Hafda and Secretary, Department of Social Services (Social services second review)
[2024] AATA 3604
•11 October 2024
Hafda and Secretary, Department of Social Services (Social services second review) [2024] AATA 3604 (11 October 2024)
Division:GENERAL DIVISION
File Number(s): 2023/5029
Re:Zakaria Hafda
APPLICANT
AndSecretary, Department of Social Services
RESPONDENT
DECISION
Tribunal:Member D Stevens
Date:11 October 2024
Place:Sydney
The decision of the Social Services and Child Support Division of this Tribunal on 7 June 2024, which affirmed a decision of Services Australia made on 12 August 2022 to reject a claim by the Applicant for Disability Support Pension, is affirmed.
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Member D Stevens
CATCHWORDS
SOCIAL SECURITY – compensation affected payment – disability support pension – lump sum preclusion period – special circumstances – decision to retain property not considered a special circumstance – payment of informal debts owed to others not considered a special circumstance – decision under review affirmed
LEGISLATION
Social Security Act 1991 (Cth)
CASES
Dranichnikov v Centrelink (2003) 53 ATR 270
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Re Beadle and Director-General of Social Security [1984] AATA 176
Re Ivovic and Director-General of Social Services [1981] AATA 57Secretary, Department of Social Security v Smith (1991) 30 FCR 56
SECONDARY MATERIALS
Commonwealth, Parliamentary Debates, Senate, 21 June 1995 (Peter Cook, Senator for Western Australia).
REASONS FOR DECISION
Member D Stevens
11 October 2024
Mr Zakaria Hafda (the Applicant) seeks review of a decision of the Social Services and Child Support Division of this Tribunal (AAT1) which on 7 June 2023 affirmed a decision of Services Australia (the Agency) made on 12 August 2022 to reject a claim by the Applicant for Disability Support Pension (DSP) (First Review). The basis for the rejection was that a compensation preclusion period was in existence, which does not expire until 19 April 2025, and that the Applicant’s circumstances were not such as to constitute special circumstances for the purposes of subsection 1184K(1) of the Social Security Act 1991 (Cth) (the Act).
AGREED FACTS
At the hearing, the parties agreed that the Applicant:
(a)received compensation for a workplace injury on about 17 April 2021, in the amount of $437 500;
(b)purchased a property in in south-western Sydney in June – July 2021 for about $390 000; and
(c)applied for DSP on 28 April 2022.
There was no dispute that a compensation preclusion period is in existence, which does not expire until 19 April 2025.
APPLICABLE LAW
Given the agreement between the parties, I shall set out the law applicable to the issue in dispute.
Subsection 1169(1) of the Act provides:
(1) If:
(a) a person receives or claims a compensation affected payment; and
(b) the person receives a lump sum compensation payment;
the compensation affected payment is not payable to the person in relation to any day or days in the lump sum preclusion period.
“Compensation affected payment” is defined to include DSP – paragraph 17(1)(a) of the Act.
The lump sum exclusion period is calculated with reference to the compensation part of a lump sum – section 1170 of the Act.
Subsection 1184K(1) of the Act provides:
(1) For the purposes of this Part, the Secretary may treat the whole or part of a compensation payment as:
(a) not having been made; or
(b) not liable to be made;
if the Secretary thinks it is appropriate to do so in the special circumstances of the case.
Given the way that the preclusion period is calculated, treating part or whole of a compensation payment as not having been made will have the effect of shortening a preclusion period.
As noted by his Doussa J, this discretion and the preclusion period are:
Intended to operate together as a fair balance of the interests of the recipient of the payment with the competing interests of others … whose needs must be met … from a finite budget allocation for social security measures.[1]
[1] Secretary, Department of Social Security v Smith (1991) 30 FCR 56, 61 (Doussa J).
Relevantly,
The compensation recovery provisions of the act protect the social security system from ‘double dippers’, that is, those who might receive social security payments, as well as compensation, for the same period.[2]
[2] Commonwealth, Parliamentary Debates, Senate, 21 June 1995 (Peter Cook, Senator for Western Australia).
