Ahmad Taleb and Secretary, Department of Social Services
[2014] AATA 657
•10 September 2014
[2014] AATA 657
Division GENERAL ADMINISTRATIVE DIVISION File Number
2014/1188
Re
Ahmad Taleb
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Mr P Taylor SC, Senior Member
Date 10 September 2014 Place Sydney The decision under review is varied so as to determine that the payments Mr Taleb received in July 2009, October 2010 and October 2011 should be treated, for the purposes of Part 3.14 of the SSA 1991, as not having been made.
Mr Taleb’s newstart application is refused, but his preclusion period ends on 26 April 2017, rather than 27 September 2017.
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Mr P Taylor SC, Senior Member
CATCHWORDS
SOCIAL SECURITY – Compensation preclusion period – Lump sum preclusion period – Whether special circumstances exist – Ongoing expenses – Whether discretion should be exercised to treat compensation payment as not being made — decision under review varied
LEGISLATION
Social Security Act 1991 (Cth) ss 17, 23, 1064, 1169, 1170, 1171, 1184, 1184K
CASES
Secretary to Department of Family and Community Services v Allan [2001] FCA 1160
Secretary, Department of Social Security v Banks (1990) 23 FCR 416
Re Beadle and the Director-General of Social Security (1984) 6 ALD 1
Dranichnikov v Centrelink [2003] FCAFC 133
Groth & Department of Social Security (1995) 37 ALD 797
Re Ivovic and Director-General of Social Services (1981) 3 ALN N95
Re Krzywak and Secretary, Department of Social Security (1988) 15 ALD 690
(1985) 60 ALR 225
Lukic v Secretary, Department of Social Security [1991] AATA 111
Secretary, Department of Family and Community Services v Mahfouz [2003] AATA 1196; 78 ALD 613
Re Secretary, Department of Family and Community Services v Marmont [2001] AATA 908; (2001) 66 ALD 635
Manafikhi v Secretary, Department of Employment and Workplace Relations [2007] AATA 1529
Re Mourtitzikoglou and Secretary, Department of Social Security (1991) 23 ALD 249
Rice v Secretary, Department of Employment and Workplace Relations [2006] AATA 757
Re Secretary, Department of Family and Community Services and Szoke [2001] AATA 353
Re White and Secretary, Department of Social Security [1994] AATA 308
Re Secretary Department of Social Security and Winterbotham [1990] AATA 88Re Zaccardi and Secretary, Department of Social Security (1995) 40 ALD 760
REASONS FOR DECISION
Mr P Taylor SC, Senior Member
10 September 2014
Mr Taleb disputes a Centrelink decision (affirmed by the Social Security Appeals Tribunal in February 2014) to refuse his newstart allowance application. Centrelink reused the application because Mr Taleb is subject to a “lump sum preclusion period”. Newstart allowance is one of many categories of social security pensions, payments and benefits that is not payable during a “lump sum preclusion period”: see Social Security Act 1991 (“the SSA 1991”) ss 17(1), 1169 & 1170.
Mr Taleb worked as a mechanic until January 2007. Then, as a result of work related injuries, he became incapacitated. In March 2007 he began to receive weekly workers compensation payments. Apart from a brief period between May and August 2007, he has not been able to return to work. His weekly compensation payments continued after August 2007 until the end of May 2013. At that time they were in the order of $600 per week, after tax. Prior to May 2013 Mr Taleb had also received additional payments for impairment related to his workplace injuries. Those additional payments occurred in July 2009, October 2010 and October 2011.
Mr Taleb’s weekly compensation payments ended because of a 23 May 2013 Deed he entered into with his former employer and the employer’s workers compensation insurer. The Deed settled Mr Taleb’s work injury damages claim against his employer. It provided for him to be paid $360,000. That amount was in addition to the compensation payments he had already received, but without any contribution to his legal costs. Those costs, perhaps with other liabilities he had, appear to have been substantial. The actual payment that Mr Taleb actually received as a result of the settlement Deed was only some $294,000.
Correspondence from Mr Taleb’s former solicitors described the $360,000 settlement amount as wholly related to lost earnings and lost capacity to earn. That description is inherently surprising, and is of doubtful accuracy. The impairment related payments made to Mr Taleb between 2009 and 2011, suggest that he had some element of permanent disability associated with his injuries. In the ordinary course of events, any common law damages to which he was entitled would have included a substantial component of general damages for pain and suffering, in addition to damages for loss of earnings and loss of earning capacity.
It was because of the May 2013 Deed, and the earlier impairment compensation payments, that Centrelink decided Mr Taleb was subject to a four year “lump sum preclusion period”. That period started on 30 May 2013 and expires on 27 September 2017.
THE “PRECLUSION PERIOD” PROVISIONS
The SSA 1991 describes the various kinds of pensions, payments and allowances that are “compensation affected payments” and whose otherwise eligible recipients may be subject to a “lump sum preclusion period”. As I have already said, the category of “compensation affected payments” includes newstart allowance. It also includes a disability support pension: see the SSA 1991 ss 17(1) & 23.
A lump sum payment relating to a claim for damages or workers compensation gives rise to a lump sum preclusion period if it is made “in respect of” lost earnings or lost earning capacity: the SSA 1991 s 17(2). All lump sum payments a person receives in relation to the same matter are effectively characterised as being “in respect of” lost earnings or lost earning capacity, if any of the individual payments merits that characterisation: the SSA 1991 s 1171(1).
If a person has not been receiving periodic compensation payments, their lump sum preclusion period starts when their loss of earnings, or loss of earning capacity, started. If a person has been receiving periodic compensation payments, the preclusion period starts the day after the last payment period: the SSA 1991 s 1170(1)-(3).
The length of any preclusion period depends, in general terms, on the amount of the payments a person receives, and on the total of various rates and limits (the “income cut out amount”) specified in the tables in SSA 1991 s 1064: the SSA 1991 s 17(8). The length of a preclusion period is expressed in weeks. The number of weeks involved is the (rounded down) numerical value of the quotient obtained from division of the relevant compensation or damages amount by the “income cut out amount”: the SSA 1991 s 1170(4).
The part of a lump sum compensation or damages payment that is relevant to the calculation of a “lump sum preclusion period” is described as the “compensation part of a lump sum compensation payment”: SSA 1991 s 17(3). The actual amount of the “compensation part” depends upon whether the payment results from an adjudicated judgment or a consensual settlement. In the case of an adjudicated judgment the “compensation part” is whatever amount the Secretary considers was paid “in respect of” past lost earnings and lost future earning capacity: see SSA 1991 17(3)(b). In the case of a consensual settlement (which includes a consent judgment) the compensation part is 50% of the total compensation payments: see SSA 1991 17(3)(a).
The distinction between adjudicated judgments and settlements involves an arbitrary categorisation. The legislative history explains the reason for the categorisation.
