David and Secretary, Department of Social Services (Social services second review) - [2021] AATA 2440

David and Secretary, Department of Social Services (Social services second review) [2021] AATA 2440 (22 July 2021)
Division:GENERAL DIVISION
File Number: 2020/7878
Re:Jena David
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Chris Puplick AM, Senior Member
Date:22 July 2021
Place:Sydney

The decision under review is affirmed.
.......................SGD.................................................
Chris Puplick AM, Senior Member
CATCHWORDS
COMPENSATION PRECLUSION PERIOD – Disability Support Pension – Newstart Allowance – calculation of preclusion period – preclusion period calculated correctly – special circumstances to disregard preclusion period – no special circumstances exist – decision affirmed
LEGISLATION
Social Security Act 1991 (Cth), ss 17, 1169 – 1171 and 1184K
CASES
Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25
Clark v Secretary, Department of Employment and Workplace Relations [2007] FCA 1076
Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114
Dranichnikov v Centrelink [2003] FCAFC 133
Gartside and Secretary, Department of Social Services (Social services second review) [2017] AATA 45
Groom and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2008] AATA 339
Hogan v Secretary, Department of Employment, Education and Workplace Relations [2011] AATA 162
Jess v Scott and Others (1986) 70 ALR 185
In the Marriage of Phillippe [1997] 4 Fam LR 153
Re Beadle and Director General of Social Security (1984) 6 ALD 1
Sams and Secretary, Department of Social Services [2016] AATA 654
Secretary, Department of Education, Employment and Workplace Relations and Morrison [2008] 105 ALD 635
Secretary, Department of Family and Community Services v Chamberlain [2002] FCA 67
Secretary, Department of Social Security v Hales (1998) 82 FCR 154
Skinner and Secretary, Department of Social Services (Social services second review) [2015] AATA 569
Tallon and Secretary, Department of Social Security [1988] 15 ALD 6
Thomas and Secretary, Department of Family and Community Services [2003] AATA 842
SECONDARY MATERIALS
Social Security Legislation Amendment Bill (No 1) 1995, Minister’s Second Reading Speech, Hansard: House of Representatives, 19 June 1995
REASONS FOR DECISION

