded by a person called “Inger” (T4/52) which includes the following comment:

“ … Information was obtained via Phone Call.  Document created by KSQ on 2 MAR 2006.  cust phone compo section for an estimate of preclusion/recovery.  his claim is likely to settle for an arrears payment of $57000.00 + $15000.00 s42 = total $72000.00.

one document for the decision, cunneen.

requested an estimate.”

On the same page in the T documents, a Centrelink officer has recorded the following comments:

“Estimated lump sum preclusion period 7 APR 2005 to 5 APR 2006.  $7937.29 likely to be repayable had settlement occurred on 9 MAR 2006.  Divisor used was 680.38.

Estimate given by BLA (automatic).

No aggregation with earlier lump sums.”

17.     The Tribunal notes that the document recorded by “Inger” includes the comments “one document for the decision”.  This comment seems to accord with Mr Abbas’ understanding that his compensation monies would be added together in order to calculate the amount of money he would have to repay to Centrelink and that this sum would only reflect the compensation affected payments he had received.  Mr Abbas said that he had conveyed the advice he received from Centrelink to his solicitors. 

18.     The Department then referred to a request for an Estimate of Social Security Charge/Preclusion document lodged by Mr Abbas’ solicitors (T31/151).  The Department pointed out that this document was incomplete as it did not include an answer to a question as to the date weekly payments of compensation were last paid and did not refer to the redemption sum of $15,000.00.  It simply mentioned a lump sum payment of $72,000.00.  The Department’s representative submitted that on this basis, Centrelink should not be blamed for Mr Abbas’ misunderstanding.  Mr Abbas said that his understanding was based on the information he had been verbally provided by Centrelink staff.  The Tribunal notes Ms Farmassonis’ evidence that she recalls seeing, at some stage, a record of a conversation between a Centrelink officer and Mr Abbas concerning the amount he would have to repay, that is a record which pre-dated the document dated 2 March 2006.  Such a document would be consistent with Mr Abbas’ evidence that he had an earlier discussion with a Centrelink officer during which he fully and accurately told that officer of the terms of the proposed settlement and that he had received advice to the effect that he would have to repay no more than about $8,000.00.  This record is not in the T documents.

19. The legislation discussed to this point would suggest that Mr Abbas’ compensation monies representing both an arrears payment of weekly compensation and a redemption of future liability should be combined under s 1171(1) of the Act and viewed as one lump sum and a preclusion period calculated upon that lump sum with Centrelink recovering, by way of charge, a sum equivalent to the compensation affected payments made to Mr Abbas (but not to Mrs Abbas) during that preclusion period.

20. Section 1171(2) of the Act reads:

“1171(2)A payment is not a lump sum payment for the purposes of paragraph (1)(a) if it relates exclusively to arrears of periodic compensation.”

This section works to negate the effect of s 1171(1) and to prevent Centrelink combining two payments of compensation if one of those payments related exclusively to arrears of periodic compensation. In this case I find that Mr Abbas’ arrears payment approaching $70,000 should be categorised as one which related “exclusively to arrears of periodic compensation”.

21.     In these circumstances it could not be combined with the s 42 redemption of future liability payment to treat both payments as one.

22.     In the circumstances, Centrelink acted appropriately in raising a debt/charge against Mr Abbas’ arrears payment of periodic compensation in the sum of $17,462.54.

23.     The preclusion period from 20 April 2006 until 5 July 2006 is calculated upon Mr Abbas’ redemption payment of $15,000, and I find that it has been appropriately imposed.

24.     I next considered whether there were special circumstances which would warrant the favourable exercise of the discretion prescribed in s 1184K(1) of the Act. This section reads:

“1184K(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.”

25.     I find it likely that Mr Abbas was not provided with clear and unambiguous responses to his enquiries concerning the likely effect of the settlement of his claim for compensation.  I make this finding in the light of my observations of the way Mr Abbas provided his evidence; the reference in a document recorded on 2 March 2006 to “one document for the decision” and a reference to the Federal Court decision of Secretary, Department of Social Security v Cunneen (1997) 78 FCR 576. These comments seem to attach some significance to whether a settlement is recorded in one or more documents. By contrast, s 1171(2) refers to the nature of an arrears payment rather than to how or where the agreement to make such a payment is recorded. I accept that the request for an estimate form sent to Centrelink was incomplete. Nevertheless, I consider it likely that Centrelink substantially contributed to Mr Abbas’ misunderstanding of the way in which it would treat his compensation.

26.     In addition, I have noted Mr Abbas personal circumstances.  He appears to have received a debilitating depression injury as a result of his duties at the Baxter Detention Centre.  Both he and his wife are substantially unemployed (Mr Abbas is able to work as a casual taxi driver perhaps earning about $50 a week).  Mr Abbas’ injury has prevented him from returning to his preferred career as an interpreter.  Mr and Mrs Abbas are in an extremely difficult financial position.  Mr Abbas’ compensation monies have been spent.  Mr and Mrs Abbas owe about $180,000 on a loan secured by mortgage over their home, worth about $200,000.  This debt is repaid, from total income of about $2,420 a month, at a rate of about $1,380 a month.  This leaves approximately $1,000 a month for Mr and Mrs Abbas to repay debts to friends; credit card debts of about $6,000 and motor vehicle loans.  In addition, they must support themselves and their two children.  Another circumstance which I consider special or unusual is Mr Abbas’ expenditure of monies on his migration law study.  He explained that it was the stresses associated with the Department’s unexpected (as far as he is concerned), decision to recover nearly twice the amount it originally suggested, from his compensation monies, working upon an already significant experience of depression, which resulted in his failure to successfully complete this course.  I consider special circumstances exist such as to warrant the favourable exercise of a discretion to treat so much of Mr Abbas’ arrears payment of periodic compensation as not having been made, so as to reduce his debt to the sum which Mr Abbas originally thought would be the sum Centrelink would recover, that is $7,937.29.

I certify that the 26 preceding paragraphs are a true copy of the reasons for the decision herein of Mr J G Short (Member)

Signed:         ............J Coulthard............................................
  Associate

Date of Hearing  20 July 2007
Date of Decision  27 August 2007
Advocate for the Applicant       In person

Advoate for the Respondent     Mr C Goldsworthy

Centrelink Legal Services Branch