In Secretary, Department of Social Security v Banks (1990) 23 FCR 416 von Doussa J discussed the corresponding provisions of the Social Security Act 1947. His Honour identified the 1988 amendments to s 152(2)(c) of the 1947 Act as the origin of what is now the "compensation part" definition in SSA 1991 s 17(3)(a). His Honour described the purpose of the amendments as being to overcome the administrative difficulties encountered under the earlier provisions. Those earlier provisions required the Secretary to form an opinion about the work incapacity component of settlements. The Minister's second reading speech for the 1988 amendments referred to the experience that settlements were being manipulated, particularly in workers compensation matters, to obscure the work incapacity component of lump sum compensation payments. Von Doussa J said the new provision was intended to overcome the mischief caused by these kinds of activities. His Honour observed, at [424]:
The wide language [of wording similar to that now contained in SSA 1991 s 17(3)(a)]… is a recognition by Parliament that unless every component part of a lump sum payment made in settlement of a claim which has the prescribed characteristics is brought to account the mischief to which [it] is directed will not be remedied. The scope for manipulation by inflating some heads of loss and diminishing or excluding others, without altering the total amount of the lump sum, would otherwise remain. The prescribed percentage (50 per cent) of the lump sum payment made in settlement of a claim which … is deemed to be the "compensation part of a lump sum payment by way of compensation" should be viewed as a broad attempt to balance the interests of the recipient of the payment with the competing interests of others in the community whose needs must be met as far as possible from a finite budget allocation for social security measures. The paragraph seeks to eliminate double dipping in a practical way which operates effectively in a straightforward manner. In the very nature of an arbitrary provision, sub-para (i) could possibly entail a degree of unfairness in a particular case …
In Secretary to Department of Family and Community Services v Allan [2001] FCA 1160 Heerey J repeated the view that the policy underlying the preclusion period provisions was to avoid “double dipping”.
The element of unfairness to which Von Doussa J alluded in Banks could arise in situations where a person’s settlement amount was inclusive of costs and where it provided compensation for matters other than lost earnings or loss of earning capacity. The apparent unfairness could be significant where an applicant’s costs accounted for a large proportion of the settlement amount, or where an applicant’s loss of earning or loss of earning capacity reflected only a small proportion of their total claim.
In the present case, however, the arbitrary 50% “compensation part” of the $360,000 Deed amount appears likely to have favoured Mr Taleb. This would be the case if, despite the doubt I expressed earlier, his former solicitors are correct in describing the May 2013 settlement amount as entirely related to lost earnings and loss of earning capacity: see paragraph 4 above.
CENTRELINK’S DETERMINATION OF MR TALEB’S PRECLUSION PERIOD
Centrelink notified Mr Taleb of its preclusion period decision in a letter dated 30 May 2013. The parameters Centrelink applied in making its decision, and the result of its application of the various legislative provisions, is summarised in the following tables.
Taleb compensation payments Date (or Description) Value Explanation 31-July-2009 $8,250.00 Impairment payment – SSA 1991 s 1171(1) 26-October-2010 $10,611.56 Impairment payment – SSA 1991 s 1171(1) 26-October-2010 $13,500.00 Impairment payment – SSA 1991 s 1171(1) 25-October-2011 $5,305.79 Pain and suffering – SSA 1991 s 1171(1) 25-October-2011 $2,694.21 Pain and suffering – SSA 1991 s 1171(1) $40,361.56 Total impairment related payments 23-May-2013 $360,000.00 Common law damages $400,361.56 Total compensation Preclusion Period determination Date (or Description) Value Explanation Total compensation $400,361.56 Damages & impairment payments Compensation part $200,180.78 50% of total payments – SSA 1991 s 171(3)(a) Income cut out amount $884.40 Social Security Act – ss 17(8) Preclusion period (weeks) 226 Compensation part / income cut out – SSA 1991 s 1170(4) 29-May-2013 Last periodic compensation payment 30-May-2013 Start: Preclusion period 27-September-2017 End: Preclusion period
As can be seen from the tables, the $400,361 compensation total includes the impairment related payments of $40,361. Those payments do not involve any compensation for loss of earnings or loss of capacity. They are taken into account in the “preclusion period” calculation only because of the May 2013 Deed, and the statutory “deeming” required by SSA 1991 s 1171(1): see paragraph 6 above.
MR TALEB’S NEWSTART AND DISABILITY SUPPORT PENSION APPLICATIONS
Mr Taleb cannot read English. It is unsurprising, therefore, that the significance of Centrelink’s 30 May 2013 letter appears to have eluded him. On 24 September 2013 Mr Taleb enquired about applying for a disability support pension. He completed the necessary application on about 9 October 2013. On 23 October 2013 Centrelink rejected that application, apparently because Mr Taleb failed to establish the threshold point score required under the relevant impairment tables. Mr Taleb then applied for newstart allowance. Centrelink rejected that application on the basis that Mr Taleb was subject to a preclusion period until 28 September 2017. The Social Security Appeals Tribunal’s 3 February 2014 decision upheld Centrelink’s decision to refuse Mr Taleb’s application for newstart allowance.
But for the preclusion period Mr Taleb would potentially have been entitled to receive newstart allowance as a single parent with dependent children. The current future effect of the preclusion period is that Mr Taleb will not be paid an amount approximating $78,000 (ie 3 years from September 2013 at a rate of about $550 per fortnight).
MR TALEB’S REVIEW APPLICATION
Mr Taleb challenges the SSAT decision to refuse his newstart allowance application. The substance of his challenge is that the refusal decision operates harshly, in his personal circumstances. He says the Secretary should have exercised the discretion conferred by the SSA 1991 s 1184K(1). The exercise of that discretion is contingent only on satisfaction that “special circumstances” apply. The discretion itself is to “treat the whole or part of a compensation payment as … not having been made”. The practical effect of the exercise of the discretion is to reduce, and potentially eliminate, the preclusion period that would otherwise apply.
THE MATTERS RELIED ON A “SPECIAL CIRCUMSTANCES”
There are four principally relevant aspects to Mr Taleb’s position. First he disputes the payment amount used to calculate the preclusion period. Second, he highlights his parental responsibilities, and limited financial circumstances. Third, he says he no longer has access to the May 2013 settlement monies. Fourth he says the whole amount relied on by Centrelink should not have used to calculate the preclusion period.
THE “COMPENSATION” AMOUNT
Mr Taleb says he only actually received $294,000 of the $360,000 payment contemplated by the 23 May 2013 settlement deed. The difference between the two amounts has not been established. It likely relates to compulsory reductions from his compensation (for example in repayment of Medicare expenses) and payment of the costs of the common law damages claim. Expenses of those kinds are inevitable, and must ordinarily be regarded as amounts that the arbitrary 50% “compensation part” formula contemplates should be discharged by the compensated person. They could not ordinarily, and do not in the present case, provide a basis for the exercise of the “special circumstances” discretion.