Chris Puplick AM, Senior Member
22 July 2021

Ms Jena David (the Applicant) is seeking a review of a decision made by the Social Services and Child Support Division of this Tribunal (AAT1) which was made on 28 May 2020. That decision affirmed an earlier decision of an Authorised Review Officer (ARO) of the Department to uphold the rejection by the Secretary, Department of Social Services (the Respondent) to deny the Applicant’s claim for payments of certain social security benefits because of the operation of a ‘preclusion period’ resulting from her receipt of previous compensation payments.
NARRATIVE: THE PRECLUSION PERIOD
On 10 February 1997 the Applicant suffered a workplace injury for which she received a total of $195,599.70 in compensation payments.[1]
[1] This consists of an agreed gross lump sum settlement amount of $150,000 and “other lump sum payments for these claims” made in a series of payments on 24 August 1999 ($8,250.00); 3 October 2010 ($6,349.70); 6 June 2011 ($10,000.00) and 9 June 2011 ($21,000.00). Tribunal documents at [34-37].
Various provisions of the Social Security Act 1991 (Cth) (the Act) provide that where a person receives certain defined compensation payments they are excluded from receiving certain other social welfare payments for a period of time[2] worked out in accordance with a formula set out in the Act.[3] This is called the ‘preclusion period’.
[2] Social Security Act 1991 (Cth), ss 17, 1169 – 1171 and 1184..
[3] Ibid s 1170.
The public policy supporting this arrangement was stated by the government to be:
‘The compensation recovery provisions of the [A]ct protect the social security system from ‘double dippers’ – that is, those people who might receive social security payments, as well as compensation, for the same period.’[4]
[4] Social Security Legislation Amendment Bill (No 1) 1995, Minister’s Second Reading Speech, Hansard: House of Representatives, 19 June 1995 page [1768]. See also Secretary, Department of Education, Employment and Workplace Relations and Morrison [2008] 105 ALD 635 at [24].
The preclusion period for the Applicant was worked out, under the formula to be a period commencing from 27 November 2019 and ending on 21 September 2021.[5]
[5] The preclusion period is calculated in this case (Social Security Act 1991 (Cth) ss 17(3) and 1170-1171) by taking the lump sum of all compensation payments and dividing it by 50%. The resultant sum is then further divided by the ‘income cut out amount’ which is a complex figure including certain other allowances. This resultant figure is then expressed as a number of weeks and that number of weeks constitutes the preclusion period which starts as from the day when the Department makes the calculation.
On 1 October 2019 the Applicant (accompanied by one of her brothers) attended at the offices of her solicitors (Sanford) where she signed an Authority to Settle. This document, inter alia, made it clear that ‘I may also be subject to a Centrelink preclusion period, which is the period during which I am not entitled to make a claim for any Centrelink benefits.’[6] The Authority also contained an indictive figure of $75,981.50 as the likely clear sum she would receive after all other related costs and disbursements had been made.[7]
[6] Tribunal documents at [94].
[7] Ibid at [96].
On 13 November 2019, the Applicant’s solicitors issued the Applicant with their tax invoice for professional services related to her compensation matter ($31,872.44)[8] and on 14 November 2019 a sum of $72,981.50 was deposited in the Applicant’s account with the NAB and marked in the statement as ‘Sanford Settlement’.[9]
[8] Ibid at [101].
[9] Ibid at [107].
On 26 November 2019, the Respondent wrote to the Applicant and informed her of the details of the preclusion period and that ‘During this period you are not able to receive income support from us’.[10]
[10] Ibid at [117].
On the same day similar advice was provided to the Applicant’s solicitors (Sanford) noting, inter alia, not only the details of the preclusion period but also that Centrelink ‘have been advised that the compensation amount is $150,000.00’.[11]
[11] Ibid at [120].
NARRATIVE: THE DISABILITY SUPPORT PENSION (DSP) AND NEWSTART ALLOWANCE (NSA) CLAIMS
On 22 November 2019, the Applicant lodged a claim for DSP on the basis of her suffering from an inability to work due to ‘spinal fusion’.[12] In that same document the Applicant indicated that she also wanted to claim the NSA.[13]
[12] Ibid at [112].
[13] Ibid at [111].
In that application she declared assets of a bank balance of $20.00; cash on hand as $5.00, net asset value of household and personal effects of $2,000.00 and net asset value of motor vehicle of $300.00.[14] At the time, the Applicant’s bank statement reveals that her balance in the account on 22 November 2019 was $25,611.41.[15]
[14] Ibid at [113]-[114].
[15] Ibid at [136].
On 27 November 2019, her application for DSP was rejected by the Respondent on the basis of her being subject to a preclusion period as outlined supra. The Applicant did not agree with this determination and sought a review of the decision.[16] At the same time the Applicant was advised that her pending payments of NSA would also be affected by the preclusion determination.
[16] Ibid at [186].
On 11 December 2019, further advice was provided to the Applicant to the effect that her DSP application was being rejected on medical grounds and repeating that it was also rejected because of the preclusion determination.[17]
[17] Ibid at [130].
The Applicant challenged both of those decisions[18] which were affirmed by a decision of an ARO on 7 January 2020.[19]
[18] The DSP decision specifically on 14 December 2019, Tribunal documents at [132-3] and the preclusion decision specifically on 24 December 2019, Tribunal documents at [196].
[19] Tribunal documents at [163]-[167].
The Applicant sought further review of the ARO’s decision in the AAT1 which heard the matter and gave its decision on 28 May 2020 affirming the determination.[20]
