Ahmet Sanal and Secretary, Department of Social Services
[2015] AATA 389
•3 June 2015
[2015] AATA 389
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2015/0383
Re
Ahmet Sanal
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
Decision
Tribunal Dr Ion Alexander
Date 3 June 2015 Place Sydney The decision under review is set aside and remitted to the respondent to recalculate the preclusion period in accordance with the direction that, pursuant to section 1184K of the Act, the amount of $103,476.10 should be treated as if it has not been paid to the applicant.
...................................................................
Dr Ion Alexander, Member
Catchwords
SOCIAL SECURITY – compensation affected payments – newstart allowance – disability support pension – lump sum preclusion period – compensation part of lump sum – discretion to disregard some or all of compensation payment – special circumstances – gambling addiction – legal costs – amount not recoverable or available – unfair and unjust result – decision under review is set aside and remitted
Legislation
Social Security Act 1991 (Cth) s 17, 1169, 1170, 1184K
Social Security (Administration) Act 1999 (Cth)
Cases
Dranchinov v Centrelink (2003) 75 ALD 134
Groth v Secretary Department of Social Security (1995) 40 ALD 541
Re Beadle and Director General of Social Security (1984) 6 ALD 1
Re Drake and Minister for Immigration and Ethnic Affairs (1979) AATA 179
Re Fuller and Secretary, Department of Family and Community Services (2004) 83 ALD 15
Re Rice and Secretary, Department of Employment and Workplace Relations [2006] AATA 757SECONDARY MATERIALS
Guide to Social Security Law
Diagnostic and Statistical Manual of Mental Disorders (Fifth Edition)REASONS FOR DECISION
Dr Ion Alexander, Member
3 June 2015
BACKGROUND
Mr Sanal, who is 61 years old, lodged a claim for Newstart Allowance on 25 June 2014 and a claim for the Disability Support Pension on the 2 July 2014.
In October 2006 Mr Sanal suffered a compensable injury at work and was paid periodic compensation until 14 May 2012. He also received lump sums of $14,000, $13,000 and $12,500 during this period.
On the 27 March 2012 Mr Sanal settled his compensation claim by consent for a sum of $350,000 including costs.
Based on a total lump sum compensation of $389,500, Centrelink calculated there was a compensation preclusion period from 15 May 2012 to 8 November 2016 and rejected both his claims both initially and on internal review.
On 6 January 2015, the Social Security Appeals Tribunal (“SSAT”) affirmed the decision.
In this proceeding Mr Sanal seeks review of this SSAT’s decision.
Mr Sanal was self-represented and was assisted by an interpreter of the Turkish language.
ISSUES
The relevant legislation in this matter is set out in the Social Security Act 1991 (Cth) (“the Act”).
Part 3.14 of the Act and the Social Security (Administration) Act 1999 (Cth) (“the Administration Act”) provide for the effect of compensation payments.
The respondent contends that pursuant to s 17(2) of the Act, Mr Sanal received a total lump sum compensation payment of $389,500. This includes a gross final settlement of $350,000 on 27 March 2012 and lump sum payments during 2011 totalling $39,000.
Pursuant to s 17(3) of the Act, the respondent contends that the preclusion period should be calculated using 50% of $389,500 which is $194,750.
At this point I note Mr Sanal submits that he received only about $280,000 in compensation as the final settlement, which was inclusive of costs, and that it is unfair that the costs are included in the calculation of the preclusion period.
Section 1169 of the Act provides that recipients of lump sum compensation payments are not entitled to receive “compensation affected payments” during the lump sum preclusion period. I note that per s 17 of the Act, Newstart Allowance and Disability Support Pension are compensation affected payments
Section 1170(1) of the Act provides that the lump sum preclusion period begins on the day following the last day of the periodic payment, that is, 15 May 2012.
The formula for calculating the length of the preclusion period is set out in s 1170(4) of the Act as follows:
(4) The number of weeks in the lump sum preclusion period in relation to a person is the number worked out by using the formula:
At the date of receipt of the compensation funds the income cut-out amount was $830.50.
The respondent contends that preclusion period is 234 weeks (the compensation part of the lump sum ($194,750) is divided by $830.50 and that the preclusion period is 15 May 2012 to 8 November 2016.