Also, in relation to a discretion to recover monies under the Social Services Act 1947 (Cth), I note:
In the exercise of the discretion … the decision-maker must have regard to whether, by exercising the discretion in a particular case, he will be achieving or frustrating ends or objects which are conformable with the scope and purpose of the [legislation].[3]
[3] Re Ivovic and Director-General of Social Services [1981] AATA 57 [45] (Senior Member Hall, Member Billings and Member Tickle).
The phrase “special circumstances” is not defined in the Act. Case law considers the phrase to refer to matters that are “unusual, uncommon or exceptional”; “markedly different from the usual run of cases”;[4] “circumstances … that take the case out of the ordinary”;[5] “something … to take it out of the usual or ordinary case”.[6]
[4] Re Beadle and Director-General of Social Security [1984] AATA 176 [12] (Toohey J, Member Wilkins & Member Billings).
[5] Dranichnikov v Centrelink (2003) 53 ATR 270, 284-285 [66] (Hill J).
[6] Groth v Secretary, Department of Social Security (1995) 40 ALD 541, 545 (Kiefel J).
Issues to be decided
Given the matters that are not in dispute, at the hearing I put to Mr Hafda that my understanding from his application for review and the transcript of the First Review, was that he seeks that the compensation preclusion period be shortened, so that he can make a claim for DSP or another benefit now. He agreed that this is the case. Accordingly, in terms of the applicable law, the issue for me to decide is whether pursuant to subsection 1184K(1) of the Act, the compensation preclusion period can and should be reduced. This requires that I decided whether there are any special circumstances.
Hearing and evidence
Mr Hafda represented himself at the hearing on 3 October 2024, and appeared via telephone link. Ms Donaghy represented the Respondent and appeared via videolink. The Applicant gave oral evidence in relation to his circumstances at hearing on 3 October 2024. I also have the advantage of the Tribunal Documents (T-documents) (including the Applicant’s Application for Review, and the Reasons for Decision of the First Review); Supplementary Tribunal Documents (Supplementary T-documents); a Statement of Financial Circumstances signed by the Applicant and dated 21 February 2024 (“SOFC”); and the Respondent’s Statement of Facts and Contentions (“RSFC”) dated 29 July 2024.
At the First Review, at his request, the Applicant was provided with an extension of time in which to provide a letter from the solicitor who represented him in his compensation claim, and to provide a copy of the contract of sale of the unit he purchased. He did not do so. I enquired with Mr Hafda at the hearing whether he intended to produce such documents, and he said that he did not.
At the hearing, Mr Hafda agreed that the Respondent had sent him a copy of the T-documents and that it was in his possession. When Ms Donaghy sought to take Mr Hafda to various of those documents, it was not clear to me that Mr Hafda had them open in front of him. When I raised this, Mr Hafda insisted that he could continue. I am satisfied that on each occasion, Ms Donaghy clearly set out what the document was, the information it contained, and fairly put to him the point she was making and where appropriate the inference she sought to draw, so that there was no prejudice to the Applicant.
THE APPLICANT’S CIRCUMSTANCES
i. Physical condition
Mr Hafda gave evidence that because of his disability for which he received a compensation payment, he is injured, he cannot work, it is painful to walk, and he needs help.
ii. Knowledge of the preclusion period
The Applicant gave evidence before me that he did not know of the compensation preclusion period when he purchased the unit.
At the hearing for the First Review, Mr Hafda said that his solicitor in his compensation matter did not tell him of the compensation preclusion period. As set out above, Mr Hafda was provided with an extension of time after the hearing to provide a letter from that solicitor confirming that this was the case. Mr Hafda did not provide that letter. In the hearing before me, Mr Hafda confirmed he would not be producing such a letter. The Member in the First Review concluded that the “most likely explanation for that missing evidence is that Mr Hafda’s solicitor did provide that information to Mr Hafda, and I find accordingly”.[7] I draw the same conclusion.
[7] T2, 6.