FINANCIAL CIRCUMSTANCES AND PARENTAL RESPONSIBIITIES
Mr Taleb’s financial circumstances are limited principally because he is not able to work, and his weekly workers compensation payments stopped as a result of the 23 May 2013 Deed. He is divorced, has no assets other than his home and household effects, and he has six children to look after.
Mr Taleb separated from his wife in June 2012. They formally divorced in April 2013. He says this came about after a long period of financial difficulty. He attributes much of that difficulty to conduct which he perceives as his former wife’s reckless or irresponsible behaviour. Whether or not his perception is justified, the fact is that in early January 2013 Mr Taleb and his then wife made a formal agreement resolving their respective financial entitlements and agreeing to the division of responsibility for their children’s welfare. That agreement was presented to Centrelink’s Fairfield office on 4 January 2013.
A single page annexure to the 4 January 2013 financial agreement recorded Mr and Mrs Taleb’s respective assets and liabilities. In relation to assets, the single page annexure recorded only some household furniture and the family home at Villawood. Mr Taleb reported to Centrelink in November 2013 that he had bought the house for $197,000 in 1999. The January 2013 agreement recorded it at an “agreed estimated value” of $300,000. For the purposes of the present proceedings the parties agreed that its current relevant value was in fact about $385,000.
The 4 January 2013 agreement annexure also recorded the Taleb household liabilities. The only significant liability, with an “agreed estimated value” of $30,000, was a “personal loan to (sic) Mustafa Mustafa”. There were also telephone and utility bills totalling $4,000. The total net assets, as recorded in the agreement, were $271,000.
The broad effect of the 4 January 2013 financial agreement was that Mrs Taleb was to receive only a modest payment of $20,000. She agreed to transfer to Mr Taleb her interest in the family home at Villawood, subject to him assuming all liability for “all payments for the mortgage debt secured over the property”. The annexure to the financial agreement contained no details of any such mortgage.
On 31 January 2013 Mr Taleb and his wife signed an application for consent orders relating to their matrimonial affairs. Those orders were made on 11 February 2013. The application included another statement about the details of Mr and Mrs Taleb’s assets, and their agreement about their division. The 31 January 2013 application details again showed that the Villawood house was the only significant asset, and retained the agreed value of $300,000. But the liabilities shown in the 31 January 2013 document were significantly increased. The previously identified $30,000 “personal loan to Mustafa Mustafa” was no longer included. Instead there was a $200,000 liability that was described as “Home mortgage – unsecured debt owed to Mustapha El Mustapha”.
Under the 4 January 2013 agreement, and the 31 January 2013 application for consent orders, Mr Taleb obtained the custody of their four minor children. He says that he is in fact responsible for all six of the children.
The eldest child is a son aged about 23. He is a fourth year medical science student at the University of Western Sydney. He receives a Centrelink study allowance, spends a substantial part of his time at Mr Taleb’s home and a good deal of time also living at a friend’s house, where he does not pay rent. Mr Taleb’s son does make some contribution to Mr Taleb’s household expenses.
Mr Taleb’s eldest daughter is aged 19. She is hoping to start work at Westmead Hospital and study at TAFE. She is currently receiving newstart allowance. She lives at home and contributes what she can to help with the household expenses.
Mr Taleb’s second son is in year 12. He is a good student. He hopes to enter university and undertake a course in construction management. Mr Taleb expects him to be successful in entering university. This young man has had some difficulties with his hips. Two years ago he had an operation on one hip. More recently he started to get pain in his other hip. He has been referred to a specialist for further investigations.
Mr Taleb has three younger daughters. The eldest of them is 15 and in year 9 at school. She too is a good student and currently hopes to be a nurse. But Mr Taleb fears she may have some difficulty in fulfilling that ambition. She has had various operations on both knees. The most recent of these operations was in December 2012. She used crutches for a time. She is now back at school and does not use crutches at school. But her legs can get tired and sore at night and she sometimes uses a walking stick at home. There has been a suggestion that she may need a further operation, but her doctors have decided that, at least for the time being, the preferable course is merely to monitor her progress. Mr Taleb, with understandable parental concern, is apprehensive about what the future holds for his daughter.
Mr Taleb’s 10 year old daughter is in good health and no cause of concern to him. But his youngest daughter suffered an eye injury when she was quite young. It has caused some continuing difficulties with the sight of one eye. For some time now she has been wearing an eye patch over one eye, to encourage her effective use of her injured eye. Periodically she has to go to Westmead Hospital to monitor her progress. Mr Taleb is worried about the extent to which her eye will fully recover, and about what further treatment she may need.
Mr Taleb said that, since the 4 January 2013 agreement, and the subsequent divorce in April 2013, he has incurred further debts. He says he now owes Mr Mustapha $50,000. The increase in the amount is because Mr Taleb borrowed from him the $20,000 he had to pay his wife under the January 2013 agreement. He also borrowed money (about $7,000) from some former work colleagues, shortly after the divorce. He also borrowed $5,000 from another friend about two months after the divorce. He owes small amounts to some of the local shop owners. The combined effect of these events is that since early 2013 Mr Taleb’s liabilities have increased by about $42,000 (ie $50,000 – $20,000 + $7,000 + $5,000).
Mr Taleb complains that he does not have enough to support himself and his children. His only current income is a family tax benefit approximating $1,000 per fortnight. In contrast, in August 2014 Australian pre-tax full time average adult total weekly earnings approximate $1,500. That corresponds to a fortnightly income of about $3,000 gross (or about $2,300 after tax). In those circumstances, Mr Taleb’s current income is much less than current average weekly earnings, and can only be described as modest. It would still be modest even if Mr Taleb was entitled to newstart allowance at the $550 per fortnight rate to which I referred in paragraph 19 above. There can be no doubt that Mr Taleb’s parental responsibilities to his children, and his desire to do his best to meet their various needs, are frustrated by his modest income and limited financial means.
Mr Taleb’s subjective disappointment about that reality is no doubt profound, and a source of real anxiety for him. I do not, in any sense, downplay either the objective significance of his financial situation or the subjective anxiety to which it exposes him. But the income disparity upon which I have remarked is simply the inescapable reality of comparison between general wage levels and the legislatively determined levels of relevant social security entitlements. Such a disparity cannot readily provide a basis for satisfaction about the existence of special circumstances. And I do not discern from the details Mr Taleb provided about his family situation and his children’s needs, circumstances that involve particular hardships or difficulties – beyond those that might be regarded as likely to arise in connection with, or as a consequence of his limited financial means. In making that observation I bear in mind the underlying context that applicants for newstart allowance are inherently likely to be in straightened financial circumstances, and that the preclusion period provisions are nevertheless ordinarily intended to apply to any relevant lump sum payment that such a person receives.
