Adam Mosha and Secretary, Department of Education, Employment and Workplace Relations

[2013] AATA 19

[2013] AATA 19

Division	GENERAL ADMINISTRATIVE DIVISION
File Number(s)	2012/3106
Re	Adam Mosha
APPLICANT
And	Secretary, Department of Education, Employment and Workplace Relations
RESPONDENT

DECISION

Tribunal	Mr Conrad Ermert, Member
Date	17 January 2013
Place	Melbourne

The Tribunal affirms the decision under review.

[sgd]........................................................................

Member

SOCIAL SECURITY – Workplace injury – lump sum compensation payments – lump sum compensation preclusion period – whether correct amount used to calculate preclusion period – legal costs – money used for other purposes – money used to buy house – money required for rates and medication – whether special circumstances – decision affirmed.

LEGISLATION

Social Security Act 1991 ss 17(3), 1169, 1170, 1184K

CASES

Re Beadle and Director-General of Social Security (1984) 6 ALD 1

Re Fuller and Secretary, Department of Family and Community Services (2004)83 ALD 152
Groth v Secretary, Department of Social Security (1995) 40 ALD 541

Secretary, Department of Family and Community Services v Allan (2001) 116 FCR 1

REASONS FOR DECISION

Mr Conrad Ermert, Member

17 January 2013

INTRODUCTION

1. On 11 June 2004 Mr Mosha, the applicant, suffered a work place injury.  For his injuries Mr Mosha received lump sum compensation payments of $420,000 and $33,750.  Mr Mosha also received fortnightly workers’ compensation payments until 21 October 2011.  On 7 November 2011 Centrelink wrote to Mr Mosha advising him of the imposition of a lump sum preclusion period effective from 22 October 2011 to 27 January 2017.  Centrelink is the service provider for the Secretary to the Department of Education, Employment and Workplace Relations (the Secretary). 

2. On 11 April 2012 Mr Mosha lodged a claim for Newstart Allowance.  The claim was rejected by an officer of Centrelink because of the effect of the lump sum preclusion period.  On 24 April 2012 Mr Mosha requested a review of that decision.  The decision was affirmed in turn by an Authorised Review Officer of Centrelink on 1 May 2012 and the Social Security Appeals Tribunal (SSAT) on 21 June 2012. 

3. This matter is an application for review of the SSAT decision.

   THE HEARING

4. Mr Mosha attended the hearing and gave evidence (under affirmation) with the assistance of an interpreter in the Arabic language. Mr Tim de Uray, an advocate from the Centrelink Program Litigation and Review Branch, represented the Secretary. I took into evidence the documents provided pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (the T-documents).  I took into evidence also a letter from Dr Juliette Hooper dated 5 November 2012 (Exhibit A1), a prescription from Dr Vikas dated 8 November 2012 (Exhibit A2) and a lawyers’ remittance advice to Mr Mosha (Exhibit A3).

   THE LEGISLATION

5. The Social Security Act 1991 (the Act) contains the relevant legislation. Section 1169 of the Act provides that a compensation affected payment is not payable in the lump sum preclusion period to a person who receives a lump sum compensation payment. 

6. Section 17(3) of the Act provides that the compensation part of the settlement amount is taken to be 50 per cent of the payment. Section 1170 of the Act provides the formula for the calculation of the preclusion period. 

7. Section 1184K(1) of the Act provides that the Secretary may treat the whole or part of a compensation payment as not having been made, or not liable to be made, if there are special circumstances. 

   THE ISSUES

8. Mr Mosha does not dispute that he received lump sum compensation payments, nor the formula used to calculate the preclusion period.  He does question the amount of the payment used in that calculation.  Mr Mosha also contends that his circumstances are special circumstances within the meaning of the Act.

9. Accordingly, the issues to be decided are whether:

   ·the correct amount has been applied in calculating the lump sum preclusion period; and

   ·there are special circumstances to treat the whole or part of the compensation payment as not having been made.