If I reject Mr Sanal’s submission in respect of the calculation of the preclusion period, and accept the respondent’s contention that preclusion period should be calculated on the basis that the total lump sum compensation payment was $389,500 I am satisfied that the compensation preclusion period has been correctly calculated.
However, Section 1184K(1) confers a discretion on the decision maker to disregard some or all of a compensation payment “if it is appropriate to do so in the special circumstances of the case”.
In Mr Sanal’s case the respondent contends that there are no special circumstances which would persuade the Tribunal to disregard some or all of the compensation payment.
Therefore the definitive issue in this proceeding is whether there are special circumstances such that it would be appropriate to for the Tribunal to disregard some or all of Mr Sanal’s compensation payment.
RELEVANT EVIDENCE AND FINDINGS OF FACT
Mr Sanal lives with his son in a Department of Housing townhouse with rent at $270 per fortnight. He claims he has only $975 in the bank and needs to borrow money from friends for daily living expenses. His son now contributes about $100 per week in rent. He receives a Turkish pension of approximately 300 lira per month (AUD $147) which is accumulating in a bank in Turkey with a current balance of about $3,000.
Mr Sanal told the Tribunal the when he received his compensation payment he was informed and understood that there would be a preclusion period in respect of qualification for Centrelink benefits. Nevertheless he did not limit his discretionary spending, including incurring significant gambling losses. The spending included $15,000 for the repayment of debts, $15,000 for a car which he still owns and $5,000 as a gift to his daughter.
Mr Sanal travelled to Turkey on two occasions to visit his family, particularly his older sister who was ill. He was in Turkey between 13 June 2013 and 28 October 2013 and between 8 August 2014 and 28 September 2014. He estimated an expenditure of about $35,000 in respect of these two trips.
Mr Sanal told the Tribunal that between 2011 and 2013 he had to provide financial support for his son who had previously been living elsewhere and supporting himself. He explained that during this time his son was avoiding the police.
I note that in the record of a conversation with a Centrelink officer on the 21 July 2014 Mr Sanal is reported to have advised that he had to support his son for 2 years as his son had bought a car but was unlicensed to drive and was stopped by the police after a police chase. His son failed to attend his court appearance and was “on the run” as he was scared that he would be sent to jail if caught by the police.
Mr Sanal was reported as saying that he was very stressed as his son would not listen to him and that he had to pay all the bills for both of them and also give his son spending money.
Mr Sanal told the SSAT that the police eventually caught up with his son, and after a court appearance his son was put on a good behaviour bond and lost his licence.
Mr Sanal told the Tribunal that he had paid his son’s fine of $1,500, legal fees of about $1,000, and estimated between $6,000 and $10,000 per month for spending money.
Mr Sanal admits that he has a longstanding problem with gambling and estimated that in since early 2011 he had lost about $100,000 playing poker machines. He played at three clubs, primarily at Dooley’s Lidcombe Catholic Club (“DLCC”) which was close to home.
The Tribunal was provided with monthly DLCC player activity statements from January 2011 to December 2014. These statements provide a monthly account of Mr Sanal’s gaming machine activity and included a monthly betting summary that noted total turnover, total wins and net win/loss. The statements also provide a record of time spent at the machines on relevant days.
From January 2011 to December 2011 Mr Sanal spent an average of 31 hours per month at the machines with a total turnover of about $247,794 and a net loss of about $25,615.
From January 2012 to December 2012 Mr Sanal spent an average of 43 hours per month at the machines with a total turnover of about $542,000 and a net loss of about $69,000. During this period it was not unusual for Mr Sanal to spend between 5 and 7 hours per day playing the machines on several days per month.
From March 2013 to June 2013 Mr Sanal spent an average of 26 hours per month at the machines with a total turnover of about $90,000 with a net loss of about $10,500.
Mr Sanal told the Tribunal that when he was in Turkey between June 2013 and October 2013 he did not gamble.
In November 2013 Mr Sanal spent 29 hours at the machines with a total turnover of $19,021 and a net loss of $3,906. In December 2013 he spent about 9 hours at the machines with a total turnover of $7,452 and a net loss of $1,757.