In order to distinguish between the kinds of financial hardship likely to be commonly associated with the operation of the preclusion period provisions, and circumstances that can properly be characterised as “special”, so as to permit the exercise of the statutory discretion, it is sometimes said that the particular applicant’s circumstances must be exceptional: see Re Krzywak and Secretary, Department of Social Security (1988) 15 ALD 690 and Re Zaccardi and Secretary, Department of Social Security (1995) 40 ALD 760. Such an exegesis on the statutory criterion can be a useful way of emphasising that the statutory provisions are inherently likely to involve some degree of hardship. But the actual statutory criterion is only “special circumstances”, and the emphasis involved in the commonly used emphasis does not impose any higher standard than those words require.
In Re Beadle and the Director-General of Social Security (1984) 6 ALD 1 the first instance decision in the Federal Court said that " … ‘special circumstance’ is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional." In the subsequent appeal [(1985) 60 ALR 225], the Full Federal Court said that
… special circumstances must include events which would render [a happening or eventuality] … unfair or inappropriate … We did not think it is possible to lay down precise limits or precise rules … The phrase ’special circumstances’ although lacking precision, is sufficiently understood in our view not to require judicial gloss.
Subsequently, in Groth & Department of Social Security (1995) 37 ALD 797 it was said that “special circumstances”
… would require something to distinguish … [the] 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.
In Dranichnikov v Centrelink [2003] FCAFC 133 at [65], the Full Federal Court had this to say about the suggestion that “special circumstances” required something that was “unusual, uncommon or exceptional”:
The Full court in Beadle comprising Bowen CJ, Fisher and Lockhart JJ, however, was of the view that it was not possible to lay down precise rules as to what constituted special circumstances under the then s 102(1)(a) of the Social Security Act 1947 (Cth). Their Honours point out that the question whether there were special circumstances was one for the decision maker … bearing in mind the purpose for which the power was given. The reference to the first instance decision from which the words “unusual, uncommon or exceptional” come was not actually affirmed by the Full Court.
Subsequently, in Rice v Secretary, Department of Employment and Workplace Relations [2006] AATA 757 at [36] & [37] the Tribunal discussed the differences in these various attempts to elucidate the concept of “special circumstances”. That instructive discussion was in the following terms:
[36] The explanation of the “unusual, uncommon or exceptional” trilogy made by the Full court of the Federal Court in Dranichnikov v Centrelink does not appear to have affected or limited the use of this particular trilogy by this Tribunal (see for example, Secretary, Department of Family and Community Services and Danielsen-Jensen [2004] AATA 1319 and Secretary, Department of Family and Community Services and SRKKKK [2005] AATA 480) and by the Federal Court (see Ubachs v Secretary of the Department of Family & Community Services [2004] FCA 310 and Jazazievska v Secretary Department of Family & Community Services [2000] FCA 1484). The Groth formula (which has also enjoyed wide citation in income support law: see Secretary, Department of Employment and Workplace Relations and Carabott [2006] AATA 79; McAliney and Secretary, Department of Family and Community Services [2005] AATA 96 and Strang and Secretary, Department of Employment and Workplace Relations [2006] AATA 51), with respect, should also be seen as an attempt to paraphrase "special circumstances". This Tribunal is of the view that these paraphrases cannot supplant the statutory language, while at the same time recognising that these paraphrases elucidate the meaning of the statutory language.
[37] The clear thrust of some of the authorities discussed above (see in particular Dranichnikov v Centrelink [2003] FCAFC 133 and Ryde v Secretary, Department of Family and Community Services) is that "special circumstances" should not be interpreted according to synonyms (and in particular not confined by these). The Tribunal considers that the clear and ordinary meaning of the words "special circumstances" is the meaning that should be assigned to them. The Tribunal also considered that it is important not to approach "special circumstances" against an a priori set of established factual circumstances or recurring factual patterns which have been recognised in the authorities as supporting or generating special circumstances, or which in fact exclude special circumstances (compare Dranichnikov v Centrelink [2003] FCAFC 133 at [67] and Green and Secretary, Department of Social Security (1990) 21 ALD 772). Accordingly, for any adjudicator to state or conclude that special circumstances precludes the exercise of a power and discretion under s 1184K simply because the circumstances of an income support recipient are commonplace is to misconceive and misapply the provision.
The premise on which the preclusion period provisions apply is the receipt of relevant compensation. The “special circumstances” criterion therefore needs to be assessed in the light not only of an applicant’s financial needs, but also with regard to the amount of the compensation they have received. This is evident in the concern, that Von Doussa J attributed to “preclusion period” provisions in Secretary, Department of Social Security v Banks (1990) 23 FCR 416, against “double dipping” in relation to income assistance and compensation entitlements. In Rice v Secretary, Department of Employment and Workplace Relations [2006] AATA 757 at [19] the Tribunal appeared to endorse a contention that the intention underlying the SSA 1991 lump sum preclusion period provisions was that “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”. At [2006] AATA 757 [19] the Tribunal also appeared to endorse the related proposition that 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 Tribunal went on to refer to the observation of DP Burns (in Re Secretary Department of Social Security and Winterbotham [1990] AATA 808) that the legislative provisions were
aimed specifically at preventing those people receiving compensation for loss of income because of incapacity for work, from being able also to receive benefit from the public purse … Primary responsibility for the payment of such compensation lies at the feet of those responsible for the compensable injury. Once that responsibility has been met, by way of a settlement sum agreed to by both parties, it is inequitable for the recipient to seek supplementary funds from the tax-payer.
However, the concern against “double dipping” exists against the background of an assumption that the compensated person has a real practical ability to utilise the “compensation part” of their lump sum payment, as a reservoir into which they can “dip” and, perhaps, other assets into which they can reasonably be expected to “dip”, in order to meet their day to day living expenses, before receiving taxpayer funded assistance. Consistent with that assumption, in the present matter Centrelink’s 25 November 2013 letter notifying Mr Taleb of its decision not to waive the preclusion period, and consequently refuse his newstart application, noted that “special circumstances” would not be regarded as applying “where the person concerned has sufficient liquid assets to support themselves, and their family, for the duration of the preclusion period”.
DISPOSAL OF THE MAY 2013 SETTLEMENT MONIES
The Centrelink decision essentially reflected the view that Mr Taleb could reasonably have been expected to use a substantial proportion of his 2013 settlement payment to draw against for his expenses during the ordinary preclusion period. The real thrust of Mr Taleb’s complaint about the refusal of his newstart allowance application is that he does not have any part of the compensation payments he received. His argument is that the “double dipping” concern identified in Secretary, Department of Social Security v Banks (1990) 23 FCR 416 does not relevantly apply to his particular circumstances.