   THE EVIDENCE

10. Mr Mosha acknowledged that he received the Centrelink letter about his ineligibility for benefits but thought that it related only to money in the bank.  He thought it would be alright if he bought a house. 

11. In regard to his payments, Mr Mosha said that he did not receive $453,750.  He said that legal fees had been taken out before the payments were made.  He believed the calculation of the preclusion period should have been made on the amount he actually received.

12. In answer to questions from Mr de Uray, Mr Mosha said:

    ·he owned and drove a car;

    ·his account with the Commonwealth Bank is linked to his home loan which allows him to draw down money when he needs it;

    ·between 2005 and 2012 he borrowed $37,000 from friends;

    ·his friends started to charge him interest when he received his lump sum payment so he repaid their money from the lump sum payment;

    ·in 2005 he started gambling at the Casino but does not know how much money he lost;

    ·from his lump sum payment he has sent $10,000 overseas as an obligation to support his mother who is elderly;

    ·in April 2012 he bought a four-bedroom house for $450,000, of which he paid $360,000 from his lump sum payment;

    ·a real estate agent’s estimate of the current value of the house is $395,000 after the payment of stamp duties; and

    ·he currently owes the bank about $110,000.

13. Mr Mosha said that he received the letter from Centrelink (T20, page 99) advising him of the preclusion period that would apply until 27 January 2017.  He said that lawyers advised him to do something with the money, to buy a house or something like that.  A real estate agent advised him that it was better to buy a new house than an old one. 

14. In his submissions, Mr Mosha stated that the medications for his medical condition are very expensive.  He said he cannot work, council rates are expensive and since April he has had to borrow $16,000 from the bank.  Mr Mosha said that his interest payments are accumulating and without help, the house he bought will become the property of the bank. 

15. Mr Mosha explained that his gambling was a psychological situation.  One reason for buying the house was to force him to pay his money to the bank and to stop gambling.  He said that buying the house is a sign that he wants to help himself.

16. Mr Mosha does not want to sell his house because he would lose money on the sale and he cannot afford to lose more money.  He said he was obliged to send money to his mother in Iraq.  The money was used mostly for medical treatment and not for entertainment. 

17. He concluded by saying that he is not a person who relies on Centrelink.  The only thing he owns is his house and he is in need of help.

18. Mr de Uray submitted that there is no dispute with the material facts and that the primary issue is whether special circumstances apply in this case.  He submitted that the purpose of the legislative scheme is to ensure that a person who receives compensation for an injury does not ‘double dip’ and receive benefits from the public purse in respect of the same period of time.  In support of that point he referred to the judgement of Heerey J in Secretary, Department of Family and Community Services v Allan (2001) 116 FCR 1.  He submitted further that public money should not be used to give gain to social security recipients and cited the decision in Re Lintern and Secretary, Department of Social Security(AAT 8479, 14 January 1993). 

19. In regard to financial hardship, Mr de Uray submitted that, alone, financial hardship is not sufficient to amount to special circumstances and cited the decision in Re Colaiacolo and Secretary to the Department of Social Security (AAT 2109, 24 April 1985).  In regard to Mr Mosha’s financial situation, Mr de Uray noted that Mr Mosha:

    ·has a draw-down facility on his house which he can access;

    ·has sent money overseas;

    ·has indulged in reckless spending, in particular, gambling;

    ·bought a $450,000 house and not one at the lower end of the market; and

    ·still has the option of selling the house and would not suffer a serious loss from the sale.

20. Mr de Uray contended that there were no special circumstances in this case and asked the Tribunal to affirm the decision under review.

    CONSIDERATION

    Has the correct amount been applied to the calculation of the preclusion period?

21. Subsection 17(3) of the Act provides that if a compensation payment has been settled, the compensation part of a lump sum compensation payment is 50 per cent of the payment.  There is no provision to reduce this amount by subtracting legal fees.  In this case, there is no dispute that the compensation payments were settled and that the amounts were $33,750 made on 9 September 2008 and $420,000 made on 23 September 2011, a total of $453,750.