During 2014 the records indicate that Mr Sanal played the machines at DLCC only in January and May with total time spent of about 26 hours, total turnover of $16,472 and net loss of $2,992.
Accordingly the gambling losses suffered by Mr Sanal at DLCC between January 2011 December 2014 amount to at least $115,465. There is no documentary evidence in respect of any losses at other clubs.
On 21 July 2014, Mr Sanal informed Centrelink that he had only $10,000 in the bank and that after paying various bills he would be left with only $8,000.
Mr Sanal’s Maxi Saver bank statement reveals a closing balance of $90,724.96 on 21 March 2014.
Mr Sanal told the Tribunal that $50,000 was withdrawn and sent overseas to pay for the purchase of a house in Turkey which he claimed is in his name. He explained that the house was cheap and he thought it was a good investment for his future as he had been considering going back to Turkey to be with his sister and where it is much cheaper to live. He admitted that when he made this decision he had not considered that he was depleting his compensation payment and also was not able to explain how the remaining $30,000 was spent.
I note that Mr Sanal told the SSAT he had given the $50,000 to his daughter to help her buy a house in Turkey. He said that she had to borrow additional funds to complete the purchase but because she recently lost her job she was unable to meet the mortgage payments.
In relation to his own health Mr Sanal suffers from various conditions including hypertension, diabetes, prostatic disease and impairment due to the injury to his left leg. He also complains of symptoms of anxiety and panic attacks.
In a report dated 17 December 2014 Ms Oytam, a clinical psychologist, notes that Mr Sanal was seen for 12 sessions between 19 May 2010 to 18 August 2010 and that he presented with symptoms consistent with a diagnosis of “panic disorder and specific phobia”. She noted that that Mr Sanal reported relationship difficulties with his son and daughter as well as problems with gambling. Mr Sanal was provided with cognitive behavioural therapy, anxiety management skills and counselling.
Mr Sanal indicated that he was referred to a psychiatrist who prescribed medication but had only one consultation and decided not to take the medication.
In a report dated 2 January 2015, and co-written by Ms Tunganadame, registered psychologist, and Mr Hasan Onder Cinar, provisional psychologist, it is noted that Mr Sandal reported that “he gambles with increasing amounts of money to achieve the desired excitement levels” and becomes agitated when attempting to restrict his gambling behaviours.
Mr Sandal also reported that he “gambles when feeling depressed and anxious, feels worse afterwards, however continues to chase losses and feel better”, has lied to his family about his gambling, and conceals his activities and financial spending.
The report concluded that Mr Sandal has “an exhibited range of symptoms during the assessment and consultations which are consistent with” the criteria of “Gambling Disorder, Persistent, Severe” as described in the Diagnostic and Statistical Manual of Mental Disorders (Fifth Edition) (DSM-5).
CONSIDERATION
Mr Sanal submits that currently he suffers significant financial hardship and that there are “special circumstances” in his case which warrant the preclusion period to end as of the date of his claims for Centrelink benefits.
The intention of Part 3.14 of the Act is that those who receive lump sum payment compensation payments “are expected to support themselves from their own available resources use for a period before seeking support from the taxpayer”: ReRice and Secretary, Department of Employment and Workplace Relations [2006] AATA 757 at [19]
The discretion provided by section 1184K recognises there may be circumstances in a particular case where it is appropriate reduce the period of preclusion from taxpayer support.
The term “special circumstances” referred to in section 1184K is not defined in the legislation but there is considerable case law which provides guidance.
In Dranchinov v Centrelink (2003) 75 ALD 134the Full Federal Court said at [66]:
….what is required will be circumstances which distinguish the case in consideration from the usual case. There will be a requirement that the circumstances are such that takes the case out of the ordinary…
In ReBeadle and Director General of Social Security (1984) 6 ALD 1 at 3, the AAT stated :
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.
In Groth v Secretary Department of Social Security (1995) 40 ALD 541 at 545, the Federal Court stated:
….The phrase “special circumstances”, it has been said, although imprecise is sufficiently understood not to require judicial gloss… 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. That was, I consider, the only enquiry to be undertaken in this 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.
The Guide to Social Security Law contains departmental policy and provides guidance on what constitutes special circumstances.