Mr Taleb says that he used the $294,000 compensation amount that he actually received, as well as some additional compensation he and one of his daughters received in relation to a motor vehicle accident, to repay a long outstanding loan. In September 2013 he paid $306,000 by way of a bank transfer to his brother’s bank account in Lebanon. He says that this transfer was to repay money his brother had arranged to borrow in 1999 to allow him to purchase the Villawood house. He says that he had been in default of his loan obligations since about the time of his work place injury in 2007. The September 2013 repayment was one he says he had to make, and was in no sense a merely voluntary payment.
THE ASSERTED MUSTAFA “LOAN” & REPAYMENT
Mr Taleb said that in 1999 he had been living in rented accommodation and had been forced to move to different accommodation on several occasions. In order to get some stability for the family (which then included his wife and four children) he wanted to buy his own house, but he could not get a bank loan. His friend, the Mustafa Mustafa referred to above (in paragraphs 26 and 35) told him that his sister could be willing to lend the money. Mustafa suggested that Mr Taleb have his brother in Lebanon contact his sister and arrange the loan.
Mr Taleb said he spoke to his brother in 1999 about the proposed loan. He explained to his brother that could only afford to pay interest on the loan, and would only be able to repay the principal by selling the house. Mr Taleb said his brother told him he had discussed this with the lender. She was, nevertheless, prepared to go ahead with the loan on that basis. Mr Taleb said he obtained the loan funds about 3 months before he bought the Villawood house in 1999. After that, up until early 2007, he paid interest on the loan at a rate of $1,260 a month. He made these payments, as and when he could, usually by giving money to a friend or an associate to take back to Lebanon. Although these payments were somewhat irregular in their timing, up until about January 2007 he had paid the full amount of the agreed interest. He had not made, nor was he ever asked to make, any repayments of the loan principal.
Neither Mr Taleb’s brother nor Mr Mustapha, gave evidence in the review proceedings. But Mr Taleb provided two Arabic documents he said supported his account of the loan arrangement. Mr Taleb provided these documents in response to observations by the Centrelink review officer in November 2013 that he needed to provide evidence to support the loan, and especially the details of the repayment. Mr Taleb said his brother in Lebanon had sent these two documents to him in early 2014. At least one of them was provided to the SSAT in February 2014.
The first of the Arabic text documents is dated 25 June 1999. It is signed by Mr Taleb’s brother, Mohamad. It recites Mr Taleb’s desire to buy a house in Australia and purports to record a US$200,000 loan from a Mrs Souad Mustafa. The loan is said to be repayable over 7 years by 84 monthly instalments, with monthly interest of $1,260. At the end of the document Mohamad Taleb promises to repay the loan amount, if Ahmad Taleb does not. The document goes on to record Mohamad Taleb’s agreement to having his salary seized in order to repay the loan amount.
The second Arabic document is undated. It describes a loan made to Mr Taleb in June 1999. The loan was for US$200,000, repayable by 84 repayment instalments and bearing interest at a rate of AUD1,260 a month. The loan principal is said to have been sent by bank transfer from the bank account of Mr Taleb’s brother Mohamad. The document is signed by Souad Hasan Mustafa. The third paragraph of the document records a repayment of AUD306,000 by bank transfer on 25 September 2013. This payment is said to have been collected by Mr Taleb’s brother Omar.
At the hearing of the review proceedings the parties agreed on the applicable USD/AUD exchange rates in June 1999 and September 2013. That agreement is recorded in the Table below. The Table sets out the effect of the transactions in those two months, quantifies the amounts involved in the 84 principal instalments required in the Arabic documents, and also the total interest payable in the 6 year period after 2007. That interest amount is set out because Mr Taleb said that he made no interest payments at all during that period.
Date USD USD/AUD AUD Principal amount 25-Jun-99 200,000 0.6595 303,260 25-Sep-13 287,365 0.9381 306,000 Monthly principal instalments (No: 84) Amount 2,381 3,610 Interest due – September 2007 to 2013 Per annum 1260 Total (6 x pa) 85,195 0.9391 90,720
The SSAT in its 10 February 2013 reasons for decision was not satisfied Mr Taleb had satisfactorily explained the basis for the total repayment amount of AUD306,000. That criticism is correct in the sense that Mr Taleb did not at any stage produce any kind of calculation. He said that he was simply told what was required to repay the loan amount and the outstanding interest. However, if the loan obligations recorded in the Arabic documents are taken at face value, and account is taken of the relevant exchange rates in 1999 and 2013, a broad consistency can be discerned. It can be seen from the Table set out above that the AU$306,000 amount converts to a repayment of about US$287,365, and roughly corresponds with repayment of the original US$200,000 principal plus US$85,195. That amount reflects about six years of the accrued AUD interest amount, converted to USD as at September 2013. Analysed in this way, the September 2013 payment is broadly consistent with the principal and interest loan obligations that Mr Taleb claims existed.
This apparent consistency in the payment amounts lends an air of apparent regularity to the asserted loan arrangements. That appearance is, however, in marked contrast to some underlying facts. First of all, Mr Taleb said he purchased the Villawood house for AU$197,000. He had no need for a USD loan that represented an AU$ amount more than $100,000 greater than the purchase price. Second, the proffered loan agreement contained a specific obligation for monthly principal repayments, and full repayment by 2006 – notwithstanding Mr Taleb’s assertion it had been agreed that he would only make interest payments. Thirdly, at no stage did Mr Taleb ever pay the required monthly principal instalments, nor was he ever asked to pay them. Fourthly, although Mr Taleb claimed to the Tribunal that he had made the required interest payments up until early 2007, he produced no record of any such payments. Furthermore, it is difficult to see that Mr Taleb had the financial capacity to make monthly interest payments of AU$1,260. (He told the Tribunal that his monthly after tax income in the relevant period was only about AU$1,700 – an amount that is hardly sufficient to maintain a house and clothe and feed a family that increased from 4 children in 1999 to six children by March 2006.) Fifth, when Mr Taleb and his wife made their 4 January 2013 agreement, there was no reference to any liability of the kind referred to in the Arabic documents. Finally, the 4 January 2013 agreement, and the 31 January 2013 application for consent orders, only recorded Mr Mustapha (not Mrs Souad Mustafa) as the lender, did not record as an outstanding liability the actual amount Mr Taleb subsequently paid, and gave dramatically different values for the asserted loan liability.
Mr Taleb told the SSAT that he paid the AU$306,000 amount in September 2013 because his brother was threatened with being sent to gaol in Lebanon if the money was not repaid. He appears to have told the Centrelink review officer something similar in November 2013. His evidence in the present review proceedings was different. Mr Taleb told this Tribunal that his brother had been arrested in Lebanon in connection with a fatal shooting. He had been held in custody for a short time, but after establishing that the shooting had been in self defence, he had subsequently been released. Mr Taleb said that this incident, because it involved his brother being unable to work for a time (and, inferentially, unable to service the loan) had caused Mr Mustapha to put pressure on Mr Taleb to repay the loan amount. In this context, which involves the suggestion that it was Mr Taleb’s brother who was actually servicing the loan interest obligations, it is relevant to note that in November 2013 Mr Taleb appears to have told the Centrelink review officer that, at least up until 2007, his brother made the regular monthly interest payments, and that Mr Taleb merely sent his brother money as and when he could.