Ms Donaghy took Mr Hafda to a letter from the Agency to him dated 27 May 2021. Mr Hafda agreed that he received it. When taken to the text, he agreed that the letter set out that the preclusion period was from 18 April 2021 to 19 April 2025, and that the letter said, “During this period you are unable to receive income support from us”. It is not clear to me from his responses that Mr Hafda agreed that he was aware of the preclusion period from 27 May 2021.
iii. Current income and funds
In his application for the First Review, Mr Hafda stated “I only have $600 and I borrow money to live”.[8] In the First Review, the Member states that when he asked Mr Hafda how he intended to support himself, he said “he had planned on borrowing money from his mother”.[9] In his SOFC, the Applicant said that he had no income; that of the money in his bank accounts he could only access $812; and that “I am often borrowing money from my pensioner mother to get by and this is putting me more in debt”.
[8] T1, 2.
[9] T2, 6.
iv. Property
It is agreed between the parties that shortly after receiving his compensation payment, the Applicant purchased a home unit in south-western Sydney for around $390,000.
Mr Hafda’s application for the First Review was accompanied by a document which included a list of reasons why Mr Hafda is unable to sell the home unit.[10] These reasons included that since his purchase the value of the property had decreased; the cost of selling the property, including payment to a real estate agent and solicitor; that estimated weekly rent of $500 was unaffordable; that he would not be approved for a rental property; he cannot afford a removalist; and he needs to be near his elderly mother in south-western Sydney to assist her.
[10] T14, 123.
Under cross-examination, Mr Hafda agreed with a current valuation of the property at about $425, 000. He agreed that he owned the property outright with no mortgage. He agreed that if he sold it, he would be able to afford to pay a real estate agent, solicitor, and removalists; pay rent for the preclusion period; have enough to live on and pay other expenses during the preclusion period; and have money left over for a deposit on another unit. He also agreed that with evidence of a bank balance of several hundred thousand dollars, he would be approved for a rental property.
He also agreed that if he had not bought the unit, he would have had enough money to live on, including paying rent, during the whole of the exclusion period.
At the hearing, Mr Hafda insisted that he would not sell the property. He agreed that this was his choice. He said that the reasons he had bought the property and would not sell it are that money does not last long when you pay rent; he wanted something that he knows is his; when you rent you have to pack up and move all the time, which is difficult with his disability; he wants to stay in one place; and when he dies the property will go to his children.
v. Money in bank account
In his SOFC the Applicant states he has $29,133.77 in a bank account he describes as “child support”. Bank statements show the balance has been over $29,000 since 12 October 2021.[11] In his evidence, Mr Hafda said the balance is still around $29,000.
[11] ST5.
Ms Donaghy put to Mr Hafda that $29,000 is about equivalent to the yearly payment of DSP. Mr Hafda said he had tried to withdraw this money but that the bank would not let him as it is "child support garnishee money” and not his. An amount of $29,133.72 was withdrawn on 11 October 2021 by telegraphic transfer and described as “CSA Garnishee”.[12] There have been no similar withdrawals since that time.
[12] ST5, 255.
vi. Movement of significant amounts of funds
In the RFSC the Respondent notes that before receiving the lump sum compensation payment, the Applicant had over $320,000 in a bank account.[13] It was put to the Applicant in cross-examination that following payment of the lump sum and before the purchase of the unit, the Applicant had over $680,000 in a bank account.[14] He said that he did not remember that.
[13] RSFC, 9 [70]; ST6, 275.
[14] ST6, 275.
In the RFSC the Respondent notes that between July and December 2021 (after the purchase of the unit and excluding the child support garnishment), the Applicant withdrew $256,500 from his bank accounts, including 5 withdrawals over $40,000.[15] When asked to explain these withdrawals at the hearing, the Applicant responded that “I owed people money, so I gave it to them”. He agreed that he did not have details or receipts in relation to these debts. He agreed that at the First Review he had told the Tribunal that his debts were around $50,000. He added that in his divorce his wife took all of his money, and that whenever he saw his children he gave them food, games and anything they wanted. He also said that he “bought all new furniture” for his unit.