Although the Tribunal is not bound to strictly apply the guidelines I acknowledge that cogent reasons are required in a particular case for not doing so (Re Drake and Minister for Immigration and Ethnic Affairs (1979) AATA 179).
It is clear from the evidence that Mr Sanal was unconstrained with his discretionary spending and did not set aside sufficient funds to meet his living costs during the preclusion period.
On due consideration of the all evidence before the Tribunal I am satisfied that most of the circumstances in this case are not unusual or out of the ordinary and could not be considered as “special circumstances”.
However, I am persuaded that two circumstances warrant further consideration, namely Mr Sanal’s gambling and the amount of costs included in the final settlement payment.
The respondent submits that Mr Sandal’s gambling problems were not outside his control as there is “no evidence to corroborate any assertions that the Applicant’s gambling was an addiction.”
The respondent appears to make this submission on the basis that the “Applicant did not neglect his life needs, and was able to maintain his expenses of daily living” but provides no reference to any evidence that supports the proposition that the factors that have been raised are in any way relevant to making a diagnosis of gambling addiction.
The respondent also questions the motives behind Mr Sandal’s referral to a gambling counsellor, in that, this occurred only after he had been advised that “evidence of such treatment would be needed in order to consider it as a special circumstance”.
In my view the respondent is misguided on this issue as the relevant question is not whether Mr Sandal has had any treatment but whether at the relevant time his symptoms and behaviour were consistent with a diagnosis of a gambling addiction.
The psychology report that is before the Tribunal clearly supports the proposition that Mr Sandal’s has self-reported symptoms which are consistent with a DSM-5 diagnosis of a severe “Gambling Disorder”.
Furthermore, it is my view that the diagnosis is supported by the objective evidence provided by the player activity statements from DLCC.
These statements demonstrate that during 2011 and 2012 Mr Sandal had a severe gambling habit with more than 80% of his total losses occurring during this period. Relevantly, this coincides with the period that Mr Sanal’s son was “on the run” from the police.
The psychology report notes that Mr Sandal gambles when feeling depressed and anxious and, in my view, it would be a reasonable to assume that the situation with his son caused Mr Sanal significant anxiety and stress and may well have led to an aggravation of his chronic gambling habit.
Furthermore, I am satisfied that the circumstances involving Mr Sandal’s son can be considered as unusual and sufficient to be labelled as a special circumstances.
On the issue of the inclusion of costs in the final compensation payment I note that Mr Sandal’s MAXI SAVER bank statement shows a credit from of $246,532.90 on 14 May 2012 labelled as ‘LAW PARTNERS Settlement’. I assume, therefore, that the amount taken out for costs was $103,467.10, almost 30% of the final settlement.
Accordingly the total compensation payment actually received by Mr Sanal was $286,032.90 which includes the earlier payments of $39,500.
In accordance with the reasoning and approach suggested by Downes J in Fuller and Secretary, Department of Family and Community Services (2004) 83 ALD 152, I find that the costs of $103,476.10 were incurred to obtain Mr Sanal’s compensation and as none of the amount is recoverable or available to support him this gives rise to an unfair and unjust result in that he would be penalised when he has not received any benefit from this amount.
In my view this constitutes special circumstances and pursuant to s1184K the $103,476.10, taken out for costs, should be treated as if it had not been paid. This will result in a significant reduction of the compensation part of the lump sum and also the calculated preclusion period.
After considering all the evidence I am satisfied that by reducing the compensation part of the lump sum by $103,476.10 and the consequent reduction in the calculated preclusion period is sufficient in the circumstances of this case and that a further reduction in the compensation part of the lump sum with respect to Mr Sanal’s gambling addiction is not warranted.
DECISION
The decision under review is set aside and remitted to the respondent to recalculate the preclusion period in accordance with the direction that, pursuant to section 1184K of the Act, the amount of $103,476.10 should be treated as if it has not been paid to the applicant.
I certify that the preceding 75 (seventy five) paragraphs are a true copy of the reasons for the decision herein of Dr Ion Alexander, Member ..................[sgd]......................
Associate
Dated 3 June 2015
Date of hearing 14 May 2015 Applicant In person Solicitor for the Respondent Department of Human Services
0
1
0