In relation to the period after 2007 Mr Taleb ultimately told the Tribunal that whilst he had not made any loan payments, he was not even sure whether his brother had made any payments. He also said that he had made some arrangement with his brother about the inheritance of his father’s house in Lebanon. He said he had agreed to give his brother his own share of the house in Lebanon.
Mr Taleb also said that Mr Mustapha had forced him to acknowledge the loan amount in a court document. When Mr Taleb was pressed about this assertion, in his evidence in the present proceedings, he referred to the amount in the 31 January 2013 application for consent orders. As I noted above, this document records a liability of $200,000 as an unsecured debt to “Mustapha El Mustapha”. This amount was substantially greater than the $30,000 liability to Mr Mustafa recorded in the earlier document dated 3 January 2013. The context of Mr Taleb’s explanation for the assertion that Mr Mustafa forced him to sign this document was his perception of a risk that, unless Mr Taleb acknowledged a liability to Mr Mustafa, Mrs Taleb could insist upon the sale of the house as part of the divorce settlement. I note also that in late October 2013 Mr Mustafa had told Centrelink he had a court order to the effect that he owed money that he was required to repay. He was told at that time that he needed to produce evidence of such an order. No such evidence has been provided, other than an oblique reference to a “law suit” in the second of the Arabic documents to which I referred above.
I am not at all satisfied that the bank transfer payment Mr Taleb made to his brother’s account in Lebanon in September 2013 was a repayment of a loan obligation. The reasons for my lack of satisfaction are principally (i) the appearance that the 1999 Arabic document, on Mr Taleb’s evidence, was never intended to operate according to its terms, (ii) the reality that it never did operate to require monthly principal repayments, and (iii) the unexplained, and very substantial, variation in the supposed loan amount, and the mis-statement of the identity of the lender, in the January 2013 documents.
Even if the 1999 bank transfer should be regarded as some kind of loan transaction, I am far from satisfied that any repayment that Mr Taleb made in September 2013 was anything other than a voluntary payment. His evidence establishes that if the amount he says he received in 1999 was indeed a loan, it was a loan that was subsequently administered with outstanding tolerance towards him. That tolerance extended to the point of requiring no periodic principal repayments, and no interest payments for about 6 years after 2007. In contrast to that apparently sustained tolerance, nothing Mr Taleb put forward in evidence provides any substantial basis for satisfaction that the September 2013 payment was made under any relevant compulsion or exigency. In that regard I particularly note the inconsistency, to which I referred in paragraph 55 above, in Mr Taleb’s evidence about his brother going to gaol in Lebanon. I note also the absence of any evidence of the “law suit” referred to in the second of the Arabic documents. Finally I note the obscurity, and indeed the apparent exaggeration, of Mr Taleb’s suggestion that Mr Mustapha “forced” him to sign the January agreements with his wife.
NO “SPECIAL CIRCUMSTANCES” IN ANY EVENT
I do not accept Mr Taleb’s evidence that there was a genuine loan transaction, or that he was under any genuine compulsion, from either Mr Mustapha or Souad Mustapha, to repay any moneys. However, I do accept that he did transfer $306,000 to his brother in Lebanon in September 2013. The fact that he did so, despite the fact that it deprived him of his only significant realisable asset, perhaps indicates that he in fact believed he had some kind of obligation to make the repayment at that time.
The Secretary’s submission was that no “special circumstances” could be found to exist if the compensation monies had been spent to acquire a realisable asset. The Secretary characterised the Villawood house as such an asset and submitted that there was no relevant, or at least no sufficient, hardship in applying the preclusion period provisions, even if that meant Mr Taleb would likely be forced to sell the house and move to other accommodation. The Secretary supported that submission by reference to a number of previous Tribunal decisions.
In Re Secretary, Department of Social Security and Winterbotham v [1990] AATA 808 the Tribunal decision concerned a 23 year old married man who had two small children. In 1987 he spent part of a $225,000 common law settlement on the purchase of a block of land on which he had a house built for his family. The house was valued at about $135,000. Some years later, having exhausted the balance of the settlement funds, and being in difficult financial circumstances, he applied for a special benefit. In dealing with that application the SSAT had determined that “special and exceptional circumstances” applied to Mr Winterbotham, and decided that his preclusion period should be substantially reduced. The Secretary successfully appealed to the Tribunal. In a majority decision setting aside the decision under review, the Tribunal said:
24. The respondent contended that he was perfectly entitled to have expended his settlement moneys in providing his family with a home and no-one, least of all this Tribunal, would dispute that. However, that is not the issue – it is the fact that the respondent, having disposed of his settlement moneys, now seeks support from the community. The emotional attachment of the respondent and his wife to the family home was obvious and their reluctance even to think of selling it understandable. However, the Tribunal roust take that home into account in deciding whether the respondent is in a position of exceptional financial hardship. While the respondent has assets of such value he can never be so regarded.
25. As to the submission that the respondent should not be forced to sell his house, the Tribunal would compare his position with that of another recipient of a compensation award who chooses to expend his compensation moneys on investments. Should there be any difference between one who invests his money in stocks and shares and one who invests in real estate? Neither should expect the tax-payer to support him while he holds on to assets he could well realise and use to support himself. This is not to say that the Tribunal seeks to force the respondent to sell his house; or even recommends that course of action. It is not the Tribunal's role to do that. At the same time, the Tribunal cannot ignore the view that the selling of the house is one way by which the applicant could resolve his present difficulties. It is an evident cause of action, although not by any means the only one.
In Lukic v Secretary, Department of Social Security [1991] AATA 111 the matter concerned an invalid pensioner who challenged the imposition of a preclusion period as a result of a $130,000 damages settlement. Mr Lukic and his wife had been living in rented accommodation in Sydney. He used about $80,000 of a $130,000 settlement amount to purchase and renovate a house in Adelaide, and moved there with his wife. Virtually all of the balance of the settlement amount was used to pay off existing liabilities and to meet the expenses involved in the move to Adelaide. They had no other assets, and since the preclusion period decision, they had borrowed money to meet their living expenses. Mr Lukic unsuccessfully contended that “special circumstances” applied. In rejecting that contention the Tribunal said:
18. The final matter on which Mr Bennett relied as constituting "special circumstances" was the manner in which the money had been spent. However, this cannot be relevant in the context of the legislation. The assumptions behind Part XVII are that a recipient of a lump sum payment of compensation will use a proportion, defined by statute, of that lump sum for normal living expenses, at a weekly rate equal to average male weekly earnings; and that, if it is spent in that manner, it will provide for the person's living expenses until the expiry of the preclusion period. Once the settlement money had been paid to Mr Lukic it was his to use as he chose. He chose to spend it principally on a house and a car. He still has those assets. It is not the intention of the legislature that a recipient of compensation for incapacity to work should use that compensation to acquire assets and then also continue to receive a pension at public expense in respect of that incapacity for work.