[20] Ibid at [6]-[12].
The Applicant sought review of the AAT1 decision in this Tribunal which heard the matter on 17 July 2021. The hearing was conducted by telephone with the Applicant having access to the services of an interpreter in the Arabic language.
It should be noted that the only matter before the Tribunal is the decision of the AAT1 affirming the existence and operation of the preclusion period in relation to any of the Applicant’s claims. The claims themselves (DSP and NSA) are not matters which were considered by the AAT1 and hence are not reviewable in this jurisdiction.
THE APPLICANT’S CLAIMS
There are two claims advanced by the Applicant. In the first instance she states:
‘You made the wrong decision. You based the decision on the amount Workcover gave me, not on what was left after paying lawyer and debt to Dept of Housing and lenders.’[21]
[21] Ibid at [2].
Her second claim is that she is now impecunious and is facing severe financial hardship without any money and struggling to survive on a day-by-day basis.[22] In other words, the Applicant seeks to establish that there are ‘special circumstances’ which would dictate a different outcome or decision.
[22] Ibid and Email to Tribunal dated 18 April 2021.
Were the correct calculations made?
Calculations in relation to preclusion period arrangements are made essentially under sections 17(3) and 1171 of the Act. The starting point in calculations is to determine the total amount of compensation payments received by an applicant. This amount is the gross amount that they were awarded, agreed to by settlement, or otherwise received in terms of payment for the compensable injury.
In this case, the amount of the agreed settlement was $150,000.00 to which must be added the total of the four payments made between August 1999 and June 2011 which relate to the same event. This yields a total of $195,599.70.
It is clear that the Applicant did not receive anywhere near this amount after deductions were made in relation to matters such as legal expenses and other disbursements (which totalled some $74,018.50[23]). In total the Applicant actually received $118,581.12.
[23] Tribunal documents at [95]. Subsequent adjustments raised this to $77,108.50.
This is the sum which the Applicant believes should be the basis of calculations as this was the quantum of money available to her for her use. However, that is not what the law provides – it requires calculations to be based on gross payments.
Having established that the $195,599.70 figures is correct, the Act then provides that in calculating the preclusion period (see above) 50% of that is taken and divided by the ‘income cut out amount’ which gives a rounded figure of 95. This means that the preclusion period commences on the day following the last periodic payment made to the Applicant[24] and continues for 95 weeks. This gives a preclusion period from 27 November 2019 to 21 September 2021.
[24] Social Security Act 1991 (Cth) s 1170.
The Tribunal is satisfied that the preclusion period has been calculated correctly.
Special circumstances
Section 1184K of the Act allows ‘special circumstances’ to be found so that part or all of a compensation payment may be disregarded for the purposes of determining a preclusion period.
As with so many key concepts in the Act, the term ‘special circumstances’ is not given any precise definition. Without going into extensive detail, it can be said that the courts have identified a number of factors which go to establishing whether or not ‘special circumstance’ exist. They must be:
·Something more than ordinary or usual;[25]
·Markedly different from the usual run of cases – not necessarily unique but having a particular quality of unusualness;[26]
·Somehow distinguishing from usual cases of an analogous nature;[27]
·Attuned to the individual circumstances of each case;[28]
·Not so rigidly applied as to risk harsh or unreasonable outcomes;[29]
·Involving ‘facts peculiar to the particular case which set it apart from other cases’; or[30]
·Supportive of the overall integrity of the social security system and recognising the public interest in ensuring that public moneys are recovered where they can and should be.[31]
[25] Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25; Jess v Scott and Others (1986) 70 ALR 185.
[26] Re Beadle and Director General of Social Security (1984) 6 ALD 1, 3.
[27] Dranichnikov v Centrelink [2003] FCAFC 133.
[28] Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114.
[29] Secretary, Department of Social Security v Hales (1998) 82 FCR 154.
[30] In the Marriage of Phillippe [1997] 4 Fam LR 153 per Kay J.
[31] Skinner and Secretary, Department of Social Services (Social services second review) [2015] AATA 569; Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114, Secretary, Department of Social Security v Hales (1998) 82 FCR 154.
Additionally, the Tribunal is invested with ‘a broad discretion to respond to a variety of circumstances’[32] but should note that special circumstances ‘are not merely directed to the person's own circumstances. Rather; they are directed to those that are “special circumstances ... that make it desirable to waive”’.[33]
[32] Hogan v Secretary, Department of Employment, Education and Workplace Relations [2011] AATA 162, 82.
[33] Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114, 80.
The Applicant claims that, at this stage, she is effectively without any assets or means of livelihood.
This may well be the case however the reason for this is essentially a simple one: within a period of some eight weeks of receiving the compensation payment of $72,981.50 the Applicant had spent it all.
Her bank balance on 14 November 2019 was $72,987.41 CR. On 6 December 2019 it was $318.81 CR.[34]
[34] Tribunal documents at [136]-[137].
Where did the money go? The answer to that is made difficult to determine by the fact that the Applicant has offered a number of contradictory and incompatible explanations for the expenditure.