[15] RSFC, 6 [58]; ST6, 275-278, 282; ST5, 255, 277.
CONSIDERATION
I have to decide whether there are special circumstances in respect of the Applicant which put his case out of the ordinary, such that I should vary the preclusion period so that he can apply for DSP earlier than 19 April 2025.
Mr Hafda’s evidence regarding his physical condition means that he is in very similar circumstances to other people who have received compensation payments for workplace injuries. Sadly, his circumstances are not special.
It is likely that Mr Hafda was aware of the compensation preclusion period when he purchased the unit. Even if he was not, that does not constitute a special circumstance for the purpose of altering the preclusion period, especially given that the unit has risen in value and could be sold at a profit.
The main issue for consideration is the Applicant’s overall financial situation. Mr Hafda’s evidence regarding his financial circumstances establishes that he is probably in a better position than some other people who received compensation payments and who are in the latter part of their preclusion period.
I am concerned by the scant explanation provided to me by Mr Hafda regarding the withdrawal of over a quarter of a million dollars from his bank accounts in a 6-month period in 2021. Mr Hafda sought to explain this by saying he had to pay debts, but provided no particulars. I do not know why Mr Hafda would have incurred significant debts when he had $320,000 in a bank account before payment of his compensation lump sum. I have no knowledge of the amount of each debt, or to whom money may have been owed. I only know that he intended to borrow money from his “pensioner mother”. I am left with the possibility that Mr Hafda still has access to all or some of that money.
If I leave his bank accounts to one side and take Mr Hafda’s account of his circumstances on its face, Mr Hafda is describing that he has a liquidity problem. Mr Hafda owns outright a home unit currently valued at $425,000, and so he has ample assets from which to support himself more than adequately to the end of the preclusion period, and beyond. I appreciate that Mr Hafda does not want to sell his unit. He has expressed this very strongly. However, it was purchased following the payment of a lump sum in compensation which was meant to be used by him to support himself. His purchase of the unit has covered one need, accommodation, however his assets must cover all his needs. The fact that Mr Hafda has tied up his funds in real estate is not a special circumstance justifying the expenditure of taxpayer funds on Mr Hafda’s other living expenses. If I was to decide otherwise, I would be exercising the discretion in a way that frustrates the legislative intent that compensation recipients should not be “double dippers”.
Mr Hafda has about $29,000 in a particular bank account in his own name.[16] The Child Support Agency garnisheed an amount of just over $29 000 for child support payments from that account in 2021.[17] The Child Support Agency has not subsequently taken any money from that account. In his evidence Mr Hafda insisted that the bank would not allow him to withdraw that money because it is “child support money”. There was no other evidence before me regarding that bank account and this issue. I do not understand why Mr Hafda cannot access this account. Perhaps the bank staff Mr Hafda spoke to made a mistake. Perhaps there is a caveat or warning on the account that should be lifted. In any event, Mr Hafda should raise this issue further with the bank and seek some advice. Ms Donaghy notes the amount is equivalent to a year of DSP payment – this may suffice to cover Mr Hafda’s expenditure through the remaining 29 weeks or so of the preclusion period without requiring him to sell his unit. This is of course entirely a matter for the Applicant.
[16] Oral evidence; ST5, p 264.
[17] ST5 p 255
Given Mr Hafda’s outright ownership of a property valued at $425,000, there is no special circumstance regarding his financial situation which would justify reducing the length of the compensation preclusion period. Neither are there any other special circumstances. As a result, I have decided not to shorten the preclusion period, and its end date remains 19 April 2025.
DECISION
The decision of the Social Services and Child Support Division of this Tribunal on 7 June 2023, which affirmed a decision of Services Australia made on 12 August 2022 to reject a claim by the Applicant for Disability Support Pension, is affirmed.
I certify that the preceding 40 (forty) paragraphs are a true copy of the reasons for the decision herein of Member D Stevens
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Associate
Dated: 11 October 2024
Date(s) of hearing: 3 October 2024 Applicant: In person Solicitors for the Respondent: Ms N Donaghy, Services Australia
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