19. If Mr and Mrs Lukic were to sell the house on which they expended some $80,000 of the settlement moneys, they would be in the same position as they were before the receipt of those moneys. That is, they would be living in rented accommodation, and would have money on which to live. Prior to the receipt of the settlement moneys, their living expenses were met by their pensions. If they were to sell their house, their living expenses would be met out of the proceeds of the house; that is, in effect, out of the settlement moneys. That is the intention of the legislation. It is for them to decide whether or not to do this or to obtain other financial support on which to live until 27 July 1992
The decision in Manafikhi v Secretary, Department of Employment and Workplace Relations [2007] AATA 1529 concerned a $500,000 settlement amount. Mr Manafikhi actually received a net amount of only about $330,000, after all relevant expenses and liabilities had been met. That was in 2003. He then purchased a house. He funded the purchase partly from the settlement funds and partly by a substantial mortgage loan. By the end of 2004 he had used a further $200,000 from the settlement funds to reduce the mortgage debt. That payment, together with the initial purchase, the repayment of various other debts, and ongoing living expenses, had exhausted the settlement funds. By 2006 Mr Manafikhi had separated from his wife, and had the custody of their four children (twins aged 5, and two other children aged 9 and 10). The balance of his mortgage debt had increased, and his only income was family tax benefit. Mr Manafikhi, who was clearly in strained financial circumstances, contended that “special circumstances” applied to him. He pointed out that his mortgage repayments had been less than the rent he would otherwise have been likely to have paid in providing accommodation for the family.
In a July 2007 decision, the Tribunal disagreed with Mr Manafikhi’s “special circumstances” claim. The Tribunal pointed out that (i) he had the potential to redraw $200,000 against his mortgage, (ii) whilst his decision to purchase the house was reasonable, it did not provide a sufficient justification to find “special circumstances” and (iii) the effect of the remaining preclusion period would only be to deprive Mr Manafikhi from receiving about $28,000 in disability support pension payments. The Tribunal considered that Mr Manafikhi’s financial position was hard, but not extreme, and that he had the potential to reduce the severity of his financial hardship by drawing against the mortgage facility.
The three decisions to which I have just referred all preceded the decision in Dranichnikov v Centrelink [2003] FCAFC 133, and its apparent rejection of the idea that “special circumstances” necessarily required something that was “unusual, uncommon or exceptional”: see paragraph 41 above. They were considered in a subsequent decision in Secretary, Department of Family and Community Services v Mahfouz [2003] AATA 1196; 78 ALD 613.
Mr Mahfouz had settled a work injury claim for $590,000. That was in about 1999. He actually received a net amount of about $470,000. In the next two years he spent some of this money to travel to Lebanon, seeking additional treatment for his injuries. After returning to Australia he spent much, if not all, of the remainder of the settlement funds on the purchase of a house. The evidence was to the effect that the house was somewhat more expensive than the average, because it was located in a more highly regarded suburb. At the end of 2001 the Social Security Appeals Tribunal determined that Mr Mahfouz’s preclusion period should be treated as having ended. On the Secretary’s appeal to the Administrative Appeals Tribunal, the Tribunal affirmed the decision and accepted that Mr Mahfouz had made out the “special circumstances” criterion, because of the combined effect of his frail psychological condition, the importance and reasonableness of purchasing a house near his relatives and the support they were able to provide, and the physical difficulties that he would otherwise have encountered in continuing to reside in a third level apartment.
In dealing with the “special circumstances” criterion the Tribunal said
[38]Much has been written in the authorities about special circumstances. It is not a term which lends itself to prescription, because it is the individual circumstances of a case which will determine the presence or otherwise of special circumstances. A determination concerning special circumstances encompasses concepts such as unfairness, injustice, uncommon, unusual or exceptional circumstances. In Secretary, Department of Social Security v Smith (1991) 30 FCR 56, and also in Kirkbright v Secretary, Department of Family and Community Services (2000) 106 FCR 281, it was considered appropriate to apply section 1184 or its equivalent, to ameliorate unfairness or injustice when it appears by the virtue of the strict application of the Act (see also Kertland v Secretary, Department of Family and Community Services (1999) 95 FCR 64). Factors such as financial hardship, physical and mental health and social conditioning have been considered special as determined by Einfeld J in Secretary, Department of Social Security v Thompson (1994) 53 FCR 580. In more recent times, the impact of the GST on the divisor for calculating the preclusion period has also been considered as a special circumstance as was decided in Secretary, Department of Family and Community Services v Allan (2001) 116 FCR 1; Secretary, Department of Family and Community Services v Giannekas [2001] FCA 1161; Re Stephens and Secretary, Department of Family and Community Services (2001) 32 AAR 430.
In Re Secretary, Department of Family and Community Services v Marmont [2001] AATA 908; (2001) 66 ALD 635 Mrs Marmont successfully disputed the application of a preclusion period attributable to a work injury settlement amount she had received shortly after making an application for a carer’s payment. Mrs Marmont had a 25 year old son who had suffered severe brain damages in a drowning accident in 1981. Shortly before her 2001 application for carers payment her son, who for some years had been living in supported accommodation elsewhere, had come to live with her. After receiving the settlement amount Mrs Marmont spent a substantial part of it building a new house, with facilities suitable for her son. There was evidence that building the new house was a more economical course of action than seeking to modify her existing house.
The SSAT waived the preclusion period that would otherwise have applied to Mrs Marmont. That decision was upheld by the Administrative Appeals Tribunal, despite the Secretary’s review application. In the course of its reasons for decision the Tribunal commented upon a number of previous decisions, including Re Ivovic and Director-General of Social Services (1981) 3 ALN N95, Re Secretary, Department of Family and Community Services and Szoke [2001] AATA 353, Re Mourtitzikoglou and Secretary, Department of Social Security (1991) 23 ALD 249 and Re White and Secretary, Department of Social Security [1994] AATA 308.