In a Statutory Declaration dated 16 December 2019 the Applicant listed a number of expenditure items as follows:
·Second-hand vehicle purchased for $19,000.00;[35]
·Two payments for ‘funeral costs’ amounting to $10,000.00;
·Repayment of a loan to her brother of $20,000.00;[36]
·Repayment of loan to her brother-in-law of $9,000.00;
·A new laptop and washing machine for her own use at $1,749.00 and $1,540.00 respectively; and
·A ‘gift’ to a neighbour of $5,000.00.
[35] Ibid at [144]-[149].
[36] There is a handwritten statement (dated 20 May 2020) by the Applicant’s brother David David (Dawood Dawood) to the effect that he lent his sister a total of some $20,000 ‘over the years since 2012’. Ibid at [168].
In addition, there are a series of cash withdrawals from the bank including large sums such as $11,000.00 and $20,000.00 in singe transactions; $16,000 in 6 transactions on the one day and then a series of small transactions (each over $1,500) virtually every day from 18 November to 29 November 2019.[37] In all, more than $71,000 was withdrawn in cash.
[37] Respondent’s Statement of Facts, Issues and Contentions (SFIC) at [61].
In response to questioning by the Respondent, the Applicant offered a series of explanations, which included:
·The motor vehicle, despite an invoice showing her as the purchaser was actually purchased by her brother, although it is registered in her name;[38]
·The two payments made to Mr Mari Emanuel (described by her as a ‘Bishop’[39]) were variously reported as being for ‘funeral expenses’, the purchase of a ‘burial plot’ or a ‘donation’ to the Church. There are no receipts for any such transactions;
·The repayments to her brother were made because he ‘forced’ her to repay them and indeed ‘threatened to kill her’ if she did not, and may have arisen, in part, because, as the Applicant alleges, he ‘forced’ her to go gambling with him and lose money on poker machines;
·The ‘neighbour’ in question was someone with ‘psychological or mental health problems’ who had lent her money at some stage and who she wanted to help, and the money may have been used to buy him a washing machine; and
·The cash withdrawals were not done by her and she had no idea about them because she had given her bank card and PIN to her brother or brother-in-law who may have made the transactions.
[38] Tribunal documents at [149].
[39] Mr Mari Emanuel is the schismatic bishop of the Church of the Good Shepherd in Wakeley NSW which was formed as a breakaway from the Assyrian Church of the East.
Frankly, the Tribunal is not prepared to give any credence to the multiplicity of explanations offered by the Applicant as to where and how the money was spent. The Tribunal notes that none of the purchases (the car or white goods) were made using any of the lump sum payments made between August 1999 and 2011. Nor were any of the transactions with the Bishop conducted during that period.
Nor were any of the family ‘loans’ repaid during that period, indeed it is the period in which the Applicant receives some $45,600.00 but her brother’s statement of 27 May 2020 claims that it was during this period that he was lending her up to $20,000.00.
As to the withdrawals of small sums of money, it was the Applicant’s evidence that she was advised by ‘friends’ and by her ‘solicitor’ to make regular small withdrawals so as to deplete the bank account to a low enough level to qualify for Centrelink payments.
The Applicant had previously sought to mislead the Department when, in her application for the DSP she listed her bank assets as $2,000.00 instead of $25,000.00.
Of course, it goes without saying that even if the withdrawals from her account were made by another person to whom she had given her bankcard and PIN she, and she alone, remains responsible for the transactions undertaken.
The Applicant claims to have been unaware of the existence or the impact of the preclusion period. The Tribunal does not accept this assertion. The preclusion period and its impact were drawn to her attention when she signed the Authority to Settle on 1 October 2019 and she received the Department’s letter of 26 November 2019 making her position clear.
The Tribunal accepts that the Applicant may have been under the influence of her brother(s) as she claims, and that influence may have been malign, but that in no way diminishes her personal responsibility for the financial decisions which she took or permitted to be taken, nor does it alleviate her of the personal responsibility for prudent budgeting and management of her own financial affairs.
Finally, it should be noted that none of the expenditure items were essential in the sense of being necessary for the Applicant in terms of management of her health, nor, apart from some advance payment of rent ($2,500.00), were they in any way financially prudent investments.
Many applicants pleading special circumstances will find themselves in circumstances of financial hardship. However, in Gartside[40] the Tribunal made it clear:
‘I do not understand the many Federal Court and Tribunal decisions on “special circumstances” to require the Tribunal to find that special circumstances exist simply because the Applicant is in straitened financial circumstances. My understanding of the law is that it is open for the Tribunal to find special circumstances in such a circumstance, but a Tribunal Member is not obliged to do so. In exercising the discretion vested in the Tribunal, a Member is required to consider all of the matters the evidence admitted produces and straitened financial circumstances is one factor, albeit a very important one, but not the sole one. As Sheppard J said in Director General of Social Services v Hales [1983] FCA 81; (1983) 47 ALR 281 at 321:
“The legislation provides for the payment of a variety of benefits to different classes of people who will usually have one thing in common; they will be impecunious and in straitened circumstances. Very often their stories will be quite tragic.”’
[40] Gartside and Secretary, Department of Social Services (Social services second review) [2017] AATA 45, 57.