22. I note the decision of Downes J in Re Fuller and Secretary, Department of Family and Community Services (2004)83 ALD 152 in which he distinguished between settlements inclusive of costs (as is the case here) and those excluding costs. Where costs are inclusive of the compensation amount, the total amount is used to calculate the preclusion period.

23. In this case the total of $453,750 includes the legal costs and in accordance with the decision in Fuller is the correct figure for the calculation of the preclusion period.  Fifty per cent of the total is $226,875 which is the amount used by Centrelink to calculate the duration of the preclusion period.  Accordingly, I find that the correct amount of payment has been applied to the calculation of the preclusion period.

    Are there special circumstances in this case?

24. The term ‘special circumstances’ is not defined in the Act but has been extensively examined in the Tribunal and the Federal Court.  In Re Beadle and Director-General of Social Security (1984) 6 ALD 1, Toohey J stated at 3:

    An expression such as ‘special circumstances’ is by its very nature incapable of precise or exhaustive definition.  The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional.  Whether circumstances answer any of these descriptions must depend on the context in which they occur.  For it is the context which allows one to say that the circumstances in one case is 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.

25. In this case Mr Mosha contends that his financial situation should be considered a special circumstance.  He says that after paying his mortgage and his council rates he does not have enough money to buy the medications he needs for his legs and back conditions. 

26. The purpose of the compensation payments was, in part, to provide for living expenses in lieu of Mr Mosha’s previous wages.  Mr Mosha, however, chose to use that money for other purposes.  Mr Mosha testified that he spent an unknown amount of money on gambling and $37,000 on the repayment of personal debts.  He also sent $10,000 overseas to support his mother.  Mr Mosha also spent $370,000 of his lump sum payment buying a house.  In doing so, he left himself with insufficient available cash to meet his ongoing expenses.

27. A solution to Mr Mosha’s cash problem is clearly available to him.  Mr Mosha’s house has a current value of about $395,000 and his outstanding mortgage is about $110,000.  Mr Mosha’s equity in the house is approximately $285,000.  However, unpalatable it may be, Mr Mosha can sell his house, find cheaper accommodation and use the balance of the proceeds of the sale to meet his living costs.  I am satisfied that Mr Mosha is not in straitened financial circumstances and that his circumstances are not unusual, uncommon or exceptional nor do they have a particular quality of unusualness that permits them to be described as special (Re Beadle).

28. In regard to Mr Mosha’s medication expenses, I note that he was paid the lump sum payment as compensation in part for the expenses related to his medical condition.  In Secretary, Department of Family and Community Services v Allan (2001) 116 FCR 1 Heerey J stated at 2: The basic policy, understandably enough, is that there should not be “double dipping” in that people should not receive social security payments where they have received compensation from another source.  In this case, Mr Mosha has already received payment for his medications to last him at least for the duration of the compensation preclusion period. 

29. In Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545, Kiefel J of the Federal Court stated:

    …it is sufficient to observe that it would require something to distinguish Mr Groth's case from others, to take it out of the usual or ordinary case. ... It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.

30. After considering Mr Mosha’s circumstances and applying the test in Groth, I am satisfied that there is nothing unfair, unintended or unjust in the application of the preclusion period to an applicant in his circumstances.

31. Accordingly, I am satisfied that Mr Mosha’s financial situation is not a special circumstance calling for the exercise of the discretion in s 1184K(1) to treat the whole or part of the lump sum payment as not having been made.

32. As I have found that the correct sum of money was used to calculate the preclusion period and that Mr Mosha’s circumstances are not special circumstances, I find that the preclusion period has been correctly applied in this case and I affirm the decision under review.

I certify that the preceding 32 (thirty‑two) paragraphs are a true copy of the reasons for the decision herein of Mr Conrad Ermert, Member

[sgd]........................................................................

Associate

Dated  17 January 2013

Date of hearing	30 November 2012
Applicant	In person
Advocate for the Respondent	Mr Tim de Uray
Solicitors for the Respondent	Centrelink Program Litigation and Review Branch