In Ivovic the applicant, despite knowing a potential repayment obligation for social security benefits, spent his settlement funds purchasing land and undertaking the construction of a house. The Tribunal found that the house construction project was always beyond the applicant’s financial capacity and that no “special circumstances” precluded the recovery of his benefit repayment obligation, even though this would inevitably require the sale of the incomplete house. In the Szoke case the Tribunal accepted that special circumstances might exist where the applicant was at risk of suicide as a possible consequence of enforcing the preclusion period. In Mourtitzikoglou the Tribunal accepted that using compensation funds to renovate sub-standard housing could justify reduction of the preclusion period on the basis of “special circumstances”. In White the applicant had received a $600,000 compensation payment. He and his family had been living in rental accommodation. After he was injured his wife bought a new house, and obtained a mortgage loan to assist in funding the purchase. After the applicant received his compensation payment some of the money was used to repay the existing mortgage, to purchase land and build a new house. Other parts of the compensation payment were used to purchase motor vehicles of one type or another and various tools and items of household equipment. Within four years all of the settlement moneys had been spent. The Tribunal noted that some of the applicant’s use of the settlement funds could not be regarded as involving special circumstances. But the Tribunal nevertheless decided that the expenditure involved in acquiring the new house did constitute special circumstances, because the applicant’s existing housing was particularly substandard and the applicant had a responsibility to provided proper accommodation for his children. At [25] the Tribunal noted
While some tribunal decisions have found that owning unencumbered assets would be inequitable in the recognition of financial hardship, one thing is, however, certain and that is that in this country, particularly in the context of social security legislation and having regard also to the formal premise of a parent being able to adequately support and provide care for children is that poverty should not be a consequence of the provision of basic care. For the purposes of these reasons and in the context also of families with children I have decided that provision of adequate and safe housing is encapsulated within the concept of care.
The preceding outline of some of the Tribunal’s previous decisions suffices to show that there is some danger of misapplying the “special circumstances” criterion if undue emphasis is placed on either the perception of a payment as “voluntary” or upon the apparent realisable value of an applicant’s home. There are situations where the use of compensation monies to purchase, or retain, appropriate accommodation can give rise to “special circumstances”. Circumstances of that kind may exist where a person, or their dependants, have special needs, vulnerabilities or relationships. The fact that an applicant has spent substantial parts of their compensation on the purchase of an apparently valuable asset does not necessarily preclude satisfaction that “special circumstances” exist.
Nevertheless, I am not satisfied that Mr Taleb has made out his complaint that special circumstances exist in his case. He has not established that it was necessary for him to have made the $306,000 payment. He has not established that the Villawood house has any qualities that make it especially appropriate accommodation for either himself or his children. And even if there is some significant risk that he may have to sell the house, that risk is one that, on his own evidence, he has faced since he purchased the property using funds he obtained from Souad Mustapha. According to Mr Taleb’s own evidence he appears never to have had the ability either to repay the principal or to fully satisfy his ongoing loan interest risk liability. He has always been a risk of defaulting on the loan obligations expressed in the first of the Arabic documents, and consequently at risk of being required either to borrow money against the security of the house or to sell the house and move to other accommodation. The fact that the application of a preclusion period has given that risk a current poignancy does not warrant a conclusion that Mr Taleb has made out a claim for “special circumstances”.
THE APPROPRIATE “COMPENSATION PART” OF MR TALEB’S PAYMENTS
In these circumstances there is no basis for considering that Mr Taleb has established “special circumstances” that would warrant or permit the exercise of the SSA 1991 s 1184K discretion in his favour. That is so, at least in relation to the compensation payment he received as a result of the May 2013 Deed. However, and as I have already noted, the general policy underlying the lump sum preclusion period provisions is the prevention of “double dipping” so as to have the benefit of both income support from “compensation affected payments” and compensation for loss of earnings and loss of earning capacity. That policy assumes, as I indicated in paragraph 44 above, that an applicant such as Mr Taleb has the practical ability to resort to the compensation funds, and can reasonably be expected to so do.
The first of those elements of the underlying policy has no application to the impairment related payments that Mr Taleb received in 2009, 2010 and 2011. None of those payments was to any extent related to loss of earnings or to loss of earning capacity. Those payments are only required to be taken into account for two reasons. The first is that, more than 18 months after the last of those payments, Mr Taleb did in fact receive earnings related compensation. The second is that after May 2013, SSA 1991 s 1171 operated so as to deem the earlier payments to have been a single payment- and in effect made in about May 2013.
The deeming provision in SSA 1991 s 1171 may have a sensible, fair and reasonable operation in many situations. These will include situations where an applicant receives payments that are close in time, and where either the precise character of the particular payments is unclear, or there is reason to apprehend that the payment amounts and timing have been structured to circumvent the ordinary operation of the preclusion period provisions. But in the present case, the payments were neither close in time nor, so far as is reasonably apparent, in any sense contrived. The impairment related payments were completely unrelated to earnings, and their amount would have been determined according to the statutory impairment assessment criteria in the relevant workers compensation legislation.
Finally, the payments were individually of comparatively modest amounts – the most recent payment totalling only about $8,000. In the present case the details Mr Taleb has provided sufficiently indicate the overwhelming probability that those payments were totally exhausted long before he received the settlement payment provided for in the May 2013 Deed. There is, in my view, no likelihood that those payments were spent other than for the ordinary maintenance of Mr Taleb’s children and household. There is nothing to suggest that those monies were, in any meaningful sense, merely dissipated by unnecessary voluntary payments. I consider that in relation to these payments Mr Taleb has made out a case for “special circumstances”. This is so because (i) the payments were clearly not in relation to loss of earnings or loss of capacity, (ii) there is no reasonable basis on which Mr Taleb could or can, reasonably be regarded as “double dipping” in relation to these payments, (iii) there is no reasonable basis on which to regard these payments as relevantly “available” to Mr Taleb, and (iv) Mr Taleb does indeed face the prospect of considerable financial hardship and stress in supporting himself and his children.
DECISION
The decision under review is varied. I consider that the payments Mr Taleb received in July 2009, October 2010 and October 2011 should be treated, for the purposes of Part 3.14 of the SSA 1991, as not having been made.
The result of treating those payments as not having been made is to determine that Mr Taleb’s lump sum preclusion period is as set out in the following table:
Preclusion Period determination Date (or Description) Value Explanation Total compensation $360,000.00 Compensation part $180,000.00 SSA 1991 s 171(3)(a) Income cut out amount $884.40 Social Security Act – ss 17(8) Preclusion period (weeks) 204 Compensation part / income cut out – SSA 1991 s 1170(4) 29-May-2013 Last periodic compensation payment 30-May-2013 Start: Preclusion period 26-April-2017 End: Preclusion period
Notwithstanding the shortening of Mr Taleb’s preclusion period, it still commenced on 30 May 2013 and has not yet expired. In those circumstances he is not entitled to newstart allowance and the decision under review is otherwise affirmed.
I certify that the preceding 80 (eighty) paragraphs are a true copy of the reasons for the decision herein of Mr P Taylor SC, Senior Member. ........[Sgd]................................................................
Associate
Dated 10 September 2014
Date of hearing 6 August 2014 Date final submissions received 27 August 2014 Applicant In person Solicitors for the Respondent Ms B Salaji, DHS Program Review Litigation Branch
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