There is also clear authority as to the burden of personal responsibility borne by individuals where they are required to manage compensation payments.
In Groom the Tribunal found that the applicant’s ‘circumstances are entirely of his own making and occurred despite him having received legal advice of the preclusion period and its consequences’.[41]
[41] Groom and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2008] AATA 339, 62.
In Sams, Deputy President Constance noted that the applicant should have ‘been more careful in managing her finances then Mrs Sams’ present financial hardship could have been prevented’.[42]
[42] Sams and Secretary, Department of Social Services [2016] AATA 654, 40.
On the other hand, the Tribunal also recognises that ‘hardship is hardship even if it is self-inflicted’[43] and that ‘even the foolish and profligate must be protected in appropriate circumstances through the exercise of the discretion embodied in s 1184’.[44] The facts in this case mitigate against a finding of appropriate circumstances constituting special circumstances.
[43] Tallon and Secretary, Department of Social Security [1988] 15 ALD 6, 8.
[44] Thomas and Secretary, Department of Family and Community Services [2003] AATA 842,16.
It might also be noted that while the Applicant’s claim that it is ‘unfair’ for her to be assessed on her gross payments, rather than the actual amounts received, this has also been considered by the Courts.
Keifel J (as Her Honour then was) stated:
‘In the present case the Tribunal considered that the application of the formulae was unfair to the applicant because she would have to pay more than she had received by way of compensation for economic loss, indeed twice as much. That factor will however be present in most cases and is an aspect of the application of the formulae. In my view it cannot, by itself, amount to a special circumstance, one out of the ordinary.’[45]
[45] Secretary, Department of Family and Community Services v Chamberlain [2002] FCA 67, 33.
More generally, the view was expressed in Clark that:
‘It may well be that in Mr Clark’s case, because of his age, the sum of $280,000 included no component, or only a very small component, for loss of his capacity to earn beyond age 65 (29 April 2004) and the statutory formula produces a result that is unfair to him, but if so, that result flows from a deliberate policy decision of the legislature favouring simplicity and efficiency of administration and reduction in administrative costs over attaining a fair result in each case considered on its individual merits.’[46]
[46] Clark v Secretary, Department of Employment and Workplace Relations [2007] FCA 1076, 44.
No special circumstances, as per section 1184K of the Act, can be found to exist.
DECISION
The decision under review is affirmed.

I certify that the preceding 53 (fifty-three) paragraphs are a true copy of the reasons for the decision herein of

................................SGD........................................
Associate
Dated: 22 July 2021

Date of hearing: 14 July 2021

Applicant: In person

Solicitors for the Respondent: Mr G Lozynsky, Services Australia

Date of hearing:	14 July 2021
Applicant:	In person
Solicitors for the Respondent:	Mr G Lozynsky, Services Australia